Uber Founder Travis Kalanick Is Leaving the Company’s Board of Directors
techcrunch.com
techcrunch.com
Suppose you were in a position where you thought poorly of the long term viability of the company. Wouldn't engineering a fallout with* the board be ultimately prudent?
*"with" here could even mean "in collaboration with".
See: Wall Street in 80's.
(also interesting that the meanings are reversed in the other saying "you talk the talk but can you walk the walk?")
Tethics - Silicon Valley: https://www.youtube.com/watch?v=nfRUQh_EHoQ
Silicon Valley S06E05 - Richard vs Tethics: https://www.youtube.com/watch?v=n9cdGXa-uyM
The valuation has the "implicit" success baked into the price already-- and I don't think you could say Uber is a guaranteed success story yet. With CK, you take the risk of being an early employee with very little, if any, upside. This came up in other threads recently, but it's likely better odds to stick with Big N companies.
One angle people might be missing is how much CK is a real estate play. There's real technical problems to tackle, but it requires spinning up these dark kitchens in dense, pricy real estate markets. Conceptually, it's the WeWork of restaurant kitchens, though I'm hesitant to draw that comparison due to the many other connotations of WeWork that I wouldn't associate with CK.
But, but, but... how can that be?! There's such a massive shortage of software developers! Surely you're mistaken, right?
https://en.wikipedia.org/wiki/Travis_Kalanick#Criticism_of_K...
For Travis, it's his time and possibly something that prevents him from creating another company.
For shareholders, it's a cost of an advocate and vote. They want someone there who will represent them the best.
He wasn't exactly portrayed as a symbol of trust in the media. I guess you could say, for PR purposes, his active involvement became a liability. I don't see Uber having trust issues as a result of him leaving.
I'm guessing he just wants to move on.
Certainly, being below a certain threshold would be one important factor.
He was a contentious figure, and Uber might want to see him off - remember that he got in a huge boardroom war with other board members - so this is likely something they want. His departure could have been part of the long term deal, or possibly in his contract somewhere.
Though there's definitely cred in having the founder around, I suggest this is not that kind of situation.
There's only so many board seats as well, there may have been angling for others to step in.
Personal choice matters a lot as well - he simply may not really want to do it for a variety of reasons.
To me it seems there are no hard rules for boards: it's not like hiring staff or even execs wherein you're generally looking for things, often, the board is just the 'gang of people with the power' duking it out for influence and control etc. so things can be very nuanced, political etc..
So if you think that the board might be held liable by shareholders for something in the future it is usually a prudent step to create as much distance between you and the board as a shareholder as you can so you don't end up on both sides of a lawsuit.
I guess the reputation cost is a good point, but Kalanick is always going to be associated with Uber, whether he's officially on the board or not.
That said, its more like a 5-10hr / wk commitment, not a full time job.
He exits his position in a way that can hurt the investment optics of Uber.
He didn't do that, though. He exited his position predictably and without huge newsworthy sales. As usual, Levine puts it better than I can; from https://www.bloomberg.com/opinion/articles/2019-12-17/the-se...:
> There is nothing particularly strange about this. At one point—basically before June 2017—Kalanick was the founder-CEO of Uber and owned an appropriate amount of stock for a founder-CEO, and now he is not the founder-CEO and is working his way down to an appropriate amount of stock for a non-founder-CEO.
…
> He has sold stock every day since the lockup expired. He has accounted for about 7.8% of Uber’s volume during that time
Based on this article Cloud Kitchens is competing with Uber Eats so my guess is that's why.
If it is voluntary, then they step down because they want to ( for whatever reason - pursue other opportunities, etc ).
If it is involuntary ( forced out ), then it's pressure from shareholders ( especially a major shareholder or a group of major shareholders ).
Board of directors are elected by shareholders and they serve the interests of the shareholders. Only shareholders can remove board of directors. Of course if you have more than 50% of the voting shares and are on the board of directors, then you are golden. In that case, only legal action could get you removed, but that bar is very very high.
I could be reading tea leaves, but it seems like something he’d have thought about.
The whole lease situation is kind of fucky though, they're like a sharecropper.
Not from US, could it be Uber being more widely known?
( Why hasn't Lyft expanded beyond US ? )
In other words, based on my understanding of the brands, the only reason for me to install Lyft would be if I wanted to boycott Uber. And I already have Uber, but not Lyft, and I would likely have to keep Uber because I go to cities where Uber exists and Lyft doesn't.
