The news seems just to get worse each week for this man. He’s undergoing an investigation for violating numerous laws, he’s been criticized for the way he treats women, and leaks from those around him are rampant, with new accusations nearly every day. There’s a separate investigation being conducted by an ex-attorney general, and this past week was one of his worst, where he’s confronting the likelihood of a federal trial.
Yes, Travis Kalanick, the CEO of Uber, is in hot water. The latest blow is a federal judge finding in favor of Waymo, Google’s self-driving car initiative, which is suing Uber for theft of its technology. The judge ruled that a jury trial is warranted—not the arbitration that Uber wanted—and is referring the company for possible criminal activity.
Uber, a venture capital-backed firm valued at $69 billion, has long had a reputation as a startup without normal corporate constraints, due mostly to its CEO, Travis Kalanick, who’s success is a result of fighting convention. But that aggressiveness has reached such a level that his leadership has been called into question, and he’s now looking for a COO to help.
Under Kalanick’s leadership, Uber has become a dominant force in the transportation business, going up against unions, governments, and bureaucracies that are resistant to change, and likely even facing mob-controlled organizations. And his efforts have succeeded brilliantly with an alternative to taxis that most of his customers love.
But he’s now facing one of the biggest challenges ever, including the accusation that the executive leading Uber’s self-driving development stole 14,000 files from his former employer, Google. The files include some of the most confidential engineering details relating to self-driving technology. That executive, Anthony Levandowski, to whom Kalanick courted and paid hundreds of million dollars, has refused to testify, citing the self-incrimination clause. Now Uber has reluctantly asked Levandowski to comply with the judge’s orders, even if it incriminates him.
“We understand that this letter requires you to turn over information wherever located, including but not limited to, your personal devices, and to waive any Fifth Amendment protection you may have,” Uber wrote Uber’s general counsel, Salle Yoo.
Kalanick had said repeatedly that Uber’s survival is based on replacing drivers with self-driving cars. With it being so important, did he hire Levandowski, knowing that he would bring along stolen files?
Former Attorney General Eric Holder, along with board member Arianna Huffington, are expected to announce the results of their investigations into the sexual harassment and other issues around Kalanick’s behavior in a few weeks. Early indications are that the findings will be quite serious.
But I subscribe to the belief that little of this matters over the long term because Uber is built on a house of cards that is difficult to sustain. They have a business model that burns through $2 billion a year because the rider fares cover just 40% of their costs. Reliance on self-driving cars, and now the flying cars they’ve recently announced, are years away, and most of these are just public relations efforts to raise more money. Their only hope is that the taxi companies stay as inept and dysfunctional as they’ve always been, allowing Uber to raise their prices and sell their services on the convenience of the app.
Meanwhile, investors in Silicon Valley want to believe in Uber because of the upside to make money. They keep pouring more money into the company despite its troubles. For another take on this company check out this article that’s making the rounds of many in the financial community.
Yes, like in politics, there’s a deep fascination in watching a potential train crash, and Silicon Valley need only look in their own backyard to see one coming.