The rise of super-voting shares has given founders the ultimate job security
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The real reason they won't replace him is that he built a unicorn from nothing for them, making them very rich and cool in the process (imagine being able to say "I was an early stage investor in Uber"), and by all accounts he has not changed, with Uber being run as a large, efficient company that delivers globally with McDonald's level reliability.
Investors also know that what people say and do are very different things. In aggregate, customers will publicly complain and say they will take Lyft, but privately will vote with their wallet (after all who sees what you book), in the same way that publicly they decry energy wastage whilst they take holidays on other continents and drive SUVs to their giant McMansion. I literally cannot think of a company that "won" by promoting its ethical competitiveness, beyond conquering the few percent of the market who can afford to care and care enough to pay a premium. I wonder how many of the #DeleteUber reinstalled it quietly a few weeks later. The public has a very short memory - as a Frenchman I remember being called cheese-eating surrender monkey by the same Brits who today protest against "American imperialism".
Governments won't do anything since Uber has tons of positive externalities such as reduction in drunk driving, creation of many part time unskilled jobs and generally electorate happiness in having a reliable and affordable taxi service. They think in terms of net welfare and a few Californians having some issues at work is the least of their worries.
Exactly, public opinion doesn't really have any weight anymore.
In practice, network effects/'brand name' recognition/QA make for a generally reliable customer base from those who don't remain informed or care about your policies/practices or are just used to your product, and that's even before high barriers to entry and other market factors limiting competition to those who engage in the same cost-cutting-oriented models and so end up optimizing the same way.
TL;DR: Probably not.
It means that public opinion is complicated because people can hold more than one idea in their head at once.
Are there really people who think being an investor is cool ?
If you live somewhere with a healthier balance of careers where not everything is focused around tech, it would come off as incredibly dull and tone-deaf.
Uber is a private company that, from everything I've read, is bleeding money and currently getting a ton of bad press.
How has it made anyone rich (yet)?
I can't say I was a part of that hashtag "mob", but I got rid of it and haven't considered it since. Furthermore, even though they are one of the potential employers on the Udacity SDC Engineer Nanodegree "shortlist" - assuming I make it that far - I won't be sending my resume their way (or Otto's way, I guess); to me it seems like a toxic culture I want no part of at this moment.
Could they change? Sure - right now it is too early to tell, but I have noticed movement in that direction. They still have a long way to go, though. I'm not hitching myself to that boat just yet.
> The public has a very short memory
I understand that I am an exception to the rule, nor do I really consider myself a part of the "general public"; simply being a poster here sets anyone apart from that particular grouping, generally.
My memory about some things tends to run longer; Nadella's gestures to the open-source community aside, I am still wanting an apology for Microsoft's former business practices, especially their hostility toward Linux. I know I will never get it.
Secondly, I am still rather angry over how, a few years back, the Susan B. Komen Foundation did this:
http://freethoughtblogs.com/blaghag/2012/01/do-not-donate-to...
...don't think I'll ever forgive that one.
And, for how much they pay, they'll easily find a good/better coder anyways. Everything has a price, and if bad culture can be compensated with a big(ger) paycheck, people will continue to work and apply there.
From the Parent:
> beyond conquering the few percent of the market who can afford to care and care enough to pay a premium
That's pretty much a confirmation of the stated view - only people "who can afford to care". And by "afford to care", I'm gonna go out on a limb and say that is (with 99.9% likelihood) someone who posts on Hacker News and could send their resume to Uber (but won't).
I don't know about everywhere else, but i consistently find lyft to be cheaper than uber for rides here in Seattle.
Just off the top of my head there's starbucks whose main marketing innovation when they opened up was that they use only "fair trade" beans. And there's American Apparel, which despite the recent controversy, started off with the marketing promise that they are sweatshop free.
I don't know how much ethics matters, but certainly it matters to some extent.
That's not all that's at play and ultimately, Denmark did do something: https://techcrunch.com/2017/03/28/uber-to-pull-out-of-denmar...
Kalanick has described Uber as his baby. He won't properly mentor someone he's forced to accept as his replacement. This means a CEO totally unequipped to know where Uber's chips are, let alone play them properly. Keep in mind: Uber is largely forging new ground. We don't have a playbook for replacing a durable good purchased by consumers with technologically synchronised fleets.
Replacing a CEO is usually seen as a textbook cosmetic change. A swap at the top and nothing below. Bringing in a Schmidt to Travis's Page looks like the savviest option.
Uber has been drawn through the dirt for good reason. They need to change or die. That said, assuming they can get past the Waymo bullshit, there's nothing the press loves more than a turnaround story.
