by Isaac, Mike
Whitman had been acquainted with Uber since the beginning, and had even made an angel investment in 2010. At Benchmark’s request, she had provided mentorship to the young executives at Uber while they were still getting their bearings, chatting over the occasional dinner at Whitman’s house or office over the years. She liked Graves—he was a hard guy not to like—but kept a watchful eye from a healthy distance on the brash and unruly Kalanick. She advised them on possible board member additions, and was considered a possible candidate for Uber’s board herself. Her first real counsel and business advice to Kalanick was about his obsession with China, a market she knew he would never conquer. “You will never have more than 30 percent of that market,” Whitman once told Kalanick. “Because of the Chinese government, you could be Mother Teresa herself and still never gain more share.”
As soon as Kalanick was ousted, Heidrick & Struggles, the executive search firm, reached out to Whitman as a possible candidate. At first, Whitman equivocated. She was still CEO of HP, after all. And even from the sidelines she could see Uber was an enormous mess. “I suggest you talk to everyone before me,” Whitman told the recruiters. “If you run through that list and still find that you want me, call me back.”
Benchmark had made its mind up already: they were Team Meg. She had the professional acumen they wanted, and experience scaling a software-based business globally. Most of all, she had a hard-and-fast rule: if Whitman was going to run Uber, Kalanick had to be completely gone. No meddling, no interfering, no nothing. She said that an Uber under Meg Whitman meant the end of Travis Kalanick—music to Benchmark’s ears.
With Kalanick scratching at the windows, Benchmark had to act fast. Whitman was rushed to interviews with all the sitting board members—Matt Cohler of Benchmark, David Trujillo (who had replaced David Bonderman) of TPG, Ryan Graves, Garrett Camp, nearly everyone.
On the afternoon of Tuesday, July 25, Whitman was driving her car in downtown Palo Alto when she got a frantic phone call from Henry Gomez, her top communications and marketing strategist at HP. A story was about to be published that claimed she was among the candidates for the top job at Uber.
Whitman was beyond livid. One of Kalanick’s allies, who knew of Whitman’s hard-line stance against him, planted the leak with the press to smoke Whitman out. As the CEO of a public company, Whitman would be forced to bow out, lest she risk revolt among her employees and shareholders at HP.
In the weeks that led up to the courtship, Whitman had stressed that there could not be any leaks about her participation or consideration. Any hint of her departure could devastate HP, which was already in dire financial straits. She made clear she would deny everything if the press caught wind of the situation. For two days, Whitman’s spokesman gave the same statement over and over: Whitman was “fully committed” to Hewlett-Packard, and planned to stay with the company until her work was done.
The press speculation continued, however, and then escalated on the afternoon of Thursday, July 27, after another leak: Jeff Immelt, the outgoing CEO of General Electric, was also a top candidate for Uber CEO.
Much of the board speculated about the purpose of the leak—some believed while Benchmark was trying to rush Whitman through, Kalanick and his allies were pushing Immelt, a candidate who was much more amenable to Kalanick’s presence at the company than Whitman. Whitman didn’t want Kalanick allowed in the building, but with Immelt, Kalanick saw a pathway to a comeback.
This was Gurley’s worst nightmare. It wasn’t clear Immelt had a vision for his current company—GE’s stock price and business had cratered during Immelt’s tenure—much less a coherent one for Uber. But Gurley worried more about something else: if Immelt left even a crack for Kalanick to push his way back in, who knew what would happen next?
The crescendo of media coverage intensified the pressure on Whitman. HP’s board felt her first statement was not unequivocal enough; employees and shareholders agreed. So Whitman did what she believed had to be done: she pulled the ripcord.
At around seven o’clock in the evening that Thursday, just as Uber’s board of directors was beginning a quarterly meeting to discuss the progress of the CEO search, Whitman sent out three brief tweets to the world.
“Normally I do not comment on rumors, but the speculation about my future and Uber has become a distraction. So let me make this as clear as I can. I am fully committed to HPE and plan to remain the company’s CEO. We have a lot of work still to do at HPE and I am not going anywhere,” she said. The eight board members’ cell phones began lighting up and buzzing, one after the other, as Whitman’s tweets began circulating throughout the Twittersphere.
