# Uber pays a $26 billion price for its toxic corporate culture



## BurgerTiime (Jun 22, 2015)

http://amp.smh.com.au/business/uber-pays-a-26-billion-price-for-its-toxic-corporate-culture-20170630-gx1x3w.html
*Uber pays a $26 billion price for its toxic corporate culture*
The Sydney Morning Herald July 1 2017 by Elizabeth Knight

*Those who think corporate culture is just a soft issue should take a close look at Uber.*

The Uber story stands as parable of the perils of poor governance and how it can spread to a secondary cancer - corporate culture. The company, which only a few months ago was worth US$70 billion ($91 billion), is now said to have lost as much as $US20 billion ($26 billion) of that value.

The extraordinary part is that there is no suggestion this plunge was the result of any short-term deterioration in revenue. It was a series of scandals, ranging from the alleged theft by an Uber engineer of Google's driverless car technology, to bullying, sexual harassment and accusations of passenger abuse by drivers.

Poor governance allows a toxic culture to fester, and Uber provides clear evidence of how a good business model and value can be undermined.

This is no regular instance of 'a few bad apples' or even one that's confined to a single department.

Nor does the Uber tale appear to involve financial misdeeds, serious breaches of accounting or theft.

This is a cultural disease and it appears to be riddled throughout the organisation. Left unchecked, it is threatening to become existential.

Financial markets are now questioning whether this company, which has revolutionised markets around the world with its ride-hailing service, could now succumb to newer competitors.

Poor corporate culture has traditionally been an issue difficult to quantify or regulate. But that doesn't mean it doesn't come at a cost to organisations.

The problematic culture in Australia's banking sector, which has been beset with scandals in the areas of financial advice, insurance and foreign exchange, gave the federal government the excuse to to hit the major banks with a $6.2 billion tax.

This was a far bigger than expected fine for the banks, which previously thought that the financial penalties would be confined to compensating customers that had been victims.

Uber, meanwhile, fired more than 20 employees after a company investigation into sexual harassment claims and workplace culture.

This was the result for a former Uber engineer, Susan Fowler, going public with allegations of sexual harassment and discrimination, which in turn prompted the company to hire former US attorney general Eric Holder to investigate the claims.

The story sparked plenty of debate about sexism and misconduct across Silicon Valley startups and was a salutary tale for other entrepreneurial companies whose governance structures had not keep pace with their corporate growth.

*Rot starting from the top*
In Uber's case, there was clearly a belief from its major investors that the rot started at the top of the organisation and with its founder, Travis Kalanick. He resigned in mid-June, having earlier announced he would take an indefinite leave of absence. Shareholders didn't think that had gone far enough.

And it was difficult to ignore Kalanick's contribution to Uber's culture rot when he was caught on video yelling at an Uber driver who had been complaining about falling rates.

"Some people don't like to take responsibility for their own shit.," he railed. "They blame everything in their life on somebody else. Good luck!"

An avalanche of senior executives, including the chief financial officer, have departed the company over recent weeks and months in the wake of the various scandals, leaving a business scrambling to fill various vital management positions.

Whether Kalanick's departure is significant enough to sever his influence on management remains to be seen. He is still on the board and says he will be available to help.

*Assault allegations*
Meanwhile, the lack of governance can also blamed for another major problem that has besieged Uber - the behaviour of its drivers.

Apart from the accusations of rape of which there are many (The Independent newspaper reported that there were 32 cases of sexual assaults by Uber drivers in the UK last year), there are many other assault claims.

While not all complaints will be valid, the rising tide of negative publicity is clearly scaring off investors.

Because Uber is not sharemarket listed, its valuation is set when shares are privately traded or fresh capital is raised.

The markets have been waiting for Uber to float on the US stock exchange this year in what was previously billed to be a major IPO. They may need to wait a bit longer.


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## nickd8775 (Jul 12, 2015)

Travis took $60 billion of value


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## roadman (Nov 14, 2016)

Article states value decreased by 20 billion which would mean it is worth 50 billion instead of 70 billion. They running out of money. The existing shareholders are going to lose big when they need to raise more, and there shares get heavily diluted.


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## RamzFanz (Jan 31, 2015)

BurgerTiime said:


> http://amp.smh.com.au/business/uber...-toxic-corporate-culture-20170630-gx1x3w.html
> 
> 
> 
> ...


