Uber’s messy breakup with Jones complicates search for COO

During his brief tenure as Uber Technologies Inc.’s president, Jeff Jones toured far-flung offices in India, the Netherlands and other key markets for the global ride-hailing giant. In meetings with local staff, Jones professed that one of his biggest apprehensions was working with Chief Executive Officer Travis Kalanick, according to a person familiar with the gatherings.

Six months after joining Uber, his misgivings were apparently confirmed. Jones, the most senior member of Kalanick’s executive team, resigned as president of ride sharing on Sunday. He joins three other senior executives who have left in the last month as the company grapples with a long succession of scandals. Without naming his boss, Jones chastised Uber management: “The beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber,” he wrote in an email.

The ugly split with Jones further complicates Kalanick’s attempts to navigate Uber’s crises. Along with fulfilling his promise to seek “leadership help” by hiring a chief operating officer, Kalanick must fill new holes in his top ranks and prove that Uber’s culture isn’t beyond repair. “Startups that lose people, that happens,” said Bill Aulet, a senior lecturer on entrepreneurship at MIT. “But startups that lose people in such a bitter way that they don’t believe in the company’s existence? That’s toxic.”

Before joining the adolescent San Francisco startup, Jones was chief marketing officer at Target Corp. The 49-year-old quickly found that his younger supervisor lived up to his reputation for being headstrong, pugnacious and hard-
partying, said a person familiar with Jones’s thinking. Jones advocated for major changes favored by Uber drivers, such as adding the ability to tip within the app and a more cautious approach to the company’s auto leasing and safety programs, the person said. However, the CEO was resistant to some of the proposals, and Jones’s team of Kalanick loyalists often bristled at taking direction from a new leader, said multiple people, who asked not to be identified discussing internal matters.

Kalanick, 40, has acknowledged his weaknesses as a manager. He apologized after Bloomberg published a video of him berating an Uber driver. His plan to hire an operating chief was seen internally as an effective demotion for Jones, insiders said. In an email to employees obtained by Bloomberg, Kalanick wrote: “After we announced our intention to hire a COO, Jeff came to the tough decision that he doesn’t see his future at Uber.”

Bill Gurley, a venture capitalist who sits on Uber’s board of directors, is helping lead the COO search, along with executive recruiting firm Heidrick & Struggles, people familiar with the process said. Possible targets floated by investors include Thomas Staggs, the former COO at Walt Disney Co.; Tim Armstrong, CEO of Verizon Communications Inc.’s AOL; and John Martin, CEO of Time Warner Inc.’s
Turner, said a person familiar with the matter. The three men declined to comment.

Kalanick has turned to some Silicon Valley bigwigs for advice on the search. He’s sought input from Facebook Inc.’s Mark Zuckerberg and Sheryl Sandberg, as well as Hewlett-Packard Enterprise Co.’s Meg Whitman, two people familiar with the matter said. Kalanick and Zuckerberg were recently photographed together at a Breakfast at Tiffany’s-themed ping-pong party called Babes and Balls.

Uber, a worldwide ride-hailing gargantuan that once seemed unstoppable, has been rocked by tumult this year. It was the subject of a boycott in January dubbed #DeleteUber for appearing sympathetic to Donald Trump, which led Kalanick to step down from the president’s business advisory council. In February, it faced explosive allegations from a former employee that her boss sexually harassed her and that the human resources department protected him, prompting the company to hire the former U.S. attorney general Eric Holder to investigate. Alphabet Inc.’s Waymo sued Uber for allegedly stealing trade secrets. This month, the New York Times reported that Uber used a tool called Greyball to help drivers evade government regulators and enforcement officials.

If not for the maelstrom at Uber, the COO job might be one of the Valley’s most appealing job openings. The privately held company was valued at USD69 billion by investors last year, making it the world’s most valuable technology startup. But the company risks setting expectations for this role too high, said Robert Siegel, a lecturer at Stanford’s Graduate School of Business: “Is an outsider coming in going to fundamentally overhaul the culture in and of itself? No.”

“Is an outsider coming in going to fundamentally overhaul the culture in and of itself? No.”

There’s also the question of whether Kalanick will entrust his new deputy to operate unimpeded. In order to attract a top candidate, Uber may offer the person an expanded role beyond operations to suit his or her area of expertise, people familiar with the matter said. For example, Uber doesn’t have a chief financial officer.

Several more vacancies opened up amid the recent tumult. Amit Singhal, a former Google executive, was asked to resign as senior vice president of engineering last month when Uber learned of a previously undisclosed sexual harassment claim from his time at the search giant. Singhal denied the allegation. Ed Baker, vice president of growth and product, left this month. And hours after Jones’s exit became public on Sunday, Brian McClendon said he was leaving amicably to return to his hometown in Kansas. McClendon was a vice president overseeing mapping projects.

The four men who left in the last month sat on a senior leadership team of about two-dozen. Raffi Krikorian, a director in Uber’s self-driving car division, also quit this month.

In Jones’s short stint at Uber, he positioned himself as a voice for drivers. He held question-and-
answer sessions on his Facebook page, which were frequently flooded by complaints from Uber drivers. He promised them better support, clearer communication and improvements to the app. “From all I heard and experienced, one thing is clear: we have a lot of work to do,” Jones wrote in a blog post.

Behind closed doors, Jones was a vocal proponent for allowing customers to tip within the app, a top-requested feature by drivers, according to two people familiar with the discussions. Although other executives have privately expressed support for in-app tipping, Kalanick has long held what he’s called “principled” opposition to it. He believes restaurants and taxicab companies have used the prospect of tips as a way to underpay workers, the people said.

However, Kalanick may be softening on this stance. During a recent call with employees, he suggested he would reconsider his views on driver earnings and tips, one person said.

Among Jones’s objections, he thought the company should have pursued a path to profitability, which it had set in some developed markets last year, said one of the people. As he argued for more careful spending, the mandate from the top was for aggressive expansion. Bloomberg reported last year that Uber was on track to lose $3 billion in 2016 based on performance from the first three quarters. Uber was on pace to generate more than $5.5 billion in revenue. Jones joked to at least one group of people that when he came to the company, he expected a P&L, meaning a profit and loss statement, but he’d found only an L, said a person at the meeting.

Despite expressing strong views, Jones failed to make sweeping organizational changes during his time there. By contrast, Rachel Whetstone quickly restructured her policy and communications team after coming onboard. Jones had outlined some plans for changes in his group before his abrupt resignation, another person said.

Jones also expressed concerns that Uber’s auto leasing program could attract reckless drivers and that options to pay for fares in cash, mainly outside the U.S., put drivers in danger, one person said. Riders who pay in cash can avoid registering their names with Uber, making it easier for criminals to remain anonymous, and drivers who collect cash can be lucrative targets. But the cash option has helped the app grow in places where people don’t usually have credit cards.

Uber was rolling out cash payments more broadly in Latin America when Jones joined last year. At the time, Andrew Macdonald, the regional general manager, dismissed concerns about dangers associated with tipping: “If they’re worried, it’s a bit emotional.” He later apologized and committed to making improvements to how Uber handles cash.

Jones had mostly resisted accepting cash in the U.S., along with Rachel Holt, who runs the region, a person familiar with the matter said. With Jones gone, Holt and Macdonald will report to Kalanick until he hires an operating chief. Eric Newcomer, Bloomberg