The entire Uber board now wants an IPO, CEO says: ‘The numbers support it’


Date: 23.02.2018

Major investors from Saudi Arabia and Japan are not pushing Uber to go public — but it's the right thing to do and — by 2019, CEO Dara Khosrowshahi said Thursday.

"We have all of the disadvantages of being a public company, as far as the spotlight on us, without any of the advantages," he said in his first high-profile appearance since he became CEO. "So Travis [Kalanick] and the whole board now agree we should just go public. The numbers support it."

Kalanick, Uber's co-founder who stepped down as CEO amid intense scrutiny of the company's culture, had previously said it should go public "as late as humanly possible." He did not immediately reply to CNBC's request for comment on Thursday.

While Uber is unprofitable, Khosrowshahi said, the "math is working" in certain geographies, and the company is simply subsidizing other investments. The U.S. won't be profitable for about the next six months, depending on how rival Lyft performs, he said in an interview by New York Times columnist and CNBC anchor Andrew Ross Sorkin at The New York Times DealBook Conference.

Uber's new CEO, Dara Khosrowshahi, replaced Travis Kalanick. On Wednesday, Nov. 22, an Uber hack involving 57 million customers and drivers was revealed. Under Kalanick, the company had hidden the hack for over a year and paid a $100,000 ransom.

The IPO goal of 2019 is not due to pressure from potential investor SoftBank, the ultimate long-term investor, Khosrowshahi said. Uber also has an existing $3.5 billion investment from the Saudi Public Investment Fund, which could be compounded by a SoftBank's Vision Fund, also backed by Saudi Arabia's sovereign wealth arm.

Khosrowshahi has already made waves since officially joining Uber at the end of August. He did not inherit an easy company to manage. When he took over, Uber was reeling from regulatory investigations and a workplace culture investigation that resulted in the exodus of key staffers.

"I don't know exactly when it went sideways. Winning can hide rot within an organization, and I think Uber was winning ... and I think winning gave some excuses for bad behavior," Khosrowshahi said.

Khosrowshahi said he ignored calls early on to gauge his interest in the CEO role, wanting to avoid the "media circus." He said he viewed himself as a back-up option behind "giants of industry" like Hewlett Packard Enterprise's Meg Whitman and Jeff Immelt, formerly of GE.

"I was really worried about the leaks, et cetera, that were going on, and really happy that my name did not leak out there until the very end," Khosrowshahi said. "Things are never as bad as the press makes them out to be."

Khosrowshahi said he has read some of the allegations of sexual harassment at Uber, but he did not ask to see the workplace culture report before taking the job. He said he thought about making it public once he joined the company.

"When I got into this role, I didn't want to take sides. And I wasn't interested .... in what happened in the past. I'm interested in the company, and the employees, and the brand, and how we move forward," Khosrowshahi said. "Don't tell me what happened, tell me what we're going to do."

On top of that, Kalanick was sparring with top investors, dividing the board of directors. Major investors like SoftBank and potential foes like Alphabet's Waymo have also been circling amid Uber's shakeup.

"The board went in a very bad direction," Khosrowshahi said. He added: "We're reconstituting the board. It's going to be a big board, but that's OK. ... Our bringing in SoftBank as a strategic investor at the right price would be a good thing."

One of the disputes at Uber was the extent to which certain shareholders could control the makeup of the rest of the board. Many companies have multiple share classes and are able to make long-term investments, Khosrowshahi said. But in Uber's case, the structure needed to be simplified.

"You have two parties here who are far from being in concert and are shooting at each other," Khosrowshahi said. "And to some extent, what I told the board is, 'If we're going to shoot at each other, at least let's shoot at each other with conventional weapons instead of nukes.' ... This is not about control, this is about the company."

Khosrowshahi said he pushed Kalanick, who is still a board member, to back off, and he took it "really well."

"Over a period of time, I would be foolish not to use Travis' incredible genius and his knowledge. ... Some weeks we won't talk, some weeks we talk 10 times," Khosrowshahi said. "I think he understands the 'why,' which is that early on I've got to have my space. ... He's been very plain with me that he wants to be involved in the company, and I've told him I want him involved."

He's also reformulated the company's cultural code from the bottom upas the massive start-up prepares to go public. When Uber's license to operate in London was canceled, Khosrowshahi did something that's stereotypically un-Uber: Apologized.

"I think we were generally immature about how we dealt with regulators," Khosrowshahi said.

But Khosrowshahi is not softening on one of Uber's other battles, namely, a lawsuit from Waymo, Alphabet's self-driving car venture.

"It's going to court," Khosrowshahi said. "The damages claims that they have, I think, are highly questionable."

Khosrowshahi also pushed back at proposals that all drivers should be staffers instead of contractors, saying that drivers like to be their own bosses. He pointed to changes Uber has made under his tenure, including allowing tipping, to support driver happiness and higher pay.

"Part of the issue is the cost of insurance, and the biggest winner in this is the insurance companies," Khosrowshahi said. "Believe me, we're not making a ton of money here in the U.S. on the drivers."

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