Former CEO Travis Kalanick unilaterally appointed two board members

Former Uber CEO Travis Kalanick appointed two new members to the Uber board. Kalanick explained in a statement:

“I am appointing these seats now in light of a recent Board proposal to dramatically restructure the Board and significantly alter the company’s voting rights. … It is therefore essential that the full Board be in place for proper deliberation to occur.”

Kalanick was responding to a proposal from Benchmark Capital, a large shareholder in Uber, seeking to eliminate super-voting power of shares held by Kalanick, other early executives, and investors. With two more board members receptive to Kalanick’s perspective, Benchmark’s proposal is correspondingly less likely to proceed. (Forbes called the appointees “presumed allies” to Kalanick.)

An Uber spokesperson indicated that Kalanick’s appointment of two new board members “came as a complete surprise to Uber and its board.” The New York Times reported that new Uber CEO Dara Khosrowshahi called Kalanick’s move “disappointing” in an internal memo to employees. Bloomberg reported that the appointment was contrary to a prior agreement associated with Kalanick’s resignation.

The New York Times called Kalanick’s approach a “power move.” Former Uber adviser David Plouffe indicated that events at Uber were crazy and that the Trump white house “seems sane by comparison.”

Texas firemen retirement fund claims Uber misled them about risks and law-breaking

In a lawsuit, the Irving Firemen’s Relief & Retirement Fund alleges that Uber and its former CEo Travis Kalanick knowingly misled them while raising funds, including failing to disclose that the company had broken laws.

The lawsuit chronicles a variety of Uber improprieties including “Greyball” evasion of law enforcement, “Hell” tracking of rivals, allegations of intellectual property theft from Google, sexual harassment and other human resources violations, knowingly renting out recalled and unsafe vehicles, and theft of a passenger’s medical records.

The lawsuit seeks class-action treatment for Uber investors.


Uber investor alleged former CEO Kalanick interfered with CEO search

In a lawsuit, Uber investor Benchmark Capital alleged that former Uber CEO Travis Kalanick is interfering with Uber’s CEO search. Benchmark says “various potential candidates have withdrawn from consideration because of Kalanick’s continued participation in the search and his efforts to re-assert influence over the company.” In a letter to Uber employees, Benchmark explains the impact of Kalanick’s actions:

Travis’s failure to make good on this promise, as well as his continued involvement in the day-to-day running of the company, has created uncertainty for everyone, undermining the success of the CEO search. Indeed, it has appeared at times as if the search was being manipulated to deter candidates and create a power vacuum in which Travis could return.

Uber investor challenged “fraud” by former CEO Travis Kalanick

In a Delaware complaint, Uber investor Benchmark Capital Partrners challenged “the fraud, breaches of fiduciary duty, and breaches of contractual obligations perpetrated by” former Uber CEO Travis Kalanick “to entrench himself on Uber’s Board of Directors and increase his power over Uber for his own selfish ends.” The lawsuit focused in part on Kalanick’s “fraudulently obtain[ing] control” of three new seats on Uber’s boards through “his material misstatements and fraudulent concealment … of material information” that would have led Benchmark to reject the request.

Benchmark said Kalanick engaged in “gross mismanagement and other misconduct” which it summarizes as follows:

Kalanick’s personal involvement in causing Uber to acquire a self-driving vehicle start-up that, according to a confidential report not disclosed to Benchmark at the time (the “Stroz Report”), allegedly harbored trade secrets stolen from a competitor; an Uber executive’s alleged theft of the medical records of a woman who was raped by her Uber driver in India; a pervasive culture of gender discrimination and sexual harassment that ultimately prompted an investigation by the former U.S. Attorney General Eric Holder; and a host of other inappropriate and unethical directives issued by Kalanick.

Benchmark said Kalanick “knowingly concealed these matters from” it and other investors.

Benchmark explained its approach and its concerns in a letter to Uber employees.

In a statement, Kalanick replied: “I am disappointed and baffled by Benchmark’s hostile actions, which clearly are not in the best interests of Uber and its employees on whose behalf they claim to be acting.”

Kalanick moved to send the lawsuit to arbitration, avoiding a deposition that Recore said could have been “damaging.” On August 30, 2017, the Court agreed, ending the public litigation docket and putting all further proceedings in confidential arbitration.

Litigation docket

Ties to Trump

CEO Travis Kalanick served on Donald Trump’s economic advisory council. After intense criticism, Kalanick stepped down in February 2017, indicating that he did not intend the advisory council participation to be an endorsement of the president’s agenda but understood that it had been interpreted in that way.

