Uber Was Being Run As A 'Frat Party,' Former GM Exec Says

Uber Technologies is a prime example of a Silicon Valley startup that has become too big for the original founders to manage, Bob Lutz, a former General Motors Company (NYSE:GM) vice chairman told CNBC.

Uber's co-founder and recently ousted CEO Travis Kalanick did a good job in running Uber when it is a small startup, Lutz said as a guest on CNBC's "Squawk Alley" segment. But once Uber grew in size, it could no longer be run like it is a "frat party" and executives need to "obey the rules," including proper sexual conduct, and minimizing/avoiding jokes about races and ethnicity.

"That has to go away, and at some point when the company gets big and you are in charge of all that shareholder money, you owe it to people to behave responsibly in a mature fashion," he added. "And [Kalanick] was obviously not capable of doing that."

The fact that Kalanick will be replaced is a "good thing" for Uber, Lutz concluded.

Not Just About Morals And Ethics

Vanity Fair's Nick Bilton jumped in and suggested that Uber's financial backers might not necessarily have ethics as their top concern. Rather, Uber's venture capital investors want a return on investment and for the company to go public — an event that wasn't on Kalanick's near-term radar.

"For the VCs that pushed him out, I don't believe it was all about ethics and morals," Bilton said. "They wanted to get their money out and [an IPO] is the only way they can do it since it is such an overvalued company."

But this isn't anything new for Bilton, who suggested that the venture capital scene has prioritized profits over "making the world a better place."

Related Links:

Why Sheryl Sandberg Won't Leave Facebook For Uber

Gadfly's Shira Ovide: We All Created The Uber Monster

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