Super Pumped : The Battle for Uber (9780393652253)

by Isaac, Mike

  The group had been discussing the situation for weeks. Gurley had spent hours on the phone with the other VCs—Josh Kopelman and Rob Hayes over at First Round, Doug Carlisle and Shawn Carolan at Menlo, Chris Sacca from Lowercase. He spent even more time agonizing over the situation with his own partners at Benchmark. The group was so paranoid someone would overhear their plans that they used codenames for Kalanick when discussing the matter in public; “Travis” was always “Bob” or “Jeff” or a dozen other names picked at random if a partner happened to be talking about Kalanick in the back of an Uber. After the driver video of Kalanick surfaced, it was assumed someone might be recording or listening at all times.

  Most of Gurley’s meetings with Benchmark staff took place around the long, wooden conference room table in Benchmark’s Woodside offices. The group—Gurley, Cohler, Fenton, and partners Eric Vishria, Sarah Tavel, and Mitch Lasky—worked out the details of their plan together, over and over, until they had it memorized. They worked through every possible permutation of what could happen when Cohler and Fenton approached Kalanick. (Would Travis throw a fit? Would he accede immediately? Would he lunge over the table and murder them?) They typed up a dozen different versions of the letter they would deliver to Kalanick, one for each possible scenario of the coming showdown. Lawyers at Paul, Weiss—the venerable white-shoe law firm—vetted each draft.

  The group met at Benchmark’s office the Tuesday before the big day. They worked out their plans once more, gearing up for what promised to be an ugly, public fight. There was no way Kalanick was going to yield. An Uber executive recalled that Kalanick said he was “ready to take Uber’s valuation to zero” before he would ever leave the helm. (Later, through a spokesperson, Kalanick denied he ever said this.) The syndicate needed to steel themselves for what was to come.

  For all their agonizing, the firm made peace with what the partners were about to do. This was about saving a company—about saving the firm’s legacy—and they couldn’t sit idly by while Travis Kalanick single-handedly drove a $68.5-billion behemoth into the ground. Over the six weeks they had been discussing the plans together, their mantra to outsiders, to each other, was the same: “We have done all we can.” It had come to this only because they had exhausted all other options.

  As daylight waned in the conference room, Gurley looked around the room at his partners and nodded. He was anxious. But he was resigned.

  “I really think we’re on the right side of history here,” Gurley said.

  Matt Cohler and Peter Fenton chartered a private plane that morning, a direct flight from San Francisco International to O’Hare. The two arrived and checked into another swank hotel—down the street from the Ritz-Carlton—to prepare for the day ahead. After walking off the tarmac and taking an Uber to their hotel, the two met up with Steven Rubenstein, the crisis communications expert who had flown in from the east coast to handle press outreach after Kalanick inevitably turned down their proposal. Rubenstein was a fixture in the world of crisis PR firms, having done damage control for Rupert Murdoch during the infamous phone hacking scandal that engulfed News Corp in the early 2000s. A wiry, sarcastic New Yorker with thick black glasses, Rubenstein would begin spinning the events to journalists once the confrontation had occurred.

  Though they all knew Kalanick was at the Ritz, Cohler, Fenton, and Rubenstein couldn’t escape the sneaking suspicion they would accidentally run into the CEO somewhere in the city. Benchmark’s paranoia had been running on high for months now; after the firm’s investigation into some of Uber security’s more clandestine activities, Gurley couldn’t shake the feeling that people were following him, or that Kalanick had cameras placed outside of his home.

  Back in Woodside, Gurley sat at the head of the table, swiveling back and forth in a black leather armchair. Benchmark partners trickled in and out of the room. To keep things running smoothly, the syndicate started an internal group chat using WhatsApp, the text messaging service. At this point, more than a dozen people were involved in planning Kalanick’s ouster. They needed a way to keep everyone on the same page. Besides the WhatsApp group, numerous other texting threads sprang up between members of the syndicate. But Gurley remained the point man.

