Uber Set to Announce Major Investment Led by SoftBank Group

Uber Set to Announce Major Investment Led by SoftBank Group

Nov. 12, 2017 6:38 p.m. ET

Uber Technologies Inc. is attempting to put its past behind. A deal between former CEO Travis Kalanick and Benchmark, a major investor will clear the way for Uber to make a multibillion-dollar investment with SoftBank Group Ltd. The deal will add six seats to Uber’s 11-person board, which in turn will eliminate Mr. Kalanick’s outsized voting power. This will bring the new CEO Dara Khosrowshahi (and Uber itself) some stability. The company faced a rough year that included sexual harassment chargers, battles with regulators from Brazil to the United Kingdom, and other scandals that led investors to take Mr. Kalanick out of power. With a SoftBank investment waiting at the door, Uber is getting a reset as everyone is focused on the doors that could open in the future by the Japanese investor. SoftBank already has board of directors in ANI Technologies Pvt.’s Ola and GrabTaxi Holdings Pte. Both of these directly compete with Uber in India, Singapore, and Southeast Asia. An investment by SoftBank would give Uber a powerful ally against these competitors. However, if SoftBank does not obtain at least 14% stake in Uber, it is said they will walk out of the investment.

Uber’s lack of advertising and poor personal branding opened the doors for strong competitors to enter their industry. The ride-hailing company did not prepare for competitors, as it was such an innovative idea. They did not anticipate other companies to pass the market introduction phase as quickly as they did. They now face competition meanwhile having a bad image. The multiple suits filed against their personnel raise concerns for consumers and investors, which put the company at risk. Having a CEO like Mr. Kalanick who’s evident only concern is power, dissatisfies consumers. Consumer satisfaction can be highly personal. If consumers do not feel like they can trust the company for its poor top management choices, then they will turn to alternatives (Uber’s competitors).

Uber is attempting to fix the poor choices it made. By having a SoftBank investment they will acquire some power against their competitors and by removing Mr. Kalanick and transforming their corporate structure to avoid overpowering directors, Uber is on its way to a better year.
Wall Street Journal