Uber’s bad year: The stunning string of blows that continue to upend the world’s most valuable startup

Reuters Staff

Uber was already off to a bad start in 2017, but the year is getting worse by the day for the $69 billion ride-hailing company.

In January, Uber lost more than 200,000 customers in a single weekend after the #DeleteUber movement led to a fury of account deletions by customers upset about its ties to President Trump.

But that was just a prelude to Uber’s no-good, very bad month. During the roughly 30-day period of mid-February to mid-March, the company was pummeled by a seemingly never-ending barrage of bad news, with a new crisis almost every day. And it’s barely slowed down since then.

Here’s everything that’s happened to Uber since things took a turn for the worse in February:

Sunday February 19: The beginning

Susan Fowler starts it all with her reflections on “one very, very strange year at Uber.” Fowler, a former engineer at the company, alleged in a blog post that she was sexually harassed at Uber and experienced gender bias during her time at the company. She claimed that one manager propositioned her and asked for sex, but her complaints to HR were dismissed because the manager was a high performer. She said Uber continued to ignore her complaints to HR, and then her manager threatened to fire her for reporting things to HR.

Uber CEO Travis Kalanick immediately pledges to look into Fowler’s investigations, and hires former US Attorney General Eric Holder to lead the investigation. Kalanick responded within hours of publication to say Fowler’s account was “abhorrent & against everything we believe in.” Uber hires Eric Holder, former US attorney general, to lead an independent investigation into it.

Wednesday February 22: Cocaine and groping

The New York Times publishes a bombshell report that suggests Fowler’s claims were not isolated. Employees did cocaine during a company retreat and a manager had to be fired after groping multiple women, according to the report. Former employees said they’d notified Uber’s leadership, including Kalanick and CTO Thuan Pham, of the workplace harassment.

Thursday February 23: Investor betrayal and accusations of stolen technology

Uber investors, Freada and Mitch Kapor, blasted the company for failing to change. In an open letter to Uber’s investors and board, the Kapors said Uber has ignored the behind-the-scenes work that some of its investors have tried to do for years to change the company culture. “We are speaking up now because we are disappointed and frustrated; we feel we have hit a dead end in trying to influence the company quietly from the inside,” the Kapors wrote.

Google, another Uber investor, sued the company for intellectual property theft. In an explosive lawsuit, the Google self-driving-car group, now known as Waymo, accused Uber of using stolen technology to advance its own autonomous-car development. The suit, filed in the US District Court in San Francisco, claimed that a team of ex-Google engineers stole the company’s design for the lidar laser sensor that allows self-driving cars to map the environment around them.

Friday February 24: Losing the benefit of the doubt

Uber denied Google’s claims of stealing its self-driving tech. “We have reviewed Waymo’s claims and determined them to be a baseless attempt to slow down a competitor and we look forward to vigorously defending against them in court,” a spokesperson said. 

On the same, Uber also had to clarify that it’s not behind mysterious efforts to dig up ‘intimate’ info about the ex engineer who accused it of sex harassment. Fowler tweeted that someone was doing research for a “smear campaign” against her, warning her friends to beware of anyone seeking personal information about her. Uber said it was not involved in any such efforts.

But trust in the company was undermined that same day when a news report revealed that Uber’s account of another controversial incident was not entirely forthright. Uber had blamed “human error” for one its self-driving car running a red light on a San Francisco street in December. As The New York Times revealed, it was the self-driving car system that failed to recognize the six stop lights at the intersection and run the red as a passenger entered the crosswalk. The only “human error” was that the human failed to notice the car’s error and correct it in time.

One week into the storm, crisis experts agree: Uber needs to make a big statement, and that might mean firing Kalanick

“If I were on the board, I would find a way to get rid of him,” said Michael Barnett, a business and management professor at Rutgers University.

Read more: “Travis Kalanick is Uber’s biggest asset, and now its biggest liability”

But Uber had an even worse week to come.

Monday February 27: A high-profile exec is out under a cloud of controversy

Uber’s SVP of engineering stepped down over sexual-harassment allegations at his former job at Google. The engineer, Amit Singhal, left Uber after Recode’s Kara Swisher notified the company of the allegations through her reporting. When Uber CEO Travis Kalanick found out, he asked Singhal to resign, according to a person familiar with the situation. The person also said that Singhal went through the standard background checks before his employment at Uber and that the sexual-harassment allegations during Singhal’s time at Google never came up. Singhal has strenuously denied the allegations.

Tuesday February 28: Kalanick loses his cool

A dashcam video caught Uber CEO in a heated argument over prices. A video published by Bloomberg showed Kalanick losing his cool in an argument with an Uber driver on Super Bowl Sunday after the driver confronted him about lowered fares.

Kalanick then issued a “profound” apology and says he’ll seek leadership help. “My job as your leader is to lead…and that starts with behaving in a way that makes us all proud,” he wrote in the apology. “That is not what I did, and it cannot be explained away. This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.”

