Uber Founder Travis Kalanick Resigns as C.E.O.

Uber may or may not take over the world at some point, but Uber needs another round of investment in the next 18 months just to survive. If the existing investors refused to play ball, they could kill the next round, which really would kill Uber.

And here's another important moral of this story for founders: Kalanick has a controlling interest in Uber, so on paper, nobody could have removed him as CEO by shareholder vote. But despite complete control over the vote, you don't really own your company if you're dependent on future investment.

No matter what the cap table says, if you're not profitable, it's not really yours yet.

If true, this seems far more likely to be a cause of Uber's death than Kalanick resigning. That, and the valuation being as insane as it is, which is also Kalanick's fault, which as you point out, makes it hard to find greater and greater suckers.

Perhaps they'll be better off all around without Kalanick, assuming they can get the business side on track and get the burn rate under control, and perhaps make their business sustainable rather than a gigantic handout of VC money.

Kalanick has serious issues but he's demonstrated unquestionably forceful (and polarizing) leadership that mere "managers" will never be able to replace.

I've been bullish on Uber despite all their mistakes and internal issues because at the end of the day, the guy at the top was irrationally emotionally committed to _winning_. Now I am a bear on Uber.

I'll grab my popcorn, this will be fun to watch.

Traditional firms will generally prefer debt to equity as you will generally get a better shareholder return on debt. VC backed firms do not usually raise debt -- even if it is preferred -- because they are viewed as too risky by banks. When VC-backed firms raise debt it is because they are transitioning out of high risk to the stability of a established and predictable firm.

In some Nobel-winning economic theories the best capital structure is all debt: https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo... https://en.wikipedia.org/wiki/Capital_structure

If the only thing about this loan that makes it "leveraged" is its interest rate of 5% then that is probably preferable to equity and not a red flag.

Do you have a source for this?

Counterpoint: businesses in good shape don't just drop CEOs. This move might just help it die slower.

Highly unlikely. Why? Investors who stomach multi-billion dollar annual losses will probably just shrug off the recent bit of trouble. If the choice is to either write off $15 billion or to give another couple to help the company go through a rough patch (what a buying opportunity!) I think I know what investors are going to do.

Kalanick's head has now rolled (not that it really hurts him much personally though, it's probably even a relief for him) but seriously a whole nother level of crap would have to happen with Uber before investors start getting comfortable with the thought of letting go those $15 billion.

I don't think Kalanick had much to do with it. He created the product, but it pretty much sold by itself -- similar to how Zuckerberg created Facebook, which sold by itself.

I'm very optimistic about this change. To me, Kalanick, and the culture he bread, were toxic to Uber.

I'm reminded of how Microsoft's share price jumped by 12% the day Steve Ballmer's retirement plans were announced. Microsoft has been on a major run ever since. Let's hope that we see something similar here.

Yahoo for example is coasting along at a market cap of 53.40B down from its high of over $125 billion[1]. In 1999 dollars. Is it "dead"?

[1] http://www.businessinsider.com/yahoo-market-cap-over-time-20...

How could Uber, barring wholly incompetent leadership, completely implode?

My gut tells me that Uber's financial performance won't change

They will change the company's current culture. Slow down the pace of growth to try to adjust what is wrong. Probably focus on where they have margin to operate. This is clear in Gary ( Uber Co founder) text on Medium.

"In a highly competitive market it is easy to become obsessed with growth, instead of taking the time to ensure you’re on the right path. Now is that time… to pause"[0]

[0]https://medium.com/@gc/ubers-path-forward-b59ec9bd4ef6

Companies at this stage in an ultra competitive market (not talking about ride sharing, but self-driving) need their founders to lead and grow. It is just too early and critical to bring in a professional CEO. See Apple.

Uber final product is good for society. And other companies can provide the same product (in my city, São Paulo, there are other 3 good companies in the same space).

Uber practices as a company are toxic for its employees and some of the toxicity leak to society.

If such calculation was possible, I believe it would show a net positive impact in society. But a company with good practices and the same product would have an even larger net positive impact.

As a society, I believe we should not settle for bad companies making good products, that's why I believe all the protests are legit.

The outer boroughs, and every neighborhood in the city, has had car service options for decades, where you call a phone number (or often walk to a local storefront stand) to get a ride.

This is the exact market segment that Uber has entered. Literally. There wasn't and still isn't a restriction on the number of TLC car service cars on the streets.

