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:
Team –
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.
Sincerely,
Emil
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.
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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.
The Los Angeles Times reported:
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.
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