Major Uber Investor Sues Ousted CEO Kalanick for Fraud

Major Uber Investor Sues Ousted CEO Kalanick for Fraud

Dan Primack at Axios broke the story on Thursday of a lawsuit filed in Delaware Chancery Court, in which Benchmark Capital, a major institutional investor with a 13 percent stake in Uber, is accusing the ridesharing startup’s founder and former CEO Travis Kalanick of fraud, breach of contract, and breach of fiduciary duty for what the suit describes as an attempt “to pack Uber’s Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO”:

The suit revolves around the June 2016 decision to expand the size of Uber’s board of voting directors from eight to 11, with Kalanick having the sole right to designate those seats. Kalanick would later name himself to one of those seats following his resignation, since his prior board seat was reserved for the company’s CEO. The other two seats remain unfilled. Benchmark argues that it never would have granted Kalanick those three extra seats had it known about his “gross mismanagement and other misconduct at Uber” — which Benchmark claims included “pervasive gender discrimination and sexual harassment,” and the existence of confidential findings (a.k.a. The Stroz Report) that recently-acquired self-driving startup Otto had “allegedly harbored trade secrets stolen from a competitor.” Benchmark argues that this alleged nondisclosure of material information invalidates Benchmark’s vote to enlarge the board.

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Uber Says It’s Overhauling Culture After Scandals

Uber Says It’s Overhauling Culture After Scandals

In a call with reporters on Tuesday, Uber director Arianna Huffington joined newly appointed chief HR officer Liane Hornsey and Rachel Holt, who heads its North American operations, to discuss how the ride-sharing startup has responded to allegations of sexual harassment and widespread sexist behavior at the company that came to light a month ago, which prompted calls from investors and current and former employees to address what they described as a toxic workplace culture.

According to the Verge, there were no major announcements on Tuesday’s conference call, as the Uber leaders “acknowledged that there were serious problems with the company, but sought to convey the message that things were well in-hand”:

Huffington repeated her promise to hold [CEO Travis] Kalanick’s “feet to the fire,” as well as her declaration that there would be “no room for brilliant jerks” at Uber in the future. Hornsey discussed efforts to improve Uber’s hiring processes and training programs to improve diversity and ensure that efforts to report harassment and sexism aren’t sabotaged or ignored[.] …

“We need to bring more humanity to the way we interact with drivers,” Holt said, before ticking off all the things Uber was doing to accomplish that. This includes easier-to-read earnings statements and a new app feature that allows riders to correct pick-up locations without canceling a trip in-progress. Uber will also take into account the number of trips completed by a driver when weighing deactivation as a result of rider complaints, Holt said, so a driver who completes 10,000 trips receives more deference than a driver who completes just 10 trips.

Hornsey also confirmed that the company’s first diversity report was on its way; that report is currently expected to come out early next month.

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