Kalanick said Lyft’s casual drivers are “non-licensed” and “quite aggressive”

In 2013, when Uber focused on operations using properly-licensed black cars, CEO Travis Kalanick wrote a lengthy post assessing Lyft’s “ridesharing” using ordinary drivers:

Over the last year, new startups have sought to compete with Uber by offering transportation services without traditional commercial insurance or licensing. Uber refrained from participating in this technology sector — known as ridesharing — due to regulatory risk that ridesharing drivers may be subject to fines or criminal misdemeanors for participating in non-licensed transportation for compensation.

In most cities across the country, regulators have chosen not to enforce against non-licensed transportation providers using ridesharing apps. This course of non-action resulted in massive regulatory ambiguity leading to one-sided competition which Uber has not engaged in to its own disadvantage.

He continued:

[G]iven existing regulations, the Lyft/Sidecar approach is quite aggressive. The bet they are making is two-fold:
1. Uber, already a market leader, is too weary to enter the non-licensed market in the face of existing regulatory scrutiny.
2. Regulators for the most part will be unable to act or enforce in time to stop them before they have a critical mass of consumer support.

Kalanick specifically criticized incomplete enforcement and ambiguity that let some companies take a lead through aggressive interpretations rather than superiority on the merits:

[T]he lack of real clarity has created massive regulatory ambiguity. Without clear guidance or enforcement, this ambiguity has led to one-sided competition in which Uber has not engaged to its own disadvantage. It is this ambiguity which we are looking to address with Uber’s new policy on ridesharing.

After I posted an article quoting and discussing Kalanick’s post, Uber removed that document from its site. But kept a copy. I also preserved a screenshot of the first screen of the document, a PDF of the full document, and a print-friendly PDF of the full document.

Kalanick says every Lyft trip “is a criminal misdemeanor”

In 2013, when Uber focused on operations using properly-licensed black cars, CEO Travis Kalanick remarked on what he saw as Lyft’s unlawful “ridesharing” approach using ordinary drivers:

I’m like, holy cow, every trip that’s happening—I’m reading the law—every trip that’s happening is a criminal misdemeanor committed by the person driving. I don’t think that’s a good law, but that is the law.

Kalanick explained three sources of cost advantage from Lyft’s unlawful approach: foregoing commercial licenses, foregoing commercial insurance, and thereby accessing a larger pool of potential drivers:

What they were able to do because of no commercial insurance and because of easy access to supply, the cost was really low. You could see a situation where they’d eat you up from the bottom up.

Driver violence towards passengers

Various Uber drivers have attacked passengers. Representative examples: In March 2014, a Chicago passenger sued Uber after her driver locked the car and groped her. In June 2014, a Los Angeles driver kidnapped a woman who had passed out in his car.

In an internal crisis communication message that was accidentally made public, Uber CEO Travis Kalanick blamed the media for suggesting that Uber was liable for driver misconduct.

Tracked driver activity on Lyft servers

News site The Information in April 2017 reported that Uber built a program it called “Hell” to track how many Lyft drivers were available, where they were located, and whether they drove for Uber also.  Uber then targeted these drivers with special promotions to encourage them to use Uber only.

By all indications, Uber collected data for “Hell” by connecting to Lyft’s servers in a manner prohibited by Lyft’s Terms of Service.

The Information reported that Uber then-CEO Travis Kalanick personally praised the Hell team, saying that they demonstrated Uber’s culture in their willingness to “hustle” in order to win.

In September 2017, the Wall Street Journal reported the FBI investigating Uber’s “Hell” practices.

Bloomberg reports that Hell was overseen by Joe Sullivan, Chief Security Officer of Uber, through a team formerly known as Competitive Intelligence.

See also the “Surfcam” program whereby Uber tracked data from Grab.

Google alleges Uber stole its autonomous car technologies

In a February 2017 lawsuit, Google alleged that Uber stole proprietary Google technology for autonomous cars. Google reported that Anthony Levandowski, an original member of Google’s self-driving car project, downloaded over 14,000 confidential files (9.7GB) pertaining to Google’s designs and testing, and used this information in Otto, a self-driving company that Uber later acquired. Complaint.

When Levandowski refused to testify or otherwise cooperate with litigation, invoking the Fifth Amendment to refuse to incriminate himself, Uber fired him.

Litigation brought by Benchmark Capital indicates that Uber CEO Travis Kalanick knew, before acquiring Otto, about the likelihood that Levandowski had Google materials. In particular, in March 2016, a month before Uber acquired Otto, Uber retained an investigator to assess whether Levandowski and others had Google materials. Benchmark Capital further alleges that Kalanick never shared this information with Uber investors.

Waymo v. Uber litigation docket