  Cohler and Fenton left their hotel and began their journey to the Ritz-Carlton to see Kalanick. Rubenstein stayed behind, waiting to hear from the partners in case they were forced to go public.

  Though not everyone in the syndicate knew it, one person aware of the plan had called a New York Times reporter over the weekend. The investors were rumbling, this person said, and the Times needed to be ready to write a story in case something dramatic happened. The source’s words were cryptic and intriguing.

  That reporter was me.

  At nine o’clock in the morning on June 20, I was sitting in the Virgin America terminal of San Francisco International Airport, when my phone started buzzing in my pocket. I was flying down to Los Angeles to interview an executive onstage at a tech conference, and planned to use the rest of my week there to meet up with my other industry contacts. I thumbed the mute button and checked my iPhone—it was one of my key Uber sources calling.

  The source had contacted me over the weekend practically out of the blue, warning me that something big was about to go down. I’ve received plenty of bogus tips over the years that have amounted to nothing. But that morning, as I was boarding my plane, the source told me Kalanick’s clock was ticking. There was a chance that he might be forced to leave Uber that day. “He’s gonna go. It’s gonna go down today,” the source said.

  I was caught off guard. “What? What the fuck?” I stammered. “I’m literally about to get on a plane. Is this happening right now? Do I have to cancel my flight?”

  The flight attendant started calling out boarding groups. Even if I had Wi-Fi access in the air, I couldn’t take a phone call at 30,000 feet. All across Silicon Valley, after months of scandal and public outcry, every tech worker was watching to see whether or not Kalanick would be able to keep his job. More so now, after the botched delivery of the Holder report and the sudden ousting of David Bonderman. If today was the day Travis Kalanick was going to be pushed out, I needed to be ready.

  “Be by your computer, and keep your phone on all day,” the source said. “I’ll call you.” And then the source hung up.

  When Cohler and Fenton walked out of the gold elevator doors and onto the black and white marble of the Ritz-Carlton’s twelfth-floor lobby, they didn’t expect to be swarmed by suits. The hotel was hosting a real estate conference that week; white guys in boxy suits from national realtors like RE/MAX and Coldwell Banker flooded the main foyer. The two VCs politely pushed their way through the scrum.

  The Ritz had been open in the city for more than forty years without a refresh, and locals and regulars had noticed the stale feeling over the years. But as Cohler and Fenton walked in that morning, they saw a hotel transformed; in a few weeks the Ritz would unveil a grand remodel, $100 million and eighteen months in the making. A Roy Lichtenstein painting hung above the suited throngs. Across the lobby, a wall of windows faced north, overlooking Lake Michigan. Were the two men not brimming with anxiety, they might have appreciated the view.

  Cohler and Fenton crossed the lobby to the second set of elevators, those leading to the guest rooms, private offices, and business suites on the topmost floors in the building. Fenton had contacted Kalanick that morning, telling him that the two VCs were in Chicago, and needed to speak with him urgently. Kalanick, caught unawares, knew something was up. But he told them to come find him at the Ritz; he was working, waiting, upstairs by himself.

  As the two VCs entered the private conference room, the men gave each other a solemn greeting. Gurley’s absence made it slightly less difficult—Kalanick hadn’t stormed out of the room, at least—and Cohler and Fenton gently eased into the matter at hand. They had a request. More than a request, really. They wanted Kalanick to step down, “immediately and permanently,” for the good of the c
ompany.

  As Kalanick sat there, stunned, Fenton slid a letter§§§§§§§§§ across the table. Kalanick looked down and read the note in front of him.

  Dear Travis:

  On behalf of Benchmark, First Round, Lowercase Capital, Menlo Ventures, and others—which collectively owns more than 26% of Uber’s economic stock, and over 39% of Uber’s voting shares—we are writing to express our profound concerns about Uber’s direction and to propose a way forward.

