The thing is: they have an obscene amount of capital just to keep their narrative alive. Sunk cost fallacy is not a concept that exists in the world of their investors.
Does anyone have data on the departure of executives at other companies, past or present? Of course the reaction is that this is something like an exodus, but I would love to see data on exec-churn at similarly sized companies for comparison's sake.
I guess the upside is there's so much bad news, nobody has to know exactly why you left. Probably nobody wanted to leave right after Susan Fowler's post, for fear of being viewed as complicit in that mess and being ousted as a result.
Edit: Bad wording. Not suggesting he was involved. Just saying now is a good time to go, earlier could have been awkward.
How is it possible for them to continue recruiting talent at this rate? How does the company provide a clear direction for employees when executives are fleeing?
Coming up on 2 months since they hired Holder to investigate. I wonder how long that sort of thing usually takes. I assume they would want to get whatever press release that goes with that out of the way soon, to group all the bad news in the shortest cycle.
How is it possible for them to continue recruiting talent at this rate? How does the company provide a clear direction for employees when executives are fleeing?
"If we are not tied for first [in autonomous vehicles), then the person who is in first, or the entity that's in first, then rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber's, then Uber is no longer a thing."
Right but now imagine someone with the same unit economics but that has completely wiped away the driver cost side. That's a much cheaper service right there, no?
I don't buy this. Unless you believe someone will get a monopoly on autonomous vehicles, at which point we should just shut down the patent office. Other than that, Uber and Lyft can just buy autonomous vehicles from the makers. The real problem is this changes their business model. The market will set the pricing, and the winner is going to be the one with the biggest brand, most installed apps, etc.
> It’s also not clear if he left as a result of the sexual harassment allegations, but something tells me that scandal probably didn’t make him particularly pumped to stick around
"I don't have any facts, sources, or even a quote to substantiate this, but hey, something tells me it's related"
Dude could have left for any number of reasons. Stick to reporting the facts.
I disagree to a degree. There are feeds with minimal journalism that usually stick close to reporting bare facts. Journalism as opposed to reporting implies at least some level of commentary and surrounding context, both of which can easily be subjective.
In this particular instance the context could have been provided in a better way, but it is context nevertheless.
Uber has a misogyny problem. Talk to anyone who works there (you'll be hard pressed to find many women).
It's not a valley thing; they have offices nationwide and jokes about women being "on the rag" and such are common at all of the ones I've visited (done work for them as a vendor).
The culture at that company is toxic and it comes from the top.
Yep this. This is no different than saying "I suspect the issues at Nest have to do with rumors of Tony Faddel's noxious leadership."
No one would yell "just report the facts" at that, but because the statement in the article involves women's rights issues, there's a kneejerk reaction from 20-something guys who frequent this forum who think such things never, ever happen in the workplace, especially the 'enlightened' workplaces of SV. I wish this kind of skepticism would take a backseat. Its been well established Uber has some major corporate culture problems. Its not controversial to make such statements if you're remotely familiar with Uber.
Why? The author clearly indicated they were stating an opinion with "something tells me". I read authors because I'm interested in their opinion. If you don't like the style, find your own source. There are many.
TechCrunch is for tech journalism. Opinions have no place in proper journalism. That's what op-eds are for.
Not every news article needs a shitty half baked opinion unless of course you're in the business of manufacturing controversy rather than reporting on it.
I'm so sick and fucking tired of this style of reporting. Whoever is encouraging it or teaching it needs to stop. I've been noticing this tendency to try and link things without evidence in all forms of journalism these days. Report the facts folks.
One of the most important people in one of the most exciting and important positions in one of the most important companies for the future of our society quit at a very interesting time for said company. It's ok if the article is something beyond "he wore a green shirt and ate a bagel".
> in one of the most exciting and important positions
opinion
> in one of the most important companies for the future of our society
opinion, unlikely
> quit at a very interesting time for said company
correlation != causation, aka the point of my comment
> It's ok if the article is something beyond "he wore a green shirt and ate a bagel"
What, is there some word quota? It's also okay to just say "he quit, we do not know why or whether X is related." without implying anything you don't know.
All the departures can't help but make you wonder what is up.
Something Scott McNealy told me about becoming a senior leader is this, "The higher you are in the company the more easily something you have no control over can get you fired." It isn't exactly intuitive but it builds on the notion of leadership that doesn't like the situation and wants to do something.
