Another executive is out as Uber scrambles to repair its company culture and reputation.
On Sunday, Uber’s board of directors met to discuss the results of former U.S. attorney Eric Holder’s report on the company’s culture. The results weren’t pretty, with Uber’s senior vice president, Emil Michael, resigning amid the company’s growing culture crisis.
The Holder report is the second of two that Uber commissioned after allegations of sexism and sexual harassment at the company surfaced in February, sparked by a blog post from Susan Fowler, a former Uber employee. The findings of the first report, which investigated 215 separate claims of harassment and bullying, were presented last week and resulted in the firing of 20 Uber employees.
On Monday, Michael sent the following email to employees:
Yesterday was my last day with Uber. Starting today, David Richter, our current VP of Strategic Initiatives, will be the new SVP of Business. David is an extremely talented leader and I have high confidence in his ability to help drive the company forward.
I signed on with the company almost four years ago and it has truly been the experience of a lifetime helping Uber become the fastest growing company of all-time — spanning 75 countries with over 14,000 employees.
I am proud of our business team’s part in contributing to the company’s overall success. We have fueled our growth by raising more money than any other tech company in history; we completed one of the most valuable mergers in American/Chinese tech history with the Didi deal; and we have secured ground-breaking partnerships with automobile companies all over the world to support our autonomous vehicle efforts.
But I am most proud of the quality of the team we have built. Beginning with my first day at Uber, I have been committed to building a diverse Business Team that would be widely recognized as the best in the technology world: one that is welcoming to people of all genders, sexual orientations, national origins and educational backgrounds. I am proud that our group has made so much progress toward these goals and is a leader in the company in many of these categories. As an Egyptian immigrant who was taken under the wing of a great business leader like Bill Campbell, I have an abiding belief that we all should pay it forward by ensuring that our workplace represents all types of people.
Uber has a long way to go to achieve all that it can and I am looking forward to seeing what you accomplish in the years ahead.
Several news outlets have reported that Michael—who came under fire in 2014 for his remarks about investigating journalists —was forced to resign. His departure is added to Uber’s termination of its president of business in the Asia Pacific, as well as 20 other employees, following an investigation into allegations of harassment and misconduct at the company.
Uber’s board also discussed whether its chief executive, Travis Kalanick, will take a formal leave of absence or lead the company with decreased power and more oversight. Kalanick is on bereavement leave following his mother’s death.
The decision regarding Kalanick’s role, however, will not come as easily as ousting Michael.
Because of Uber’s corporate structure, only Kalanick himself can really decide if he stays or goes. And the Valley has been largely welcoming of such arrangements, imbuing founders with a near-mythic ability to see a company’s future clearly and weather the worst crises. The founders of both Google and Facebook enjoy majority control of their respective companies, and look how successful they are! But Uber’s woes ought to challenge the assumption behind the value of the founder. Perhaps the growth-hacking, hyper-aggressive approach to building a company with a headstrong founder at the helm might not be the only way.
Kalanick’s power within Uber has been increasing via voting rights, too.
… Uber staffers who sell even part of their stock back to the company under a repurchase program must give the voting rights associated with all of their shares to Mr. Kalanick, according to a copy of the buyback agreement obtained by The New York Times.
Under the terms, Mr. Kalanick could gain control of nearly 8 percent of the voting rights of one kind of Uber stock, Class A, and 2 percent of the voting rights of another type of stock, Class B. It is unclear how much of those types of stock he already owns.
The voting power that Mr. Kalanick has within Uber is crucial as the company wrestles with issues, including sexual harassment claims and intellectual property disputes, that have raised questions about its leadership. On Sunday, Uber’s board met for nearly seven hours to discuss these matters and to weigh whether Mr. Kalanick should take a three-month leave of absence. If he takes such a leave, it would be his longest absence from Uber since he helped found it in 2009.
Though it continues to struggle with its chief executive’s role in the company, Uber leaders are forging ahead with attempts to clean up the company’s cultural mess and repair its reputation.
Financial Times reported:
The Holder report marks Uber’s biggest attempt to date to draw a line under the crises that have dogged the company. They range from allegations of sexual harassment by employees to a lawsuit over self-driving car technology, and unsavoury revelations about an executive who obtained the medical records of a rape victim in India.
The company’s vice president of strategic initiatives, David Richter, will succeed Michael as senior vice president of business.
Sources describe Richter as pragmatic and say he was often seen as the only adult in the room. There were few people at the company who didn’t like the executive, these people said. The former media exec, who worked as an interim CFO at Say Media, worked well with the policy and communications team and understood its role.
Uber has also appointed Wan Ling Martello, Nestlé’s previous chief financial officer, as an independent board member.
