Uber CEO Travis Kalanick to Take Leave of Absence

HIGHLIGHTS

  • Uber has also released the recommendations of an internal investigation
  • Among other things, they called for reducing Kalanick’s authority
  • The recommendations were unanimously adopted by the Uber board on Sunday

Uber Chief Executive Officer Travis Kalanick told employees on Tuesday he will take time away from the company he helped to found, one of a series of measures the ride-hailing company is taking to claw its way out from under a mountain of controversies.

Kalanick’s move comes after a months-long investigation led former US Attorney General Eric Holder, who was hired by Uber to look into its culture and workplace practices after a female former employee publicly accused the company of what she described as brazen sexual harassment.

Uber CEO Travis Kalanick to Take Leave of Absence

Uber on Tuesday released the recommendations from that report, which include reducing Kalanick’s sweeping authority and instituting more controls over spending, human resources and the behavior of managers.

Kalanick’s departure, even if it is temporary, is a thunderclap for the Silicon Valley startup world, where company founders in recent years have enjoyed great autonomy and often become synonymous with their firms.

It also marks a pivotal moment for the world’s most valuable venture-backed private company, which has been largely defined by Kalanick’s brash approach.

Kalanick, 40, said he needed the time away to grieve for his recently deceased mother and to work on his leadership skills, according to a staff email seen by Reuters. He did not say how long he would be away.

“If we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve,” Kalanick wrote in his email. “During this interim period, the leadership team, my directs, will be running the company.”

According to a source familiar with the matter, Kalanick can return to the company whenever he would like.

More oversight needed
The company on Tuesday shared with its staff 47 recommendations for management and policy changes that were unanimously adopted by the board on Sunday. Kalanick was not at the meeting, said a source who was present.

The meeting was marred by private equity executive David Bonderman making a sexist remark about women talking too much. He later resigned from the board of directors, calling his comment “careless, inappropriate, and inexcusable.”

The recommendations from Holder’s firm, Covington and Burling, include adding an independent director to the board and considering an independent chair; mandated manager training; and a bigger and more independent audit committee to oversee spending and management.

“I would now suggest to any startup, here are the Covington rules, and when you get passed 100 people, put these in place,” said Steve Blank, a startup founder and mentor and adjunct professor at Stanford University.

Other recommendations prohibit romances between bosses and their subordinates and create clearer guidelines on the use of drugs and alcohol.

 

“I think it paints a picture of a company pretty out of control with no oversight from the board or basic controls,” said Elizabeth Ames, senior vice president at the Anita Borg Institute, which advocates for women in technology.

At Tuesday’s employee meeting, human resources chief Liane Hornsey thanked the former employee who wrote about harassment, Susan Fowler, for being a catalyst for the changes. She received applause from employees, according to the source at the meeting.

Holder’s recommendations stressed the importance of a new chief operating officer. The company has been searching for a No.2 executive for more than three months and is also looking for a chief financial officer.

A number of senior Uber managers left in recent weeks as the Holder investigation and a parallel probe focused strictly on sexual harassment and other employee complaints, conducted by the law firm Perkins Coie, moved forward.

The most recent departing executives included Emil Michael, head of business and Kalanick’s closest confidant, and Eric Alexander, who ran the Asia Pacific region.

Uber said last week it had hired two women to fill top roles: Harvard Business School management professor Frances Frei will serve as an executive coach and Apple marketing executive Bozoma Saint John was hired to mend Uber’s brand. Uber also added a second woman to its board, Wan Ling Martello, an executive vice president at Nestle, to serve as an independent director.

There are 14 people at Uber who report directly to Kalanick and who will likely take on more responsibility in his absence. They include Ryan Graves, head of operations and one-time chief executive at Uber.

Founder power
Uber grew to a valuation of $68 billion in seven years amid non-stop controversy. It has upended the tightly regulated taxi industry in many countries and changed the transportation landscape, but has run into legal trouble with a rough-and-tumble approach to local regulations and the way it handles employees and drivers.

