How one venture capitalist fought back against Uber's founder
ASMA KHALID, HOST:
Uber has had its share of scandals over the years, and one reason why Uber was so prone to mishaps can be traced to a seemingly never-ending supply of easy money. Darian Woods and Adrian Ma are from our daily economics show The Indicator From Planet Money, and they tell the story of how one venture capitalist fought back against Uber's founder.
DARIAN WOODS, BYLINE: When Bill Gurley first invested in a new startup called Uber, he thought he had found a great CEO - Travis Kalanick.
SEBASTIAN MALLABY: Somebody who was tough and determined and energetic and could kind of push through obstacles.
ADRIAN MA, BYLINE: This is Sebastian Mallaby, author of a new book "The Power Law: Venture Capital And The Making Of The New Future."
WOODS: Bill Gurley is a venture capitalist, so that means money. His company first pumped $12 million to a young Uber. But it also means advice and control.
MA: But as the 2010s rolled on, Travis realized that, as CEO, he didn't really need Bill's venture capital money.
WOODS: Venture capital had built Silicon Valley, but over the decades, outside money had come pouring in. Traditional Wall Street firms like Goldman Sachs and J.P. Morgan would come knocking with huge buckets of cash.
MALLABY: So that oversight part of venture investing started to be lost.
MA: Without the counterbalancing governance of venture capitalists like Bill Gurley, you might end up with a disaster. Think about WeWork. WeWork had to cancel its stock market launch because the accounts and the company culture were kind of a mess.
WOODS: As a level-headed investor, Bill had a lot of worries. Like, Travis wanted to expand into China, and Bill thought that that was a terrible idea for Uber.
MALLABY: Travis Kalanick is no longer listening to him. You know, at the beginning, Bill Gurley had an electronic key. All of a sudden, that electronic key ceases to work because he's no longer welcome.
MA: Then in 2017, a former Uber employee reveals being subjected to multiple instances of sexual harassment in the company. Uber brings in outside law firms to write a report on whether Uber's culture tolerated or even fueled this sexual harassment.
WOODS: A few weeks later, Google filed a lawsuit claiming that Uber is stealing its driverless car technology. And then a video of Travis Kalanick appears of him in an Uber arguing with a driver about falling prices.
(SOUNDBITE OF ARCHIVED RECORDING)
FAWZI KAMEL: I'm bankrupt because of you.
MALLABY: Travis Kalanick responds by yelling at the driver.
(SOUNDBITE OF ARCHIVED RECORDING)
TRAVIS KALANICK: Some people don't like to take responsibility for their own [expletive].
KALANICK: They blame everything in their life on somebody else.
WOODS: Bill thinks that Uber's ethical reputation is just going to continue to careen out of control with Travis at the helm, so he decides to act. He wants to remove Travis from his position as CEO, and he uses the damning report that details Uber's culture that led to the sexual harassment of its employees to strongly encourage Travis Kalanick to take a leave of absence.
MALLABY: So he puts out a statement saying, I'm taking this break, but I'll see you soon. He was signaling that he would fight any attempt to prevent him from coming back.
WOODS: While Travis is away, Bill assembles a coalition of other investors who want Travis out. And they threaten that if Travis doesn't resign, they will make it public that they want him to go.
MALLABY: In the end, he realizes that the smart thing is to retreat, so he resigns.
WOODS: Afterwards, there are fewer scandals at Uber, and the company goes public. Bill Gurley makes a massive profit, in part because he took on one of the biggest mythologies in Silicon Valley - the cult of the founder.
MA: Adrian Ma, NPR News.
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