Sonnenfeld: Uber Investment Deal May Not Mean Smooth Sailing

Uber’s announced investment deal with Japan’s SoftBank Group yesterday indicates that while former CEO Travis Kalanick and Uber investor Benchmark have found some common ground, the company could still face some unsettled seas as it gears up for an IPO.

The deal, which could be worth up to $10 billion, would mark the end of a legal battle between Kalanick and VC investor benchmark. Once the deal is closed, it’s been reported that Benchmark would drop its lawsuit against Kalanick, while the former CEO would need to receive approval from a majority of Uber’s board when he wants to replace the board seats over which he has control.

But while deal brokered in part by current Uber CEO Dara Khosrowshahi means peace on the board for now, there could be some lingering resentments under the surface.

“I believe that this board continues to be a smoldering cauldron of mistrust between the founders and the venture capitalists,” senior associate dean for leadership studies at the Yale School of Management Jeffrey Sonnenfeld told Chief Executive.

“There may be a lurking future confrontation over this possible strategic plan.” – Jeffrey Sonnenfeld

In the long run, Sonnenfeld believes that investors will ultimately look to have Uber controlled by the surging ridesharing tech rival Didi Chuxing of China, which has been expending its global reach. Uber merged its Chinese business unit with Didi in 2016.

“While Uber was frozen out of China, forced to sell out to Didi, Didi continues to spread globally,” Sonnenfeld says. “There may be a lurking future confrontation over this possible strategic plan.”

Khosrowshahi said last week that he has full support from Uber’s board to move forward with an IPO in 2019, so the expansion of the company’s overseas operations bears monitoring in the year ahead.