ROADSHOW

For a private company, Uber is behaving a lot like a public one

Obsession
Future of Finance
Obsession
Future of Finance

One of the most unusual things about the dramatic shakeup at Uber is that it all happened pre-IPO.

Sending the co-founder/CEO packing when the downside to his immaturity finally eclipses the upside to his brilliance? Calling in a former attorney general of the United States to investigate the corporate culture, and disclosing the report with his recommendations for reform? Apologizing to customers (subject line: Our path forward) and promising to become “the company you deserve”?

Usually you have to wait for the shares to be listed before you can see a company as big as Uber go through these kinds of machinations.

It speaks to multiple trends, starting with the new desire for corporate entities to demonstrate human empathy, and the self-flagellation that is now de rigueur when they don’t. But it also reflects alterations to the timeline of Silicon Valley unicorns, for which an IPO no longer needs to be a foregone conclusion. There are alternatives now, made easier by huge growth in the private-equity industry (which managed a record $2.5 trillion in assets as of June 2016, according to figures from Preqin) and by secondary markets where antsy employees can try to cash out their shareholdings.

Perhaps Kalanick’s public downfall also reflects the leadership qualities we value now. It has only been eight years since Uber started, but just in that short time, the model of the command-and-control executive went out of fashion and a new, more consultative approach to leadership set in.

Around this time a year ago, Quartz was wondering whether Uber’s valuation could sustain itself, and what a down round would do to its IPO prospects, concluding:

It still could go public, but at a humbler valuation than its latest funding rounds suggest. And in that case, there may be no obvious way to make a killing betting against it, since Uber will in effect have swallowed the harsh medicine itself.

Now that Uber is having not a down round but, perhaps more worrisomely, a veritable lost-in-the-woods moment, its remarkable stubbornness in the face of what must have been extraordinary pressure to go public is finally paying off.

But this shakeup might also prove to be the catalyst that sends Uber into the arms of the IPO market, as a good deal of that aforementioned stubbornness was coming directly from the CEO himself. Perhaps that was the ultimate reason for the shareholder revolt against Kalanick. In any event, the market can take heart that Uber now has plenty of experience acting like a public company.

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