I think Uber is navigating a really difficult time, some of the challenges are their own fault, some are situational, but the turmoil in the stories almost palpable. While it might be tempting for someone to leave thinking the ship is sinking, it could also be pretty powerful to be part of the leadership team that navigated through that time.
Chaos could be opportunity for some, indeed. But usually outsiders will be brought in to stabilize the situation (company surgical doctors) and there will be little room to grow except those remain absolute loyal to the real boss (in this case, the investors, as the CEO himself is in a disarray).
Especially when Uber is by far the most valuable unicorn and you'd think these guys would want to stay on for their IPO payday. Maybe they know it's not happening?
I don't think Uber can go IPO any time soon. The financial of Uber is very bad. Bank is happy to manage the IPO, but the stock will probably be very unstable or fail to single digit if Uber continues to lose that much of money. If a company lives on investment money, the stock is useless.
I believe it would not serve them well to consider its 'unicorn' status, as that emphasizes what might be its biggest challenge, justifying its alleged value, and losing money at the rate they do.
Most (if not all) of the companies that went Chapter 7 (complete liquidation) in the dot com boom were like Uber, racing to grow their place into a profitable level of business through private placements. When people stopped believing they could do that, they stopped participating in the equity rounds, and the cash burn was so horrendous that they couldn't slow down if they wanted to. The only possible outcome was a complete flameout, and with no access to capital, and a business model that didn't make money yet, all they could do was go home.
Maybe insiders see something like that coming, maybe not, but I have worked in companies that were going to really existentially tough times and it isn't fun. It's actual work. You really learn who is a fair weather soldier when that happens.
Can you elaborate on 'fair weather soldier"? As employees of a company we are not soldiers we don't have to obey orders. It would be irresponsible to stick it out at a company that is going to flame out. If the option is work in a horrendously stressful environment with no real upside vs get another job that is as equally rewarding but more stable and less stressful that is a no brainner to me.
I previously was a startup were we worked very long hours over a prolonged period of time trying to turn the ship around. Unfortunately we didn't succeed. Yet I look back at that and don't feel like it was a positive experience where we could collectively feel good about our exploits. I saw what was going on and decided to try and work through it. Yet hindsight being what it is I don't foresee me making the same decision if I find myself in similar situations.
The term 'fair weather soldier' is a colloquialism that describes people who are present for the "fun and glamour" but leave as soon as things get difficult or un-glamorous.
Generally when a place is hip enough to attract people just so they can say "I work at X!" you'll get people for whom the only reason they work there is because it is hip and cool to do so. And when it starts being 'uncool' or 'lame' those same people will find the exits.
You can get other offers that will match the expected value at other companies, especially as an executive. You use it as a negotiation tactic. "Can you beat what I got at Uber?"
I'm not sure there will be a payday for anyone holding common. Outside investors will hold preferred stock with a preference multiple that will likely absorb any exit returns at this rate.
Depending on the reason for the departures (voluntary, involuntary) these could present opportunity for some brave folks who like a bit of excitement in their job. Of course, everyone has to make their own judgement as to whether this is a good opportunity or one they'd rather pass.
Just saying where there is change there is opportunity.
Totally agree, chaos is the fuel for change, change is the fuel for opportunity. Only with chaos comes opportunity.
I've known managers who inject chaos into their group just to figure out who gets frightened by it and who doesn't. Not a technique I recommend though.
I'd rather work at Uber today than Uber of 2 years ago. (Uber of the first year or two would be better, of course) -- it's a challenge.
The real question to justify Uber's valuation is "will they build something with a real moat" -- I don't think "network of drivers" is that. They did the hard work on breaking open protected taxi mafia markets, and educating the public, but it's too easy for any local city to have a dominant "Uber for our city" which isn't Uber.
Self driving is the one way I think they can differentiate themselves, and the scary thing is a lot of the departures seem to be from there. If those people have lost confidence, they're fucked.
It wouldn't be hard to turn Uber into a solid $5-10b company, but due to how financings work, that wipe out a lot of people. The only winning outcome for most employees and most investors (weighted by $ invested) is the $50-100b+ "global transportation monopoly".