There's no reason to assume someone capable of taking a company from zero to $60bn is necessarily capable of taking it from $60bn to $120bn, or even just maintaining a $60bn valuation. Quite often the skills needed to start something are different from the skills needed to grow or to maintain something.
That isn't to say Travis can't do it. He's clearly incredibly capable of doing some amazing things. I'm just questioning the idea that he's automatically the right person to run Uber using a basis of the fact he started Uber. While he has done some astounding things he's also been CEO while Uber has done some very bad things too.
Theranos comes to mind.
I don't think the Theranos comparison is appropriate. We can quibble about $12 or 25 or 68 billion. But Uber is selling over $5 billion a year [1]. There's something there. Theranos has nothing. It is, in my opinion, a fraud. That's different from a real business with--glaring as they may be--serious blemishes.
[1] https://www.bloomberg.com/news/articles/2016-12-20/uber-s-lo...
Uber may be selling over $5bn a year, but they are doing so at a tremendous loss. Regardless, judging from its current valuation, investors also seem to have high hopes for the future.
The initial success of both companies can be attributed to their respective CEOS; however, grandparent suggested that the skills needed to start something are different from the skills needed to grow or to maintain something and I believe that that suggestion is just as applicable to Uber. Just as Holmes failed to realize Therano's potential, Kalanick may fail at realizing Uber's potential. Many even expect this (seeing as we are discussing an article title Why Uber Won't Fire Its CEO).
Side note: I share your opinion that Theranos was a fraud in general, but Uber has been accused of that, and far worse, in recent times. Case in point, this other article currently on the front page: "Uber said to use “sophisticated” software to defraud drivers, passengers", https://news.ycombinator.com/item?id=14053011
Anyone can do $5BB in revenue by selling dollar bills for fifty cents.
Uber is a cool idea, but it's pretty hard to judge demand when you're subsidizing the price. I'm skeptical that they'll be able to simply "turn up prices" once they've captured the market.
How much of Uber's value comes from it's self-driving fleet potential, which might be starting from scratch?
Is there a CEO that can continue to raise money, OR that can turn a $X Billion loss into a mild loss, whilst still raising the money required to keep the enterprise alive?
That's a pretty damned niche request!
Bayes! Bayes! Bayes!...
Sure. Now quick propose a concrete CEO candidate who investors will be convinced is a better fit for the job AND is likely available.
Draw a blank? So do I.
No investor will fire a proven leader unless there is extrodinary liability or (much more rarely) upside.
I would say almost always instead of quite often.
First paragraph of the article: As the calamities amass at Uber, many people — including me — have called for new leadership. Usually, the job of hiring and firing a CEO falls to a company’s board of directors. Yet in a March 21 phone call with the press, board member Arianna Huffington said that Uber’s board had not even discussed the matter.
An honest reporter would have stopped there. Uber's CEO has not been fired because Uber's board does not seem to want to fire him. The rest of the article is conjecture. Surely the only reason the board hasn't fired him (as "many people — including me — have called for") must be that they can't because he has conned them into accepting his own supermajority. Their inability is so total that they can't even discuss the matter -- which, despite the writer's failure to secure even a single quote to support it, simply must be their foremost concern. After all, how could they possibly disagree with "many people — including me"? Inconceivable.
Snark aside, the board has plenty of leverage against Kalanick - they could definitely debate the issues, most likely take a vote of censure. If they have deep differences of opinion with him, and he resorts to overriding them with this supermajority, they can resign their seats, and mark down the value of their holdings in the company. His supermajority would not prevent Kalanick from finding himself CEO of a $20B company with no board.
Sort of like when there's any semblance of a financial scandal and HackerNews erupts, calling for not only a scalp but jail time (and worse, I've read here). SV execs get a pass?
pfft hahaha
> there's nothing the press loves more than a turnaround story
There're plenty of things that they love more. A "rise and fall" story, for instance.
Schadenfraude sells; eespecially in tech, where nominally anything is 'an idea you could've had'.
Not true. If Uber disappeared then everyone would install another app - if they haven't already - and one ride later would forget Uber ever existed.
I'd also like an answer. My theory is that these founders are "just like us!" as opposed to the grey-haired CEOs running stodgy companies.
We plead for transparency and accountability of executives...for all companies outside the Valley.
Want to fix the desirability of hacking the bare possession of a company to avoid suits¹ taking over? Fix the governance of suits.
1 - Not the best possible term, but it is the best short term to use here. I'm not going into a lengthy debate on the meaning of "suits".
There was an article about this on The Economist recently but I can't find it quickly enough.