This idea that there "were no taxis" in the boroughs and now there are is ridiculous. There weren't many yellow cabs before and there still aren't. There used to be thousands of TLC cars before and there still are. Except now people use an app instead of calling Arecibo or Carmel.

Street hailing was and still is prohibited, both for Uber and for phone style car services.

The massive innovation, of course, is the use of a smartphone app for hailing, which made it technically possible to create the market that we see today. Uber, Lyft, and the other companies that built internet enabled hailing solutions certainly do deserve credit for building out that innovation, but that change was just an obvious outgrowth of the technological change to everyone having a handheld always connected small computer. It was inevitable.

The dynamic you're describing for NYC just doesn't really fit the facts. Nor does the idea that a lot more people taking a lot more rides in cars is reducing greenhouse emissions, but that's another matter.

Even if we grant that Uber is a huge overall social good, it is clearly not sustainable at its current pace. Uber's burn rate is the highest in history, and the C-suite is barren. The board clearly felt that TK couldn't get Uber out of this mess. And the board, at the end of the day, only cares about long-term share price.

> not forcing drivers to pay excessing leasing fees for vehicles.

Err, the cheaper rates were due to uber subsidising rides with VC money, which was unsustainable. Uber also did start a leasing program for drivers.

That's insane.

Reducing greenhouse? Relative to what?

This is all one needs to read http://nyc.streetsblog.org/2017/02/27/its-settled-uber-is-ma...

I've decided to solve this by 1-starring and no-tipping any driver that fails to yield to a pedestrian, drives in a bike lane, or exceeds the 25mph speed limit at any point in the ride (so, like, all of them), but of course, I take a cab once every three months, so that won't do much.

If we really want to reduce greenhouse gases, a better approach might be:

1. Properly funding the MTA (congestion charging)

2. Widening sidewalks, especially in Midtown

3. Grade-separated and camera-enforced BRT lanes and/or surface rail with signal priority.

4. Proliferation of bike lanes.

5. Charging market rate for all street parking.

Uber and Lyft have have increased car traffic in New York: http://nyc.streetsblog.org/2017/02/27/its-settled-uber-is-ma...

There is a lot of potential for such reductions to happen in urban areas. Shameless plug - the potential for pooling using Uber data is shown in Figure 8 (https://arxiv.org/abs/1701.06635)

Uber's great in that they give competition to an entrenched monopoly of Yellow Cab.

But put Uber in a monopoly position anywhere and you'll see the rates skyrocket.

There needs to be a number of forces in the ride sharing market to keep prices down.

For one thing, because cabs were so bad, Uber was able to do a lot of stupid and scummy things yet still be way better than cabs.

Also, it had an interesting effect PR-wise. For a long time, whenever I heard something negative about Uber, I just assumed it was taxi industry shills making up ridiculous lies. Because there definitely were taxi industry shills going around (online, newspapers, etc.) and making up ridiculous lies about Uber. Later I understood that some of the negative stuff I was hearing about Uber was a huge lie and some of it was totally true.

Let's look at the flip side here. They "disrupted" an industry by repeatedly violating the law and undercutting the competition by subsidizing nearly 2/3 of the cost of fares using investment funds. Is that innovative? I'd argue that nearly anyone could disrupt any industry with such a model, regardless of the actual merits of anything else they'd built.

Add on to that their horrible corporate culture, their seeming support of industrial espionage, and the underhand tactics they use to take advantage of their drivers.

It was smart of them to take on a corrupt, broken, and outdated system, because it allowed people, like you, to whitewash so many of their flaws and transgressions.

Citation required.

"while not forcing drivers to pay excessing leasing fees for vehicles."

In the same way someone who owed money to the company store didn't have to start doing that, but due to predatory terms, once they did, things get pretty out of hand. And since Uber/Lyft are the ones who dictate those terms, they are to blame.

https://www.susanjfowler.com/blog/2017/2/19/reflecting-on-on...

https://www.nytimes.com/2014/11/20/business/media/uber-emil-...

But focusing only on the benefits and avoiding discussion of the costs or new problems that something creates is sales talk; internalizing sales talk leads to cognitive bias.

Those positives will be brought about regardless of who it is, so lets make sure it isn't a company who acts as egregiously bad as Uber.

Second, none of these apps I have seen thus far even attempts to make it easier for the user to add payment methods. Each time I need to put in my credit card information? Twice if I am on business? Nobody has taken advantage of Apple or Android pay integration.