  Please know that we are deeply grateful for your vision and tireless efforts over the last eight years, which have created a company and an industry of which no one could have dreamed. Unfortunately, however, [the] series of recent revelations have deeply affected us. . . . [A]ll of these issues are causing tremendous damage to Uber’s brand and threaten to destroy Uber’s value for its shareholders and stakeholders. We believe the issues stem from deep-seated cultural and governance problems at Uber and from the tone at the top. . . .

  We must take concrete steps to address these issues and strengthen Uber’s brand and governance. If we do not adequately address these issues now, Uber’s brand and market share will continue to erode, to the detriment of the company and all of its shareholders, including you.

  . . . With these changes we firmly believe Uber can regain its place as one of the most important companies Silicon Valley has ever produced. We hope you will agree to move forward with us on this path.

  “Moving Uber Forward”: Investor Demands

  First, you must immediately and permanently resign as CEO. We strongly believe a change in leadership—coupled with effective Board oversight, governance improvements, and other immediate actions—is necessary for Uber to move forward. We need a trusted, experienced, and energetic new CEO who can help Uber navigate through its many current issues, and achieve its full potential.

  Second, Uber’s current governance structures, including the composition and structure of the Board of Directors, are no longer appropriate for a $68 billion company with over 14,000 employees. The new CEO must report to an independent Board that will exercise appropriate oversight. . . . Further, as you know, the Holder Report calls for the appointment of additional independent Board members. To that end, you should fill two of the three Board seats you control (retaining one for yourself) with truly independent directors who comply with the Holder Report’s recommendations for qualification for service. . . .

  Third, . . . [y]ou should support a board led CEO search committee, with an independent chairperson, and the inclusion of a representative of senior management and a representative of the driver community. . . .

  Fourth, the company should immediately hire an adequately experienced interim or full-time Chief Financial Officer. The company has intentionally operated without a properly qualified executive in the top finance [role] for over two years. The investor group broadly believes that this specific executive hire needs to be addressed urgently.

  We hope you will agree to move forward with us on this path, and look forward to your response.

  Kalanick was furious. He stood from his chair, unable to finish the letter at first. He was livid that the two men had sprung this on him just weeks after the sudden, tragic death of his mother. How could Benchmark do this to him?

  Kalanick immediately recalled a board meeting that had occurred just a week before. Graves, Gurley, and other board members had been discussing Kalanick’s leave of absence, and were openly wishing him well. Gurley, who said he was on the fence about Travis returning after his leave, added that he’d support the outcome either way. Kalanick was heartened by that comment; in the wake of all the personal turmoil he had been through, Kalanick felt supported and comforted by his colleagues on the board. Now, as Cohler and Fenton slid his death letter across the table, Kalanick wondered how long they had been plotting his demise. It was the ultimate betrayal.

  He started pacing, the way he always did. He shouted at the two investors—people he once considered his allies, his supporters—while Cohler and Fenton sat there, stone-faced, and took it. Kalanick was lashing out like a cornered animal. He wouldn’t take it lying down. He wouldn’t accede to their demands. He was going to fight.

  “If this is the path you want to go down, things are gonna get ugly for you,” Kalanick said. “I mean it.”

  The two investors knew Kalanick meant it. But so did they. When Cohler and Fenton presented him with the letter, the syndicate started a ticking clock. It was currently close to noon. They gave Kalanick an ultimatum: They needed an answer by the end of the day, around 6:00 p.m. If he declined to answer, if he took too long, if he tried to stall them further—if he did anything that seemed like an underhanded maneuver—the venture capitalists would walk out of the room, text members of the syndicate and immediately spin up the communications machine to take the fight public. By the next morning, the fight would be on the front page of the New York Times. Word would spread fast, and other investors—emboldened by the hard-line stance taken by Uber’s largest shareholders—would ultimately join them. At least one heavy hitter already had; at the last minute, Fidelity Investments, an enormous stakeholder and powerful ally to Benchmark, also signed on to the letter demanding Kalanick’s removal. Others—Glade Brook Capital Partners, Wellington Capital Group, angel investors like David Sacks—were already privately agitating to remove Kalanick. The rest would join them, the two VCs threatened, once Benchmark spread the word.