Be wary of "obvious" things that "should" be true. A lot of people said the Fed was pumping up the stock market with QE, that inflation would go crazy, etc. I ignored them and bought into the market heavily in 2009. Maybe the market is being irrational but I sure did make a lot of money (doubling my personal account and nearly tripling my retirement) by ignoring so called "obvious truths" and investing in a "rigged market".
Maybe in the long term you are right. You sure can lose a lot of money or miss out on a lot of gains that way too.
Was it? Did you buy, make money, and sell?
What about the guy you sold to? Is he the Greater Fool? How much money do you make from buying and holding a stock that pays no dividends, forever?
Sure the shares will not reach as high of a valuation as they would if shares didn't come with this condition, but there is no claim whatsoever that somehow shareholders somehow gain more power over the company than what they agreed to when purchasing the shares.
https://hbr.org/2010/04/the-myth-of-shareholder-capitalism
My non-expert view is that super shares for founders change less about the legal status of corporations than people think they do.
Huh? An IPO is literally going to the public to sell a stake in the company.
If you want to maintain control, don't go public. This has been a truism for 100 years.
And while tenure at public elementary schools could be up for debate, getting tenure at an organization you founded seems reasonable. You created the institution, your values are its values. That's kind of the point of tenure, it's like a marriage. It's saying "we believe in each others values, so let's stop asking whether we're going to have a relationship and just see how the relationship evolves."
Something like vesting for stock voting would be interesting. What if we had the number of votes equal to the number of years the stock was held by that investor (with some max)?
On the other hand, I don't agree with CEOs having board control. That prevents any company oversight (which is exactly the point of the board.) No one should be immune from reproach. The article gives examples of great CEOs being fired, but there are at least as many examples of poor CEOs retaining power.
While I like any idea that would encourage longer-term thinking, wouldn't the founders be the longest-term shareholders with the most voting power, in this case? So, many of the problems of super-voting shares would still apply?
> comments saying that HN is turning into Reddit [...] a common semi-noob illusion, as old as the hills
Compare that to something like Szechuan Sauce.
> It's why HN comments are so much higher in quality.
Though "savvy" and "smart" today, tomorrow other words might be used to describe this type of behavior.
Iconoclastic and resolute.
Half-jokes aside, why do you think people will have a negative view of this sort of thing, in the future?
Its main purpose is to circumvent the short-term groupthink of investors that plagues all modern companies (I'm looking at you, Amazon). Even if this means the CEO sets course for shipwreck (ex. Uber), the people being hurt the most are investors.
They'll be seen as populists fighting the fat cats who can't keep their fingers out of everyone's cookie jars.
why do you think people will have a negative view of
this sort of thing, in the future?
Imagine a company has $x and has to distribute that money between investors' dividends and the CEO's bonus. The more control the CEO has, the larger his slice of the pie.
Or perhaps the CEO will decide he really feels like only working 2 days a week. Or he wants to appoint his idiot relative as a senior manager. Or he wants to use employees' time to run a political campaign. Or any of a lot of other things that he likes the sound of, but that investors don't.
Like Stan Lee said in Spider-Man "with great power comes great responsibility". If anyone who currently has this type of power abuses it, they could really do some damage to others. Uber's CEO is already throwing a lot of red flags.
We shall see what happens.
He made the rules, and every investor either choses to accept Kalanick's rules, or they can not invest.
I will do EXACTLY the same if I raised a lot of outside capital.
If you don't trust the founder's judgement, don't invest.
To me it feels like this is often the underlying (mis)understanding in articles like this one: "It's dictatorship; dictatorship is bad!". Well, I guess it's obvious to most here, but let me say it anyway: Companies are not democracies, they're not meant to be, and there's a hell of a difference between Travis clinging to power in Uber and say The Donald doing the same, but in the White House.
If the ability to vote is valuable then that means investors will be willing to pay more for it. If it's not valuable then why do founders insist on reducing investor power?
There's a contradiction in there somewhere.
If capital were to suddenly dry up what would happen to the value of most of these companies? I would predict a significant drop in valuations for all companies that aren't monopolies (e.g. Google and Facebook).
Steve Jobs is often used as an example of why we need "CEOs for life." But let's not forget that Jobs had fairly little shareholder power in Apple - most of his billions came from Pixar.
So ironically, at the time Jobs was brought back to Apple it was basically equivalent to bringing in a non-founder CEO from the perspective shareholder power.
Maybe this was unintended, but the metaphor is definitely there.
Well, let's just wait how people will react when they will understand that they accepted to invest billions in assholes who got lucky but have as much vision and management skills as a 5 years old kid.
All unethical stuff aside (that's not to say it's not important), he's brilliant. disrupting transportation industry - including logistics industry - is not something you can do without that.