I don't consider myself a heavy cab user, but I probably take at least ~200 rides a year, and unless the city is regulated (credit cards) I am using Lyft.

I would be fine with taxis if I didn't have to interact with the driver at all when it came to payment and could provide feedback right in the app.

The thing I find interesting is that MyTaxi is loosely coupled with the drivers. There is no obligation to pick up MyTaxi fares, you can go about your business as a cabbie and take MyTaxi fares when business is slow. Seems to work quite well for the drivers.

This morning I had to wait probably 15 minutes before a driver took my MyTaxi order, but considering how bad the phone-dispatch service is in Berlin I call that a win.

Everything else is very Uber-like: electronic receipt, pay in app if you like, tracking of the car on its way to you (more or less).

Oh, and two very neat features: you see your cabbie's full name (this feels safer to me) and you can save them, after rating, to a "favorite drivers" list, which I assume the service will use to help improve customer satisfaction.

[0]: https://de.mytaxi.com/index.html

    > cabs being allowed to use the cab lanes
    > (or, in Amsterdam, the bus lanes).

From talking to a few drivers (just asking them about Uber) my understanding is that at some point in Amsterdam Uber was just hiring pretty much anyone with a car as a driver, but then The Netherlands cracked down on it, and now they're all as legit taxi drivers as any other taxi.

So I believe you're posting on the basis of out-of-date information when it comes to Amsterdam.

Uber's decline in Amsterdam will be not only when the local market provides apps of equal caliber, but when they match Uber in prices, it's way cheaper than taking a taxi over here.

London black cabs have been available by app for a while (Hailo). The main reason people use Uber is that it's about 30% cheaper.

I suppose it might be useful during shift change?

[0]https://www.goarro.com/

Lower cost is also a factor, relative to local taxis.

Fry: "I heard one time you single-handedly defeated a horde of rampaging somethings in the something something system"

Brannigan: "Killbots? A trifle. It was simply a matter of outsmarting them."

Fry: "Wow, I never would've thought of that."

Brannigan: "You see, killbots have a preset kill limit. Knowing their weakness, I sent wave after wave of my own men at them until they reached their limit and shut down. Kif, show them the medal I won."

That is the sort of belief we're talking about, a serious investigation with the assumption the person reporting it is not lying. The investigation itself could of course result in not sufficient evidence being found. It's really not that complicated.

That being said, kudos to anyone courageous enough to speak the truth even at the risk of vilification.

One of the problems with this unilateral statement is that if this becomes the new norm, then women can just level accusations and be believed. Men get fired or have other consequences.

It is never a good idea to have a policy of sweepingly and uncritically believing some category of people over another. That is actually the problem we currently have, only it is generally white men who get believed, no matter what they say, while women and poc get ignored, dismissed, etc. Consider how poorly that is currently serving women and poc and maybe stop to wonder if you would want to be on the receiving end of that.

Your remarks make it clear that you have enormous privilege and you imagine you cannot lose that advantage. Consider the possibility of losing it. Just as a thought experiment. Your smugness is deeply rooted in your assumption that you will always be privileged. And I don't even know where to begin here in telling you how sick and twisted that is.

In a weird way, it deeply reinforces the current sick system. And if you did get your way, you could well lose the thing you currently cannot imagine losing.

I am not for having a Lord of the Flies social order and simply shuffling around who the default victims are. I would like to treat everyone better, not simply make the current victims the next generation of abusive tyrants.

I'm pushed to think that the "media" didn't report on it too much because the problems were economic. But as an average media company, that story doesn't sell, it doesn't interest the average reader, so they don't report it that much. Then the sexual harrasment scandal surfaced and _that_ is when the media jumped on board, because everybody loves getting political and hearing about scandals and feminism and all those kind of controversial topics.

If anything, the scandal damaged Uber's public image, but that is a superficial problem in proportion to their disasterous funding model and general financials.

This meme is often repeated in context of sexual harrassment (workplace or otherwise). How do you square that with the fact that women are as capable of laying and misleading as men are? How do you square that with "innocent until proven guilty" when accusation are leveled against another individual or company.

no evidence? no problem. guilty until proven innocent based on the gender of the accuser.

Travis helped build an incredible company, but his disregard for the law, for his employees' well-being, for basic decency threaten to tear all of that down. Just in the past six months:

* Susan Fowler's blog post exposed a terribly broken HR system and a culture of sexual harassment that reached the very top. This has huge legal implications in addition to the obvious moral and ethical ones.