> it's too easy for any local city to have a dominant "Uber for our city" which isn't Uber
I disagree. By virtue of being in the city, and only in the city, it would be too small to withstand pressure from local interests for long, and would end up like the local taxi monopolies. This will be especially true in countries "with lower GDP per capita".
Uber's international nature with its HQ in a country where corruption is relatively low, clearly enormous political and financial connections, track record in neighbouring countries or cities with clear and visible benefits to the customers (aka electorate), and willingness to fight (which is public knowledge, thus becoming signalling) allow it to scare off such pressure. Uber has more to fear from Apple than from Paris' UberX clones.
That's true if Uber didn't ever exist, or if uber ceased to exist. I think it would be relatively straightforward to have a "local competitor to Uber", perhaps propped up by some stupid local regulation, once the taxi mafia is broken. Austin sort of has this, but not really, now.
If you believe the 'taxi mafia' is caused by regulatory capture of local government by taxi operators, in the absence of Uber you might expect local regulation to hinder, rather than help a "local uber"
It is going to be much harder to take away ride sharing from consumers who are already using it than to keep it out of a third tier city which doesn't have it and where most of the potential users have never used it before. Austin is an outlier.
It's much worse. Most Uber drivers I get also make trips on the two other available apps (one global, one local). By now driver apps are effectively price-takers.
Edit: not to mention that drivers in nicer cars often give you their card with their direct Whatsapp number so you can schedule whole-day services, guided tours for folks from abroad and so on.
That sounds like a good thing for all "users" of ride sharing apps. Drivers make sure they get rides --local companies probably pay a little better. And passengers win because they can hunt for the cheapest (e.g. most subsidized) rates.
This is a lot like the story of the kid who gets a horse.
The level of competition of driver apps right now is excellent for passenger-users, sure. But it makes Uber (and by extension all copycats) a much less solid proposition than it seemed to be a few years back.
While it's fashionable to shit on Uber right now, it was originally hailed as revolutionary for a reason: the "local" providers were entrenched monopolies who imposed artificial restrictions on supply to extract extraordinary rents. That's what we're going back to if the Uber business model proves to be unsustainable -- and there's rigorously no reason why "local companies" would do better, given high capital costs and a poor entrepreneurship environment nearly everywhere in the world.
In a way this is a more general problem with the "disruption model": it identifies inefficient monopolies that extract too much rent and muscles in with crazy unicorn capital powers to establish business models that extract fewer rents, which in turn have to produce ROI -- at which point the business model is global rent-seeking arbitrage. And then the unicorn capitalists have to ask themselves if investing on Uber being in Brazil is a better use of their money than direct investing in assorted (large, profitable) business opportunities in Brazil. Uber-likes are not technological silver bullets. Just potato.
Nothing is up; it's what happens when companies have to transition from Silicon Valley "bro" culture to a real business where you manage risk like any other business variable.
IMO Uber's problem is that they were 5-10 years too early for their business model to work. They're getting mired in driver disputes and -- worse -- driver rules are getting codified into law in many cities. That's going to make it very hard for them to compete with leaner competitors who are not managing drivers, workforce reductions, etc. once self-driving cars are more available. Uber will have to fight tooth and nail for every piece of automation while a competitor can fly under the radar until they're big (sound familiar?)
As an outsider, I think the best case scenario for Uber is that these people are leaving because they realized this isn't the sure fire rocket ship ride to worldwide dominance it looked to be 2 years ago (most of the departures are relatively new hires) and they want to bail as times get tough.
The worst case scenario is that the underlying financials are awful, the Alphabet suit is a legitimate existential threat, and these people want to jump off a sinking ship.
Personally, I'd love to see the most predatory of the on-demand ride services flame out because of bad PR and an unsustainable (and did I mention predatory?) business model.
What's preventing Uber customers to gather a few phone number of Uber drivers, and if Uber dies, to message them directly for a ride? It's a bit of a hassle, admittedly, but if you can contact the providers directly...
The fact that Uber facilitates payment, for one, and that's handled external and prior to the ride, so you don't have to worry about the hassle at the end. Also the infrastructure around tracking who needs a ride and where they are is nice.
How many drivers' numbers will I collect? I need the app to contact the nearest driver. Also, the pool service is highly difficult to recreate without the infrastructure uber provides. You'd basically have to start another uber.
