One of the two co-founders of Uber, Travis Kalanick, resigned as the CEO of the company on Tuesday. It was an untenable result of a shareholder revolt that made him come down to this decision. With Garret Camp in 2009, he founded the company and led it to a global establishment in terms of transportation.
Kalanick stepped down after hours of debates involving the investors, as said by two people having knowledge of the situation. They requested to remain anonymous due to the confidentiality of the matter.
It was revealed that 5 major Uber investors demanded the CEO’s immediate resignation during Tuesday’s early hours. One of the investors is a major shareholder of Uber, named Benchmark, the American venture capital firm. The firm has one of its partners Bill Gurley on the board of Uber.
Kalanick was in Chicago when he received a letter from the investors demanding his stepping down. The letter titled ‘Moving Uber Forward’ was obtained by the New York Times. It contained a clear message to the investors that Uber needed a change of leadership and that Kalanick must leave as soon as possible. Kalanick agreed to step down after consulting with an Uber board member and some of the investors. He is to remain on the board of directors of the company.
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Kalanick gave his statement as “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted by another fight.”
According to the statement from Uber’s board, Kalanick always prioritized Uber before anything else. His stepping down provides the company with the “room to fully embrace this new chapter in Uber’s history.” The request for further comments on this was declined by an Uber spokesperson.
This move settled down months of questions regarding the leadership of the company, which was on the edge of a fallout. The company’s workplace culture has numerously raised eyebrows subjecting to discrimination and sexual harassment, which even led to dealing with law enforcement alongside partners. This was brought on by Kalanick, who is known to have optimistically turned the wheels for Uber from a start-up as he made it a globally dominant ride-hailing service provider, uplifting the transportation markets worldwide.
The troubles circling Kalanick started at the beginning of this year with a former Uber engineer reporting being a victim of sexual harassment in the workplace. This flooded the company with complaints and internal investigations. Additionally, the company has been dealing with a lawsuit from Waymo regarding intellectual property and a software tool federal inquiry. Uber was using the software tool for sidestepping certain law enforcement.
The company has shown intention to surpass its troubled history that inextricably grew with Kalanick. In the last few months, Uber saw fired 20 employees after an internal investigation. This embarked on major changes regarding professionalism in the work culture of Uber. Presently, they are on the hunt for new officials, including a chief executive officer.
Last week, Kalanick expressed that he wanted an indefinite leave of absence from the company, partly for himself and for the grievance of his mother, who passed away last month in a boat accident. According to him, during his indefinite absence, the company’s daily management would be handled by a committee involving more than 10 executives.
But the letter of the shareholders read that this leave of absence was not enough for the investors, who have seen their efforts of millions of dollars swelled to a valuation of nearly $70 million. For them, Kalanick had to step down.
The demanding five shareholders include some of the most prestigious venture capital firms in the technology industry that invested right from the early stage of Uber. This includes a mutual fund firm as well. Aside from the firm Benchmark, the others are Lowercase Capital, First Round Capital, Fidelity Investments, and Menlo Ventures. These firms together own Uber’s stocks for more than a quarter. Due to the stocks having an outsized number of votes, some of the investors own about 40% of Uber’s voting power.
The five firms did not respond to requests for comments regarding Kalanick’s resignation. But Mr. Gurley, one of the earliest Kalanick supporters, said on Twitter, “There will be many pages in the history books devoted to @travisk — very few entrepreneurs have had such a lasting impact on the world.”
The resignation leads to questions about filling up Kalanick’s shoes, considering his recent influence on the image of the company. Kalanick himself is likely to have a presence in the decision as he still owns a majority of Uber’s voting shares.
It is not usual for Silicon Valley to take a start-up CEO fill-up issue publicly, where the investors endorse the aggressiveness of the entrepreneurs, given that their companies are evolving fast. It is only then that the start-ups face declination or at least are in a precarious position when investors step up to protect their investments.
On the other hand, Uber is one of the highest valued private companies in the world, where billions of dollars would be lost by the investors in case the company’s valuation is marked down.
Since its founding in 2009, Uber has raised more than $14 billion from investors. It includes a broad base of shareholders, excluding the ones that signed the letter. Some of the investors of the company are TPG Capital, mutual fund giants like Blackrock, and well-established brands such as Goldman Sachs and Morgan Stanley.
The letter of the shareholders, alongside the resignation, contains their task of oversight the board of Uber by employing at least two “truly independent directors.” Their demand also involves the support of Kalanick in a search committee led by the board for a new CEO, alongside asking Uber to hire an experienced chief financial officer immediately.
With Kalanick’s resignation, Uber goes on to improve relationships with some of its constituencies. On Tuesday, in the early hours, Uber emailed their contractual drivers that they would soon be allowed to take tips, which the drivers were unable to accept previously. This tipping change is a part of several new initiatives for the drivers.
The company said, “Over the next 180 days we are committed to making driving with Uber better than ever. We know there’s a long road ahead, but we won’t stop until we get there.”