Jun 14, 2017

Uber's $68 billion valuation at risk amid culture crisis

Heisenberg Media/Creative Commons

Uber's dysfunctional and toxic work culture is the headline reason for its current chaos. It threatened Uber's reputation and ability to attract and keep top talent.

But, as CEO Travis Kalanick goes on leave and loses some of his power when he comes back, a risk remains to Uber's out-of-this-world, $68 billion valuation. Dogged by a lawsuit that it stole its self-driving technology from Waymo, Uber has lost the undisputed perception of a company as likely as any to be central to the future of transportation. The Waymo case threatens to leave Uber armed with one of the world's best-known brand names, but still a taxi service, and less prepared than competitors for the widely forecast shift to self-driving cars, a transformation that Kalanick himself has called "basically existential" for Uber.

Kalanick's strategy: He has argued that Uber's enormous valuation — it is the most valuable startup in the world — is justified by his plan to create a self-driving fleet, and eliminate many of the company's costly drivers. Analysts largely agree with the strategy. But the proprietary technology on which he has been relying is now the subject of the Waymo lawsuit, putting the company as conceived at grave risk. The trial begins in October.

Kalanick successfully muscled his way into markets around the world, said Kevin Rivette, of Sherpa Technology Group, a Silicon Valley consultant firm. But — while stirring up a hornet's nest of trouble — he also failed to build a rich foundation of intellectual property under Uber's feet. This has left it "a company based on plans and an idea," rather than one armed with its own valuable, protective inventions, Rivette told Axios.

Last year, Aswath Damodaran, a valuation expert at New York University, said that Uber's biggest problem was parlaying its outsized market size into outsized profits. That's why he estimated Uber's valuation at about $23 billion, much less than the $68 billion at which its latest investors bought shares. Uber's challenge now is to justify the greater number.

  • Intellectual property isn't the sole basis for a company's valuation or predictor of its ultimate success, and Uber is improving its AI algorithms. But, aiming to come out on top in a brutally competitive space in which IP is a central factor while also validating its sky-high valuation, Uber has said it's crucial to develop its own autonomous driving technology.
  • Uber's technology relies on Lidar, a sensing system. "If I was sitting on Uber's board, I would say, 'Let's pick up every patent related to that," Rivette told Axios.

Go deeper

John Kelly defends James Mattis against Trump attacks

John Kelly in the White House in July 2017. Photo: Cheriss May/NurPhoto via Getty Images

Former White House chief of staff John Kelly defended James Mattis on Thursday after President Trump attacked the former defense secretary as "the world's most overrated general" and claimed on Twitter that he was fired.

What he's saying: “The president did not fire him. He did not ask for his resignation,” Kelly told the Washington Post in an interview. “The president has clearly forgotten how it actually happened or is confused."

Barr claims "no correlation" between removing protesters and Trump's church photo op

Attorney General Bill Barr said at a press conference Thursday that there was "no correlation" between his decision to order police to forcibly remove protesters from Lafayette Park and President Trump's subsequent visit to St. John's Episcopal Church earlier this week.

Driving the news: Barr was asked to respond to comments from Defense Secretary Mark Esper, who said Tuesday that he "did not know a photo op was happening" and that he does everything he can to "try and stay out of situations that may appear political."

Updates: Cities move to end curfews for George Floyd protests

Text reading "Demilitarize the police" is projected on an army vehicle during a protest over the death of George Floyd in Washington, D.C.. early on Thursday. Photo: Yasin Ozturk/Anadolu Agency via Getty Images

Several cities are ending curfews after the protests over the death of George Floyd and other police-related killings of black people led to fewer arrests and less violence Wednesday night.

The latest: Los Angeles and Washington D.C. are the latest to end nightly curfews. Seattle Mayor Jenny Durkan tweeted Wednesday night that "peaceful protests can continue without a curfew, while San Francisco Mayor London Breed tweeted that the city's curfew would end at 5 a.m. Thursday.