SoftBank investment offer complicating an effort with an unprecedented array of obstacles
This article originally appeared in The Wall Street Journal. Click here to read the original article.
By Greg Bensinger and Joann S. Lublin
Five weeks after Travis Kalanick’s surprise resignation as chief executive of Uber Technologies Inc., the board of the now-leaderless company is wrestling with a thorny question.
Should it negotiate with SoftBank Group Corp. 9984 -2.25% , which has in recent weeks approached Uber with a multibillion-dollar investment offer that could alter the course of the ride-sharing powerhouse? Or should it wait until after it hires a new CEO to consider the offer?
The puzzle is emblematic of the delicate situation Uber’s eight-member board is in as it rushes to find a CEO to take the reins of a depleted executive suite and help navigate a litany of legal challenges, fierce competition and a contentious investor base angling to preserve its nearly $70 billion valuation.
On Thursday, Uber’s board met to discuss CEO candidates and the potential deal from the Japanese tech giant, which ultimately could affect the recruiting. Uber has set a Labor Day deadline to name a new CEO, but the search is complicated by a board with an unprecedented array of obstacles, uninvolved recruiters say.
The board at the same time is trying to find an independent chairman to replace its sitting chair, Garrett Camp, an Uber co-founder who is expected to remain a director. The board is also simultaneously integrating three new directors, all of whom serve on its five-member CEO search committee.
And Mr. Kalanick, known for his tight grip on the company that he co-founded, sits on the board’s search committee, something of a rarity. It is unusual for an ousted CEO to serve on the board committee seeking his or her replacement, according to Margot McShane, a managing director in the San Francisco office of executive-search firm Russell Reynolds Associates Inc.
Meanwhile, Uber’s board is still contending with the fallout of an internal investigation into allegations of sexism and sexual harassment and a list of 47 reforms from former U.S. Attorney General Eric Holder, whose law firm oversaw the monthslong probe.
Some candidates who have been approached and investors said the search process seemed haphazard, particularly in the early stages when Uber hadn’t taken certain steps like creating a detailed multi-page job description, known as a “spec”—the company has a spec now. Board members and investors had reached out to some of their favored candidates on their own, leading to an occasionally scattershot approach.
An Uber spokesman declined to comment.
Uber lost one big-name candidate Thursday when Hewlett Packard Enterprise Co. CEO Meg Whitman said on Twitter she wouldn’t be leaving to take the job. General Electric Co. CEO Jeff Immelt remains a candidate, according to a person familiar with the matter. GE declined to comment.
GE’s Jeff Immelt remains a candidate for Uber’s top job. PHOTO: SCOTT EISEN/BLOOMBERG NEWS
Mr. Immelt’s fellow directors may raise questions about his Uber flirtation during a GE board meeting Friday. He relinquishes his CEO role at the end of the month but remains chairman through year-end.
Others who had been approached for the job early on include John Donahoe, the former CEO of eBay Inc., and Thomas Staggs, the former Walt Disney Co. COO, according to people familiar with the matter.
Some investors privately said they were disappointed Ms. Whitman pulled out of the running, viewing her as the most qualified of the candidates on Uber’s short list. Several investors said they believed it was the result of apparent factions emerging among Uber’s directors, including media magnate Arianna Huffington who is seeking a leader in the mold of Mr. Kalanick and the newer board members who are angling for a CEO who will set a different course.
In the weeks before he was pushed out, Mr. Kalanick frustrated some investors by blackballing numerous COO candidates, before that search was suspended in June after about three months, according to people familiar with the matter. He and the other search-committee members each get one vote, and Uber’s board is striving for a unanimous decision, though it isn’t necessary, said a person familiar with the matter. A strong CEO prospect might balk at taking Uber’s top job without unanimous board support.
SoftBank—which shares a board member with Uber in Yasir Al Rumayyan, head of Saudi Arabia’s sovereign-wealth fund—had approached the San Francisco company in recent weeks with a possible multibillion investment offer.
A massive capital injection would help a new CEO sustain the company’s breakneck growth which led to losses of more than $3 billion last year.
But Uber isn’t exactly in need of a big capital infusion with some $7 billion in cash on hand, and recently it has shown signs it could retreat from fiercely competitive markets. It did so this month in Russia when it combined its operations with Yandex.Taxi, and last year in China with Didi Chuxing Technology Co.
SoftBank is a big investor in three of Uber’s Asian rivals, including Singapore’s GrabTaxi Holdings Pte., which some investors said seemed a likely merger candidate for Uber in southeast Asia.
Uber’s accelerated search timeline of about 2½ months—CEO searches typically run about three to six months—befits a company that grew to be the world’s most highly valued private company and has embraced the Silicon Valley ethos to “move fast and break things.” But Uber faces challenges including repairing the company’s tarnished reputation after a series of scandals this year and a continuing lawsuit over what rival Alphabet Inc. alleges was the theft of self-driving car trade secrets.
“They’re in desperate need of a culture change and that’s a big deal,” said Steve Nilsen, a partner at executive search firm Boyden.