The Uber board’s drive to pull one of Silicon Valley’s most closely watched companies out of its months-long nose-dive moved ahead Monday with the departure of a controversial top executive and the addition of a new outside director amid the fallout from a report on workplace culture by former U.S. attorney general Eric Holder.
Departing is Senior Vice President Emil Michael, a close ally of chief executive Travis Kalanick, said a person familiar with the decision, speaking on the condition of anonymity. And joining the board, this person said, is Nestle Executive Vice President Wan Ling Martello. Kalanick himself, according to multiple reports, is considering a leave of absence.
In a letter to the company’s 14,000 employees on Monday, Michael said his resignation took effect Sunday but did not explain the reason for his departure, though some in Silicon Valley believed he was the taking the fall for Kalanick’s troubles. “I signed on with the company almost four years ago and it has truly been the experience of a lifetime,” wrote Michael.
The letter said he was being replaced by David Richter, vice president of strategic initiatives. He will be charged with helping right a company weakened by a series of crises and a wave of executive departures.
Michael had been at the center of several controversies at Uber. In 2014, he suggested that the company should hire opposition researchers to probe the personal lives of journalists – prompting some to ask whether he should be fired over his remarks at a private party. Michael also reportedly knew about the medical records of an Uber customer obtained by another executive, Eric Alexander, who was fired last week for improperly acquiring and sharing the files, which belonged to a woman in India who accused an Uber driver of raping her.
The moves come ahead of Tuesday’s highly anticipated report from Holder, whose recommendations were accepted in total by Uber’s board during a marathon meeting Sunday. The report to employees will include only the recommendations themselves, not the full report, because of concerns about the privacy of the hundreds of people who communicated their concerns about Uber’s allegedly toxic workplace culture to investigators. The company has fired 20 employees and reprimanded others because of findings related to the investigation.
The actions, taken together, leave enormous unresolved questions about the future of the embattled ride-hailing company. Top among those is whether Kalanick will step down for a temporary leave of absence, a possibility that raises further questions about who could take his place. Reuters reported Monday that he is “likely” to do so.
But whoever winds up running Uber for the next few months, one thing is clear: He or she will inherit a mountain of challenges left unaddressed as the company has lurched from crisis to crisis. As the controversies pile up, those problems could languish or worsen, throwing Uber into even greater disarray.
Uber’s many high-profile missteps this year have been reflected in customer trends, with some users choosing to switch away from the service in favor of rivals, according to outside analysts. Much of this change began in late January after the #deleteUber campaign began circulating on social media, in response to the way Kalanick handled President Donald Trump’s travel ban for Syrian refugees.
“There was a nearly literally overnight shift in market share when #deleteUber first came out,” said Jonathan Wolf, chief executive of TXN Solutions, which uses credit card spending data to track consumer trends. “That shift has stayed – as Uber has run into subsequent woes, there’s been a slow steady drip.”
Uber’s main rival, Lyft, now accounts for 25 percent of all trips taken in the U.S. ride-hailing market, up from 18 percent at the beginning of the year, according to data from TXN. In recent months, Wolf added, even loyal Uber customers that have stayed with the service have also increased their spending on Lyft. Uber didn’t immediately respond to a request for comment.
Lyft’s own ridership figures appear to underscore the damage of Uber’s scandals on its own business. In the fourth quarter of 2016, Lyft said, its drivers were responsible for 52.6 million rides. But in the first quarter of 2017, ridership had surged to 70.4 million rides, significantly exceeding expectations.
“I think it’s safe to say that our growth trajectory shifted dramatically upward since the beginning of the year, and some of that growth is undoubtedly due to Uber’s problems,” said Adrian Durbin, a Lyft spokesman. Durbin declined to provide more recent statistics, but added that the company’s growth has continued at a higher rate than its initial internal projections.
Meanwhile, Uber continues to slog through a court battle with Waymo, the self-driving car outfit owned by Google’s parent company, Alphabet. Waymo has accused Uber of stealing the laser-sensing technology that allows driverless cars to see their surroundings.
The lawsuit has already led to the firing of a top Uber engineer who was responsible for the company’s automated vehicle development. Now, how the suit turns out could have massive ramifications for Uber’s long-term business model.
Kalanick has effectively bet the business on self-driving technology. Without it, he has said, Uber cannot hope to compete in a world of growing automation.
“What would happen if we weren’t a part of that future? If we weren’t part of the autonomy thing?” he said in a 2016 interview with Business Insider. “Then the future passes us by, basically, in a very expeditious and efficient way.”
A court ruling against Uber could be “disastrous” to the company’s efforts to develop its own self-driving cars, some analysts said, raising questions about its ability to survive in a world where everyone from Tesla to Ford are vying for dominance over the future of automated transportation.
“If a company like Waymo masters self-driving technology while Uber is legally forced to surrender or curtail its current efforts, it’s a handicap that could unravel Uber’s position in this rapidly-evolving field,” said Karl Brauer, an analyst at Kelley Blue Book. Other analysts said that falling behind on automation could put the company in jeopardy with investors, many of whom are also banking on Uber coming through with the technology.
And finally, there’s the matter of Uber’s IPO, which many investors and employees have been eagerly awaiting but could be undermined by the company’s troubles, according to some venture capitalists. In March, Kalanick told CNBC that he plans to delay the IPO “as late as possible.”
Whomever takes the reins at Uber for the foreseeable future will be forced to confront these and other issues that have been simmering for months. And how he or she manages them is likely to have an enormous impact on the fate of the business.
(c) 2017, The Washington Post · Brian Fung, Craig Timberg