Uber is facing calls for a boycott of its app in the Persian Gulf, a region that has poured billions of dollars of investment into the company’s ride-hailing business in recent years: Directly via Saudi Arabia’s Public Investment Fund (PIF) and indirectly because the Saudis are major investors in Softbank’s Vision Fund vehicle, which is another big Uber investor.
The regional calls to boycott Uber were stoked yesterday by Saudi ally, Bahrain, whose foreign minister retweeted hashtags calling for a boycott of the company, according to reports by Bloomberg and Reuters.
An Uber spokesperson declined to comment when reached for a response.
No place for you in Saudi Arabia#DeletingUber pic.twitter.com/hYLXXEKFQI
— عبدالله الشهراني
(@abdullh2223) October 14, 2018
A few boycott calls circulating on Twitter urge app users to switch to Uber ride-hailing rival, Careem, though it’s unclear whether Uber alternatives are seeing any local uplift as yet.
Anger at Uber has been sparked by the reaction of CEO Dara Khosrowshahi to the disappearance of Saudi journalist, Jamal Khashoggi, a U.S. resident, who has not been seen since entering the Saudi consulate in Istanbul on October 2 for a pre-arranged appointment to obtain documentation for his forthcoming marriage to a Turkish citizen.
Newspaper reports have suggested Khashoggi was killed inside the embassy by a Saudi hit squad that traveled to Turkey for the purpose of carrying out the murder. As a Saudi ex-pat the journalist had written critically of the crown prince’s regime.
And while independent CCTV footage shows Khashoggi entering the embassy but there is no proof to show he ever left. Although the Saudis have denied any wrongdoing, and claimed their citizens were just visiting Turkey as tourists.
Following growing alarm over Khashoggi’s disappearance, Uber’s CEO was among several business leaders to announce they were pulling out of an investment conference due to take place in the Saudi capital later this month.
“I’m very troubled by the reports to date about Jamal Khashoggi. We are following the situation closely, and unless a substantially different set of facts emerges, I won’t be attending the FII conference in Riyadh,” said Khosrowshahi in a statement last week.
Uber confirmed to TechCrunch today that Khosrowshahi will not be attending the Future Investment Initiative conference — a conference’s hosted by Saudi’s crown prince, Mohammad bin Salman bin Abdulaziz Al-Saud, aka MBS, who is also chairman of the PIF; a key Uber investor, which has a member sitting on Uber’s board.
Those links underline quite how complicated managing this particular piece of legacy baggage is for Khosrowshahi — who, as Uber’s new broom, has made it his stated mission to chart a new course by ‘doing the right thing. Period‘.
Yet when Uber accepted $3.5BN from the Saudi PIF two years ago ‘doing the right thing’ meant just one thing: Growing Uber, with few if any other considerations on the table for then CEO and founder Travis Kalanick.
At the time he took the Saudi billions, Kalanick said: “We appreciate the vote of confidence in our business as we continue to expand our global presence. Our experience in Saudi Arabia is a great example of how Uber can benefit riders, drivers, and cities and we look forward to partnering to support their economic and social reforms.”
It’s unclear whether he weighed up the ethical and political risks of accepting investment from a conservative regime seeking to project a reforming image at the same time as carrying out violent repression in Yemen, and with its own long history of persecuting domestic critics.
But Uber’s decision to take Saudi money in 2016 and again, via SoftBank at the end of last year, is very much Khosrowshahi’s problem now.
In a public remark on Twitter, tech investor, Mark Tluszcz, co-founder and CEO of Mangrove Capital Partners, suggested Uber’s CEO should have kept his concerns about Khashoggi’s fate to himself — saying there’s “no upside” for Uber or its investor SoftBank…
Responding to a follow up question about human rights, Tluszcz also told us: “Personally [a CEO] can do what they want, but should NOT use their position to express personal opinions. I doubt personal opinions are in the best interest of all stakeholders.”
Bloomberg also notes that SoftBank’s shares have continued to have a bumpy ride as outcry has grown over Khashoggi’s disappearance, as well as investors responding to wider uncertainties attached to its approach with the Vision Fund.
In the case of Uber, you could argue that had Khosrowshahi said nothing about the extraterritorial vanishing of a journalist critical to the Saudi regime that might have been a pretty tricky position for the CEO to square with a loud PR message about ‘doing the right thing’.
‘Uber: We do the right thing, sometimes’, wouldn’t have the same purifying ring as: ‘We do the right thing. Period.’ And detoxifying the Uber brand is clearly a key intent of Khosrowshahi’s tenure at Uber.
Yet, at the same time, Uber remains awash with billions of dollars of Saudi investment. And a PR message alone can’t purge problematic legacy decisions which are also baked into the investment structure of the company.
That would take more than fine words.
So Uber is now facing regional blowback for something Khosrowshahi said, and setting itself against a major investor — risking another messy investor spat — while still potentially looking a like a hypocrite.
Safe to say, there are no shortcuts when the legacy issues attached to a business run so deep.
Not that Uber is alone in having Saudi money on its books, of course. As we wrote last week, a number of other Silicon Valley firms have welcomed recent overtures from MBS, and plenty will also have accepted Saudi PIF money, mostly via SoftBank’s vision fund.
Talking generally about MBS, longtime VC Jeff Bussgang of Flybridge Capital Partners in Boston told us last week that venture and private equity firms have been raising money from Middle East capital sources for many years — adding that “typically, entrepreneurs don’t like to focus on politics and historically have not cared very much where the money came from” (unless it’s “from the PLO or Iran”).
Whether future entrepreneurs will have the luxury of not being able to care so much about where investment comes from remains to be seen. Political and geopolitical risk must surely be looming larger on every entrepreneur’s radar.
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