Learn to read. Anti-Uber people, at least pretend.


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## BurgerTiime (Jun 22, 2015)

roadman said:


> Article states value decreased by 20 billion which would mean it is worth 50 billion instead of 70 billion. They running out of money. The existing shareholders are going to lose big when they need to raise more, and there shares get heavily diluted.


It's different money translation it should say US yeah.


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## Drivincrazy (Feb 14, 2016)

Lawsuits will keep the drain going. $20 B valuation soon to be. Uber signs drivers up by the 100,000's...vast majority quit in short order. Raise driver pay is one answer. Maybe they have others...we will see.


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## observer (Dec 11, 2014)

Your title is wrong.

Ubers valuation drops from maybe 70B to maybe 50B. 

This is a rehashed article published by many other sources.


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## Mr. G (Sep 4, 2016)

Fake news. The Russians hacked your post.


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## BurgerTiime (Jun 22, 2015)

Mr. G said:


> Fake news. The Russians hacked your post.


Those guys are great for headlines


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## effortx2 (Jun 21, 2017)

How do they know? Did they do another funding round?

If so, it actually means they somehow found even more money to spend (irrespective of valuation).


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## Fubernuber (Jan 15, 2017)

Their valuation is based off member count at this point. Losses, opperating expenses and even gross revenue take a backseat to active rider count. When that number stops growing is when the fun starts. You can help cripple uber and lyft by not accepting pool. This will ultimately force them to raise rates directly and indirectly


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## Jo3030 (Jan 2, 2016)

Valuation is only what someone is willing to pay for something.
If I have a car that no one wants to buy, its value is essentially 0.


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## dirtylee (Sep 2, 2015)

It's what happens when qualifed people keep turning down your ceo job offer & publicly state they will not take it. 

How often do you hear about that happenning?


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## run26912 (Sep 23, 2015)

BurgerTiime said:


> http://amp.smh.com.au/business/uber...-toxic-corporate-culture-20170630-gx1x3w.html
> 
> 
> 
> ...


With private companies, the so-called valuation is purely subjective. The only way Uber's valuation dropped is if shares were exchanged or sold at a discount to the last round of financing. Uber has an airtight super strict policy of restricting outside transactions on it's shares, they are absolutely ILLIQUID for a reason. At least this was the case when Travis was CEO. Somehow, some were able to unload shares I assume, otherwise, the article is worthless.

Technically this company has no real assets except for cash, a few sh*tty self-driving cars and a non-proprietary, non-patented piece of monkey crap APP... and some Uber Eats delivery bags. Their marketshare is non-tangible on the books. Uber and valuation don't belong in the same sentence.

BONG!!!


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## Michael - Cleveland (Jan 1, 2015)

observer said:


> Your title is wrong.
> 
> Ubers valuation drops from maybe 70B to maybe 50B.
> 
> This is a rehashed article published by many other sources.


The title has been corrected to reflect the headline of the article.

Did I miss it somewhere in the article, or is the author's statement of valuation decline entirely speculation?
I mean, I don't doubt the valuation (because at $46bil that's a valuation of just around 4 times current revenues)...
but I don't see any basis for the author's estimate - not even the one I just cited.


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## observer (Dec 11, 2014)

Michael - Cleveland said:


> The title has been corrected to reflect the headline of the article.
> 
> Did I miss it somewhere in the article, or is the author's statement of valuation decline entirely speculation?
> I mean, I don't doubt the valuation (because at $46bil that's a valuation of just around 4 times current revenues)...
> but I don't see any basis for the author's estimate - not even the one I just cited.


Ahhh, yea I see it has now been changed.

I don't think there is any basis. Everyone is just guessing, including Uber. There won't be an honest valuation until they go public, if they ever do.


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## Michael - Cleveland (Jan 1, 2015)

observer said:


> Ahhh, yea I see it has now been changed.
> 
> I don't think there is any basis. Everyone is just guessing, including Uber. There won't be an honest valuation until they go public, if they ever do.


valuation is in the eye of the be[share]holder.


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## Ballard_Driver (Jan 10, 2016)

observer said:


> Ahhh, yea I see it has now been changed.
> 
> I don't think there is any basis. Everyone is just guessing, including Uber. There won't be an honest valuation until they go public, if they ever do.


