How Uber drove from Immelt to Whitman before stopping for Khosrowshahi

By last Friday afternoon, most of Uber’s eight directors had gathered in San Francisco for a board meeting. Their agenda was simple: Pick a new chief executive for the ride-hailing company. What unfolded over the next 72 hours was anything but straightforward.

In discussions at the Four Seasons Hotel downtown and at the offices of the private equity firm TPG Capital, which holds an Uber board seat, directors operated under the cloak of secrecy. They spoke in a kind of code about some of the candidates, limiting knowledge of the shortlist to a handful of people.

By Sunday morning, one of the finalists, the former General Electric chief Jeffrey R Immelt, had publicly pulled out. Some board members were behind another finalist, Meg Whitman, chief of Hewlett Packard Enterprise, and some people close to the process had taken steps to prepare for an announcement of her appointment.

But as Sunday wore on, Whitman, emboldened by her front-runner status, started negotiating for increasing control over Uber were she to accept the job, siding with one faction of the board that wanted to limit the clout of Travis Kalanick, the former chief. Those tactics deterred most board members, who then swung decisively in favour of Dara Khosrowshahi, the chief executive officer of Expedia.

This account of Uber’s CEO selection is based on interviews with more than a dozen people with knowledge of the board’s discussions, who spoke on the condition of anonymity because the deliberations were private. It illustrates the high-wire act of herding eight board members - many of whom have big personalities and some of whom are feuding with one another - toward consensus at the world’s most valuable privately held company. It also gives a taste of the kinds of issues that Khosrowshahi may have to navigate at Uber. 

Late Tuesday, Uber formally announced the 48-year-old executive as its new leader, saying the board was “confident that Dara is the best person to lead Uber into the future”. 

Khosrowshahi said he was attracted to the Uber role because the company is “reinventing the transportation industry and is one of the most powerful brands in the world,” adding, “I’m excited to shape that unfinished story.” One of his priorities, he said, is helping Uber’s employees get back “to running a company they can be proud of.”

That may be difficult given the numerous scandals that Uber has confronted this year, including a new development that surfaced on Tuesday: The Department of Justice is looking into whether Uber managers broke an American law, the Foreign Corrupt Practices Act, which governs acts such as international bribery. Uber confirmed that it was cooperating with the Justice Department’s preliminary review. The company declined to comment on its search for a new chief.

Since Kalanick resigned under pressure in June, the company’s board had worked to put together a list of potential recruits. Over two months, that list was whittled down to three candidates.

Whitman, a veteran of the tech industry who had led multiple public companies, quickly became a favourite candidate of Benchmark, one of Uber’s largest investors, which also has a board seat. Immelt, who was on the verge of leaving GE, was favoured by Kalanick and a few other directors for his depth of experience running a public company. Khosrowshahi, the longshot candidate, also gained favour with some directors.
 

On Friday, Immelt and Khosrowshahi made the trip to downtown San Francisco for the last leg of the selection. In an airy conference room on the 33rd floor of TPG’s offices, the two candidates presented their visions for the future of Uber. Whitman met with some board members the next day at the Four Seasons Hotel, changing locations as a way to throw people watchers off the trail.

After the presentations, some board members grew concerned about Immelt. They questioned the success of his tenure at GE, while others — particularly Benchmark — worried that he would serve only as a surrogate for Kalanick. And while Immelt had experience with large organisations, some board members felt he lacked the technical and strategic prowess to run Uber. Immelt withdrew from the process on Sunday morning with a post on Twitter.

At the same time, Khosrowshahi continued to present himself as a low-key and steady hand. The fact that he was not publicly campaigning for the job — his name had not surfaced in the media — helped his cause.

After Immelt dropped out on Sunday morning, things changed. Whitman, as the front-runner, negotiated for conditions including limiting Kalanick and potentially reshaping the board of directors. She also wanted an end to a lawsuit between Kalanick and Benchmark for board control.  

Directors were put off by Whitman’s tactics. A consensus grew among Uber board members that Khosrowshahi was a stronger candidate who came with fewer potential headaches.

By Sunday evening, that conclusion had hardened into a unanimous vote for Khosrowshahi. Minutes later, news of the board’s decision leaked.

©2017 The New York Times News Service