Her final sentence was unequivocal: “Uber’s CEO will not be Meg Whitman.”
Bill Gurley was crestfallen.
His firm had spent weeks grooming Whitman to take the CEO job, only to have her nuke her own candidacy in public at the last moment. Kalanick, refreshed and geared for war, had begun to play dirty—just as Gurley had feared.
Now it was Gurley’s turn to fight back. On August 10, Benchmark partner Matt Cohler—who was on safari in the middle of the African outback, surrounded by elephants, lions, and hippopotamuses—began calling other board members to notify them of Benchmark’s next move: the firm filed a lawsuit against Travis Kalanick accusing him of defrauding Uber’s shareholders and breaching his fiduciary duty, a stunning act of open warfare between board members at a high-profile company.
Gurley’s move was strategic, but also desperate. Kalanick was laying siege; he had reneged on his deal to name two independent board members to the seats he controlled. If Kalanick added two puppet directors to the board, their support could clear a pathway for him to return.
Gurley’s idea in suing the former CEO was to invalidate Kalanick’s rights to those board seats entirely. In the lawsuit, Benchmark claimed Kalanick lied to Gurley and the rest of the board, all of whom would never have given such power to Kalanick were they to know how poorly Kalanick had been running his company.
This was an ironic case for Benchmark to make. Gurley hadn’t blinked when Travis barreled past regulators and operated illegally in cities, or launched self-driving cars in San Francisco against the wishes of transportation authorities. He invested in a transportation disruptor, and disruptors by definition don’t play by the rules. Some inside Uber thought Gurley and Benchmark expressing shock—shock!—at Travis’s behavior was disingenuous.
Still, a VC firm suing one of its own CEOs was a big deal, showing just how far Benchmark was willing to go to rid Uber of Travis Kalanick. If the coup hadn’t already done so, the lawsuit damaged the “founder friendly” image Benchmark had worked so long to cultivate.
Shervin Pishevar, an early Uber backer, came to Kalanick’s defense. In the war of investors versus Travis Kalanick, Pishevar sided with Kalanick. On August 11, Pishevar sent a letter to Benchmark, asking the firm to step down from Ubers’ board of directors.
“We do not feel it was either prudent or necessary from the standpoint of shareholder value, to hold the company hostage to a public relations disaster by demanding Mr. Kalanick’s resignation,” the letter said, claiming to represent a group of shareholders. The move came with an offer: Pishevar and his coalition said it would buy out 75 percent of the shares held by Benchmark—an action that would require Benchmark to step down from the board.
Gurley and his allies didn’t believe it. To them, Pishevar was nothing but talk. He made such enormous boasts, so frequently, that he had become a Silicon Valley in-joke among VCs, so over-the-top that not even his friends took him seriously. Now he claimed, with no evidence, that he represented a group with billions of dollars in capital to purchase Benchmark’s stake. They believed Pishevar was clearly a front for Kalanick, who was trying to force Benchmark off the board.
On the contrary, if Kalanick were able to pick who would wage battle on his behalf in a war against Benchmark, Pishevar would not have been his first choice. Nonetheless, Pis
hevar’s parry made a certain amount of strategic sense. Based on the rules of the company, the board and Benchmark were forced to seriously consider his proposal. If Benchmark were off the board, it would give Kalanick the room he needed to return as CEO. More than a clever stalling tactic, it might have actually worked.
As Kalanick, Gurley and their allies traded blows in public, a new figure was circling like a vulture over the company, drawn by the smell of money. That figure was Masayoshi Son.
Known more colloquially by the business world as “Masa,” Son was the founder and CEO of SoftBank, a Japanese mega-conglomerate with stakes in some of the world’s most successful finance, telecommunications and technology companies.
He also happened to take a “madman” approach to the world of business; rivals could never predict Masa’s strategy, could never guess his next move.