Uber has suffered a series of damaging setbacks in recent months, including a federal probe into the company’s use of technology to evade regulators in certain cities and a trade secrets lawsuit filed by Alphabet Inc’s self-driving unit, Waymo.

Some venture capitalists say Uber’s challenges should serve as a warning that the Silicon Valley ethos of leaving founders in control of companies, even after they grow into big corporations, can be a dangerous proposition.

“Inevitably, this will help drive the pendulum back toward better governance inside an organization,” said Robert Siegel, a lecturer at Stanford University and venture capitalist at XSeed Capital. “Sometimes we conflate great business leaders with strong personalities with great governance.”

Uber Director Bonderman Resigns After Making Joke About Women at Company Meeting on Sexual Harassment

HIGHLIGHTS

  • David Bonderman has quit Uber after he made inappropriate comments
  • The comments were targeted towards women working at Uber
  • He later sent an apology along with his resignation

Billionaire businessman David Bonderman, a member of Uber’s board, resigned Tuesday after making what he called an “inappropriate” comment about women at a company-wide meeting that was aimed at addressing the harassment of women and other unprofessional conduct within the company.

The comment came as an interruption of fellow board member Arianna Huffington, who was explaining the benefits of having more female representation on Uber’s board.

Uber Director Bonderman Resigns After Making Joke About Women at Company Meeting on Sexual Harassment

“There’s a lot of data that shows when there’s one woman on the board, it’s much more likely that there will be a second woman on the board,” said Huffington, according to several people who heard the remarks.

“Actually,” Bonderman interjected, “what it shows is, it’s much likely there’ll be more talking.”

“Oh, come on, David,” Huffington said, in between awkward laughs. Addressing the crowd, she added, “Don’t worry, David will have a lot of talking to do, as well.”

In an email that was sent later to company employees, Bonderman said, “I want to apologize to my fellow board member for a disrespectful comment,” calling it “inappropriate.”

Bonderman, the 74-year-old co-founder of a private equity firm, also apologised personally to Huffington.

“David has apologized to all Uber employees for a remark that was totally inappropriate and against the new culture we are building at Uber,” Huffington said in a statement.

A few hours later, Bonderman resigned and released this statement: “Uber is examining the issues with its culture, and making significant changes and working to right what has been done wrong, which is extremely important for the future of the company. I do not want my comments to create distraction as Uber works to build a culture of which we can be proud. I need to hold myself to the same standards that we’re asking Uber to adopt.”

Huffington also issued a statement praising Bonderman for his decision, “I appreciate David doing the right thing for Uber at this time of critical cultural changes at the company.”

The incident came as Uber sought to move past a leadership crisis that has led to the departure this week of chief executive Travis Kalanick for a leave of absence and the exit of his close ally and confidant Emil Michael, a senior vice president at Uber.

Kalanick’s return date was not specified, and his responsibilities will undergo “review” to possibly shift some duties to other executives. He also faces the likelihood of reduced clout on the board, which is adding new “independent” members and creating an oversight committee to monitor efforts to improve corporate ethics and diversity.

 

“The ultimate responsibility, for where we’ve gotten and how we’ve gotten here rests on my shoulders,” Kalanick wrote in an email to employees. “There is of course much to be proud of but there is much to improve. For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team. But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.”

In describing reasons for the leave, Kalanick also cited the death of his mother and serious injury of his father in a boating accident last month, saying, “I need to take some time off of the day-to-day to grieve my mother, whom I buried on Friday, to reflect, to work on myself, and to focus on building out a world-class leadership team.”

Tuesday marked the release of recommendations from a report by former US attorney general Eric Holder Jr. on Uber’s workplace culture. Holder had been hired by Uber to address mounting criticism of the company. The full report is being withheld from the public and the bulk of the company’s 14,000 employees worldwide.

The 47 recommendations, which are sweeping and touch virtually every aspect of company management, were released at an employee meeting at the company’s San Francisco headquarters Tuesday after being accepted by the board at a marathon meeting Sunday.

Under the proposals, senior managers will undergo mandatory leadership training and Uber’s current position of head of diversity will be renamed as the “chief diversity and inclusion officer” and report directly to the chief executive or chief operating officer. Uber also will adopt the equivalent of the National Football League’s “Rooney Rule” requiring that when the company is filling a key job, at least one woman and one minority candidate be interviewed before the hire can go forward.

