Even though Uber Technologies Inc. has found itself a new CEO, its problems are likely far from over.
Newly appointed chief executive Dara Khosrowshahi is staring down at a company that's losing billions of dollars each year and a management team that has seemingly few ideas on how it can achieve profitability. On top of that, it faces several ongoing lawsuits -- one with a major shareholder and another brought by internet giant Alphabet Inc.'s (GOOGL) Waymo -- and increasing skepticism about its high-flying $68 billion valuation.
Elevation Partners' co-founder Roger McNamee.
Elevation Partners' co-founder Roger McNamee, who was an early investor in Facebook Inc. (FB) and Alphabet, said Khosrowshahi really has no choice but to pull back on some of Uber's bets, including its aggressive overseas expansion and ambitious self-driving car program. Uber can still expand internationally, he added, but they shouldn't be "setting money on fire" in new markets anymore. McNamee also believes there are some fundamental unanswered questions about the sustainability of Uber's underlying business.
"If I were the new CEO, the first thing I would do is order a forensic audit of the business," McNamee told TheStreet. "I have no reason to believe there's something wrong with the numbers, but there's been something wrong with literally everything else. This was a company not even remotely troubled by rules and regulations -- no rules and regulations applied to them."
On numerous occasions, Uber has repeatedly tested the limits of regulators, while depending on shady business tactics to grow the ride-hailing service, as part of its grow-at-all-costs attitude. Most recently, Uber said it was cooperating with the Department of Justice as officials investigate whether it violated a U.S. law against foreign bribery. It's also the subject of another DOJ investigation into its "Greyball" software, a tool that Uber used to evade law enforcement agencies trying to crack down on it in areas where its service hadn't yet been approved.
Ride-hailing rival Lyft Inc. has previously accused Uber of using a secret program called "Hell," which allowed Uber to see how many Lyft drivers were able to give rides and what they were charging. Additionally, the California Department of Motor Vehicles forced Uber to stop testing self-driving cars in the state after the company refused to apply for a simple $150 permit.