By last Friday afternoon, most of Uber’s eight directors had gathered in San Francisco for a board meeting. Their agenda was simple: Pick a new chief executive for the ride-hailing company.
What unfolded over the next 72 hours was anything but straightforward. And before the final outcome could be announced, investors faced a new shock amid revelations the company is being investigated over possible violations of US laws against overseas bribery.
Finalising their CEO search at a Four Seasons Hotel and the offices of the private equity firm TPG Capital, which holds an Uber board seat, directors operated under the cloak of secrecy. They spoke in a kind of code about some of the candidates, limiting knowledge of the shortlist to a handful of people.
By Sunday morning, one of the finalists, former General Electric CEO Jeff Immelt had publicly pulled out. Some board members were behind another finalist, Meg Whitman, chief of Hewlett Packard, and some people close to the process had taken steps to prepare for an announcement of her appointment.
But as Sunday wore on, Whitman, emboldened by her front-runner status, started negotiating for increasing control over Uber were she to accept the job, siding with one faction of the board that wanted to limit the clout of Travis Kalanick, the former chief. Those tactics deterred most board members, who then swung decisively in favor of Dara Khosrowshahi, chief executive officer of Expedia.
The company finally announced Khosrowshahi’s appointment late on Tuesday, ending its months-long search. High-wire act
This account of Uber’s CEO selection is based on interviews with more than a dozen people with knowledge of the board’s discussions, who spoke on the condition of anonymity because the deliberations were private.
It illustrates the high-wire act of herding eight board members – many of whom have big personalities and some of whom are feuding with one another – toward consensus at the world’s most valuable privately held company.
It also gives a taste of the kinds of issues Khosrowshahi may have to navigate at Uber. Interviewed at Expedia’s offices in Bellevue, Washington, before his appointment was made official, the 48-year-old executive said he would be “happy to get started”.
Khosrowshahi said he was attracted to the Uber role because the company is “reinventing the transportation industry and is one of the most powerful brands in the world,” adding, “I’m excited to shape that unfinished story.”
One of his priorities, he said, is helping Uber’s employees get back “to running a company they can be proud of.” Department of Justice inquiry
That may be difficult given the numerous scandals that Uber has confronted this year, including a new development that surfaced overnight: The US Department of Justice is now looking into whether Uber managers broke the Foreign Corrupt Practices Act, which governs acts such as international bribery.
Uber confirmed that it was cooperating with the Justice Department’s preliminary review in the matter, which was earlier reported by The Wall Street Journal.
The Justice Department’s investigation just adds to the wounds Uber sustained under the tenure of its co-founder Kalanick’s tenure that Khosrowshahi will now have to tend to.
The company is being sued by a woman whose Uber driver was convicted of rape in an Indian court. Top Uber executives, including Kalanick, privately questioned whether the rape happened and whether it had been a set up by Uber’s largest competitor in India. There are questions in that case about how Uber executives acquired the woman’s medical report.
Uber is also being sued by the self-driving company Waymo, a subsidiary of the search giant Alphabet. Waymo claims that Uber stole trade secrets when it brought on engineer Anthony Levandowski, a former Alphabet employee, as part of a $US680 million acquisition last year. Uber denies the allegations.
Uber’s largest shareholder, Benchmark, is suing Kalanick for fraud, accusing him of hiding many of the company’s problems when he requested the power to appoint new board seats. Kalanick argues that Benchmark was kept informed about issues at Uber. Three CEO candidates
Uber’s search for a new chief was already complicated leading up to last weekend. Since Kalanick resigned under pressure in June, the board had worked to put together a list of potential recruits with Heidrick & Struggles, the executive search firm. Over two months, that list was whittled down to three candidates.
Whitman, a veteran of the tech industry who had led multiple public companies, quickly became a favourite candidate of Benchmark, one of Uber’s largest investors, which also has a board seat. Whitman, who was steering Hewlett Packard through a challenging landscape for corporate technology, was intrigued by the possibility of leading a turnaround at Uber.
But in July, she publicly denied she wanted the Uber job in a series of tweets, taking herself out of consideration. Board members had all but written her off until recently, when Ryan Graves, an Uber director and early employee, coaxed Whitman to return to the process.
Immelt, who was on the verge of leaving GE, was favoured by Kalanick and a few other directors for his depth of experience running a public company. Khosrowshahi, the long-shot candidate, also gained favour with some directors.
On Friday, Immelt and Khosrowshahi made the trip to downtown San Francisco for the last leg of the selection. In an airy conference room on the 33rd floor of TPG’s offices, the two candidates presented their visions for the future of Uber.
Whitman met with some board members the next day at the Four Seasons Hotel, changing locations as a way to throw people watchers off the trail. ‘They asked me if I knew my passenger rating’
After the presentations, some board members grew concerned about Immelt. They questioned the success of his tenure at GE, while others – particularly Benchmark – worried that he would serve only as a surrogate for Kalanick. And while Immelt had experience with large organisations, some board members felt he lacked the technical and strategic prowess to run Uber.
Immelt withdrew from the process on Sunday morning with a post on Twitter. I have decided not to pursue a leadership position at Uber. I have immense respect for the company & founders – Travis, Garrett and Ryan.??? Jeff Immelt (@JeffImmelt) August 27, 2017
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