Is Uber 2.0 now possible after CEO’s departure?

Uber may get a fresh start after Travis Kalanick's resignation this week. But any new CEO needs to own up to the company's past -- and watch out for the old one's continued involvement.

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Travis Kalanick is out as CEO, but will remain on the company's board.

Michel Porro / Getty Images

The next CEO of Uber faces a lot of obstacles.  

After Travis Kalanick's exit as Uber's chief executive on Tuesday, the world's biggest ride-hailing company needs to find someone who can move forward after a series of controversies, defend the service against regulators around the world and who has experience leading a fast-growing, global organization with 12,000 employees. 

Add to that a need to reset Uber's brash, toxic culture pretty fast, and you've got a nearly impossible job on your hands.

"Uber needs someone who's patient, persistent, has a softer touch, but is just as driven, ambitious and achievement-focused as Travis was," said Marc Cenedella, CEO of career site Ladders. "It's a remarkable job and there's maybe two dozen people on the planet that can do it."

Watch this: Travis Kalanick resigns as CEO, stays on as board member

The shakeup at the top throws into question the future direction of the world's highest-valued startup, worth roughly $70 billion. The change could affect how the service is run and how it offers rides to customers in the 80 countries it serves, from Azerbaijan to Vietnam, and give a lift to rival Lyft. Despite its popularity, Uber is now a tarnished brand -- if you're on Twitter, you've probably seen #DeleteUber, the trending hashtag from people boycotting the service over its many missteps.

Even with its woes, Uber's board will likely have its pick of Silicon Valley's and the world's top executive talent, so long as they can assure the incoming CEO that Kalanick -- who remains a board member and is Uber's single-largest shareholder -- won't get in the way.

And recruitment experts say all of Uber's problems are unlikely to dissuade a new leader from taking on the job. Uber is still the world's most popular ride-hailing service, and it's unclear whether most riders even care about the inside drama at the San Francisco-based startup.  

"Top CEOs will relish a chance to fix the issues this extraordinary company has and lay the groundwork for the next phase of growth," said John Challenger, CEO of Challenger, Gray & Christmas, which helps workers find new jobs.

How we got here

It's not a surprise Kalanick, who helped co-found Uber in 2009, has called it quits. Uber's image problem was bad enough that some of its key investors saw him as a liability. Bill Gurley, a major investor and one of Kalanick's early backers, led the effort to force the CEO to resign, according to The New York Times. On Wednesday afternoon, the newspaper reported Gurley would be replaced on Uber's board by another member of Benchmark, his firm venture capital firm.

His ouster as CEO comes a week after Kalanick announced he was taking a leave of absence, in part to allow him to grieve for his mother, who died just weeks earlier. But it also came on the day that Uber released the results of an internal investigation, led by former Attorney General Eric Holder, that found an overall pattern of unprofessional business conduct. "If we are going to work on Uber 2.0," Kalanick wrote to employees in a June 13 memo, "I also need to work on Travis 2.0 to become the leader that this company needs." 

Some people figured he would return from leave, necessitating a formal request he step down from the company, according to The Washington Post. The New York Times said Kalanick asked for advice from Uber board member Arianna Huffington after receiving a letter titled "Moving Uber Forward" from Gurley and four other top shareholders asking he resign immediately. He made the decision to step down hours later on Tuesday, saying "I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight."

The stage for his departure was set by a raft of scandals that erupted over the past year. Here are some of the (low)lights:

  • In February, Waymo, a self-driving car company owned by Google's parent company Alphabet, sued Uber, alleging that Uber stole secretive autonomous car technology.
  • Also in February, a blog post by former engineer Susan Fowler described a workplace culture involving instances of sexual harassment, gender bias and unprofessional business practices.
  • In March, Uber was in hot water after using a tool called "Greyball" to evade local officials.
  • In April, Uber reportedly had a run-in with Tim Cook after the Apple CEO was upset that the app allowed Uber to secretly identify iPhones, even after its app had been deleted from people's phones.
  • In June, a woman raped by an Uber driver in India sued the company and several executives, alleging that they obtained and mishandled her medical records.
  • In response to Fowler's blog post, the company hired Holder to lead an independent probe into allegations of sexual harassment. The board voted to adopt all of the recommendations in his 13-page report, which included "changes to senior leadership."  
  • During an employee meeting to discuss Holder's findings, board member David Bonderman made a comment disparaging women during a discussion about sexism. Bonderman stepped down from Uber's board a few hours later, saying his comments were "careless, inappropriate and inexcusable."

Not everyone is willing to pile on. Richard Branson, the founder of the Virgin Group, and an attention-grabbing leader in his own right, defended Kalanick during an event hosted by Sprint and its prepaid arm, Virgin Mobile

"He's an extraordinary individual who's human like the rest of us," Branson said. He added that he's recommended an unnamed "he" as a potential CEO candidate.  

And on Wednesday, Uber employees circulated a petition calling for Kalanick's return to the company in an operational role. "Yes, Travis is flawed, as we all are," the petition says. "But his passion, vision, and dedication to Uber are simply unmatched. We would not be here today without him, and believe he can evolve into the leader we need. He is critical to our future success."

On Thursday, news site Axios reported that over 1,000 employees had signed the petition.

Where to next?

Uber, a privately-held company, is now run by a committee of 14 executives and has lost a large number of its leadership due to resignations or firings. As part of Holder's review, more than 20 executives exited the company, including Emil Michael, senior vice president of business and Kalanick's second-in-command. This situation is unsustainable and needs to change soon, said Erik Gordon, a professor at University of Michigan's Ross School of Business.

Watch this: Richard Branson excuses mistakes of Uber's Travis Kalanick

"You can't run anything by a committee of 10," he said. "A company needs real leadership."

The brand currently stands for "an egomaniacal, semi-evil company," Gordon added, so the new leadership will have to take what's good about Uber -- the idea that it's a better alternative to taxi services, for example -- and have the startup stand for that.

The culture can also be changed, recruitment experts said, but that's going to take time and may happen methodically, one issue at a time.

Beyond that, Challenger argued that a major hurdle the board and a new leader will face could be Kalanick, who holds a sizable number of voting shares. Kalanick's decision to stay on the board might undermine the incoming boss.

"They're going to have to prove if they want to get one of these top talents that this person would have autonomy and room to move," Challenger said of the board, "and not be subject to second-guessing from the former CEO."

Even with all those issues, Uber should still end up nabbing a leading executive, with those interviewed for this story and other news reports mentioning executives including Facebook COO Sheryl Sandberg, Hewlett Packard Enterprise CEO Meg Whitman and former Microsoft CEO Steve Ballmer.

With Uber in desperate need for someone to take charge -- especially if it aims to go public one day -- we may find out pretty quickly who that new leader will be.

--CNET's Jessica Dolcourt contributed to this story.

First published June 21, 1:58 p.m. PT.
Update, June 23 at 4:03 p.m. PT: Adds details about employee petition for Kalanick's return, additional background.  

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