With its SoftBank deal, Uber may have invited a tiger into the hen house
- On Thursday, SoftBank became one of Uber's largest investors.
- The checks were barely cut when Uber's new board member from SoftBank hinted that SoftBank was ready to throw its weight around and influence the direction of the company.
- The problem is what SoftBank wants Uber to do may be better for SoftBank than for Uber.
The instant the checks were cashed in Softbank's $9.3 billion investment in Uber on Thursday, SoftBank started throwing its weight around.
Rajeev Misra, Uber's new board member from SoftBank, told the Financial Times on Thursday that the company would hit profitability faster if it left certain international markets and focused on others. He wants Uber to concentrate on growing its business in the US, Europe, Latin America and Australia.
Notice the region he didn't mention? Asia.
Even though Uber has been known to exit money-pit markets like China or Russia, giving up on Asia would still be a major shift from Uber's mission of "transportation as reliable as running water, everywhere for everyone."
More importantly, under new CEO Dara Khosrowshahi, Uber is making parts of Asia into a model of the kinder, cooperative, law-abiding company that Khosrowshahi wants to build. Throughout Asia, Uber has inked several partnerships with taxi companies, once its sworn enemies. Even in India, where Uber faces stiff competition and had a rocky start (including a high-profile rape of a passenger that led to Uber's temporary ouster from the country), the company by the end of 2016 claimed it had a profitable, 40% market share.
Such examples are especially important as Uber tries to get in the good graces of London regulators, one of the most important markets in Europe. Uber lost its London license in September thanks to a number of scandals including the use of a technology called Greyball used to dodge regulators.
So what motivated Misra's suggestion?
The first thought is that Uber pulling out of Asian countries would be great for SoftBank, which has investments in Uber's competitors throughout Asia.
To recap: In 2017, the Japanese-based SoftBank moved far beyond its roots as a telecommunications and internet giant and became one of the most powerful, perhaps even the most feared, investor in tech when it raised a whopping $100 billion investment fund. Like its deal with Uber, SoftBank has been pouring vast amounts of money into a wide assortment of companies.
With that newfound power, SoftBank tossed out one of the sacred tenants of investing: avoiding conflicts of interest in its investment portfolio.
Before it bought into Uber, SoftBank was already an investor in several major Uber rivals, including Didi Chuxing in China, Grab in Southeast Asia, 99 in Brazil, and Ola in India.
So, on the first day of the new partnership, SoftBank's board member hints he wants to steer Uber away from markets where its other companies compete. That would neatly divide the ride-sharing market to serve SoftBank's needs, even if it didn't fit Uber's global ambitions.
But remember, ousted CEO Kalanick remains a board member, a major shareholder, and is still vocally committed to helping Uber best its rivals, maybe at all costs. So instead of this deal signaling the end of Uber's dysfunctional board, the world may be treated to more of it.
This has not been lost on people who closely follow the company, like New York Times journalist Mike Isaac. After reading Misra's interview in the Financial Times, Isaac tweeted, "the ink is not even dry on the SoftBank deal and SB's Rajeev Mishra goes on the record with the FT telling Uber how to run its business. Amazing. The shitshow is just beginning."