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Pity new Uber CEO Dara Khosrowshahi.
Cleaning up yet another mess created by his pugnacious predecessor Travis Kalanick, the former Expedia CEO flew to London yesterday to prostrate himself to regulators this morning.
His thankless task: To get back a license that would allow the troubled car-hailing to operate in its key European market after it was deemed “unfit” to operate a taxi service.
And this afternoon, he gets to call into a critical board meeting that could determine who controls Uber, trying to win support from its always fractious and deeply dysfunctional board for his proposal to “de-nuke” its rats-nest governance structure.
According to sources some of those terms — like its “one share, one vote” change — are likely to prevail. But others, such as a plan to make sure Kalanick will never be able to lead Uber again, might not.
Intense negotiations that have been ongoing to deal with objections from Kalanick, who lobbed an unexpectedly sneaky but extraordinarily deft attack on Friday by appointing two prominent executives to join the Uber board without telling anyone.
Including Khosrowshahi, who got to learn the only consistent lesson of Uber the hard way. Which is: Nobody puts Baby — oops, Travis — in the corner.
Let’s be clear and unequivocal: The mess Uber finds itself in right now — from its lawsuit over Waymo to its sexually toxic culture to its general mode of thumbing its nose at sensible corporate norms and practices — is all on Kalanick. He both deserved to be removed as CEO and seemed to do everything possible to make it an inevitability.
Of course, according to numerous sources who have spoken with him, this is not the movie running inside Kalanick’s head, where he often casts himself as a victim and a champion for what is right (and seems to genuinely believe it).
This, despite the fact that, while a disruptive visionary, he has also been a persistent distraction at Uber and has presided over a series of management mishaps that would have sunk pretty much everyone else but, say, Donald Trump.
This week, for example, his allies have insisted he is fighting to protect “good governance” at Uber, despite all he has done to wreck it.
But let’s also not forget that Kalanick was enabled every single step of the way by acquiescent investors like Benchmark — whose partners are now deep in a so-sorry mode and have engaged in full-scale war to take away the power they themselves handed him — and coddling board members.
Though they doth protest at the characterization, they have clearly picked the eventual and massive payday over the very ugly road it took to get there.
End meet means, Silicon Valley style.
So do not be too surprised that today at the board meeting, instead of a comeuppance for Kalanick, what is more likely to happen is a split-the-baby solution. In fact, according to sources and despite a board that is strongly supportive of Khosrowshahi, Kalanick is not likely to be completely sidelined at all.
The overall goal is obvious: To clear the way for a big, new $10 billion stock deal by SoftBank and, eventually, a smooth public offering for Uber next year that will top its current $70 billion valuation.
“We all hope this is Travis’ last stand,” said one person close to the situation. “He has to be stopped from fighting, which is all he knows how to do.”
Well, that and also cunning corporate politics, which he pulled off this weekend by somehow convincing former Xerox CEO Ursula Burns and former Merrill Lynch CEO John Thain to join as directors in what was a full-scale slap down of the rest of the board and also Khosrowshahi.
“No one can figure out how he did that,” said one source, noting that Burns is a particularly big get for Uber, which has been justly pilloried for its treatment of women and its lack of diversity.
She was introed to Kalanick via Teneo, who is advising him and where she serves as a senior advisor now. Perhaps the most prominent African-American female exec in tech, the well-regarded and experienced Burns was also on Uber’s board candidate list already.
Still, both the Uber board and Khosrowshahi publicly expressed displeasure at the Kalanick board action, largely because of how it was pulled off, calling it a “surprise,” “disappointing” and “unusual.”
Strong words, but only words. And they probably should have seen it coming, given the constant drama that has plagued the company over the last year with Kalanick at the dead center as chief troublemaker.
That seemed to have calmed down with the appointment of Khosrowshahi as CEO just weeks ago. But after Khosrowshahi’s dramatic proposal to change Uber’s governance, which had been crafted with the help of Uber investor and investment bank Goldman Sachs, Kalanick reignited the conflagration using a voting agreement he had previously promised not to use.
Claiming Goldman had a conflict because it wanted to take Uber public and that Khosrowshahi was overreaching (there was even an inaccurate rumor floated that he wanted to become chairman of the board), Kalanick made the power move to fill those board seats.
It worked. Burns and Thain were officially seated on Monday on Uber’s board, they have been in contact with other directors and will vote today on a still-evolving package of reforms of Uber’s governance. (Recode was the first to write about all the proposals this weekend, which you can read here.)
Sources said that a key part of the proposal likely to win would essentially strip Kalanick, as well as Benchmark, who was key to of much of their “high-voting power,” which are manifested by shares that carry more voting weight and were given out in the early days of the company.
“One vote, one share should win,” said a source close to the board, which others confirmed.
All this comes after a frantic three days of hours-long conference calls and legal threats. Kalanick allies, for example, argued — without any proof — that they were making progress on turning a few board votes against the entire proposal.
Outside pressure was also brought to bear. For example, one of Kalanick’s close associates, Shervin Pishevar, threatened to sue co-founder Garrett Camp and longtime Uber exec Ryan Graves — both of whom are on the board — for “tens of billions of dollars” should they support the proposal to strip away high-voting shares.
“We are writing in advance of Tuesday’s ill-advised vote to avoid irreversible and cataclysmic damage to the company which would result from your agreement, tacit or otherwise to the proposal,” Pishevar’s attorneys wrote. “Please accept this as formal notice that if you vote in favor of Tuesday’s proposal, our clients have authorized us to pursue any and all legal recourse.”
But such noisy legal efforts aside, Kalanick simply does not have have sufficient voting power to completely kill the effort to overhaul how Uber is governed. He currently holds about only 16 percent voting power, according to the lawsuit filed by Benchmark earlier this summer, and has none of the good will that others with such power — like Facebook’s Mark Zuckerberg — have had.
He also is strongly opposed by Benchmark, which seems almost completely motivated by making sure Kalanick will lose as much power as they do.
Others on the board are not averse to that outcome. According to people on both sides, other potential votes once on Kalanick’s side — Arianna Huffington, Wan Ling Martello and Yasir Al Rumayyan — want to back Khosrowshahi as much as they can. So too Graves, Camp and TPG’s David Trujillo. Presumably, Burns and Thain will back Kalanick.
But who knows with this crew whose endless machinations have played out like a soap opera (and soon will be a hopefully juicy book!).
“We all want peace in the kingdom and that comes at a price of finding a way to live with Travis,” said one source closer to the situation. “And that means compromise.”
One silver lining: The possibility that Benchmark will drop the lawsuit, now slowly winding its way through the private arbitration process, if the governance changes are passed and sufficiently limit Kalanick’s role.
And then, Khosrowshahi can get back to fixing Uber’s actual business — from getting London back online, to finding top managers to replace its decimated staff to settling its potentially devastating Waymo lawsuit to an IPO — instead of forever wrangling with its tortured psyche.
With additional reporting by Teddy Schleifer