Though Martello is familiar with difficult situations— Financial Times reported that she handled Nestlé’s Maggi noodle crisis in her second month in the position—Uber’s shareholders said independent directors have limited power. “I see this appointment as cosmetic,” a shareholder told Financial Times.
As the hits keep on coming for the company, Uber asserts that its scandals and PR crises haven’t greatly affected business.
Uber declined to comment for this story. But the company has said its corporate issues haven’t had a significant effect on ridership, though 200,000 users deleted the app during a social media protest in February. Indeed, Uber’s scandals haven’t led to sustained upticks in app downloads of rivals such as Ola in India or Lyft in the U.S., according to analysis by research firm Sensor Tower.
But there is evidence of brand damage within the technology community.
Discussions in women tech groups pointed to sexism and harassment at the company for years, says Allyson Kapin, founder of Women Who Tech.
“To rebuild that culture is going to take a long time — it’s going to take a complete leadership overhaul,” Kapin said.
UPDATE: Kalanick has announced he is taking an official and indefinite leave of absence. The decision comes after Kalanick stepped away from the company after his mother died in a boating accident over Memorial Day weekend.
Kalanick announced his leave of absence in a companywide memo, telling staff that he “need[s] to work on Travis 2.0 to become the leader that [the] company needs and that [employees] deserve”:
For the last eight years my life has always been about Uber. Recent events have brought home for me that people are more important than work, and that 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.
The ultimate responsibility, for where we’ve gotten and how we’ve gotten here rests on my shoulders. 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.
During this interim period, the leadership team, my directs, will be running the company. I will be available as needed for the most strategic decisions, but I will be empowering them to be bold and decisive in order to move the company forward swiftly.
It’s hard to put a timeline on this – it may be shorter or longer than we might expect. Tragically losing a loved one has been difficult for me and I need to properly say my goodbyes. The incredible outpouring of heartfelt notes and condolences from all of you have kept me strong but almost universally they have ended with ‘How can I help?’. My answer is simple. Do your life’s work in service to our mission. That gives me time with family. Put people first, that is my mom’s legacy. And make Uber 2.0 real so that the world can see the inspired work all of you do, and the inspiring people that make Uber great.
See you soon,
Kalanick’s announcement comes at the same time that Uber announced the results of Holder’s report and recommendations for cleaning up the company’s culture. The chief executive will return to diminished power.
Upon Kalanick’s return, Uber will strip him of some duties and appoint an independent chair to limit his influence, according to an advance copy of a report prepared for the board.
… The 47 recommendations include creating a board oversight committee, rewriting Uber’s cultural values, reducing alcohol use at work events, and prohibiting intimate relationships between employees and their bosses.
… Uber’s board has unanimously voted to accept is a reallocation of Kalanick’s responsibilities, which many felt was a critical part of the turnaround of the company.
“The Board should evaluate the extent to which some of the responsibilities that Mr. Kalanick has historically possessed should be shared or given outright to other members of senior management,” the report reads. “The search for a Chief Operating Officer should address this concern to some extent.”
This morning, employees were presented the recommendations from Covington & Burling that were unanimously approved by the Board on Sunday. Implementing these recommendations will improve our culture, promote fairness and accountability, and establish processes and systems to ensure the mistakes of the past will not be repeated. While change does not happen overnight, we’re committed to rebuilding trust with our employees, riders and drivers.
The company’s communications team also tweeted a statement:
— Uber Comms (@Uber_Comms) June 13, 2017
The statement was included in Uber’s note announcing new policies that are meant to help it fight sexual harassment and change a corporate culture that’s been blamed for allowing workplace misconduct to flourish.
What do you think of the statements, PR Daily readers? Do you think they’re steps in the right direction, or too little, too late?
UPDATE: It appears Uber still has a lot of work to do to turn its company culture around.
Yahoo Finance obtained audio of the company’s board meeting, during which a member cracked a sexist joke.
During the all-hands meeting, Arianna Huffington excitedly announced that Wan Ling Mortello was joining the board. Uber employees, in turn, appropriately applauded the news that women would go from 14% of Uber’s board makeup to 25%.
… “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,” Huffington said.
“Actually, what it shows is that it’s much more likely to be more talking,” said David Bonderman, a director at TPG Capital and another board member.
Huffington laughed awkwardly — the rest of the room remained silent — before saying “Ohh come on David.”
Bonderman gave Business Insider the following statement:
I want to apologize to my fellow board member for a disrespectful comment that was directed at her during today’s discussion. It was inappropriate. I also want to apologize to all Uber employees who were offended by the remark. I deeply regret it.” “Actually, what it shows is that it’s much more likely to be more talking,” said David Bonderman, a director at TPG Capital and another board member.
Though Bonderman apologized, several Twitter users are slamming him (and the company) for his remarks.