Uber Chief Executive Dara Khosrowshahi puts it best when he acknowledges that “if you’re going to do business with SoftBank, you just have to get used to sometimes their doing business with the competition.” In practice, it is against the norm for Firms to invest in companies that compete with each other, however Mr. Son feels that these companies can help each other by doing research together and in doing so, raise shareholder value but that SoftBank will not attempt to "force them to do anything." This statement can be taken seriously because although SoftBank does have stake in the companies, their influence is limited within the ride sharing companies (only 15% of Uber stake). Another reason this is out of the ordinary is that after investing $20 million into these companies, some of that money is being spent trying to battle each other. Vinnie Lauria, a founder of Golden Gate Ventures, a Singapore-based venture-capital firm said that SoftBank is acting more as a "private-equity buyout firm that’s looking to consolidate a market.”
The stage is set for conflict between companies because of their shared interest in dominating their region; in Japan Uber gears up to face new competition after SoftBank invested $10 million into Didi Chuxing Technology Co. Both firms have hit upon similar strategies to address the Japanese market and for this reason Mr. Khosrowshahi has said Uber will shift course to better tap opportunities in Japan’s $16 billion taxi industry. Mr. Khosrowshahi feels that“clearly we needed a different way of doing business.”
It is important to these companies that SoftBank does not push them to act one way or another as they have different goals in mind within their firms. For example, SoftBank has a 30% stake in ANI Technologies Inc.'s Ola, who operates in India and Australia. In India, Ola was the local go to for ride sharing, with Uber entering the market two years after Ola established itself. Ola fears SoftBank will try to push them to combine operations while they wish to remain independent.
What these companies ultimately decide is probably of little concern to Mr. Son and SoftBank executives since they predict that eventually one ride share company will dominate in each region or they will begin to work together. Furthermore, given the magnitude of each market these companies are unlikely to feel the need to expand further. In the meantime, they can only hope for more cooperation and that their investments won't be squandered as a result of competition that is increasingly hard to contain.
For me, it was interesting to view the conflicts that come with being seen as part of a product line to investors. SoftBank viewed each as individual products while in fact, these are distinct companies. All these brands of on-demand transportation are services that are of quality; they all met their customer's needs and because they knew their strengths they had their own goals and did not want to be influenced by SoftBank. Because of these companies' unique situation, they are forced to respond to this heightened competition by modifying their strategy or finding new ways to reach different segments. With rises in technology happening daily, what will the introduction to self-driving cars do for these firms already entrapped in their own battle of brands?
https://www.wsj.com/articles/uber-battles-ride-sharing-startups-in-softbank-family-1520164801
Published March 4, 2018. 7 a.m. ET.
Appeared in the March 5, 2018, print edition as 'Uber, Rivals Battle Using Softbank Cash.'
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