Is the rate of executives departing greater than at a similar-sized tech company? I'm skeptical that I'm being fed a narrative meant to drive readership. I don't mean to say that there is a conscious intent by media, but it could be a feedback loop of public interest which increases reporting about a subject.
Maybe it's wrong to doubt this, but I've been misled plenty of times by journalists committing the base rate fallacy, weaving unrelated events into a narrative, etc.
> Is the rate of executives departing greater than at a similar-sized tech company?
This seems like a big stretch. Can you name a company that has lost its "head of comms, president, head of AI Labs, VP of growth and SVP of engineering" and now the VP of Global Vehicle Programs?
Not that they should be held to the same standard, but the allegations in the parent are based only on suspicions without any factual foundation - we'd be very disappointed in journalism that did the same.
Just because the Junior Vice President of CompuGlobalHyperMegaNet has left - does not mean there's a problem with the org itself. For one -- you'd have to know how many other VP's there are in the org.
Well, head of AI and SVP of engineering could be representative of an internal shift in focus, so relatively easily explained - maybe they weren't moving fast enough with autonomous vehicles? Head of comms is easy too - lots of press recently, so this could be anything from vanilla burnout to a replacement of someone who can handle it better. VP of Growth could also be as simple as they're not growing at the rate expected, so someone has to take the hit.
Could all of it be related to the same thing, and that thing being their culture? Sure. But couldn't it also just be that these things happen, and everyone is so focused on Uber that it's getting an inappropriate amount of attention and analysis for things that really do just happen on their own from time to time? I'd argue yes.
The SVP Engineering departure, though, didn't appear to be planned at all.
Uber found themselves in a scandal, then a previously undisclosed scandal of the same nature came to light. They had to act, or find themselves in a deeper hole.
What would "appear to be planned" look like from the outside? Maybe if they were spotted meeting with execs elsewhere or something, sure. But if it was a termination, that's slow and wouldn't be apparent from outside, and if he just chose to leave, it would be more abrupt, but we still don't, and probably never will, know the reason, and until he says it everything is conjecture.
Are you saying the news stories about the nature of Amit's departure were all pure conjecture? They did appear to use unnamed internal sources, but it would be odd to go out that far on a defamation limb if you didn't have credible sources.
Edit: Or ignoring all that, the short tenure implies unplanned all on its own.
What would "appear to be planned" look like from the outside? Maybe if they were spotted meeting with execs elsewhere or something, sure. But if it was a termination, that's slow and wouldn't be apparent from outside, and if he just chose to leave, it would be more abrupt, but we still don't, and probably never will, know the reason, and until he says it everything is conjecture.
> easily ... easy ... vanilla ... simple ... these things happen ...
I disagree that all these high-level departures are normal - again, name another company where this is happening (and where it wasn't failing) - or easily explained. And in fact, some of those departing did point to problems within Uber.
> could be ... maybe .. could be .. Could all of it be ... couldn't it also just be ...
There is no basis for the parent post. It could be that someone poisoned all these executives, or that they run a human trafficking ring and retired on the income, or that Kalanick secretly reports to Putin and Putin wanted them out. Without a factual basis, it's all similarly meaningless.
Exactly, we don't know when other companies' executives leave, because it's not reported. The most important metric, which is never mentioned, is the base rate: how often other companies' executives leave. Until this is included, the narrative is compelling but doesn't hold water.
None of the "scandals" so far matter. Those are just due to Silicon Valley political correctness nonsense. The real story that people are missing here is that the Uber business model does not work fundamentally. They're losing money in every transaction, and no, they won't make it up on volume. This is a plain and simple business failure, not a company culture failure.
I think we should look at who in the executive is still around. Sometimes the group leaving and the group staying have different visions. The group leaving could have not agreed with Uber's current vision and the group staying refused to change or vice versa.
98 comments
[ 2.4 ms ] story [ 160 ms ] threadThis feels like one of those things that's going to keep snowballing.
My best offer is here Yahoo. Just before and after the announcement of acquisition, there was a bleeding of top executives from Yahoo.
Edit: Bad wording. Not suggesting he was involved. Just saying now is a good time to go, earlier could have been awkward.
Or just waiting for that 1 year vesting cliff?
True vesting is delayed until an exit event. He won't have a tax hit.
Okay
(1) http://www.businessinsider.com/travis-kalanick-interview-on-...
