Despite Grab deal, consolidation not strategy of the day, says Uber CEO Khosrowshahi

Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., poses for a photograph following an interview on the opening day of the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 23, 2018. Photographer: Simon Dawson/Bloomberg

In an email to employees on the deal with Southeast Asia’s ride-hailing major Grab, Uber CEO Dara Khosrowshahi maintained that consolidation – in other words, exits from markets in return for a stake — is not its strategy.

After selling its China business to the country’s ride-hailing leader Didi Chuxing in 2016 in return for a 17.5 per cent stake, the firm had also sold its Russian business to Yandex.

“It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no,” Khosrowshahi wrote in an email to Uber staff.

He also emphasised that the deal was a win for one of the world’s most valuable startups. “After investing $700 million in the region, we will hold a stake worth several billion dollars, and strategic ownership in what we believe will be the winner in an important global region,” he wrote.

Transcript of email to Uber staff:

Team:

See below for some news out of Southeast Asia. I want to thank the team there for everything they’ve built over the last five years—this deal is a testament to their hard work.

It is fair to ask whether consolidation is now the strategy of the day, given this is the third deal of its kind, from China to Russia and now Southeast Asia. The answer is no.

One of the potential dangers of our global strategy is that we take on too many battles across too many fronts and with too many competitors. This transaction now puts us in a position to compete with real focus and weight in the core markets where we operate, while giving us valuable and growing equity stakes in a number of big and important markets where we don’t.

While M&A will always be an important value-creation tool for our company, going forward we will be focused on organic growth—growth that comes from building the best products, services and technology in the world, and re-building our brand into the mobility brand that riders, cities and drivers want to support and partner with.

Onward,

Dara

 

Transcript of email to SEA staff 

Team SEA,

I wanted to let you know that we have reached an agreement to combine our business in Southeast Asia with Grab.

In exchange, Uber will get a 27.5% stake in the combined company. Around 500 colleagues across the region will transition to Grab, and over the coming weeks we will help our customers move to Grab’s apps.

Our journey in Southeast Asia started in Singapore almost five years ago. I’m conscious that much of the hard work happened before I arrived, and I want to recognize the operations you have built across these eight countries. After investing $700 million in the region, we will hold a stake worth several billion dollars, and strategic ownership in what we believe will be the winner in an important global region. That’s all because of you and what you have done.

These are never easy decisions and I know this will mean a big change for you and your families, but I believe that combining forces with Grab is the right thing to do for Uber for the long term.

Our growth and success in Southeast Asia would not have been possible without this amazing team. Your efforts to bring the benefits of ridesharing to millions of people across Singapore, Malaysia, Indonesia, the Philippines, Thailand, Vietnam, Cambodia and Myanmar have changed lives and transformed cities for the better—and this transaction doesn’t change that history.

I’m sure you will have lots of questions, so our local leaders will be holding roundtables with everyone across the region today. Thanks again for your dedication and all you’ve done for Uber.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.