Super Pumped : The Battle for Uber (9780393652253)

by Isaac, Mike

  Eventually, Kalanick started dispatching proxies to talk to the venture capitalists as he tried to figure out what to do. Arianna Huffington, who by this time had been in close contact with Kalanick for hours, began talking and texting with Fenton.

  Up until this point, Huffington had been in lockstep with Kalanick, supporting him and playing defense for him against the press and angry employees. Huffington had been on CNN earlier that year, claiming that Kalanick had “evolved” in his behavior and defending his capabilities as chief executive. Travis Kalanick, she claimed on live television, was the “heart and soul” of Uber. Huffington had aligned with Kala­nick for years until this very moment–she suggested to him that maybe he should consider an exit.

  Were it any other time in Kalanick’s life, he would have immediately cast the idea aside. Kalanick never, ever stopped fighting for what he wanted, and more than anything in the world, he wanted to recover from a terrible year and continue Uber’s quest for global domination.

  But things were different. Kalanick was shattered by the sudden death of his mother. The syndicate’s coup had caught him still shaken and absorbing the fact that he would never see her again. It had only been a couple of weeks since he had flown to Fresno after the boating accident and sat by his father’s hospital bed, hoping he would recover. Even less time had elapsed since he buried his mother in Los Angeles. For the first time in his life, Travis Kalanick realized he was tired of fighting. Maybe, for once, stepping down and walking away to mourn was the right thing for him to do.

  Gurley texted an update to a member of the syndicate: “he’s leaning towards backing down,” he wrote. The VCs and advisors chattering over the WhatsApp group together couldn’t believe it actually might happen.

  By the time the sun went down in Chicago that night, Kalanick had stalled for hours. The investors had had enough. After Huffington’s first hint to the syndicate that Kalanick might step down, the group had made little progress. Fenton and Cohler had been periodically talking with various people representing Kalanick and his interests throughout the day. Travis had scrambled and found a handful of allies to help advocate on his behalf.

  But as hours passed with no definite word from Kalanick, they were fed up.

  At 9:19 p.m., Eastern Standard Time, Peter Fenton texted Arianna Huffington to let them know they were going to call up the New York Times.

  “Forgive my anxious tone, I’m leaving for Europe in fifteen minutes,” Fenton wrote, noting the plane he soon had to catch. “But there’s no way I can stop the group from going public. I know you’re moving heaven and earth, but we are out of time.”

  Huffington responded quickly. “Calling him right now,” she said. Fenton shot back a “praise hands” emoji text as a sign of gratitude.

  The syndicate’s final bit of prodding—coupled with Huffington’s last-minute counsel that Kalanick should step down—had finally worked. The CEO was exhausted, out of options. He had failed to convince any of his former allies to join him in battling the venture capitalists. He agreed to meet again and sign the paperwork.

  The final meeting at the Ritz-Carlton was a flurry of ink and negotiation. Kalanick pulled out a pen and started tearing through the letter, crossing out things he wouldn’t agree to, amending stipulations he thought overreaching.

  Even if he was no longer going to lead the company he created, he was damn sure still going to have a say in the future of the business at the board level. The investors agreed; allowing him to stay on the board was the least they felt they could do.

  It became untenable for Bill Gurley to remain on the board. Gurley may have won the fight, but Kalanick never wanted to see or deal with the venture capitalist ever again, much less work with him on Uber’s board for years to come. After some haggling, the sides agreed on a compromise; Gurley would step off Uber’s board and be replaced by his partner, Matt Cohler, instead.

  The group promised Kalanick his soft landing. The exit would be simple and graceful; outsiders would understand.

  Over text messages, Fenton showered Huffington with effusive praise:

  My deepest and most heartfelt thank you. Today, you made the impossible happen. i’m in awe. I would love to work with you anytime, anywhere. Just think of what we can do when the circumstances aren’t so unduly stressed. I badly want all the energy going forward to be towards the positive, fresh Uber. This company has a brilliant future.

