16 ms·

You're right, but I think that's exactly how/why Uber's investors were able to convince Kalanick to step down. Uber may or may not take over the world at some

• kornish 9y ago
  “He who can destroy a thing has the real control of it.” – Dune, Frank Herbert
  • anth1988 9y ago
    I really need to finish that book. sigh.
  • deleted 9y ago
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  • beambot 9y ago
    Ironically applies to both Kalanick & the investors!
  • Radim 9y ago
    "The machines themselves condition the users to employ each other the way they employ machines." - God Emperor of Dune, Frank Herbert (a prescient book on social feedback loops, my favourite in the series)
    • thinkfurther 9y ago
      > Our main way of relating ourselves to others is like things relate themselves to things on the market. We want to exchange our own personality, or as one says sometimes, our "personality package", for something. -- Erich Fromm ( https://www.youtube.com/watch?v=Cu-7UDT0Xe4&t=1m34s https://www.youtube.com/watch?v=Cu-7UDT0Xe4&t=1m34s ) > The danger of computers becoming like humans is not as great as the danger of humans becoming like computers. -- Konrad Zuse And when Picasso said that computers are useless because they only provide answers, was he just being witty, or pointing at an abyss, knowingly or not?
  • imranq 9y ago
    Any of us could inflict real damage or destruction on our surroundings especially while driving but that doesn't mean we have "control" over them.
    • tskaiser 9y ago
      Insofar none of us would want to suffer the consequences of such acts we cannot truly say we are capable of carrying them out. It is what we mean when we claim someone is "incapable of <x>" such as murder. It does not mean they do not physically possess the means, but rather that they lack the psychological impetus to do so.
      • thinkfurther 9y ago
        So a person who is psychologically capable of murdering has more control over me than one who isn't, and both are less in control than, say, a tsunami? Maybe, but neither can get at things I give freely to a friend? Control is the incapability of either friendship or self-defense, in my opinion, so yes, in a way always it requires numbing or killing something or someone. Leashes transform those on both ends.
        • tskaiser 9y ago
          The original quote does fall apart, as most quotes do, upon closer inspection. Say you can kill a man, but irregardless of the threat to their life said man would refuse any and all of your orders, who can then be said to have 'control'? In the end control means the ability to influence outcomes. There are many metrics, and for some choice of metric the capability of destruction is control.
          • avar 9y ago
            The original Dune quote makes perfect sense in context. Paul was talking about destroying the spice supply by making Arrakis barren of sandworms. "Control" in this context is control of the spice, specifically being able to control there being none at all.
• bduerst 9y ago
  That's one probable story. Another is that the board could have threatened to sue Kalanick for violating the loyalty and duty obligations that corporate officers have to shareholders - e.g. for suppressing systemic sexual harassment, withholding details about the Otto acquisition, etc.
  • berberous 9y ago
    This would never have happened.
    • bogomipz 9y ago
      How do you know that?
      • berberous 9y ago
        Have you ever seen a Board sue a CEO in a similar situation? I also don't think the examples he cited are violations of those duties.
        • jacquesm 9y ago
          He may not, but I have seen a board threaten a CEO in a situation like that. It never came to a lawsuit, the CEO stepped down but this sort of thing definitely can happen depending on how bad the situation is.
        • bduerst 9y ago
          Investors sue all the officers all the time. United Airlines, Ebay/Craigslist, Skype, non-profits, etc. Suppressing systemic sexual harassment violates his duty to report management problems to the board. Same with any meetings with Otto's founder a week prior to them leaving Google and founding Otto.
          • bogomipz 9y ago
            Indeed. The CEO of Sears was recently sued by investors: http://www.businessinsider.com/sears-ceo-will-pay-40-million-to-settle-shareholder-lawsuit-2017-2 http://www.businessinsider.com/sears-ceo-will-pay-40-million...
• keeptrying 9y ago
  The investors would have had to pay up given size of previous investments. The VCs just timed it "well" with Traviss personal tragedy. /smh They could smell the liquidity ...
  • Xxplosive 9y ago
    Are you implying he's being strong armed into selling some of his shares?
• chrissnell 9y ago
  That's insanity. Why would existing investors refuse to play ball? They're basically locked into it. Uber's massive valuation is built on its potential and to anything they do that hurts Uber's access to capital hurts them. I think they made a huge mistake in pushing Kalanick out, but I'm an outsider. There is surely something dark at play here, that we don't know about.
  • deleted 9y ago
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  • ThrustVectoring 9y ago
    Liquidation preferences, senior equity, and debt-like terms, perhaps? If Uber is valuable enough in liquidation, it'd be a great opportunity to zero out the common stockholders and go home with a pile of cash.
    • elmar 9y ago
      you are absolutely right depending on liquidation preferences terms cascade it could be a great deal to force an IPO or another type of exit for later investors.