So some network effect is there, but I don't see how it justifies the insane valuation of the company. AFAIK they're still operating at a loss.
Their strategy seems to be having the network when self-driving cars come around, but any competitor offering (safe) self-driving rides would get my sign-up just due to novelty. Even if not, $100B buys you a lot of new-user incentives.
Uber has to solve completely different issues than a self-driving cab: A self-driving cab company can just flood a market with cars to ensure a smooth experience for new users, offer a bunch of free rides in a limited time to get people to sign up, then move the excess cars to the next city (can't simply do that with human drivers).
No need to recruit and manage drivers, deal with driver fraud, settle disputes when a driver claims a passenger puked in the car and the passenger claims they didn't (if they take a picture after the passenger leaves). All the tracking and fraud detection systems of Uber are worthless.
Writing an app that can show a map and let people press a "I want a car" button may not be trivial, but it isn't going to cost a billion dollars.
Uber: 1) You drive to a surge area for an extra reward and as soon as you get there it disappears. Your presence eliminates the need for a surge reward. Chasing the surge is for rookies. 2) Most of the time I get let's say X for taking someone to the airport. On a surge I am supposed to get X + Y, however they'll pay me 75% of X + Y. Isn't that great that I made Y extra! actually no, they reduced X. It's straight up robbery.
Lyft 1) I drove out some rural roads to a scheduled pickup. The rider didn't show up. Before I had a chance to cancel the ride and get some payment, the algorithm cancelled the ride paying me nothing. This does not happen on Uber. I always get paid for cancelled rides there. 2) I got a pickup in an area I was not currently in. I went there. The pickup point was inside a cemetery at night. I'm not going to drive into a cemetery at night and get robbed. I get a message "You are in a very high demand area (the neighborhood next door) Why don't you stay there and wait for a ride?" The zombie pickup went away with no comment from Lyft. Lyft sneakily lured me into an area (an unsafe lure too) 3) There were too many drivers waiting at the airport. Lyft created a high demand reward area in a town next to the airport. It didn't make sense to me, but I went there and waited. I noticed a bunch of other Lyft drivers parked there waiting. No one getting any rides. So Lyft created a false high demand reward area to siphon excess drivers from the airport waiting lot (keeping the peace with folks that live around there)
I'd say the Uber algorithm is less dishonest than the Lyft algorithm. The odd thing to me is that they don't want to hear from techie drivers that could serve as beta testers, but neither Lyft or Uber want to hear from drivers. At all. They are losing business because good drivers (smart drivers) won't take some actual legitimate rides or cancel them because of these games.
The one area where I have been able to draw a distinction and for me this is the most important is customer service. When I have had issues with Uber I found the customer service to be completely worthless. It seem to consist of nothing more than canned email responses from a support center in India. Case in point I had a psychopath Uber driver who kicked me out of car at night and left me on the side of the road when I asked if they could turn on the air conditioning because there was a heatwave. Despite my persistence I was never able to get anything more than a canned email response of "Uber upholds our drivers to the highest standards ..." Every email I sent asking if they could please escalate this as it was serious issue resulted in a new canned email response signed by a different employee name.
Lyft by contrast on the two occasions that I had a somewhat serious issue responded to me by having a customer service representative call me and ask me further details.
For me this matters much more than the fare differential at any given time. In my experience Uber/Lyft feels increasingly more like a race to the bottom and this distinction has become more important to me.
Source? And what do you mean by margins specifically?
> one of the most powerful network effects in business
Disagree. One result of a very strong network effect is that it means higher switching costs for customers/users.
- Rider switching costs are near zero. For example, it's as simple as downloading a new app. If I switch from Facebook to Path (if it was still around), I have to re-establish all of my connections again, which is a massive amount of friction.
- It has one of the frailest controls on its sourcing. Drivers switching costs are near zero (unless of course the drivers are sucked into preferential leasing by the rideshare company).
Ridesharing will become a race to the bottom. Stronger network effects imply margin expansion (see what Facebook did to its gross margin circa 2013-2017).
Ridesharing has always been a race to the bottom, it's just been VC money keeping it afloat longer.
[citation needed]. They’re bleeding billions every year.
Uber has virtually no network effects. One driver is just one more driver without any effect on other drivers or users, in contrast to say, user-driven content generation on tiktok or youtube.
In fact, due to the natural constraints on supply in cities if anything there a negative effect to growing the business, which is of course why there has never been a taxi monopoly, to begin with, and transportation is a traditional small business, high competition sector.