"I don't have any facts, sources, or even a quote to substantiate this, but hey, something tells me it's related"
Dude could have left for any number of reasons. Stick to reporting the facts.
In this particular instance the context could have been provided in a better way, but it is context nevertheless.
https://techcrunch.com/author/megan-rose-dickey/
Just bias from the reporter.
It's not a valley thing; they have offices nationwide and jokes about women being "on the rag" and such are common at all of the ones I've visited (done work for them as a vendor).
The culture at that company is toxic and it comes from the top.
No one would yell "just report the facts" at that, but because the statement in the article involves women's rights issues, there's a kneejerk reaction from 20-something guys who frequent this forum who think such things never, ever happen in the workplace, especially the 'enlightened' workplaces of SV. I wish this kind of skepticism would take a backseat. Its been well established Uber has some major corporate culture problems. Its not controversial to make such statements if you're remotely familiar with Uber.
Decent writeup here:
https://www.merryjane.com/culture/uber-incidents-that-highli...
edit: -3 and not a single reply... emotional downvotes aren't winning the argument. In fact, they just concede it to me.
Why? The author clearly indicated they were stating an opinion with "something tells me". I read authors because I'm interested in their opinion. If you don't like the style, find your own source. There are many.
Not every news article needs a shitty half baked opinion unless of course you're in the business of manufacturing controversy rather than reporting on it.
I don't know why you're being downvoted. In the sea of "the media sucks" hand-wringing, you're the only one who zeroed in on the fundamental issue.
(This, please, is not a defense of Uber.)
debatable
> in one of the most exciting and important positions
opinion
> in one of the most important companies for the future of our society
opinion, unlikely
> quit at a very interesting time for said company
correlation != causation, aka the point of my comment
> It's ok if the article is something beyond "he wore a green shirt and ate a bagel"
What, is there some word quota? It's also okay to just say "he quit, we do not know why or whether X is related." without implying anything you don't know.
Something Scott McNealy told me about becoming a senior leader is this, "The higher you are in the company the more easily something you have no control over can get you fired." It isn't exactly intuitive but it builds on the notion of leadership that doesn't like the situation and wants to do something.
I think Uber is navigating a really difficult time, some of the challenges are their own fault, some are situational, but the turmoil in the stories almost palpable. While it might be tempting for someone to leave thinking the ship is sinking, it could also be pretty powerful to be part of the leadership team that navigated through that time.
Most (if not all) of the companies that went Chapter 7 (complete liquidation) in the dot com boom were like Uber, racing to grow their place into a profitable level of business through private placements. When people stopped believing they could do that, they stopped participating in the equity rounds, and the cash burn was so horrendous that they couldn't slow down if they wanted to. The only possible outcome was a complete flameout, and with no access to capital, and a business model that didn't make money yet, all they could do was go home.
Maybe insiders see something like that coming, maybe not, but I have worked in companies that were going to really existentially tough times and it isn't fun. It's actual work. You really learn who is a fair weather soldier when that happens.
I previously was a startup were we worked very long hours over a prolonged period of time trying to turn the ship around. Unfortunately we didn't succeed. Yet I look back at that and don't feel like it was a positive experience where we could collectively feel good about our exploits. I saw what was going on and decided to try and work through it. Yet hindsight being what it is I don't foresee me making the same decision if I find myself in similar situations.
Generally when a place is hip enough to attract people just so they can say "I work at X!" you'll get people for whom the only reason they work there is because it is hip and cool to do so. And when it starts being 'uncool' or 'lame' those same people will find the exits.
Just saying where there is change there is opportunity.
I've known managers who inject chaos into their group just to figure out who gets frightened by it and who doesn't. Not a technique I recommend though.
That's roughly one of main goals of basic training in the military. Inject unsolvable manufactured problems, see who doesn't figure out how to cope.
Not recommending it either, but the key to recognize when the goal isn't really to solve the intractable issue.
I shudder to think of the examples of this.
The real question to justify Uber's valuation is "will they build something with a real moat" -- I don't think "network of drivers" is that. They did the hard work on breaking open protected taxi mafia markets, and educating the public, but it's too easy for any local city to have a dominant "Uber for our city" which isn't Uber.
Self driving is the one way I think they can differentiate themselves, and the scary thing is a lot of the departures seem to be from there. If those people have lost confidence, they're fucked.