      • elmar 9y ago
        Hidden Cap Table Secrets https://aleph.vc/hidden-cap-table-secrets-bd6c4e9e780e https://aleph.vc/hidden-cap-table-secrets-bd6c4e9e780e
• Animats 9y ago
  If the existing investors refused to play ball, they could kill the next round, which really would kill Uber. If there's a next round, it will probably involve a big haircut for the early-stage investors.
  • nradov 9y ago
    I think you mean a big haircut for the later stage investors. Even if Uber has a down round, the earliest investors will probably still have positive returns (at least on paper).
    • vkou 9y ago
      Haircut does not imply that they will have negative returns. It could mean that instead of a 50x ROI, they end up with a 5x ROI.
    • JumpCrisscross 9y ago
      > Even if Uber has a down round, the earliest investors will probably still have positive returns No, they could be crammed out by later investors' liquidation preferences. Depends on how down the down is.
      • hobbyjogger 9y ago
        You are confusing a down round with a small exit event (here and in other places in this thread). Liquidation preferences don't come into effect until a sale of the company - so no one is "crammed out" by them in a down round. Though these two types of events are obviously correlated (a down round makes a smaller exit more likely) they are not the same and should not be confused. A financing at a valuation that is a billion dollars less than the last round would be a down round, but a sale of the company at that same valuation would still far exceed the liquidation overhang.
• baby 9y ago
  You guys are talking about Uber dying, but I cannot fathom how this is possible from just the user's perspective. Uber seems to be everywhere, people take Ubers or driver for Ubers every day. How could a company this big fail? Stop growing maybe, but going bankrupt and shutting down?
  • Retric 9y ago
    It's easy to grow when you sell dollars for 70c each. But, when you suddenly need to sell them for 1.01+$ nobody wants to buy. Uber's problem is taxi companies have lower overhead because among other thing their drivers sometimes get hailed by people at street level. Which means their either taxi prices are lower and people stop using Uber or they pay drivers more and drivers mostly stop working for Uber.
    • JumpCrisscross 9y ago
      Uber is profitable in certain cities, e.g. New York City [1]. They could turn cash-flow positive if they just gave up useless market share. [1] http://www.businessinsider.com/ubers-revenue-profit-and-loss-2015-8 http://www.businessinsider.com/ubers-revenue-profit-and-loss...
      • deleted 9y ago
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      • evgen 9y ago
        Their valuation is based upon the assumption that they can maintain market share and raise profitability in those other markets. We all know this isn't going to happen though, so eventually someone is going to eat the valuation hit but the game of musical chairs to decide that question is still being played.
        • JumpCrisscross 9y ago
          I don't think their valuation makes sense. I'm more replying to the gist of this thread, which seems to be saying they're dead because they aren't profitable. They could be if they needed to prioritise that. > someone is going to eat the valuation hit Liquidation preferences mean earlier investors (and employees holding Common Stock) take the hit of a down round.
• NicoJuicy 9y ago
  He's "Amazon profitable", Uber has profits if you neglict investments for market dominance.
• ritchiea 9y ago
  You don't have a company yet if you're dependent on future investment.
  • 65827 9y ago
    This is an unpopular sentiment around here, but needs to be said more. You're still a child playing with other people's money until you're actually self sufficient. In some cases this lack of maturity is particularly striking.
  • ncallaway 9y ago
    Eh, I think that's taking it a bit too far. I think it's far to say you don't have a sustainable business model yet if you're dependent on future investment.
    • ritchiea 9y ago
      Yes yes, clearly there are points in time where there is a real entity that exists as a company. But in the context of "can I lose all this?" where you are a founder building something, you don't just not have control, you don't have anything when you are dependent on future investment.
      • ncallaway 9y ago
        I would argue that _every_ company needs to be worried about the question "can I lose all this?" Even a company that is fully owned, with a sustainable and profitable business model, needs to ask the question "can I lose all this?" every day. If the metric for "you don't have a real company" is you could potentially lose it, then nobody has a real company.
    • Allower 9y ago
      what does being a 'company' mean if you don't have a sustainable business model? Just call it what it is, a train-wreck about to happen
• exelius 9y ago
  I dunno, my guess is that he was too set in his ways to make the leap from "CEO of a growth startup" to "CEO of a mature company". If you look at founder/CEOs who have made that leap, they all tend to be very young (Jobs, Gates, Zuck, etc) and had very strong teams behind them. Someone like Kalanick - who has run multiple startups to various exits - has been running startups all his professional life. His management style likely works very well at a startup, where failure is assumed so risk tolerance is high. At a startup, you need a field general leading the troops into battle. But at a large, maturing company, you need a different skill set. Risk tolerance becomes a negative attribute once the company grows so large you can't control the risk anymore. Rather than a field general, you need a therapist capable of massaging the egos of the executive team and the board of directors. The job becomes more strategic and political -- execution is assumed, and failure is no longer an option. I don't think Kalanick is that guy, and I think the board finally convinced him of that. But if I was an investor, I'd still be happy to listen to his next startup pitch...
