Frustrated Board and Shareholders Put Cash Flows Before Bros -- Finally!

Activist board members and shareholders can be a last line of defense when a CEO is bullying his entire company, which is why Uber CEO Travis Kalanick resigned today.  According to reports, investors demanded that he step down, in what New York Times reporter Mike Isaac described as an “outright rebellion.”

Some news sources were more cynical about the departure. The tech news site Pando said that Silicon Valley puts “cash flows before bros,” but whatever you believe, it’s about time. I’ve been calling for Kalanick’s resignation for months as this textbook case of a Silicon Valley “bro” who mismanaged the company he founded and allowed the regular abuse of his employees has dominated business headlines. It’s amazing how motivated people can be to stop abuse when their investment is at risk.

According to Adrienne LaFrance at the Atlantic, “It was ultimately concerns over the bottom line—not merely the toxic culture, or Kalanick’s trademark hubris, or explosive allegations of sexual harassment, or revelations about Uber’s secret software to evade of law enforcement—that forced Kalanick out. Well, out of his job as CEO, that is. He’ll still be on Uber’s board of directors, and he will retain his control of a majority of Uber’s voting shares.”

This doesn’t sit well with Benjamin Edelman at Harvard Business Review. He sees Uber’s troubles as deep and systemic: “I suggest that the problem at Uber goes beyond a culture created by toxic leadership. The company’s cultural dysfunction, it seems to me, stems from the very nature of the company’s competitive advantage: Uber’s business model is predicated on lawbreaking. And having grown through intentional illegality, Uber can’t easily pivot toward following the rules.” For this reason, Edelman is calling for regulators to shut down the company.

I’ve discussed all of these issues at length in my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, and dedicated the entire first third of the book to the critical question—“Is Your Workplace Culture a Ticking Time Bomb?” The bottom line is that Uber was a ticking time bomb, but shareholders finally got it right. Investors and boards have a responsibility to employees to be responsible for a psychologically healthy, safe and fair workplace. I’m glad to see that they’ve stepped up at last. Maybe now we can have a news cycle without Uber dominating the business headlines.

Illustration credit: Jack Ohman/Sacramento Bee