Wednesday March 1: Arch-rival Lyft seizes the moment

Lyft, capitalizing on the moment, is trying to raise $500 million to fight Uber. In a kick ’em when they’re down way (or just smart business), The Wall Street Journal reported that Uber rival Lyft is trying to raise an extra half a billion to fund its growth against a cash-flush Uber.

Thursday March 2: Uber has hired another law firm

Ex-Uber engineer Susan Fowler said the company is blaming her for users deleting their account and investigating her personal life. As a result, she’s hired her own lawyer. Uber acknowledges that it hired a second law firm, Perkins Coie, to look into her allegations (but, the company says, not investigate her personally).

Uber changed its mind about its self-driving cars. After a clash with California’s DMV in December, Uber did an about-face and decided to apply for a permit for its self-driving cars to get them back in California. Its spat with California regulators in December was the beginning of the old Uber starting to rear its ugly head, but the company’s change of mind was a sliver of a good press in the maelstrom of scandals.

Friday March 3: ‘Greyballs’ and another executive resignation

The New York Times revealed that Uber has been secretively deceiving authorities for years with a tool called ‘Greyball’.  Uber used the tool to evade authorities, particularly at times when city regulators were trying to block the ride-hailing service, according to a report by The New York Times’ Mike Isaac. The tool collected data from Uber’s app to identify and evade officials in cities like Boston, Paris, and Las Vegas. The Times reports that the program was used in markets where Uber was banned or being resisted by law enforcement.

Uber loses another top VP: Uber’s VP of Product and Growth, Ed Baker, suddenly resigned after more than three years at the company. In an email obtained by Recode, Baker said he wanted to join the public sector, but his departure has mysterious timing as Recode alleged there was other “questionable” behavior from the executive.

Meanwhile, the Uber exec and board member who oversaw the HR department has been strangely absent during Uber’s biggest crisis. Business Insider reports that Ryan Graves’ absence is leading some inside and outside the company to wonder whether he could take the fall — with or without cause. Graves also has ties to “Greyball” since he was aware of the program.

March 7: Uber is officially looking for a COO

Uber CEO Kalanick agrees to get help for the next chapter of Uber. After admitting he needs leadership help following the leaked video him arguing with a driver, Kalanick made it official that he was looking for a COO for the company — “a peer who can partner with me to write the next chapter in our journey.” Many people want a Sheryl Sandberg-like fixture to balance Kalanick, if not just Sandberg herself. 

March 8: Uber changes it mind about greyballing as the executive exodus continues

Uber back-tracked and changed its position on “Greyballing.” While it first gleefully admitted that it had used the controversial to target government officials, Uber reversed its position and said it would no longer do so going forward.

The executive exodus also continued with Uber’s head of AI only lasting four months at the company. Gary Marcus stepped aside to become an “adviser” to Uber, only four months after the ride-hailing company had acquired his artificial intelligence startup, Geometric Intelligence.

March 17: Leaked data shows Uber’s self-driving cars can’t drive themselves

To make matters worse, data leaked showed that Uber’s self-driving car project is a long way from becoming a reality. One particularly alarming statistic was that in the week that ended March 8, the cars travelled only 0.8 miles on average between each time a human driver had to take control, overriding the self-driving tech, otherwise known as a disengagement. By comparison, Google’s self-driving cars are streets ahead. Waymo cars last year were being disengaged at a rate of just once per 5,000 miles, according to data released in February.

March 19: Uber’s president quits

Uber suffered another black-eye when its president abruptly quit the company after only six months. In a statement, Jeff Jones said he was leaving because “the beliefs and approach to leadership that have guided [his] career are inconsistent with what [he] saw and experienced at Uber.” There was no love lost between the company and Jones. “After we announced our intention to hire a COO, Jeff came to the tough decision that he doesn’t see his future at Uber. It is unfortunate that this was announced through the press but I thought it was important to send all of you an email before providing comment publicly,” Kalanick wrote to his employees.

Shortly after Jones’ departure, it was reported that another VP was also leaving. Brian McClendon, who lead Uber’s mapping teams, had planned to leave the company, but the timing was of course poor given the other departures. McClendon said he was heading back to Kansas where he wants to get into politics.

 

March 21: Uber says it’s turning things around

Given its bad month, Uber is at the point where it’s starting to make some changes. In its first press conference since the series of crises started piling up, Uber said it’s already taking steps to reverse its course, including:

• Releasing a diversity report
• Opening an anonymous tip line for employees to air complaints
• Holding more than 120 “listening sessions” with employees
• Updating 1,500 job descriptions to eliminate any “unconscious bias”

Travis Kalanick was missing from the call because he was busy interviewing COO candidates. But the company’s board indicated that it supported Kalanick’s continued role in the CEO job. Uber said it’s not going to work on filling the various recently-vacated executive positions until it’s hired a new COO who can be part of the process. 

