THE PARADOX
Growth vs. Governance
Uber's financial performance remained strong even as its reputation collapsed
Source: Company reports and media analysis (illustrative data)
A high-stakes boardroom decision that would define Silicon Valley governance for years to come
By early 2017, Uber had become a paradox: the most valuable private startup in history, yet simultaneously one of the most controversial companies in the world.
Uber's rise was nothing short of meteoric. Founded in 2009, by 2017 it had expanded to over 600 cities across 80 countries, fundamentally disrupting the global transportation industry. The company's valuation had soared to $68 billion, making it one of the most valuable private companies in history.
At the helm was Travis Kalanick, the visionary founder whose relentless ambition and "Always Be Hustlin'" mentality had driven this extraordinary growth. His leadership style was aggressive, competitive, and unapologetically confrontational—characteristics that helped Uber battle entrenched taxi monopolies and regulatory systems worldwide.
But by early 2017, the very culture that fueled Uber's expansion had become its greatest liability. What worked in a scrappy startup was poisoning a company with 15,000 employees and millions of users.
A six-month period that brought Uber's toxic culture into the global spotlight
Uber accused of breaking a taxi strike during protests at JFK Airport. More than 200,000 users deleted the app in a single weekend, creating a PR disaster and revealing the company's tenuous relationship with public sentiment.
Former engineer Susan Fowler published a devastating blog post detailing systematic sexual harassment, HR failures, and a hostile work environment for women. The post went viral, exposing Uber's cultural rot to millions.
A video surfaced showing Kalanick arguing with an Uber driver about fare cuts, displaying a dismissive attitude. His response—"Some people don't like to take responsibility"—epitomized the leadership problem investors feared.
Google's Waymo sued Uber for stealing autonomous vehicle trade secrets. Simultaneously, key executives began departing—the President, CMO, and several VPs left within weeks, signaling internal turmoil.
Investigations revealed Uber had used software called "Greyball" to evade law enforcement and regulators. Reports also emerged of Uber's research into psychological manipulation of drivers and aggressive corporate espionage tactics.
Former Attorney General Eric Holder's independent investigation confirmed a pervasive culture problem, documenting discrimination, harassment, and management failures. The 47-page report recommended sweeping reforms, including reconsidering Kalanick's role.
Uber's financial performance remained strong even as its reputation collapsed
Source: Company reports and media analysis (illustrative data)
You are a board member at Uber in June 2017. The Holder report has just been released, confirming a toxic culture that traces back to the founder's leadership style.
Yet Uber's business metrics remain strong: revenue is growing at 150% year-over-year, the company dominates ridesharing in key markets, and Kalanick's aggressive strategy has successfully fought off competitors in dozens of countries.
Should the board remove Travis Kalanick as CEO?
Each option carries profound implications for Uber's future, its employees, and the broader tech industry
On June 21, 2017, Travis Kalanick resigned as CEO of Uber
The board chose Option 2: Remove Kalanick as CEO—but the decision was far from straightforward. It required careful orchestration, investor pressure, and ultimately, a direct request from five major investors for Kalanick to step down.
On June 13, 2017, Kalanick announced he would take a leave of absence, seemingly choosing Option 4. But behind the scenes, investors—including Benchmark, one of Uber's earliest backers—concluded that half-measures wouldn't work. The cultural problems were too deep, the reputational damage too severe, and the legal exposure too significant.
Within days, Benchmark and four other major investors delivered a letter to Kalanick demanding his immediate resignation. The letter outlined the existential threat facing the company and made clear that his departure was not negotiable. On June 21, 2017, Travis Kalanick stepped down as CEO.
The decision was presented as voluntary, but it was effectively a boardroom coup enabled by investor pressure—a rare and dramatic intervention in Silicon Valley's founder-friendly ecosystem.
Dara Khosrowshahi, former CEO of Expedia, was appointed as Uber's new CEO in August 2017. His diplomatic style and operational expertise contrasted sharply with Kalanick's aggressive approach.
Under new leadership, Uber implemented sweeping cultural reforms, settled major lawsuits, and successfully went public in May 2019, albeit at a lower valuation than hoped ($82 billion initially, down from $120 billion expectations).
Uber revamped HR policies, increased board oversight, added independent directors, and implemented the Holder report's 47 recommendations. The company hired a new Chief Diversity Officer and Chief People Officer.
Kalanick remained on Uber's board initially but sold most of his shares ($2.5 billion worth) and resigned from the board in 2019. He retained significant wealth but lost control of his creation.
Bitter legal battles ensued between Kalanick and Benchmark over governance. Eventually settled, but the conflict revealed deep fractures in Silicon Valley's investor-founder relationship model.
The Uber crisis became a watershed moment for corporate governance in tech, sparking broader conversations about founder control, dual-class shares, and the "move fast and break things" mentality.
Source: Company financial disclosures and market analysis
The board ultimately determined that legitimacy crisis outweighed performance strength. While Uber's business metrics remained robust, the board recognized several critical factors:
First, the reputational damage was existential. The company wasn't just facing bad press—it was becoming a cultural symbol of Silicon Valley's worst excesses. Uber risked becoming "uninvestable" for major institutional investors needed for the IPO.
Second, the talent exodus was accelerating. Key executives were leaving, and recruiting was becoming nearly impossible, especially for diversity-critical roles. Without leadership change, Uber would hollow out from within.
Third, regulatory risk was mounting. Cities worldwide were reconsidering Uber's operating licenses. London—one of Uber's largest markets—threatened to revoke the company's license explicitly citing corporate culture and governance failures.
Fourth, the legal exposure was staggering. The Waymo lawsuit threatened billions in damages, but more concerning were potential securities fraud claims if the IPO proceeded with known governance issues.
Finally, investors concluded that Uber's competitive advantages were now structural, not personal. Network effects, brand recognition, and market position would survive a leadership transition. Kalanick had built the machine; someone else could run it.
What works in a 50-person startup can become toxic at 15,000 employees. Culture must evolve as organizations scale, and founder behaviors that were once assets can become liabilities without adaptation.
Financial performance is necessary but not sufficient for long-term success. Companies must maintain legitimacy with multiple stakeholder groups—employees, regulators, customers, and society. When legitimacy collapses, even strong business results can't compensate.
Uber's board was initially too weak, too founder-friendly, and lacked sufficient independence. Strong governance structures must be built before crises emerge, not during them. Dual-class share structures that give founders excessive control can backfire dramatically.
Contrary to conventional wisdom, companies can survive founder departures—even forced ones. The key is having strong succession planning, operational depth, and structural competitive advantages that transcend individual leadership.
The board's initial hesitation—trying leave of absence before removal—arguably made things worse. In existential crises, decisive action is often better than gradual approaches. Half-measures can signal weakness and prolong uncertainty.
Uber's valuation initially suffered post-Kalanick, and the transition was turbulent. But the company emerged stronger, more sustainable, and ultimately viable as a public entity. Strategic patience and willingness to accept short-term costs enabled long-term success.