A short, vivacious Korean who grew up in Japan, Son was always an outsider; his childhood Japanese classmates threw rocks at him for his heritage. After his idol, the founder of McDonald’s in Japan, told him to study in the United States, Son made his way to California and enrolled at the University of California, Berkeley, where he majored in economics. He bankrolled his college years by importing Pac-Man video arcade machines and then leasing them to bars and restaurants around the Bay Area.
He returned to Japan to make his fortune, starting SoftBank to disrupt the telecommunications industry in 1981. Over twenty years, Son grew his fledgling startup into a corporate behemoth with a $180-billion market capitalization, based on Masa’s maverick style of making big bets on world-changing companies and industries. He invested widely across Silicon Valley in the height of the dot-com craze, spreading SoftBank’s capital across dozens of risky bets. In 2000, the crash erased billions of market value overnight, and SoftBank’s value plummeted. Masa himself lost some $70 billion in personal wealth. Webvan, one of Son’s biggest losing investments, also happened to be a portfolio company of Benchmark’s.
Masa wasn’t down for long. Over the next decade he continued making big, bold bets and built SoftBank back to the force it once was. By the early 2010s, SoftBank owned stakes in more than a thousand internet companies; his acquisition of Sprint made SoftBank the world’s third-largest telecommunications company. Friends and colleagues considered him fearless. Son said he hoped to be remembered as a “crazy guy who bet on the future.”
By 2017, SoftBank had been making serious turbulence in Silicon Valley by slinging money from the “Vision Fund,” an enormous $100-billion pool of capital formed by the Public Investment Fund of Saudi Arabia, the Abu Dhabi Investment Authority, Apple, Qualcomm, and SoftBank itself, along with a few others. Masa’s mandate was simple: by focusing the fund on technology investments—something he had done practically his entire career—SoftBank would finance the global tech infrastructure that would undergird the future. He designed the investment vehicle for speed; Vision Fund was required to invest all of its capital within five years of its closing date. That meant parking truckloads of cash in startups, fast.††††††††††
As Uber’s management and morale eroded, Masa sensed opportunity. The feud between Kalanick and investors had surely knocked enormous sums off Uber’s potential market value. If SoftBank could buy shares at a lower valuation than Uber’s last $68.5-billion round, Masa had a chance at making billions by the time Uber had re-stabilized and went public—if that day should ever come.
An IPO was still a big “if.” At the moment there was open warfare between members on the board of directors, employees continued to leave, and users were fleeing the product for Uber’s main competitors. There was a real chance the company would continue to stumble, and perhaps even implode.
For Masa Son, that made an investment in Uber that much more attractive. He needed to find a way in.
Chapter 30 notes
¶¶¶¶¶¶¶¶¶ Kalanick ended up paying the driver, Fawzi Kamel, approximately $200,000 of his own money, to keep Kamel quiet and prevent further damage. Some wondered if it was worth it, considering the video was already public.
********** Literally, in some instances. In 2007, Whitman was accused of shoving a subordinate in front of multiple employees. Whitman and the employee, Young Mi Kim, eventually dealt with the matter privately, with Whitman reportedly forking over a settlement of around $200,000.
†††††††††† This strategy disturbed the dynamics of venture investing in Silicon Valley. None of the funds in the Valley had the money to compete with SoftBank. A $100-million investment from SoftBank could make a startup overnight, while getting shut out from SoftBank could break one.
Chapter 31
THE GRAND BARGAIN
Beginning on Friday, August 25, and through the rest of that weekend, Uber’s board of directors planned to make a final decision on who would become the company’s new chief executive officer.
By the end of the summer, just a few weeks after Meg Whitman had pulled herself out of consideration, the recruiting firm had produced a list of five potentials, then whittled the group to three. Over the last weekend in August, each of the three candidates was asked to give individual presentations to the board of directors. It was a test run, a demonstration of their skills and an opportunity to present a roadmap of how they, if chosen, would run Uber.