  Gurley texted the syndicate a final update. “We have a signed resignation letter.”

  At 9:30 p.m. Pacific Time, I got a final tip from a source as I walked back to my hotel in Downtown Los Angeles. I had been relayed a copy of the letter, and learned a general sense of Kalanick’s day facing off against investors in Chicago. I was told to call Kalanick and Huffington, and ask for Kalanick’s statement.

  What I didn’t know was that the two sides had negotiated a peaceful exit for Kalanick. I had no idea that they were going to tell the press that Kalanick decided, of his own accord, to step down from his position.

  All I was told was that Kalanick was being pushed out in an investor coup, and that I needed to hurry up and file a story before someone beat me to it. What I wouldn’t know until much later: at least one source in the syndicate full of people plotting Kalanick’s downfall wanted to make sure Kalanick would never return to his spot at the top. While most of the syndicate expected the soft landing story to be carried out as planned, there were a select few who wanted it to look as messy as it all really was. And they used me, an unwitting participant, to make that happen.

  As I received word from my contacts, I scrambled upstairs to my hotel room, furiously typed out a thousand words on Kalanick’s ouster, and called the CEO and Huffington for comment.

  “I love Uber more than anything in the world,” Kalanick wrote to me in a final emailed statement. “At this difficult moment in my personal life, I have accepted the investors’ request to step aside, so that Uber can go back to building rather than be distracted with another fight.”

  The story hit the web at just after 1:30 a.m. Eastern Time, as a push notification from the New York Times smartphone app was sent out to the home screens of hundreds of thousands of subscribers simultaneously. “Travis Kalanick resigned as chief executive of Uber after investors began revolting over legal and workplace scandals at the company,” it said.

  Kalanick was blindsided. He was supposed to get a soft landing, to tell the story of his departure on his own terms. Instead, he was utterly humiliated. Someone had betrayed him.

  Back in Woodside, the members of the syndicate were all in shock. Someone had leaked the entire story to the Times. In the end, all they wanted was Kalanick’s resignation, not his embarrassment. Somehow, in the scrum of the past forty-eight hours, things had gone sideways. There was a sense of guilt among the syndicate. But outweighing the guilt was something greater: a sense of relief. Travis Kalanick was no longer the chief executive of Uber.

  Now, the company could start to rebuild.

  Less than twenty-four hours later, a front-page story dropped in the Times, laying out in excruciating detail what happened to Travis Kalanick in Chicago. Seeing the tick-tock of events on page A1, followed by an enormous graphic of Kalanick’s face shattered—like pieces of glass—across the front of the business section, was too much for him to bear. He was livid; the venture capitalists screwed him, like he always suspected they would.

  They made a fool out of him in front of the entire world.

  Chapter 29 notes

  ‡‡‡‡‡‡‡‡‡ Not that hiring a second-in-command would have mattered much. Kalanick had once said to a different candidate in an interview that the job would be to carry out his marching orders. Gurley was furious.

  §§§§§§§§§ The syndicate drafted many versions of the letter. This is not the final version Kalanick ultimately received that day, but it is very similar to the final, which included a last-minute addition to the investor syndicate: Fidelit
y Investments, the mutual fund giant. This version of the letter has never been made public until now. Some identifying information has been removed to protect the sources connected to the document.

  Chapter 30

  DOWN BUT NOT OUT

  The morning after the syndicate deposed him as CEO and a source sold him out to the New York Times, Travis Kalanick flew home to California, unclear what to do next. The two things he loved most in the world—his mother and his company—were gone. The press wouldn’t stop hounding him. The majority of his workforce was cheering his departure.

  What does a founder do when he has been fired from his own company? Kalanick, a man of immense energy and urgency, suddenly had nowhere to direct it. The fight was over, and he had lost. What now?