No offence and I don't intend to be rude but literally everything in your statement is comedically wrong. They don't make any money, there are no tech margins because drivers, regulation and advertisement cost pile up linearly, and the competition is brutal. How Uber got butchered by Didi in China is only one example of it, but the ride-sharing industry has had many victims already. Just look at bike-sharing in China.
There would be a network effect if them having more cars would make it much more likely for them to get even more cars, or add value in some other way beyond the fact that they have one additional driver. That is not the case.
For facebook say, it's much easier to get more users because each user themselves increases the value of the business, because the users interact. You don't care if Uber has ten thousand or ten million drivers, it does not improve the service (significantly) apart from increasing supply.
How does youtube have a network effect then? Using your language, youtube has a supply of viewers and a supply of creators. More videos on youtube do not beget more videos, and likewise more viewers do not beget more viewers.
In the same way that the userbase is what gives youtube value in the eyes of the creators, the passenger base gives uber value in the eyes of the drivers.
Given the virality and the way video creators interact with their audience and other video creators I don't think that statement is true. Youtube is not just a one-sided tv channel, it's also a community-driven social network which makes the network defensible.
If your favourite content creator is on youtube or twitch (or your audience if you are one) is on the same platform there's a pretty bad collective action problem to get you to move to a less popular platform.
On a ridesharing app, there's no social interaction, you don't care who drives you and every driver can easily drive for every competitor.
My favourite content creation platforms all have unique creators that I would miss, so I can't leave. Every ridesharing app I have ever used is utterly interchangeable. Not even the theoretical benefits from scale like say better service where ever noticeable.
I prefer Lyft, and still take Uber anyway in parts of the country where there aren't enough Lyft drivers. It can make a meaningful difference in wait times. I'm also unlikely to check back later, unless I think of it.
Lyft’s contribution margin is over 50%.
Taxi companies are profitable and they have employees, a fleet, garages.
Uber is not profitable and does the same job as a taxi company. Doesn’t something seem wrong here?
The reason drivers love Lyft is they pay more. They ph more because Lyft takes a bigger loss than Uber to stay competitive. That business model won’t last so Uber will outlast Lyft and then finally be on the road to profitability once the stupid Lyft price war ends.
I’m baffled by people who think Uber cant make money. there’s no logic at all in that thought process. They also ignore the huge rnd cost uber is footing for self driving tech.
I’m confident The sell off has nothing to do with kalanick spiting Uber and everything to do with him wanting to divest his interests so he can work on his other project
They’re only profitable because of regulatory capture. The government gives them a monopoly and limits supply.
If they offered unlimited medallions, taxis would lose money too.
If you want to know what business model to look at to see how Uber and Lyft will end up, look at the airline industry. Paper thin margins (and that's assuming they're profitable at all), required a government bailout, one of the few industries consistently declining in a historical market surge - many of the airline companies will go bankrupt again when there's even a whiff of a recession.
If the unit economics don't make sense, then you just lose more money by scaling. And that's exactly what Uber and Lyft are doing - they are literally losing billions of dollars every year. They aren't building infrastructure. They aren't building a brand anymore (their brands are diminishing over time instead of strengthening). They're just sucking what money they can out of their failing business model as the ship slowly sinks.
Taxi companies tend to own their fleet (and in some cases their licenses / medallions). The profit comes from return on capital invested. Uber does the same job as someone on the phone line at a taxi company.
EDIT: abbreviation
Good find.
Partly because NeXt was failing, but it was more than that. I suspect there’s a lot of similarity there with Travis, but in his case he may be in a better position.
1. founder starts company
2. board replaces abrasive founder with operator
3. founder fully exits company (except for 1 share)
4. founder starts new company
5. original founder company nears bankruptcy
6. founder executes reverse take over of original company
7. founder revitalizes original company
Now mobile users will have to scroll right to left to read your content.
I doubt if that's the correct usage of this particular formatting style.
- This is an item in the list.
- This is a second item.
> “This is an example of a quote”
Followed up by some final points from the commenter.
But yes, an unordered list would have worked OK here, albeit not quite as effective at making the GP's point.
Game = Won.
When that founder leaves, unless the company has become a monopoly, the company is basically lost.
No amount of the worlds best and brightest bean counters can replace the talent and spark that founder had.
These are just personal thoughts. It will be interesting to see how this plays out in the future. To see if the board killed the golden goose like Apple did in the 90s.