Jeff Immelt, General Electric’s outgoing chief, was still Kalanick’s top choice. The sixty-year-old executive was winding down a terrible run at GE. The storied corporation had lost billions in market cap during Immelt’s tenure, and his board asked Immelt to “retire” early in 2017. Bringing Uber out of its darkest period and, eventually, across the finish line of an initial public offering, would certainly rehab Immelt’s image and cement his business legacy. Most important to Kalanick, though, was that Immelt was malleable, open to Kalanick’s continued influence at the company. Immelt was the best possible pick for the ousted founder who wasn’t ready to relinquish control.
Then there was the dark horse candidate: Dara Khosrowshahi. A career executive and the current chief of the travel and logistics site Expedia.com, Khosrowshahi made plenty of sense on paper. He was a Brown undergraduate in bioelectric engineering who later turned investment banker at Allen & Company. With thinning hair balancing a thick brow line and a full, steeply-bridged nose, Khosrowshahi was handsome, charming, even cool. Like someone’s dad, who also happened to look good while wearing black skinny jeans. Westerners often found his Persian surname tricky; everyone ended up calling him “Dara.”
Khosrowshahi’s family fled Tehran in the late ’70s in the midst of the revolution that brought the Ayatollah Khomeini to power, escaping to the south of France before eventually settling in Tarrytown, New York. His parents, trying to usher their sons into American culture as painlessly as possible, enrolled young Dara and his two brothers at Hackley, a K–12 private prep school in the area, where they quickly assimilated. Khosrowshahi worked hard in high school to gain entry into the Ivy League. “There’s this chip you have on your shoulder as an immigrant that drives you,” he later said of his childhood.
After Allen & Company, Khosrowshahi joined Barry Diller’s InterActiveCorp where he worked for years until moving over to Expedia and eventually rising to the top spot. Expedia’s travel business was all about logistics, getting people around the world via an online marketplace. It was, as it turned out, a business not terribly different than the one he was asked to consider running at Uber.
But where Kalanick had the kinetic energy of a pinball machine, Khosrowshahi was calm and collected, a perpetual Zen that, to the uninitiated, sometimes came off as boring, even passive. Uber’s directors were used to Kalanick, the vibrant, world-changing visionary—a true showman. The understated Khosrowshahi made perfect sense as an executive, though he lacked some of the punch and panache the board was used to. It was clear that everyone on the board liked Dara. But it was also clear that none of them quite loved Dara. As a result, he became an emergency back-up
candidate, a safe pick for the group. His identity was kept well hidden from the press through the process.
The last thing the Benchmark partners wanted in the next CEO was a passive weakling. Give Kalanick even an inch, and he’d claw his way back inside. Jeff Immelt wasn’t going to control Kalanick, and they were unsure whether Khosrowshahi would have the mettle, either. They needed someone truly unflappable: Meg Whitman.
Gurley believed that they might be able to convince Whitman to get back in the game. It would be difficult; Whitman’s statement on Twitter had been ironclad. She would look enormously hypocritical were she to take the position. So it would be on them to convince Whitman it wouldn’t matter. Become CEO of Uber first, repair the fallout later.
It was Ryan Graves who ended up coming through for Benchmark. Whitman had coached Graves on executive leadership. Graves, the affable, bear-sized mascot of Uber, had grown closer to Whitman than Kalanick had during their time together. In the days leading up to the final weekend of demonstrations Graves called up Whitman, begging her to reconsider. “We’re down to the short strokes here,” he said. And this time, Graves swore there would be no more fuckups. “I promise you, Meg. This Will. Not. Leak.”
Whitman was still stewing from the last go-round. A public company CEO entertaining an offer from another company wasn’t just a bad look, it was a material problem for shareholders. Whitman didn’t want to court a risky situation just to get publicly screwed again. She needed reassurances.
“This is what you need to do,” Whitman said. “Talk to the other two, and make sure you want me, not them, after that.”
Graves responded that the only person on the board who liked Immelt was Kalanick, and though everyone certainly liked Khosrowshahi, no one was 100 percent sold. Graves was upfront: “We want you, Meg.” He all but guaranteed Whitman would have the job if she came back and presented to the board over the last weekend in August.
