Early Uber Investors Criticize Company’s ‘Toxic Patterns’

Uber Technologies Inc. Electric Car Taxi Service In Madrid
The Uber Technologies Inc. ride-hailing service smartphone app sits on a smartphone display in this arranged photograph at a taxi rank in Madrid, Spain, on Friday, Jan. 13, 2017. Ride-hailing service Uber Technologies has launched its first electric car taxi service in Madrid, operating a fleet of Tesla Motors Inc. Model S electric vehicles. Photographer: Angel Navarrete/Bloomberg via Getty Images
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Two early Uber investors are upset with the company over how it investigated recent allegations of sexual harassment and workplace abuse.

Venture capitalists Mitch and Freada Kapor wrote a public letter to Uber on Thursday in which the two criticized “toxic patterns” within the ride-sharing startup’s company culture for allegedly ignoring workplace harassment.

The married investors’ letter comes amid a turbulent week for Uber, during which a former employee, Susan Fowler, described several episodes of sexual harassment and failures by the company’s human resources department to do anything about her complaints.

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Days after Fowler wrote about her alleged experiences, The New York Times published an explosive look into Uber that detailed a wild and reckless company culture. Current and former Uber employees told the Times that various managers sexually harassed employees, threatened subordinates with violence, and encouraged a dog-eat-dog culture that overlooked discriminatory behavior.

The Kapors described Uber’s culture as being “plagued by disrespect, exclusionary cliques, lack of diversity, and tolerance for bullying and harassment of every form.”

Since first investing in Uber in 2010, the two said they “have tried for years to work behind the scenes to exert a constructive influence on company culture.”

“We are speaking up now because we are disappointed and frustrated; we feel we have hit a dead end in trying to influence the company quietly from the inside,” the couple wrote.

The investors were especially upset about Uber’s decision to conduct an internal investigation into recent abuse and discrimination claims led by a team that includes former U.S. Attorney General Eric Holder, media mogul Arianna Huffington, and Uber’s recently hired chief human resources officer, Liane Hornsey.

The three leads chosen for the investigation create a conflict of interest for Uber, because Holder has worked with Uber since the summer on another matter, Huffington is a board member, and Hornsey reports directly to Uber CEO Travis Kalanick and his executive team.

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“This group is not set up to come up with an accurate analysis of the culture and a tough set of recommendations,” the investors wrote.

From the letter:

We are speaking out publicly, because we believe Uber’s investors and board will rightly be judged by their action or inaction. We hope our actions will help hold Uber leadership accountable, since it seems all other mechanisms have failed. As investors, we certainly want to see Uber succeed, but success must be measured in more than just returns. Uber’s response to this particular crisis will be defining for the company, so the stakes are high to get it right. Current, past and prospective employees will be watching, as will drivers and entrepreneurs and countless others, including these investors.

In response to the letter, an Uber spokesperson sent Fortune the following statement co-written by Holder and his law firm partner Tammy Albarran.

“We will leave no stone unturned in our work and all voices will be heard. We will be thorough, impartial and objective, and we are conducting this review with the highest degree of integrity and professionalism.”

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