Louis XIV wasn't a Silicon Valley entrepreneur, but it's easy enough to imagine him running certain large technology startups in 2017. "L'état, c'est moi," he is remembered as having said, whether or not he ever actually said it. I am the state. Operating from that premise, Louis built France into the leading power in Europe. He also bankrupted it and set the table for the French Revolution.
As it embarks on the work of enacting the recommendations of the law firm hired to investigate allegations of discrimination and harassment, Uber finds itself at a historical crossroads. Like 17th century France, Uber is an entity constructed in its leader's image. Travis Kalanick welcomes conflict and hates compromise. He refuses to let anyone tell him what he can and can't do, whether it's local regulators or his own legal department. He's so addicted to forward motion that he put a racetrack on the floor of Uber's offices so he can conduct meetings on the hoof.
You don't need to be an expert in corporate culture to see how those personal characteristics contributed to the public relations Chernobyl that 2017 has been for Uber. Just about everything that could go wrong for the $70 billion ride-hailing startup has.
A woman engineer, Susan Fowler, published a blistering account of her time at Uber, saying she was propositioned by her male co-workers, belittled by male superiors and ignored by the human-resources department. Other women of Uber came forward to say they'd witnessed or lived similar experiences. It emerged that Kalanick once took several of his managers to a brothel in South Korea. Uber executives obtained the medical records of a woman in India who was raped by a driver in hopes of proving she was lying. Kalanick was widely excoriated for making nice with the Trump Administration just as it was attempting to enshrine anti-Muslim xenophobia as law. Uber was busted for using software to evade local laws. The list goes on and on and on.
In long-delayed penance for all this, Kalanick announced a leave of absence Tuesday. No duration was specified, but when he returns, it will be to a somewhat circumscribed role, with the law firm recommending some of his duties be handed over to a yet-to-be-hired COO. That Kalanick is still Uber's CEO after all this is a simple matter of math: He owns too much of the equity and controls too many board seats for anyone to pry his fingers off the steering wheel against his will.
Not so fortunate is his longtime No. 2, senior vice president for business Emil Michael, who was fired Sunday by the board of directors at the urging of Covington & Burling LLP, the law firm handling the internal investigation. Michael was a central player in several of the episodes most damaging to Uber's image. He was at the brothel with Kalanick, and later attempted to keep Kalanick's then-girlfriend from talking about it. He was said to harbor the notion that the Indian rape victim's story was part of a plot by a competitor.
Yet Michael's reaction to his firing has been anything but to fall on his sword like a good soldier. According to Bloomberg Businessweek,
Michael believes that a weak board of directors, a lax internal legal team, coupled with his tight friendship with co-founder Kalanick, ultimately led to his downfall--not the scandals, two people close to Michael said. He places the blame on the directors, particularly investor Bill Gurley, for his removal, accusing them of not having the backbone to stand by him amid what he sees as largely mischaracterized and inconsequential controversies, the people said.
Not only does Michael reportedly think he should have been kept on; he thinks the decision makers at Uber will come to see that. "Michael has not ruled out to people that one day he could have a role at Uber again, the people said. He worries that Kalanick will now be further isolated from his executive team without one of his most loyal supporters, the people said."
Michael is, by all accounts, an effective, capable and even brilliant negotiator and tactician. Yet for him to believe it was even a possibility that Uber's board could have voted to let him, an underling, stay on after a law firm explicitly recommended his termination is flabbergasting. It suggests he completely failed to grasp the severity of the crisis. And for him to react by, via proxies, deflecting blame and questioning the wisdom of Uber's remaining leadership suggests a toxic hostility, a self-importance and a failure of introspection--all the things that got Uber into this mess in the first place.
Not to mention simple bad judgment. If Kalanick is indeed isolated, the answer is not to keep around a Kalanick whisperer--the indispensable man's indispensable man. The correct remedy is to build a strong leadership team that can function without him if and when it needs to.
There are some signs dithered on whether to take time off, he will surely benefit from stepping back and taking space to process events. Willingly or under duress, he has indeed been assembling a stronger leadership team, one whose composition is pointedly aimed at correcting the cultural diseases that have plagued Uber to this point. And his erstwhile friend and backer Chris Sacca says Kalanick "is in a very vulnerable and introspective state right now. For the first time he's acknowledging the places he could use help and starting to take responsibility for his broader role."Kalanick knows this. First, there is his more-or-less voluntary decision to take a leave of absence, which follows not only such a turbulent period for Uber but also the recent death of his mother in a boating accident. While Kalanick reportedly
Kalanick and Uber may, in fact, be indivisible. But unless he stops behaving like it, neither will amount to much in the long run.
Update: This story has been updated to reflect information from Tuesday morning, when Kalanick announced his leave of absence and Uber employees were briefed on the results of Eric Holder's investigation and his recommendations.