Uber CEO Kalanick Steps Down Amid Investor Pressure - NBC 5 Dallas-Fort Worth
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Uber CEO Kalanick Steps Down Amid Investor Pressure

Uber had been facing growing allegations of sexual harassment and workplace misconduct

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    (Published Wednesday, June 21, 2017)

    Uber CEO Travis Kalanick resigned from his position at the ride-hailing app company he co-founded, Kalanick said in a statement Tuesday.

    Kalanick's exit came under pressure from investors amid accusations of a toxic culture at the company and costly missteps that damaged Uber's reputation, but he will remain on the San Francisco-based company's board of directors.

    "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 with another fight," he said in the statement obtained by NBC News.

    The New York Times was the first to report Kalanick's departure, saying that the company's major investors had demanded he step down in a letter to Kalanick earlier on Tuesday.

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    "Travis has always put Uber first," Uber's board wrote in a statement. "This is a bold decision and a sign of his devotion and love for Uber. By stepping away, he's taking the time to heal from his personal tragedy while giving the company room to fully embrace this new chapter in Ubers history. We look forward to continuing to serve with him on the board."

    Kalanick's resignation comes after he took an indefinite leave of absence on June 13 following the death of his mother and criticism of his management style.

    Uber has also been facing growing allegations of sexual harassment and other workplace misconduct. The day Kalanick took his leave of absence, former Attorney General Eric Holder released a highly anticipated report on Uber's workplace culture. It recommended that Uber set clear policies to protect employees from harassment, keep better records of worker complaints and change its written cultural values to promote inclusion and collaboration.

    The company also faced allegations it stole trade secrets and a federal investigation into efforts to mislead local government regulators.

    Uber lost an expensive battle for supremacy in China against Didi Chuxing and had to be satisfied with taking a stake in Didi as a consolation prize. Uber posted a $708 million first-quarter loss, unable to turn $3.4 billion in revenue into a profit. The loss narrowed from the $991 million it posted in the previous quarter.

    Investors have talked about selling stock in Uber to the public, a move that would imply a transition to an established business. The company was valued at near $70 billion the last time it sought capital.

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    Kalanick's penchant for conflict undermined the company's prospects, said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. Ride-hailing itself remains a topic of intense interest for the tech and auto industries as they compete to see whether Silicon Valley or the automakers will reap the profits from the digitalization of how people get from one place to another. But "the significance of Uber has declined because the company has not managed to present itself in a stable and socially responsible way," Dudenhoeffer said.

    "When you're at war with customers, employees, service suppliers, you can't build up a business model and Kalanick was at war with everyone," said Dudenhoeffer. "There is no business model in being at war."

    Under Kalanick, the company developed a reputation for ruthless tactics that have occasionally outraged government regulators, drivers, riders and employees. The company often flouted city regulations for taxi companies with a culture that encouraged "Principled Confrontation."

    The company's hard-charging style has led to legal trouble. The U.S. Justice Department is investigating Uber's past usage of phony software designed to thwart local government regulators who wanted to check on whether Uber was carrying passengers without permission.

    A key step toward Kalanick's downfall came in February, when former Uber engineer Susan Fowler posted a personal essay about the year she spent at Uber, writing that she was propositioned by her manager on her first day with an engineering team. She reported him to human resources, but was told he would get a lecture and no further punishment because he was a "high performer," she wrote.

    That caught the board's attention and brought outside investigations that led to the firing of 20 people including some managers. Former Attorney General Eric Holder conducted one of the probes, finding that the male-dominated Uber didn't have the most basic policies to protect workers from harassment. Holder's report suggested procedures that most companies have had for years such as using performance reviews to hold leaders accountable.

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    Also, Kalanick lost his temper in an argument with an Uber driver who was complaining about pay. The profanity-laced confrontation was caught on a video that surfaced in February. Afterward, Kalanick said he needed management help and had to grow up. The company began searching for a chief operating officer.

    In March, board member Arianna Huffington expressed confidence that Kalanick would evolve into a better leader. But Huffington, a founder of Huffington Post, suggested time might be running out.

    He's a "scrappy entrepreneur," she said during the call, but one who needed to bring "changes in himself and in the way he leads."

    During the past year, several senior managers left the company, including the president and chief financial officer.

    Outside experts said the only way to change Uber's culture was for Kalanick to step aside. But Uber's ownership and voting structure made it difficult to oust him.

    Kalanick took an indefinite leave of absence earlier this month, in part to deal with a personal tragedy. In May, his mother was killed and his father hurt in a boating accident on a California lake.

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