The other shoe has dropped: Under intense pressure from investors, Travis Kalanick stepped down as chief executive of Uber Technologies on Tuesday.
Kalanick, Uber's co-founder and principal visionary, had done much to build the company into the most valuable of Silicon Valley's not-yet-public "unicorns." But after months of scandal, Kalanick may have become an obstacle to Uber's efforts to move forward.
Key Uber investors wanted Kalanick gone
The New York Times was the first to report the story late on Tuesday night. According to the Times and other sources, a group of five heavyweight Uber investors delivered a letter to Kalanick on Tuesday that said Uber needed a change in leadership and demanded his immediate resignation.
The investors who drafted the letter included Fidelity Investments and venture-capital firms Menlo Ventures, Lowercase Capital, First Round Capital, and Benchmark. Some of these investors know Kalanick well: Lowercase proprietor Chris Sacca has recently been advising Kalanick on ways to navigate the scandals, and Benchmark partner Bill Gurley is a member of Uber's board.
The letter prompted hours of discussions and drama, according to the reports, as Kalanick consulted with at least one member of Uber's board of directors. Kalanick eventually agreed to step down as CEO of Uber, but he will remain on the company's board.
The background: Why Kalanick was pushed out
Since the beginning of the year, Uber has been rocked by a series of scandals that have called Kalanick's leadership style and ability into question. Uber's freewheeling frat-house culture, inspired by Kalanick, is said to have led to multiple charges of sexual harassment and discrimination, as well as questionable business practices that have challenged law enforcement officials and business partners.
Uber has also been dealing with a lawsuit filed by Waymo, the self-driving subsidiary of Google parent Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), that alleges that Uber's internal self-driving program is using intellectual property stolen from Google.
Uber has fired over 20 employees in response to the scandals. In search of a comprehensive solution, Uber's board commissioned an outside investigation by the law firm of former U.S. Attorney General Eric Holder.
Holder's firm delivered its report to Uber's board early last week. The report contained about 50 different recommendations intended to fix Uber's workplace culture and business practices. The report's recommendations were endorsed by Uber's board after an hours-long meeting on Sunday, June 12.
Under pressure from the board and to deal with the recent death of his mother, Kalanick agreed, on June 14, to take an indefinite leave of absence from Uber. But clearly, the investors concluded that a clean break from Kalanick was needed.
Kalanick's departure may help Uber solve its biggest problem
The biggest problem facing Uber right now is that the company needs a new management team. Kalanick's departure may make it easier for Uber to attract high-quality executives.
Several top executives have left Uber -- voluntarily and otherwise -- since the beginning of the year, including its president, its engineering, finance, and business chiefs, and the head of its self-driving research-and-development program. None of those slots have yet been filled, and Kalanick may have been part of the reason why. There have been hints that Uber approached some well-qualified candidates who may have balked at the idea of working for Kalanick.
Now that Kalanick is gone, Uber may be able to attract a high-quality leadership team that's willing and able to get the company back on track -- and that can eventually take it public.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy.