Ride-hailing service Uber has endured an astronomically high level of unfortunate events over the past year. Some of these happenings were a series of bad luck. Others were self-inflicted wounds brought on by big egos and poor workplace culture.
Earlier this year, CEO Travis Kalanick called for Uber to undergo an internal investigation following sexual harassment and gender bias allegations at the company. The investigation was led by former U.S. Attorney General Eric Holder.
Those results were just released, suggesting almost 50 ways that Uber can improve its workplace.
If only it ended there. Uber ran into issues in seemingly every direction it turned. I can’t imagine a worse 2017 unfolding for Kalanick, who on Tuesday announced he will take a leave of absence.
Tragically, Kalanick also recently lost his mother.
So Will Uber Ever IPO?
Without Kalanick, Uber has no chief executive, and there’s no telling when or if he’ll be back. Of course, it was already looking for a COO and a CFO, and its CBO/senior vice president of business Emil Michael — Kalanick’s right-hand man — is resigning.
So who’s left?
On the outset, it appears that there’s a nearly $70 billion startup with more than 14,000 employees and a million drivers without a C-suite. There’s no CEO. No top dog. No head honcho. Nada.
So we can pretty much scratch an IPO off the list of things to do in 2017.
An Uber IPO will happen eventually, though, especially as investors continue to have the company’s back.
At a time where it’d be easy to throw Uber under the bus, many investors feel the opposite. Why? Because the business continues to grow despite these issues. Uber is operating in more than 550 major cities around the world and it’s redefining the way we get around. Its 2016 gross bookings of $20 billion were up 100% from 2015. Net revenues came in at $6.5 billion for 2016, although losses were high at $2.8 billion.
As gross bookings continue to grow, so too will revenues. With its money-sucking China operation out of the way (thanks to a deal with Didi-Chuxing), profitability doesn’t seem quite so far away. Not that that’s the main focus at this point.
There Are (Obviously) Issues
Uber has run into operational issues in places like Denmark and Thailand. Finland is now pushing back as well. In fact, a battle with European lawmakers may force Uber into far-tougher regulations in the continent if it’s regarded as a transportation company rather than a technology company.
These issues, largely, are merely unfortunate for the world’s most valuable startup. However, others are not. Workplace culture — it’s bad when your company is under the microscope for sexual harassment claims, only to have a board member throw out a sexist remark at a board meeting amid the scrutiny — could have been fixed or avoided all together.
Uber’s self-driving car fiasco revolving around the simple task of applying for a permit from the state of California was a needless headache for a C-suite already in distress. Additionally, Uber and Alphabet Inc (NASDAQ:GOOGL) are now trapped in a swirling lawsuit after the latter alleged that former engineer Anthony Levandowski stole vital information in Google’s self-driving car work.
Alphabet went on to spin off the project into Waymo, while Levandowski went on to create Otto. Uber later bought Otto for nearly $700 million, getting Levandowski in the deal.
Autonomous car technology is already important — here are seven must-own stocks for it — so this is a pretty big deal for both companies.
Uber vs. Lyft
Lyft’s potential is the one thing that seems to be flying under the radar, despite all the drama. In December 2015, Lyft raised $1 billion at a valuation around $4.2 billion with General Motors Company (NYSE:GM) as the lead investor. But just a few months ago, Lyft raised $600 million at a $7.5 billion valuation.
Why’s Lyft need that money? Because even though it’s only operating in the U.S., it’s got a long ways to go. Earlier this year, Lyft said it will expand from 200 cities to 300 by year’s end. They’ve already done it, though. The 50% increase may seem small, but if Lyft can start clawing away customers from Uber, the latter may feel the pain.
Lyft has also brought on Alphabet’s Waymo and Jaguar as recent partners. That will help in its self-driving car efforts. It should also benefit from its collaboration with General Motors.
Uber has had more than its fair share of struggles and it’s still losing billions of dollars. But at the end of the day, it’s got the biggest lead in a game-changing technology and deep-pocket investors still backing it.
Uber won’t vanish — but it should act quick. Lyft, although almost one-ninth the size, is trying to catch up. Without a management team, it will be hard for Uber to steer the ship and it doesn’t want to lose any more ground to its rivals.
An IPO will eventually happen, but it’s been severely delayed thanks to Uber’s disastrous 2017.