* Waymo's lawsuit could shut down Uber's self-driving car program, into which they have put hundreds of millions of dollars. There may be evidence that Travis colluded with Levandowski to steal Google's self-driving techonology.

* Uber is under investigation at several levels of government for their Greyball program to hide from law enforcement.

* On top of all this, Travis was videotaped cursing at a driver who complained about pay rates.

At this point, Travis had to go. It's going to be hard for Uber to recover from all this, but this is the first step. I hope that this becomes a lesson in SV that there are consequences to this kind of behavior, and that at some point the adults will step in.

> Hope everyone's paying attention to the identity of these investors behind this horrid behavior. Travis is not without his flaws but he created an awful lot of value for them.

He's been very well compensated for the value he's created. You don't keep a job because of what you've done in the past, you keep a job based on what you can do in the future.

Yes his assertiveness and drive got them where they are, but sometimes companies do need to grow up.

Jobs was a consistent asshole expecting perfection. That is way different than emboldening a climate of harassment, degradation, etc. that took place under his watch. Having recent external c-level hires quit due to the revelations of "culture" speak much.

I hope Uber can continue. As someone who travels internationally on business, it's quite useful. Seeing him go, it's just one more example. Pincus felt screwed through how Tribe.net went through, set himself up in a sheltered position at Zynga and through a combination of "management style" and problems at the company had to step down.

The cultural issues made public between Zynga and Uber are way different, but in both cases you had CEOs that structured the holdings such that they could retain power despite turmoil.

Sometimes the turmoil is too great.

My last international trip, I used Lyft.

But who cares about that? He created and maintained a culture that systematically abused people and covered it up.

Fuck the investor value. People were harmed. This was the only ethical move they could make regarding Kalanick.

It's business. Travis ought to understand that.

Kalanick is a bro on an ego trip who stumbled upon a business. But harassing women, and all his other flaws, are not what created uber.

Steve Jobs' flaws actually served Apple. The worst he's been accused of is driving people hard to achieve the perfection he sought.

    > he created an awful lot of value for them

Nobody else is going to buy it, and this is death for Uber.

But the reason anybody's fool enough to trigger the apocalypse is because THEY will be in charge and assume that's the answer. If they were on the outside looking in, they would have a very different opinion.

Better than abiding by an epic destruction of values.

I hope everyone pays attention to the identity of the people that invests in his next company.

Maybe some things matter more, like, not fostering an environment where sexual harassment is tolerated.

Exactly. I would be wary of these specific folks. I bet you they would do the same to any founder in a heartbeat.

Valuation != value

IBM's recent demise, Lehman Brothers going down under, Enron, Arthur Anderson / Worldcom, the dismantling of Japanese mega conglomerates by the GHQ, Apple's 90's turnaround, the death of workstation companies, deregulation of US airlines, are all orders of magnitude more impactful than if Uber dies and Lyft prevails.

Uber is in 100 more US cities than Lyft and 81 countries where Lyft isn't. I find that in large parts outside of the USA "Uber" is synonymous with ride sharing.

Uber bookings revenue is doubling each year[0], net revenue growth is outpacing growth in losses[1] and they claim to be profitable on a per-city basis in early markets[2]

Direct comparisons: Countries 82 (Uber) vs 1, Bookings: $20,000M (Uber) vs $1,400M, Growth: 100% (Uber) vs 250% (Lyft), Net revenue: $6,500M (Uber) vs 700M, Losses: $2,800M (Uber) vs $800M (Uber has much better margins and margin growth), Valuation: $70,000M (Uber) vs $6,000M, Revenue/Valuation: Uber 3.5x Lyft 4.28x

Not an insurmountable task, but Lyft have a long way to go and no track record or operations outside of the USA.

[0] http://fortune.com/2015/08/21/uber-bookings-double/

[1] https://www.bloomberg.com/news/articles/2017-04-14/embattled...

[2] https://www.businessinsider.com.au/uber-profitable-in-hundre...

But it's almost certainly not possible to do it with the same CEO. A leave of absence is not sufficient.

Also, it wasn't even close to profitable.

It's such a strange idea--that out of the seven billion people on the planet, only one is capable of leading [Company X]. Who really believes this?

I'm seeing a bunch of references in these comments to when Steve Jobs was fired from Apple.[1] A more relevant reference might be when Jobs stepped down to treat his cancer. He named one interim CEO--Tim Cook--and fully empowered him to run Apple.

