
How Uber Backers Orchestrated Kalanick’s Ouster as CEO - petethomas
https://www.wsj.com/articles/how-uber-backers-orchestrated-kalanicks-ouster-as-ceo-1498090688
======
adharmad
In retrospect, it is interesting to see that a reflective blog post from an
engineer ended up in the casualties of CEO, most of the senior leadership and
a few board members. Maybe the cracks were already there but nevertheless it
has been surreal seeing this unfold in the space of 5 months. It is almost
like watching the butterfly effect in action.

~~~
potatolicious
I'm reminded of the Hemingway quote:

"How did you go bankrupt?"

"Two ways. Gradually, then suddenly."

Without diminishing the impact of Susan Fowler's blog post, Uber has already
been "going bankrupt" slowly for years before this point.

I has been surreal watching this unfold, but I'd hesitate to compare it to the
butterfly effect - unless we're talking about many, many butterflies over a
long period of time ;)

I do hope that these events have inspired companies to pay more attention to
their workplace and culture - festering problems like these are easy to
ignore, but reveal their consequences suddenly and severely.

~~~
ethbro
Isn't part of the butterfly effect narrative that a number of things were
already balanced at such a delicate point that they could be tipped?

~~~
btilly
No, or at least not as originally propounded.

The point of the butterfly effect is that every small input magnifies so much
in a chaotic system over time that you won't be able to predict it correctly
if you miss any detail, even one so insignificant as a single flap of a single
butterfly's wings.

The moral being that a chaotic system is fundamentally unpredictable in
detail, and can only be predictable in averages and aggregates. (So we can
predict climate, but not weather.)

------
mabbo
A commenter in another thread put it very well: you can have as many voting
shares as you like, but you aren't in control of your company until you're
profitable.

~~~
danieltillett
You are never in control of your company unless you don’t have employees.

~~~
dsacco
Yeah, but at what point does the bar for control become meaningless? It's not
really productive to raise it to the point that every company ostensibly has
no one in control because they have obligations to other parties.

It _is_ productive to discuss how founders like Zuckerberg and Kalanick
retained majority voting rights, because that's meaningful even if you use a
pithy definition of control that makes it virtually impossible to achieve.
Similarly we can talk about the class of shares Snap issued which do not allow
shareholders to control the company.

When you abstract legitimate insights like "executives at pre-
profitable/public companies can't rely on voting rights for security" to "no
one has control as long as customers are a thing", you preempt a lot of very
useful discussion. You've defined away the controversy.

~~~
danieltillett
I haven’t defined away the controversy, just taken a step back and tried to
look at the issue more globally.

My company over the years has transitioned from no employees, to employees, to
no employees again, and back to employees. The only time I have been in
control (despite having 100% ownership) is when I have had no employees.

When you are thinking about starting a business the decision to employ or not
is even bigger than deciding to take in investors.

------
redm
Just a slightly different perspective from the mob.

"The culture at Uber is Toxic."

I keep hearing this. Yes, there are clearly some sexual harassment issues, I'm
not sure it's systemic. I lived a couple of blocks from Uber's HQ's on
10th/Market and I went to lots of meetups there. People I met were happy and
proud of the company.

As for the rest of the events, such as Greyball, etc. I don't consider that
toxic, I consider that disruptive. Had Uber not have done that, the lobbyists
for the Taxi industry would have kept the status quo.

It was Uber, pushing hard, that changed the world, for the better. That's how
the world changes, people pushing hard and breaking the rules when they know
the rules are wrong.

I also personally worked with Travis and I know his personality. He pushes
hard, he works hard, he wants to win. That may be because he's had some really
tough losses too (Scout, RedSwoosh [1]). I have a lot of respect for him,
being an entrepreneur is tough, especially when it's raining.