  Kalanick knew he was pinned. After a prolonged back-and-forth between the two sides, he asked the two of them to give him some time to think. Cohler and Fenton agreed, and the two sides parted for the first time that day.

  After Cohler and Fenton updated Gurley at Benchmark’s headquarters back in Woodside, Gurley typed in a text message updating the syndicate on what was happening.

  “He’s stalling,” Gurley texted.

  The chief executive of Uber was doing more than just stalling. After Cohler and Fenton left the room, Kalanick began frantically calling people, beginning with Arianna Huffington, one of his few remaining allies. Huffington said she was as shocked as Kalanick that the cabal of investors would pull such a move. The two discussed Kalanick’s options.

  Kalanick trusted Huffington. But what he didn’t know was that Huffington was already helping prepare a draft of his resignation statement. As Kalanick’s world was crumbling down around him, Huffington jumped into a recording booth to tape a podcast with Ashton Kutcher.

  Cohler and Fenton kept updating the group back in Woodside. Gurley wasn’t panicking. He had anticipated this would happen. Kalanick had lost many friends inside Uber, and would likely reach out to allies, to make a play to save himself. All Benchmark had to do was keep Kalanick under pressure—to keep him boxed in like the alien in Life.

  Another investor texted Gurley, wondering what the latest was. Gurley texted back: “dancing around.”

  Kalanick didn’t just call Arianna Huffington. He rang up top business development executives still at Uber like David Richter and Cam Poetzscher, both of whom had sway within the organization and could perhaps find a way to help Kalanick out of this mess. He started calling board members and old allies like Garrett Camp and Ryan Graves. He called other investors who might have a plan to help him take on the syndicate.

  Suddenly, Kalanick saw a way out. If he rallied enough Uber shareholders to his side, Kalanick could potentially amass enough voting stock to fight back against the syndicate if it came to a public shareholder battle. To that end, he started calling up individual members of the syndicate, figuring he could charm and eventually flip them back over to his side.

  “Shawn!” Kalanick yelped into his iPhone, using his best puppy-dog, pity me voice. “I can’t believe it’s come to this! I can change! Please let me change!” he said.

  For Shawn Carolan, the Menlo Ventures partner and early backer of Uber, it was hard not to believe him. Carolan told friends that he had always found Kalanick persuasive; the founder’s confidence,
his scrappiness, his smarts, and his charm were all the original reasons that Carolan had invested in him in the first place. Now he heard the pain in Kalanick’s voice as he fought for his job. It sounded like the CEO was crying on the other end of the line. Though he knew he shouldn’t, Carolan felt guilty. He was trying to annihilate one of his own founders, a cardinal sin of the venture business. But after a beat, and some hemming and hawing over the phone, the venture partner shook it off, steeling himself for a proper response.

  “I’m sorry, Travis, I really am,” Carolan told him. “As much as I want to trust you, I just can’t. I cannot, in my right mind, support you any longer as the chief executive of this company.” And then, the venture capitalist hung up on Travis Kalanick.

  After some time had passed Cohler and Fenton returned. They leveled with Travis. If he agreed to step down, peacefully and without a fight, they would give him the dignity of a graceful exit. Often, the VCs knew, when executives were replaced or demoted from the companies they helmed, there was usually a bit of Kabuki theater and posturing on the announcement. A half-truth like “I’m stepping back to be an advisor,” or “I’ve decided to step down to spend more time with my loved ones”—these were the platitudes of corporate coups d’etat. Benchmark was happy to allow Kalanick that luxury.

  It was getting later; the sun began to dip outside the Ritz conference room. Fenton had put himself in a bit of a bind; he couldn’t wait Kalanick out with perfect calm as Fenton had to catch a flight across the Atlantic later that evening to see his children, who lived with their mother in France. At around 4:00 p.m., Kalanick’s clock was still ticking. But Kalanick still resisted, asking for another break. The group parted again.