Uber’s Michael is said to blame board, not behavior, for ouster
(Bloomberg) -- Uber Technologies Inc.’s newly ousted senior vice president for business, Emil Michael, has been dogged by public scandals, ever since his off-the-cuff remarks at a dinner party in 2014 about investigating a critical journalist.
He was forced out after Eric Holder of Covington & Burling delivered a critical report to Uber’s board Sunday that recommended Michael’s departure after a series of problems over the last year forced the board to hire Holder to run the internal investigation.
Michael was at the center of two more controversies made public this year that were included in an investigation into Uber’s culture. The former girlfriend of his boss, Chief Executive Officer Travis Kalanick, alleged that he tried to prevent her from speaking out about a work trip to a Korean escort-karaoke bar. He was also one of the executives recently alleged to hold conspiracy theories that the rape of an Uber passenger in India was linked to a local competitor.
At the same time, Michael, an Egyptian immigrant, helped Uber raise more than $10 billion, negotiate a truce with Uber’s Chinese rival, and strike deals with top automakers like Daimler AG.
Michael believes that a weak board of directors, a lax internal legal team, coupled with his tight friendship with co-founder Kalanick, ultimately led to his downfall—not the scandals, two people close to Michael said.
He places the blame on the directors, particularly investor Bill Gurley, for his removal, accusing them of not having the backbone to stand by him amid what he sees as largely mischaracterized and inconsequential controversies, the people said. Michael regrets not spending more time recruiting more experienced directors, and he has told people that Gurley put his reputation above the company’s best interests, said the people, who declined to be identified because they were not authorized to speak about the matter. Gurley didn’t immediately respond to a request for comment.
Michael, Kalanick’s closest confidant, was forced out of the beleaguered ride-hailing company by the board, after an investigation into workplace harassment and culture was presented to directors on Sunday. Michael has told people that he believes that Kalanick’s internal critics targeted him, likening it to coming after a prince if you can’t bring down the king, the people said.
The probe was led by former U.S. Attorney General Eric Holder. The San Francisco-based company’s board met for more than six hours to discuss the findings of that investigation, and directors approved all the recommendations, a board representative said.
The suggested actions from the Holder report included parting ways with Michael and adding more independent board members, people familiar with the matter said. Uber is planning to appoint Wan Ling Martello, an executive vice president at Nestle SA, to the board, Bloomberg reported.
Michael played a starring role in the latest controversy riling the ride-hailing company. His deputy Eric Alexander obtained a copy of the medical report of a woman who had been raped by an Uber driver in Delhi. Michael, Kalanick and Alexander had espoused a theory that Uber’s Indian competitor Ola might have instigated the controversy, questioning whether the woman had been raped, Bloomberg reported last week.
Michael blames the handling of the report on the company’s legal team and says he never looked at the police report or held a conspiracy theory about the crime, the people said.
Michael does regret his late-night musings two years ago that the company hire investigators to dig up dirt reporters, the people said. He also regrets going to a Korean escort and karaoke club with male and female colleagues, including Kalanick, the people said.
It was a former employee’s allegations of sexual harassment and discrimination in February that prompted the investigation by Holder’s law firm, Covington & Burling LLP, and a separate examination of human-resources matters by Perkins Coie LLP. The inquiry soon expanded to include more than 200 HR claims and resulted in the firings of more than 20 employees.
The company, valued at $69 billion, plans to begin implementing the report’s recommended changes early this week and will outline them to employees at a meeting Tuesday. Ryan Graves, a director and longtime Uber executive, told employees of Michael’s departure in an email, describing him as “instrumental in building the business we have today.” Many employees and those close to Uber remain supportive of him, the people said.
“An Uber without Emil is less valuable than an Uber with Emil,” said Hadi Partovi, an early investor in Uber and close friend of Michael’s. Partovi, who purchased shares of Uber in 2014, said Michael is a scapegoat. “Firing a brown executive -- one who had nothing to do with the issues in the engineering organization -- isn’t going to help you become more diverse.”
Michael will be replaced by David Richter, who was vice president of strategic initiatives before his promotion, according to a staff email obtained by Bloomberg. In an email to employees, Michael praised Richter. “David is an extremely talented leader, and I have high confidence in his ability to help drive the company forward,” he wrote. “Uber has a long way to go to achieve all that it can, and I am looking forward to seeing what you accomplish in the years ahead.”
Other considerations at the board meeting included a possible leave of absence for Chief Executive Officer Kalanick, who has been under fire for his involvement in the alleged incidents in question and his coarse management style. In addition to responding to a series of scandals, Kalanick has been grappling with the accidental death of his mother, whose funeral was Friday.
Michael has not ruled out to people that one day he could have a role at Uber again, the people said. He worries that Kalanick will now be further isolated from his executive team without one of his most loyal supporters, the people said.