  Kalanick decided he would travel to paradise. It was Diane von Furstenberg, the luxury fashion designer, who suggested he recuperate on a faraway island. Her husband, Barry Diller—the Manhattan media mogul and chairman of InterActiveCorp—had space on his yacht in the South Pacific. Diller and von Furstenberg were known for throwing killer parties in Tahiti; this was the kind of invitation Travis had always relished, but he was in no mood to party. Still, he felt punch-drunk, and followed the judgment of those around him. Despite her last-minute shift in allegiances in Chicago, Travis still trusted Arianna Huffington, who agreed with the celebrity couple.

  At the end of June, Kalanick boarded a plane to Pape’ete, the capital of French Polynesia, where he spent a week off the coast recuperating on Diller’s yacht, the Eos. The yacht—the second-largest of its kind in the world—was named for the Greek goddess who opens the gates of heaven for the sun each morning. Celebrities and friends cycled on and off Diller’s boat, which sleeps sixteen (served by twenty crew), and others moored nearby. The visitors came and went, but the ex-CEO stayed for weeks. Kalanick’s only consolation was an empathetic von Furstenberg, who tried her best to cheer him up.

  Maybe, if details of his ouster hadn’t leaked into the public immediately, Travis Kalanick would have spent more time in Tahiti. He needed more than a quick island getaway after eight years of working eighteen-hour days, seven days a week. In that time, he might even have made peace with what had happened, and learned from the cataclysmic conclusion to his career at the company. At that moment, Travis Kalanick had a chance to grow.

  But after he saw the minute-by-minute tick-tock of his ouster splashed across the major newspapers in the world, he abandoned thoughts of a peaceful surrender. In Tahiti, at the end of June, Kala­nick began preparing for war.

  Bill Gurley thought his headache was over after the showdown in Chicago.

  For a few weeks after that day—one of the most stressful of Gurley’s life—things seemed to quiet down. After the initial flurry of coverage, the media spotlight began to turn elsewhere. The board was ready to begin interviewing candidates to be Uber’s next chief executive.

  In the absence of a full-time CEO, the fourteen-person executive leadership team took responsibility for running the company while the board searched for a permanent replacement. It was an inelegant, oversized solution; a committee of fourteen people was hardly a replacement for a fast-moving, decisive executive.

  Worse, they quickly found themselves barraged with requests from Kalanick, who tried to isolate each of them individually, and coax them over to his side. Each day, a different member of the team would get a flurry of texts and phone calls from their former boss, all attempts to involved himself in daily decision-making—as if the Ritz-Carlton showdown had never occurred. Kalanick kept pinging one employee to discuss fallout from the infamous driver video incident, something that continued to plague him long after he had left.¶¶¶¶¶¶¶¶¶ He peppered them with questions on the present health of the business, while trying to guide decisions over its future. Kalanick was supposed to have stepped back—he hadn’t.

  Some members of the team were conflicted. Executives like Andrew Macdonald, Pierre-Dimitry Gore-Coty, and Rachel Holt—the triumvirate of leaders who collectively oversaw Uber’s operations in hundreds of cities globally—had worked only for Kalanick most of their professional lives. Daniel Graf, a math and logistics wizard, felt close to Kalanick after he elevated Graf into a more senior role working on the core Uber product. Thuan Pham, Uber’s chief technology officer, had been recruited personally by Kalanick and worked in lockstep with him for years. Now, they were all forced to shut him out.

  But members of the executive leadership team weren’t blind devotees. Many had floated in and out of kinship with their boss over the past eighteen months. Their positions against him hardened when Kalanick took his cajoling one step too far. In July, Kalanick began calling people—including Ryan Graves, a key shareholder and board member—asking for their allegiance and voting power, if he were to require it. At his most vulnerable and unpredictable, Kalanick was seeking sworn allies. The behavior scared members of the ELT; they didn’t know what Kalanick was going to do next.

  In the end, all fourteen members drafted and signed a letter to Uber’s board of directors, urging it to take further action against Kalanick to stop his meddling. On Thursday, July 27, they sent the following message:

  Dear Board of Directors:

  In fulfilling our obligation to surface issues we feel are significant, we call your attention to three examples:

  1. Travis recently reached out directly to an employee, first asking if he would talk to a reporter about an upcoming negative story related to the Fawzi Kamel incident (Kamel was the driver in the March video). Previously, Travis’ personal lawyer had also reached out to this employee on the same topic.

  Travis also requested that the employee produce private, internal emails for him, and said that if he refused to send them he would exercise his right as a board member to get them directly from the Security team. The employee did not produce the emails and Travis subsequently asked the Security team to produce the emails. The Security team also declined to produce the emails and reported the incident to Salle, who subsequently advised the ELT that we should stand firm against any requests that may violate an employee’s right of privacy, and that a Director on their own cannot conduct independent investigations.

  Travis also asked whether the employee had spoken with the Covington investigators about the issue in question. The employee was very troubled by this given the confidential nature of the Covington process and reported his concerns to the Legal team.

  2. Travis recently called an ELT member to ask if he could count on their votes (the particular purpose/vote was not identified). Current and former employees have reached out to the ELT with similar reports. This has put the ELT in a difficult position, wondering what Travis might be up to and whether or not it is a cause for concern.

  3. Travis continues to reach out to employees beyond the ELT for business purposes. Regardless of the intention of the outreach, it is disruptive to the daily work at Uber. There is also cause for concern in that the outreach often comes with a request to conceal the conversation from management.

  With deep respect,

  The ELT

  The letter came with an even firmer demand: If he continued to try to regain power, all fourteen members of the ELT would resign from their positions.

  The move shook Gurley and the rest of the board. A mass exodus at the top could send the company into a death spiral. They had to do something to neutralize Kalanick.

  Joe Sullivan, Uber’s chief security officer, had an idea. With others lacking the courage to halt Kalanick, Sullivan knew what he needed to do. He would strip Kalanick of his electronic access to Uber.

  One by one, Sullivan revoked all of his old boss’s permissions to Uber’s most sensitive information. Kalanick’s Google drive access was shut down. His ability to enter chat rooms, internal wiki pages, and employee discussion forums were gone. In just a few keystrokes, Sullivan had defanged Kalanick.

  It helped—for the moment.

  The board had tapped an executi
ve search firm to quickly find Uber’s next CEO. Board members were convinced naming the next leader would prevent Kalanick from trying to claw his way back inside. But that person had to be strong enough to bring the hammer down on Uber’s prodigal son.

  Benchmark thought it had found that person: Meg Whitman. The firm had deep ties to Whitman, a career executive who had climbed the ladder at one Fortune 500 company after another. A Princeton grad and Harvard Business School alum, Whitman was tough, hard-charging, decisive. She held positions as a consultant at Bain & Company, a strategy executive at The Walt Disney Company, a general manager at Hasbro, and other positions. Her expectations on staff were exacting; low-performers were demoted, cut loose, or pushed out of the way.**********

  But her biggest break was in March 1998, when Bob Kagle, a founding partner of Benchmark, brought Whitman in to become the new CEO of eBay. The online auction site was a crown jewel in Benchmark’s investment portfolio, though its founder and leader at the time, Pierre Omidyar, was no professional CEO. Kagle, who sat on eBay’s board of directors, saw the growth potential in the young company and placed a young Whitman at the helm. By the time Whitman left eBay a decade later, the company was an industry titan, with more than 15,000 employees and a market capitalization of more than $40 billion.

  After a failed campaign to become California’s governor, Whitman eventually landed the chief executive position at Hewlett-Packard in 2011. Though she had supporters who cited her success at eBay, some pegged her from the start as the wrong CEO to reverse HP’s declining hardware business. So, Whitman was open to offers when she was approached as a potential chief executive candidate for Uber—a skyrocketing, high-profile business emblematic of this generation’s “unicorn” era.