If it was Travis's idea to leave a 10-person committee in charge, that is the sort of insecure, bad decision that would set off investor alarm bells.

[1] This is actually not a great comparison to Travis. Jobs was not CEO when Sculley fired him, and in fact had never been CEO of Apple. He was one of 3 founders, each of whom was arguably crucial to the early success of Apple--Jobs, Woz, and Mike Markkula, who did serve as CEO and sided with Sculley in firing Jobs. Apple subsequently grew 10x under Sculley.

Questions I'd be interested in your thoughts on:

- does it actually change corporate behaviour?

- is it a good thing that press (which it seems is sometimes influenceable) can effectively hire and fire by continued pressure?

(And please note that's not whether this case was wrong, but whether it opens the possibility of intentionally targeted public campaigns to remove someone from a company sponsored by unstated private reasons. And those are genuine, not rhetorical, questions.)

A woman for Uber CEO would be a good signal -- if the best candidate for the job happens to be one. Didn't Marissa Mayer recently resign from her job, and be available?

Yeah they may start losing money every quarter.

Because certain people like Uber board member David Bonderman have a really hard time getting it through their thick Neanderthal skulls that they shouldn't make crude sexist remarks about how women talk to much, while on stage at a company all hands meeting whose topic is how the company is turning over a new leaf to address their systematic culture of sexual harassment. Even if it's hilariously ironic because it was actually a man who just couldn't keep his big fat mouth shut.

https://www.recode.net/2017/6/13/15795612/uber-board-member-...

Does he deserve to be complimented in any way shape or form?

No... Not in the slightest.

I think the question is can uber continue winning without being toxic to staff (drivers, women, I'm sure there are others), maybe stealing (waymo lawsuit), and building tools to avoid the law....

The answer is I don't know, but it is going to be hard to recover from.

It does in public markets. See sell offs, corrections.

https://news.ycombinator.com/item?id=13747414#13749264

I do wish it hadn't happened, though, I would have preferred if the company could have healed with him still managing to stay in control.

There are a number of ride-sharing services, the self-proclaimed biggest being blablacar.de, previously known as mitfahrgelegenheiten.de, I believe.

We also have a multitude of car-sharing services, where if you subscribe, you can look for a free car parked somewhere, and then drive it wherever you want within a certain area. Examples are car2go, DriveNow, and I believe Starcar and other rental-car companies also have services like that.

Uber actually had to pull out of several german cities because of taxi-related regulations. Taxi-drivers in those cities need to obtain a license, which drivers for Uber obviously don't do. So (some german) institutions also view Uber as a taxi company.

Source: https://www.theverge.com/2015/10/30/9648676/uber-germany-ham...

you should read this very interesting (but simplified) exploration of power talk for a general idea of why this article was written the way that it is:

https://www.ribbonfarm.com/2009/11/11/the-gervais-principle-...

Uber's play was that they could subsidize that through private investors in order to scale. But now they have to find, hire, and compensate basically the whole tier of upper management, while still burning operating money. I'm not a business major, but that's probably REALLY not good.

I'm surprised I haven't read about it in another comment yet, but this is screaming for a company with good management and a stash of solid reputation/PR/marketing to come get a really good deal. Maybe Facebook because the culture wouldn't clash as much as my next two: apple and Google? Apple has the cash, and needs an entry into automotive while we wait for the apple car. Google/Waymo+Uber immediately settles the lawsuit, puts uber back into moat territory with self-driving, and gives google some people on the ground to compete with Amazon in last-mile?

...and if that's a 21st Century thing, so be it.Maybe you should do 21st-century things like being a good guy, considering this is the 21st century.

With a new seasoned exec, I predict Uber will stabilize, IPO at some point and becomes the Yahoo of the industry. It won't be the next Google, Amazon or Facebook (all led by founder CEOs), that's for sure.

The hard part of cloning Uber as a company is building both sides of the market. It's almost impossible to do without a clever strategy and tons of cash.

Steve Jobs was an asshole at times, but that behaviour was always about driving people hard to create what he considered a perfect product.

Kalanick's brohaviour has nothing to do with economic success. You absolutely do not need to harass people sexually to be successful.

We detached this subthread from https://news.ycombinator.com/item?id=14600895 and marked it off-topic.

As an exercise, ask a few men and women you know if they've ever been harassed or attacked at work. If they didn't report it, ask them why.