March 25: Travis Kalanick’s visit to a Seoul escort-karaoke bar is revealed

A bombshell report by The Information describes a 2014 Uber team visit to a escort-karaoke bar in Seoul. According to the report, “four male Uber managers picked women out of the group, calling out their numbers, and sat with them.”

After the evening, a female Uber employee told HR that the trip made her uncomfortable. 

March 25: Uber suspends self-driving car program in Arizona after an autonomous vehicle was involved in a crash in Tempe, Arizona

An Uber SUV operating in autonomous mode was involved in an accident. Although nobody was seriously injured and a police spokesperson reportedly said that Uber was not at fault, Uber told Business Insider it was halting its self-driving car pilot in Arizona. 

April 2: The New York Times accuses Uber of psychologically manipulating its drivers

A report from the New York Times details the psychological tricks Uber employs to keep drivers on the road. Calling it one of the greatest behavioral experiments, the Times detailed how Uber uses everything from push notifications to incentives to shortening the time between pick-ups to keep drivers going on the road. 

April 11: Uber’s top PR chief joins executive exodus

Rachel Whetstone, Uber’s head of communications and policy, left the company after months of crises. Whetstone, who joined Uber in 2015 after a long stint overseeing communications at Google, had struggled to get Uber back on message. Jill Hazelbaker, who used to report to her, took on the new role.

April 21: The investigation into Uber’s workplace is extended

Uber delays the investigation into workplace harrasment after information pours in from “hundreds” of its employees. Instead of coming at the end of April, the report from former Attorney General Eric Holder needed more time to interview execs and leave “no stone unturned.” It’s now expected at the end of May.  

April 23: It wasn’t just “Greyball.” Uber tried to deceive Apple, too

Tim Cook once called Travis Kalanick into his office and told him to knock it off. A New York Times story published on April 23 revealed that the Apple CEO had threatened to yank Uber from the App Store if it continued to violate the App Store’s terms and conditions. As an act of fraud prevention, Uber had affixed a small piece of code that could tell if someone was using the same phone over and over again and then wiping it to take advantage of promo codes. 

May 1: Travis Kalanick cancels appearance at Code Conference

Travis Kalanick canceled a headliner interview he promised before the wave of scandals hit and rattled some people’s confidence in the CEO. Kalanick bowed out of Recode’s Code Conference nearly a month before he was set to take the stage. Renowned tech journalist Kara Swisher gave the CEO a written lashing for not addressing his company’s problems and backing down from the interview during a time of trouble. Axios’ Dan Primack also questioned whether Kalanick was right to continue the job if he couldn’t handle a sit-down with the press.

May 3: Waymo accuses Uber of creating a shell company to bring on a former Google engineer.

Google accused rival Uber of plotting a devious “cover-up scheme” with a former Google engineer to steal crucial self-driving car technology. Uber acquired Otto in August, but according to Google’s lawyers, Otto was never meant to operate as a real business.

In a court hearing on a preliminary injunction, Google’s attorneys sought to portray Otto, the startup company founded by the former engineer, as a shell company designed to help Uber catch up in the highly competitive self-driving-car field. Waymo (Google’s self-driving car project) is trying to block Uber from developing its self-driving technology and infringing on trade secrets. 

May 4: The U.S. Justice department opens a criminal investigation into Uber’s use of ‘Greyball’

The U.S. Justice Department has begun a criminal probe into  ‘Greyball’. Reuters first reported that U.S. authorities were looking into the Greyball tool, which helped Uber drivers evade transportation regulators who were looking to crack down on the ride-hailing service. Uber acknowledged it used the tool, including against officials in cities like Portland, Oregon.

It hasn’t been all bad, though. Uber’s diversity report was better than expected.

March 28: Uber’s diversity numbers are not great, but not the worst when compared to industry giants like Facebook, Apple, Google, Twitter, and Microsoft. As part of its pledge to turnaround the company, Uber released its first diversity report after Kalanick had pushed back on it for years. However, the investigation into the company’s work culture changed the CEO’s mind. One glaring problem is the lack of women and underrepresented minorities in tech leadership positions. Nearly 89% of technical directors are male at Uber, and 75% are white.

And now Uber is looking to the skies with flying cars.

April 25: Uber announced that it wants to test its network of flying cars by 2020. “It’s push a button and get a flight,” said Jeff Holden, Uber’s Chief Product Officer, in his keynote at the Uber Elevate Summit. By 2020, the company wants to have its first public demonstration of a network of electric planes that could ferry passengers at 150 m.p.h. through urban skies to their destinations. Uber wants to debut the Uber Elevate network when Dubai hosts the World’s Fair in 2020. 

Flying cars may be a distraction from its business woes, but that’s the distraction the company may need.

 

Read more stories on Business Insider, Malaysian edition of the world’s fastest-growing business and technology news website.

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