Uber: the great retreat from Asia

At first glance, Uber’s track record under founder Travis Kalanick’s successor doesn’t look great. But in fact, Dara Khosrowshahi is making all the right moves to get the ride-sharing group back on track, says Jane Lewis.

889-Khosrowshahi-634
Dara Khosrowshahi: making strides reforming Uber's toxic culture

At first glance, Uber's record under founder Travis Kalanick's successor doesn't look great. But in fact, Dara Khosrowshahi is making all the right moves to get the ride-sharing group back on track, says Jane Lewis.

When Uber's former boss, Travis Kalanick, introduced his successor to staff last August, he grew emotional. "The old chapter ends, and the next one begins," he said. It was a new start for the ride-hailing firm, "a poster child for the worst excesses of Silicon Valley", says the Financial Times. The new boss, Dara Khosrowshahi, arrived with glowing credentials from travel group Expedia and spent much of his first six months apologising "for things that did not happen under his watch". His task was to clean up Uber for an initial public offering (IPO) in 2019. How's it going?

Judged on headlines alone, not great. On Khosrowshahi's watch, Uber has admitted to covering up a data hack affecting 57 million customers. This month it made history in the worst possible way when one of its self-driving cars killed a pedestrian in Arizona. And this week's news that Uber has closed its southeast Asian unit, after losing a turf war with local rivals, prompted speculation of "a global retreat". Even the bald financials look worse. When Masayoshi Son's tech giant SoftBank took a 10% stake in December, notes Bloomberg, Uber's value on the secondary market was put at $43bn 30% lower than previous fundraisings.

Escaping Kalanick's shadow

But fears that Uber might never "escape Kalanick's shadow" seem wide of the mark, says the FT. Last month, Bill Gurley of Benchmark the venture capitalist who pushed hardest for Kalanick's removal tweeted that he was "super impressed by the maturity and tone being set" by Khosrowshahi who, as well as securing the crucial SoftBank deal, had just settled a potentially debilitating court battle with Alphabet's self-driving car outfit, Waymo, over alleged theft of trade secrets, for just $250m. Another big investor, Chris Sacca, said: "This is what real leadership looks like. Acknowledgement, apology, commitment, optimism."

Experience made Khosrowshahi a self-starter, says Slate. He was born in Tehran in 1969 into a family who owned several manufacturing plants. He arrived in the US on the eve of the 1979 Iranian revolution. When Khosrowshahi was 13 his father returned to Iran to care for his own ailing father and was held for six years, leaving the family without its main breadwinner.

After studying electrical engineering at Brown University, the young Khosrowshahi worked at investment bank Allen & Co, before moving into travel with InterActive. When the latter bought travel booking website Expedia from Microsoft, then spun it out in 2005, Khosrowshahi took over, notes TechCrunch. His clever dealmaking grew Expedia into a $23bn global giant. In 2015 he was the S&P 500's highest-paid CEO, on $95m.

On track for better days

Today, Uber's IPO next year looks to be on track. The retreat from Asia, after the sale of its operations to Grab, in exchange for a 27.5% stake in the combined outfit, follows similar withdrawals from Russia and China and is seen by most analysts as a necessary tidy up. "Even if it doesn't end up as the global giant it once aspired to be", Uber at least walks away with "hefty stakes" in local champions, notes Quartz. And Khosrowshahi has also made strides in reforming Uber's toxic culture. Indeed, if anyone can right Kalanick's shipwreck, you suspect it may well be this "sophisticated" Iranian-American diplomat.

Recommended

Great frauds in history: Alexander Fordyce and shorting the East India Company
People

Great frauds in history: Alexander Fordyce and shorting the East India Company

Alexander Fordyce's disastrous shorting of the East India Company led to him bankrupting the private bank in which he was a partner.
12 Aug 2020
Sharon White: the economist shaking up John Lewis
People

Sharon White: the economist shaking up John Lewis

Dame Sharon White had no experience of retail when she took the top job at the nation’s favourite department store. Can she turn around an ailing indu…
10 Aug 2020
Great frauds in history: Billy McFarland – the man behind the Fyre Festival
People

Great frauds in history: Billy McFarland – the man behind the Fyre Festival

Around 5,000 people paid Billy McFarland up to $100,000 each to attend the lavish Fyre Festival on a Caribbean island. They arrived to find accommodat…
5 Aug 2020
Stuart Wheeler : the granddaddy of spread-betting
People

Stuart Wheeler : the granddaddy of spread-betting

A lifelong obsession with gambling helped make Stuart Wheeler his fortune. By using that to back the Brexit campaign, he changed the face of British p…
2 Aug 2020

Most Popular

No, the UK did not “plunge” into recession yesterday
UK Economy

No, the UK did not “plunge” into recession yesterday

That the economy took a massive hit due to Covid-19 should be news to no one, says John Stepek. The real question is what happens now.
13 Aug 2020
Inflation spiked in the US last month – is this the shape of things to come?
US Economy

Inflation spiked in the US last month – is this the shape of things to come?

Prices in the US rose much more dramatically than expected in July. Can we expect more of the same, and what does that mean for your money? John Stepe…
14 Aug 2020
The MoneyWeek Podcast: house prices, staycations, and the death of cash
House prices

The MoneyWeek Podcast: house prices, staycations, and the death of cash

John and Merryn talk about the rise in UK house prices and the fact that everybody is holidaying in the UK, plus gold's new highs, the death of cash, …
12 Aug 2020