It wouldn't be hard to turn Uber into a solid $5-10b company, but due to how financings work, that wipe out a lot of people. The only winning outcome for most employees and most investors (weighted by $ invested) is the $50-100b+ "global transportation monopoly".
I disagree. By virtue of being in the city, and only in the city, it would be too small to withstand pressure from local interests for long, and would end up like the local taxi monopolies. This will be especially true in countries "with lower GDP per capita".
Uber's international nature with its HQ in a country where corruption is relatively low, clearly enormous political and financial connections, track record in neighbouring countries or cities with clear and visible benefits to the customers (aka electorate), and willingness to fight (which is public knowledge, thus becoming signalling) allow it to scare off such pressure. Uber has more to fear from Apple than from Paris' UberX clones.
Edit: not to mention that drivers in nicer cars often give you their card with their direct Whatsapp number so you can schedule whole-day services, guided tours for folks from abroad and so on.
The level of competition of driver apps right now is excellent for passenger-users, sure. But it makes Uber (and by extension all copycats) a much less solid proposition than it seemed to be a few years back.
While it's fashionable to shit on Uber right now, it was originally hailed as revolutionary for a reason: the "local" providers were entrenched monopolies who imposed artificial restrictions on supply to extract extraordinary rents. That's what we're going back to if the Uber business model proves to be unsustainable -- and there's rigorously no reason why "local companies" would do better, given high capital costs and a poor entrepreneurship environment nearly everywhere in the world.
In a way this is a more general problem with the "disruption model": it identifies inefficient monopolies that extract too much rent and muscles in with crazy unicorn capital powers to establish business models that extract fewer rents, which in turn have to produce ROI -- at which point the business model is global rent-seeking arbitrage. And then the unicorn capitalists have to ask themselves if investing on Uber being in Brazil is a better use of their money than direct investing in assorted (large, profitable) business opportunities in Brazil. Uber-likes are not technological silver bullets. Just potato.
IMO Uber's problem is that they were 5-10 years too early for their business model to work. They're getting mired in driver disputes and -- worse -- driver rules are getting codified into law in many cities. That's going to make it very hard for them to compete with leaner competitors who are not managing drivers, workforce reductions, etc. once self-driving cars are more available. Uber will have to fight tooth and nail for every piece of automation while a competitor can fly under the radar until they're big (sound familiar?)
The worst case scenario is that the underlying financials are awful, the Alphabet suit is a legitimate existential threat, and these people want to jump off a sinking ship.
Personally, I'd love to see the most predatory of the on-demand ride services flame out because of bad PR and an unsustainable (and did I mention predatory?) business model.
Maybe it's wrong to doubt this, but I've been misled plenty of times by journalists committing the base rate fallacy, weaving unrelated events into a narrative, etc.
This seems like a big stretch. Can you name a company that has lost its "head of comms, president, head of AI Labs, VP of growth and SVP of engineering" and now the VP of Global Vehicle Programs?
Not that they should be held to the same standard, but the allegations in the parent are based only on suspicions without any factual foundation - we'd be very disappointed in journalism that did the same.
Could all of it be related to the same thing, and that thing being their culture? Sure. But couldn't it also just be that these things happen, and everyone is so focused on Uber that it's getting an inappropriate amount of attention and analysis for things that really do just happen on their own from time to time? I'd argue yes.
Uber found themselves in a scandal, then a previously undisclosed scandal of the same nature came to light. They had to act, or find themselves in a deeper hole.
Are you saying the news stories about the nature of Amit's departure were all pure conjecture? They did appear to use unnamed internal sources, but it would be odd to go out that far on a defamation limb if you didn't have credible sources.
Edit: Or ignoring all that, the short tenure implies unplanned all on its own.
I disagree that all these high-level departures are normal - again, name another company where this is happening (and where it wasn't failing) - or easily explained. And in fact, some of those departing did point to problems within Uber.
> could be ... maybe .. could be .. Could all of it be ... couldn't it also just be ...
There is no basis for the parent post. It could be that someone poisoned all these executives, or that they run a human trafficking ring and retired on the income, or that Kalanick secretly reports to Putin and Putin wanted them out. Without a factual basis, it's all similarly meaningless.
TechCrunch is so trashy.