Uber is growing leaps and bounds; shareholders should have been happy, company executives should be leading an easy life. Only, they are not. The start-up that grew to become a Silicon Valley legend saw its co-founder Travis Kalanick stepping down from the position of Chief Executive Officer despite the growing business.
Kalanick founded the cab-hailing company in 2009 which went on to reshape the face of taxi business. He has been on indefinite leave since June 13, saying that he wants to grieve for his mother who passed away last month in a boating accident. This sabbatical was supposed to help him return as a better leader in face of the controversies he and his company was going through.
The resignation does raise questions as to why the chief executive of a company valued at $70 billion had to be pressed into giving up his office. The reasons may be fear of a bleak future.
Lows and rock bottom
Uber has been seeing enough trouble for its taste. It all began earlier this year when a former engineer at the company alleged she was sexually harassed at the company. This brought several other former employees and a chain of internal investigations. Uber had to face public ire after one of its executives in Asia-Pacific obtained medical reports of a women sexually assaulted by an Uber driver in India.
The company has been under the scanner of US federal authorities for a software tool that allows them to circumvent some law enforcement. Uber has also been embroiled in an intellectual property lawsuit over trade secret thefts with self-driving car business Waymo that operates under Google's parent firm.
US Attorney Eric Holder had recently filed recommendations to improve the work culture at Uber. Kalanick, as he mentioned in a memo to his subordinates, believes that he needs time to hone his leadership skills.
Investors fear valuation markdown
Uber has been doing well when it came to money matters; not so much otherwise. Making headlines for all the wrong reasons were eating into the company's credibility and could cause some serious harm in real terms - the company could be valued down.
The convention in Silicon Valley suggests that investors usually support aggressive entrepreneurs, more so if they are doing well. Only when the start-up is about to drive itself into a wall, and they find their investments threatened, do the investors step in. Uber qualifies as the former kind of a company, its investors acted like the latter one. The reason behind this intervention was fear.
The investors were not happy with the way Uber top brass was handling the company either. Investors, who had devoted $14 billion in Uber since it was founded, stand to lose billions if the company valuations were to tank owing to bad image. Kalanick was already on a leave to rediscover himself as a boss, but that apparently was not enough for the investors.
New York Times suggest that Bill Gurley of Benchmark was critical in this resignation. It was Benchmark who wrote to Kalanick while he was in Chicago, calling it 'Moving Uber Forward'.
Benchmark has been with Uber since its early days and is the biggest investor in the company. In addition, there are First Round Capital, Lowercase Capital, Menlo Ventures and Fidelity Investments that have invested in Uber along with a wide base of other shareholders.
Kalanick's steps down on steps back
Travis Kalanick believes his absence will help him recover from the grief of his mother's death "while giving the company room to fully embrace this new chapter in Uber's history."
In light of the debacles Uber has been facing recently, Kalanick believes his resignation will allow the company to rebuild itself "rather than be distracted with another fight".
However, Kalanick will remain on the company's board of directors even for now. The hunt for new chief executive, along with some other executive staff, will commence shortly.