[1] Although he had an exit, it was a slog ~7-year slog where he lost funding
and was, at one point, alone.

~~~
burkaman
What's your opinion of stuff like the Hell app, or intentionally sabotaging
competitors?

[https://techcrunch.com/2017/04/24/uber-hell-
lawsuit/](https://techcrunch.com/2017/04/24/uber-hell-lawsuit/)

[http://money.cnn.com/2014/08/11/technology/uber-fake-ride-
re...](http://money.cnn.com/2014/08/11/technology/uber-fake-ride-requests-
lyft/index.html)

~~~
redm
That's tough to say, I don't know enough about the entire situation. I think
it's safe to say that Lyft and Uber wherein a street fight and were both doing
"questionable" things to each other. It reminds me of Thomas Edison sabotaging
Tesla, and yet, here we are, on A/C. [1]

[1] [http://mentalfloss.com/article/30140/acdc-
tesla%E2%80%93edis...](http://mentalfloss.com/article/30140/acdc-
tesla%E2%80%93edison-feud)

~~~
burkaman
I couldn't find any example of similar actions by Lyft, but I could have
missed something. Also, it's not just Lyft:
[https://techcrunch.com/2014/01/24/black-car-competitor-
accus...](https://techcrunch.com/2014/01/24/black-car-competitor-accuses-uber-
of-shady-conduct-ddos-style-attack-uber-expresses-regret/)

Regardless of whether anyone else did it, do you think these are examples of
Uber making the world a better place and breaking rules that shouldn't exist?

~~~
redm
"Regardless of whether anyone else did it, do you think these are examples of
Uber making the world a better place and breaking rules that shouldn't exist?"

You're not really asking a question, you know that anti-competitive behavior
is not making the world a better place, it's fighting for market share and
dominance.

Anti-competitive behavior is often rewarded in our society with higher
profits, valuations, and market dominance. For example, Microsoft forcing PC
makers to use Windows 95, or Microsoft using Windows to push IE crush
Netscape. Look at Google pushing Chrome via all its products to take 70%
market share, much of it from Mozilla, or Google downranking Yelp to push its
own products.

~~~
burkaman
Those are all good examples, and I think a pattern of that type of behavior is
good evidence of a "toxic culture". That's what people are talking about, not
just the recent sexual harassment stories. I'm pointing this stuff out because
you said in your comment that you'd never heard of any bad behavior at Uber
besides sexual harassment. In fact there's a consistent pattern of bad
decisions made by people throughout the organization, and that's why people
talk about a toxic culture.

------
Allvitende
While I do agree that the culture at Uber was toxic and ultimately Travis was
to blame for that, on a human level I do feel for the guy. At the end of the
day, he just lost his mother and now also his life's work for the foreseeable
future. And damn that must suck.

~~~
tyingq
Maybe eventually, he will view it differently.

 _" Getting fired from Apple was the best thing that could have ever happened
to me. The heaviness of being successful was replaced by the lightness of
being a beginner again, less sure about everything. It freed me to enter one
of the most creative periods of my life."_

~~~
jbigelow76
That's a really powerful quote from John Sculley.

~~~
carbocation
> That's a really powerful quote from John Sculley.

/s/John Sculley/Steve Jobs/

~~~
adjkant
I'm sorry that you have had to use Hipchat so much that you know this and use
it outside of it. A human can truly get used to anything.

~~~
austenallred
I don't think that syntax is Hipchat-specific

~~~
jnordwick
It's originally from `ed` then `sed` then `vi`. It's been in use in email,
Usenet, and IRC for a very long time.

------
gwern
The backers:

> By Monday of last week, Benchmark had found four additional investors to
> sign the letter, including First Round Capital; Lowercase Capital; Menlo
> Ventures and Fidelity Investments, according to people familiar with the
> matter. Benchmark’s Mr. Gurley attempted to get other board members to sign,
> but at least one refused out of reluctance over being represented by Mr.
> Gurley, according to one person with knowledge of the matter.​

~~~
andybg
First Round Capital signing this is amazing to me - especially since it
doesn't look like it required them too to make this happen. Sort of expected
the others too but not them.

~~~
fasteddie
What makes First Round different than the others, out of curiosity?

------
austenallred
Wow, it was signed by Benchmark, First Round and Lowercase. Those are all of
Kalanick's earliest backers and most fervent supporters, even in times of
controversy.

------
menacingly
Perhaps with a sustained PR onslaught that will now magically disappear even
if nothing material changes at the company?