The report called for employee complaints to be handled using a comprehensive process and for upgrades to employee benefits, including equal family leave time for male and female workers. There also is a newly imposed ban on sexual relationships between employees at different levels of the staff hierarchy, and there are new limits on the consumption of alcohol and illegal drugs during the workday and at company events.

Uber also announced Monday that it was adding a new member, Nestle executive Wan Ling Martello, to one of several empty seats on the board. She is expected to bring financial expertise while representing another high-profile female addition to a company criticized as exemplifying Silicon Valley’s male-dominated “bro” culture.

“This is a hugely significant event,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania, said of the corporate overhaul.

The list of recommendations reads like a textbook from “Leadership and Management 101” and, if implemented effectively, could serve as a model for other Silicon Valley companies grappling with diversity and harassment issues, Useem said.

The public mood toward Uber began to turn when Kalanick joined an advisory board for President Trump and appeared to undermine a New York taxi strike related to the president’s controversial effort to impose a travel ban, sparking the #DeleteUber movement.

A scathing blog post in February by former engineer Susan Fowler, who reported that an unwanted sexual advance by her boss was ignored by company management, triggered a wave of denunciations of the corporate culture at Uber.

Uber uses a software tool to identify and sidestep code enforcement officials

Uber is using a tool called “Greyball” to work identity requests made by certain users and deny them service, according to Mike Isaac reporting for the New York Times. The software, later renamed the “violation of terms of service” or VTOS program, is said to employ data analysis on info collected by the Uber app to identify individuals violating Uber’s terms of service, and blocks riders from being able to hail rides who fall into that category – including, according to the report, members of code enforcement authorities or city officials who are attempting to gather data about Uber offering service where it’s currently prohibited.

The report claims that that Uber’s “violation of terms of service” or VTOS program, briefly known as Greyball, began around 2014, and has sign-off from Uber’s legal team. The company provided TechCrunch and the NYT a statement, which reads as follows:

This program denies ride requests to users who are violating our terms of service — whether that’s people aiming to physically harm drivers, competitors looking to disrupt our operations, or opponents who collude with officials on secret ‘stings’ meant to entrap drivers.

Uber maintains that this program is intended mostly for the protection of its drivers, from code enforcers working in concert with taxi interests. Uber drivers have been victims of physical harm as a result of some of these types of so-called “sting operations.” But Greyball’s use also came to light due to information supplied to NYT by four different Uber sources, including two current employees, who were uncomfortable with the circumstances of its use according to the newspaper.

Some of the techniques reportedly used by Uber include building a virtual perimeter around authority offices and facilities in cities which the company monitored for app usage. It also had employees conduct searches for social media profiles to confirm certain users were indeed members of local regulation enforcement teams, the report claims, in order to add them to the Greyball list. Uber also sometimes called drivers to end rides prematurely if they’d picked up someone on the Greyball list accidentally, per the Times.

 The report says that as many as 50 to 60 Uber employees knew about Greyball’s existence in total, including its general counsel Salle Too and VP of Global Operations Ryan Graves. VTOS continues to operate even now, though the focus remains on identifying bad actors from competitors, private industry opposition and others, according to the company.

During Uber’s launch in Portland, law enforcement were instructed to attempt to hail Ubers and bust the drivers, since the service was in violation of the city’s local transportation regulations. Oregon Live reported at the time that officials with the City Commissioner’s office couldn’t seem to book a ride, leading them to theorize that they’d already been blocked by the ride-haling provider.

The program recalls issues raised around Uber in the past, including statements made by SVP of Business Emil Michael at a dinner in 2014, which Uber CEO Travis Kalanick later apologized for, saying that Michael’s suggestion Uber could essentially do opposition research on journalists were “terrible and do not represent the company.” A report from Reveal News regarding a lawsuit in December that likewise made claims about the risks of Uber’s data management practices in terms of internal exposure to company employees, and mentioned Greyball by name.