Investors step in when company founders cross the line

The resignation of Uber’s chief executive Travis Kalanick last week shocked the corporate world.
Uber CEO Travis Kalanick. (File |Reuters)
Uber CEO Travis Kalanick. (File |Reuters)

The resignation of Uber’s chief executive Travis Kalanick last week shocked the corporate world. The symbiotic relationship between the founder of Uber and the $70 billion taxi aggregating company he had built into the world’s most valuable start-up operating in 570 cities blew up in seconds.

There were problems of sexism and macho culture in the organisation, but nobody thought Tuesday June 20 would be Kalanick’s last day as Uber chief.

Closer home, a parallel corporate drama unfolded when CEO and founder of popular online entertainment channel The Viral Fever, Arunabh Kumar, announced on 16 June that he was quitting.

This came after the Mumbai police recorded First Information Reports of two former women employees alleging sexual harassment.

Ironically, it was an on-line post by an anonymous ‘Indian Fowler’ alleging sexual misconduct against Kumar that triggered a spate of complaints by other employees.

The name ‘Indian Fowler’ was obviously a variant of Susan Fowler, an Uber employee who first went public with a blog post detailing a history of sexual harassment in the company.

Festering Issues

Kalanick’s hasty exit was hardly voluntary. Last Tuesday, the day the Uber chief quit, Matt Cohler and Peter Fenton, two representatives of Benchmark, a Silicon Valley fund and among the largest investors in Uber, collared Kalanick in a Chicago hotel. They presented a letter from 5 of Uber’s major investors, including Benchmark and Fidelity Investments, with 4 demands. His resignation topped the list.
Externally, it came as a surprise; but internally the pressure cooker had reached bursting point. A video showing Kalanick arguing with an Uber driver had gone viral, and a scandal had broken with an Uber executive trying to access the medical records of a woman who had been raped by an Uber driver in India.

As the company affairs editor of a prominent British daily put it on a BBC World News discussion: “The atmosphere was so toxic that when the internal investigation report came up for review, an Uber board member (male) castigated another member (female) for talking too much!”

The decision of the big investors in Uber to sack Kalanick was not just an ethical decision. It was a hard-nosed business call keeping the best interests of the company in mind. Kalanick’s tech vision and drive that took Uber to stratospheric heights was also his undoing. It had made him cocky and over-riding, a culture that then permeated the entire company.

The string of sexual allegations and scandals had dented the Uber brand. Many of Uber’s top executives had threatened to exit if Kalanick did not step aside. To the investors, Uber had become rudderless.

They had to bring in change, preferably starting from the top.

Arunabh Kumar, CEO of TVF, is a mirror image, albeit a smaller replay of the Uber saga. After the sexual charges against him became public, Kumar had avoided arrest, and he had bullied his employees into silence; but the negative atmosphere impacted the company’s fortunes.

Ultimately principal investor Tiger Global that had invested Rs 66 crore this February, seeing the dipping financials, took a call that Arunabh Kumar must leave. It was perhaps the only way to get the company back on the rails.

Gender Exploitation

There are some obvious takeaways. Success, and the laurels that come with it, make even the best of company leaders cross the line. They do it knowingly with the belief that no one would be able to challenge their entrenched positions. In the process, they cause immense harm to the company and its employees.

The past unfortunately is no deterrent. Phaneesh Murthy, one of the best of Infosys’ original ‘A’ team, was sacked for his sexual misdemeanours; not once, but twice – first, by Infosys in 2000, and then in 2013 by iGate Corporation where he was CEO.

To use power at the workplace to seek sexual favours and harass those who don’t give in is the worst form of misogyny; but, as these examples indicate, gender exploitation at workplace is not going away any time soon. India has a progressive legislation the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The law makes it mandatory to set up internal complaints committees and aims at creating safe workplaces. Similarly, the Companies Act, to promote gender equality, provides that all publicly listed companies enlist at least one woman board member.

These are applied more in their breach making corporations more feudal, and less productive. What is lost in the din is: it not just about ethics; it is about more efficient capitalism.

The author can be contacted at gurbir1@gmail.com

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