But the thing is being public doesn't mean anything either... In fact it is often even less "real" than private valuations, which can _theoretically _be more sober and analytical than the whims of the market. If they had been public right now their stock could have tanked 50% over bad PR, even if fundamentals were up, up, up! In theory public stocks have the "wisdom of the masses" getting at the right numbers... But the history of stock markets show that's a load of bull. Companies like Coca Cola get hammered during general market downturns for no good reason, yet magically shoot back up when the broad economy improves. Zero logic, all stupid emotion. Guys like Warren Buffett who actually have sane and rational behavior on their side laugh heartily and buy away while everybody else is being dumb.

As to Uber, in their case the PR has been bad enough to where it should take a bite out of their valuation... But nobody knows by how much, because nobody knows how much (if at all) it changes their long term prospects. Everybody hates Comcast... But they pay their Comcast bill so they have internet and TV... Everybody may hate Uber, but they'll still pay them to get home from the bar.


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## Rakos (Sep 2, 2014)

Oops...must be time to sue Uber...

Before they run out of money...8)

We could be the ones left...

Holding the bag....aaarrrrrggggghhhh!

Rakos


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## effortx2 (Jun 21, 2017)

In fact the price they pay may be even greater than $26 billion:

https://www.bloomberg.com/news/arti...ley-s-overstuffed-startups-risk-messy-blowout

Long story short there's a big glut of startups just kind of hanging around and they'll either need to start IPOing rapidly one after the other - or they need to start being sold off, like, asap.

This affects Uber negatively because they appear to be on a downward trajectory in the minds of many here (who have first-hand experience with the firm) and certainly in the court of public opinion (heavily influenced by the media of course).

With so many places coming on-line in which to dump money, why would, say, a stock market investor risk it with Uber?

Of course, it could be the case that this purported "venture capital" stuff is simply a direct transfer of wealth: a jobs program for a specific group of people, with no real intention of garnering any returns to investors.


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## blackjackross (Dec 16, 2016)

BurgerTiime said:


> http://amp.smh.com.au/business/uber-pays-a-26-billion-price-for-its-toxic-corporate-culture-20170630-gx1x3w.html
> *Uber pays a $26 billion price for its toxic corporate culture*
> The Sydney Morning Herald July 1 2017 by Elizabeth Knight
> 
> ...


It's not a good business model if you are losing $2.5 a year and the rate of loss is increasing. If using deceptive business practices against competitors, deploying software to deceive government oversight, cheating the only part of the company that really earns any money for you---it's drivers, is a good business model, then all you MBA candidates stop wasting your precious time and money. Go work for some mob owned companies for a while to make your bones and then go work for Uber.


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## 5 Stars (Jul 11, 2016)

Michael - Cleveland said:


> The title has been corrected to reflect the headline of the article.
> 
> Did I miss it somewhere in the article, or is the author's statement of valuation decline entirely speculation?
> I mean, I don't doubt the valuation (because at $46bil that's a valuation of just around 4 times current revenues)...
> but I don't see any basis for the author's estimate - not even the one I just cited.


Its called click-bait. Welcome to the Internet.



run26912 said:


> Technically this company has no real assets except for cash, a few sh*tty self-driving cars and a non-proprietary, non-patented piece of monkey crap APP... and some Uber Eats delivery bags. Their marketshare is non-tangible on the books. Uber and valuation don't belong in the same sentence.
> 
> BONG!!!


Technically, this is not how valuations work for tech start-ups. If you see a red apple, you can quantify it as many ways as you want, it's taste, density, weight, shape, etc, but you cannot quantify how many apple trees will grow if you spread its seeds. This is as layman as I can put it when talking about valuations for start-ups (which uber is far from now, but essentially)...


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## Ca$h4 (Aug 12, 2015)

No one who is respectable or responsible or knows how to read an Income Statement wants to work for Uber because Uber is a rouge's gallery of scofflaws. aka, disruptors. More importantly no one wants to buy Uber shares because Uber loses money and mainly exists because it subsidizes rides and also because Uber is still degradeingly controlled by Kalanick's shares. Bottom line, Uber having difficulty finding suckers. The incoming downround is going to smash Uber's Unicorn valuation in half if Uber is lucky.

*SoftBank is not talking to Uber about buying shares, says source*

*http://www.cnbc.com/2017/07/14/uber-backers-consider-selling-shares-to-softbank-report-says.html*


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