Sexism Controversy Weighs on Valuation of Unicorn Uber
The controversy engulfing maverick ride-sharing company Uber might bring the $69 billion value of this high-flying unicorn — more like Pegasus — back to earth. The latest body blow to Uber, which is battling sexual harassment charges, landed on Chief Executive Officer Travis Kalanick, who is stepping down from the company he helped found, for an undetermined period.
Kalanick’s decision to step away from the world’s highest-valued startup was announced at the same time Uber released an executive summary of an internal investigation — conducted by the law firm of former U.S. attorney general Eric Holder — into the company that is widely seen as tolerating a culture of sexual harassment.
The ongoing tumult might have a corrosive effect on Uber’s valuation. San Francisco-based Uber Technologies Inc. tops a list of the largest unicorns – private companies valued at more than $1 billion – compiled by 247 Wall St. last fall using data from research company PrivCo. PrivCo is one of the world’s most comprehensive private company financial databases. With PrivCo’s platform, users can identify key metrics like revenues, employees, funding and deals.
Based on that information, Uber is about $20 billion more valuable than second-place Xiaomi, a Chinese electronics manufacturer. Other notables on the list are Airbnb and Snap, the latter of which has since gone public.
Unicorns have been proliferating because of the rampaging bull market, now in its ninth year, and technology that is upending the marketplace. Valuations for private companies are dependent on rounds of private investment and are not updated as often as valuations of public companies, whose market caps change during the trading day.
Uber has spread its disruptive ride-sharing business model to virtually all corners of the globe, evolving into a logistics network that now also provides food delivery service. The company also has invested heavily in the future of autonomous cars.
Controversy has dogged Uber from its inception. Drivers have long complained about the pay structure, with some claiming they are employees while Uber maintained that they are independent contractors.
This year has seen the kind of disruption Uber can do without. Earlier this month, Uber fired 20 employees following an internal investigation into hostile workplace practices.
The sexual harassment firestorm began in February, after former Uber employee Susan Fowler published a blog post outlining sexist incidents and sexual harassment. She complained to Uber human resources but instead she said she was punished with negative performance reviews.
There was more hot water for Uber this week as board director David Bonderman resigned from Uber’s board Tuesday following a remark he made at a staff meeting perceived as sexist.
Uber’s push into various markets has prompted often violent responses from taxi and limousine drivers, and local governments around the world have passed regulations trying to restrict its ability to operate at places such as airports.