~~~
CodeWriter23
Well he did say there was no way in hell Uber would IPO. What's a poor
billionaire to do when faced with an obstinate CEO messin' with their payday?

PS the rest of the Uber story is IPO in 5..4..3..

~~~
tyingq
Doesn't an IPO require some actual disclosure of financials in a format
accountants would accept?

Or is there some way to IPO without outing exactly how much the burn to date
has been subsidizing rides?

~~~
jpttsn
Not counting fraud, I don't believe there is.

------
name_for_now
> It became clear from conversations with potential COO recruits that few
> would take the job if Mr. Kalanick stayed, they said.

Aha. Now I think this makes more sense.

------
dandare
Could someone please explain to me why does Uber has 12,000 employees? Drivers
are not employees, there is no content to curate, no brick & mortar operation,
the app and tech stack is pretty much developed and stable. Sure the Otto and
UberEATS are now part of Uber but still.

~~~
hboon
They are active in more than 600 cities. Even assuming tech support, design,
engineering and R&D staff are negligible, 20 employees per city seems to make
sense. Partnership, Marketing, legal, operations, vehicle rentals.

Their software might scale and business model replicable across many cities,
but they still need people on the ground running.

~~~
dandare
All those cities are located in less than 100 states. What are those people on
the ground doing?

~~~
robbiemitchell
You need people on the ground to recruit and hire drivers, hand out ride
incentives (especially on campuses), manage out-of-home advertising and local
events, manage the in-city staff...

It's easy to think everything is handled online via digital advertising, but
ops-heavy businesses like this require bodies on the ground.

------
untog
It's an interesting dynamic. The investors hold the cards, because Uber is
going to need more funding soon. But on the other hand, pushing Travis out
might tank the valuation.

I'm guessing they decided that any valuation damage will only be short term. I
suspect they are right.

------
treyfitty
The article doesn't make it clear what the letter said, other than "A group of
us think you should step down. Do it." What could have possibly been in the
letter that made Travis step down?

~~~
shostack
That's what I wish I could read more about. The behind the curtain
conversations, emails, etc. Those rarely come up light but are an important
part of how business gets done at that level.

------
vesrah
Non-paywall version?

~~~
ericleung
You can do the same trick that used to work with Google, but with Facebook
instead. Search the text of the title in Facebook and follow the link through.

Could also probably modify some header or something to achieve the same thing.

~~~
jcsnv
Thank you, TIL!

~~~
Overtonwindow
Get Brave, it works very well.

~~~
_dark_matter_
It is still blocked in Brave.

~~~
Overtonwindow
Ah I was meaning to say use Brave as it will by pass adblock walls.

------
gadders
Are WSJ links going to be penalised now the google firewall workaround no
longer works?

------
zebraflask
Couldn't have happened to a nicer person.

------
code4tee
Imagine the pressure the VCs on the board are under from the people that gave
them money to invest. An investment in Uber went from:

"Man I can't believe you got our money in there, we're gonna be rich!"

to

"$&?@! our money is in Uber? We're going to lose our shirts. Do something!
Now!"

The VCs on the board had no other choice but to kick Kalanick out of the CEO
job.

~~~
draw_down
It's unclear to me how much the actual business has been affected by the
upheaval.

But once they get Sandberg in there, combined with Huffington on the board,
and Boz St John on the exec team, the press is going to love it. It's a new
day at Uber, Uber goes from harass-y to classy, all that stuff.

~~~
kbos87
Agreed. The great irony of all this is that a more palatable group of people
running the company are more likely to take it further and thus do more damage
to society, building an even more enormous and dependent economy of drivers
they already intend to fire.

~~~
draw_down
The more I think about this, the more I respect the moves they're making, even
as I agree with you that they're evil.

In fact, this is a brilliant pattern: start by winning with shitty,
extortionate tactics. When everyone eventually, inevitably hates you, fix the
image problem by replacing leadership with a more optically-appropriate team.
Continue as before.

And why not? Do investors care who is ostensibly in charge, as long as the
wheel keeps turning? They do not. Employees love that action has been taken,
voices have been heard, wrongs have been righted. Plus, now they don't work
for just another bunch of white dudes like everywhere else in tech. Press is
all about it, of course.

It's smart!

