Chaos at Uber: The New CEO's Challenge|Business Ethics|Case Study|Case Studies
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Case Details

Case Code: BECG157
Case Length: 17 Pages 
Period: 2018   
Pub Date: 2018
Teaching Note: Not Available
Organization : Uber Technologies Inc
Industry : Taxi Industry
Countries : US
Themes:    --  
Case Studies  
Business Strategy
Human Resource Management
IT and Systems
Leadership & Entrepreneurship

Chaos at Uber: The New CEO's Challenge

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Uber followed a “founder-friendly” governance structure wherein some board seats carried more voting power than others. In this kind of a dual-class share structure, one class of shares carried one vote while the other class shares came with ten votes each or more. According to Uber’s articles of incorporation, the company had 11 board seats, nine of which were controlled by shareholders with super-voting rights. Co-founders Kalanick and Camp along with longtime Uber employee Graves held super-voting shares and controlled a majority of shareholder votes. The trio held sway over company decisions leaving other independent directors who were mostly outsiders with fewer rights and little influence...

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The crisis at Uber began in February 2017 when Susan Fowler (Fowler), a former software engineer at Uber, went public with her account of sexual harassment, discrimination, and extensive sexism inside the company. In a blog post, she described how the human resources department had ignored her complaints, which included being propositioned by her manager. Fowler wrote that even after she had lodged a complaint with HR and higher management, she was told the manager was a ‘high performer’ and he would not be disciplined for his actions. Fowler’s account was allegedly so condemning that it inspired other women employees at Uber to come forward with their own stories..


On June 13, 2017, Uber released the results of the highly anticipated internal investigation. Lack of oversight and poor governance were some of the key issues running through the findings of the report. The Holder report specifically identified Kalanick as part of the problem as the first line of the report read, “Review and Reallocate the Responsibilities of Travis Kalanick.” The report in total made 47 recommendations including emphasizing more on diversity and company-wide performance reviews, and installing an independent chair and oversight committee to handle ethics issues. In the area of corporate governance, the report advised that the board should have greater independence and the additional board members should be directors with meaningful experience on other boards and should exercise independent oversight of Uber’s management...


When Uber became embroiled in a series of legal and ethical scandals, the investors who, until then saw little wrong with Kalanick’s aggressive antics, became suddenly combative. They felt that their investment in Uber was at risk and started agitating for change at the top ...


Experts attributed the root of Uber’s problems to weak corporate governance marked by a rapid chase after growth, the cult of Kalanick, and the company’s failure to address workplace issues. They felt that Uber’s Board of Directors did not care about governance issues and let Kalanick run the company the way he did as long as profits were generated and growth achieved. According to Jean-Louis Gassée (Gassée), Editor of Monday Note, a tech and media blog, ....


Amidst a series of scandals, Uber’s Board of Directors found themselves divided. On August 10, 2017, investor Benchmark Capital, which held a 13% stake in Uber and spearheaded Kalanick’s ouster, filed a lawsuit against him for fraud, breach of contract, and breach of fiduciary duty. The investor wanted him removed from the Uber board. According to Benchmark Capital, Kalanick had concealed material information from investors when he created three new board seats and expanded Uber’s board from 8 to 11 directors in June 2016...


Despite a tumultuous 2017, Uber’s business continued to grow. In the second quarter of 2017, Uber raked in US$8.7 billion in gross bookings, a 17% increase from the previous quarter and a 102% increase year-over-year. The company also curbed losses. In the second quarter of 2017, adjusted net loss fell almost 9% quarter-over-quarter to US$645 million compared to US$708 million in the first quarter. The company’s adjusted net revenue amounted to US$1.75 billion, a 17% growth compared to the first quarter of 2017. ...


Exhibit I:Uber Funding Rounds
Exhibit II:Uber Gross Bookings (Q1 2015-Q3 2016)
Exhibit III:Uber Quarterly Net Revenues
Exhibit IV:Uber Quarterly Losses (in US$, millions)
Exhibit V:Top Ten Privately Owned Unicorns in the World (as of August 2017)
Exhibit VI:Uber Board of Directors
Exhibit VII:Top Executive Departures at Uber
Exhibit VIII:Uber’s US Market Share
Exhibit IX:Uber’s Performance in 2017
Exhibit X:Uber’s Cultural Norms
Exhibit XI:Uber’s Market Valuation