  • emilsedgh 9y ago
    Uber's valuation is still based on its growth. Therefore, it still needs to be a startup to justify this valuation and burn. I'd argue that a "mature CEO" is not a fit for Uber which needs to keep growing or die.
    • jacquesm 9y ago
      Some business models are fundamentally broken, then the growth is eventually no longer effective in selling the story that one day the company will be profitable.
    • exelius 9y ago
      Uber's valuation is based on a formula that looks something like (raw brand value in an autonomous car world) - (burn rate)^(number of years until autonomous cars are widespread). The valuation can be quite high if you assume that the value in the exponent is low. But I personally think that the "autonomous vehicle revolution" is not going to pay off as well for Uber as they had hoped. It's becoming more clear that the market for autonomous vehicles isn't going to look like the market for human-driven ones -- and vehicle manufacturers are going to be looking to build their own self-driving auto services rather than sell self-driving vehicles directly to consumers. Uber's biggest innovation was their app. Even complex apps like Uber are not hard to clone if you have any sort of budget. There's an assumption a lot of investors make about their brand value: it assumes that another, already strong brand does not enter the same market. Seeing as Tesla has made no secret of their intentions to compete directly with Uber in the ride-hailing space, I don't think that's a fair assumption. Would you rather call an Uber or a Tesla at this point? And what does buying a Tesla in that scenario even look like? Do you buy a car and rent it out a la Airbnb when you're not using it? How much money do you get for that, and how much of a cut does Tesla get since it's their algorithms actually driving the car? Don't get me wrong; the brand value is actually really high because hundreds of millions of wealthy customers worldwide know Uber. Even if the company fails spectacularly, someone will buy them for a few billion in a fire sale just for the brand.
• LoSboccacc 9y ago
  Given K ruthless record I'd say he bailed before the crack more than stepped down to see it flourish. Would wait to see what'll happen to his equity before take a bet, but gonna guess will be sold high and eventually rebought after the crack when K will try to step back in at a better condition, with less stakes and more hard cash.
• Allower 9y ago
  Just another reason why trying to raise insane amounts of investment capital probably isn't the best idea for creating a successful business
• Exuma 9y ago
  Can you explain how these large companies operate, explained like I'm a golden retriever? How does a company so big not make a profit/could possibly go bankrupt? My current understanding is companies either focus on growth (at a loss) or choose to focus on profit (with the risk of competition overtaking them or decay over time). But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"? If there is no "profit mode" ... then why are people investing in the first place?
  • andy_boot 9y ago
    >But lets say they go bankrupt in 1 year, couldn't they just switch to "profit mode"? Well that they might have to try and do now. But usually it is hard to move to 'profit mode' - you upset your customers when you start to charge double. The idea is that before you do that you have either killed of the competition or your competition 'moat' is so big that everyone wants to keep using you because of $reason and so you can charge what you like. >If there is no "profit mode" ... then why are people investing in the first place? Nobody is ever sure if any startup will get to 'profit mode' you simply look at their market / numbers etc and if you decide to invest then you hope the startup can figure it out. This is the investing gamble.
  • EvanL 9y ago
    Companies in burgeoning industries at this scale are concerned with longevity, specifically outlasting their competitors. Not short term profits. They are thinking more along the lines of "how can we make 10 billion dollars per year, for the next 150 years." Think General Electric. That's why they require huge amounts of money from investors, so they can aggressively grow to a size where other companies can't touch them. The huge amount of capital is sort of like a moat. When you're larger, you have something called economy of scale. Which means you have enough resources to do stuff the smaller guys can't do. When you're larger, you also have something called a data advantage. Which means you know so much more about your customers, you can predict things and make decisions the smaller guys can't.
  • wpietri 9y ago
    As best I understand it, Uber's play was for dominance. Consider Facebook and Google. Together they're worth over a trillion dollars. Now ask yourself: what's the combined net worth of the second-biggest search engine and the second-biggest social network? Nothing close. In a business where being second or third place is pretty good, you can switch to profit mode as you please. But Uber's valuation only makes sense to me if it lets them dominate a market like Google or Facebook does, setting prices and terms for the industry. I think that if they switch to profit mode, people will start to value them like a normal business, which would mean a giant drop in valuation. I presume that's why board members supported an aggressive jerk for so long: Kalanick has been undeniably good at seizing territory, and if one sets aside little things like morals and externalities and long-term consequences, one could argue that aggressive jerkiness is exactly what Uber has needed. Honestly, this market never struck me as one where dominance was even possible, so the investors' theories never made sense to me. But that's my best guess as to why they've been allowed to keep burning money like this.
• tmaly 9y ago
  How much interest does he actually control right now?