Jan 3, 2018 · 4 minutes

As we were taking some time off for the holidays, the news finally broke that that Softbank deal with Uber is done.

It was quite an end to one of the most disastrous years in the history of would-be Silicon Valley “darlings.”

Schools like Vanderbilt and Harvard are teaching courses and preparing case studies that caution against being like Uber… and yet, there are still few consequences for those who aided and abetted bad behavior that includes major alleged trade secret theft, threatening to smear rape victims, and treating female employees like shit.

Thank Softbank’s Vision Fund. While those who sold shares to Softbank did so at a “discount” to Uber’s $70 billion valuation that started the year, they still made billions and got liquidity despite Uber’s current inability to go public. That will continue to reverberate throughout Silicon Valley as “pattern recognition” trumps morality, and assholes continue to get funded no matter what laws the break, or how they treat people. (Softbank’s own investors aren’t totally sold on the fund either as this Bloomberg piece details…)

In addition, Uber got more capital in the deal too and somewhat held up its valuation despite a year of bad news, at least when it comes to the primary investment by Softbank.

The business press hailed this as a win for Uber’s beloved new CEO Dara Khosrowshahi, and given how rotten this company is: Yes, this was a remarkable achievement. Even I have to admit that.

And yet, I have covered entrepreneurs long enough to know that what is dressed up as “a win” from the outside, frequently isn’t felt as a win by the founder. Put another way: If you know anything about Travis Kalanick, you know this wasn’t what he considered victory. For one thing, the “win” and all future wins Uber has will be credited to Khosrowshahi, not Kalanick. His tenure at Uber will be taught in most top business schools as what not to do.

But bigger that that: The concession Uber made to get this deal done was pushing thru recommended governance changes and upping the size of its board to an astounding 17 members. TechCrunch did a great job of detailing what this “Frankenboard” will look like. There are two major ramifications: The first is that it appears Travis Kalanick will no longer exert control. But the second is that on a board of that size, will anyone be able to exert control?

From TechCrunch:

At 17, Uber’s board would be among the largest corporate boards publicly or privately held. Compare that to some of the Valley’s largest tech companies: Apple and Facebook each have eight, while Snapchat and Twitter each have nine. Alphabet, Oracle and Intel each have 12, Microsoft has quite a few at 14 and IBM is whopping at 15 members.

Perhaps even more relevant, recent IPO candidates have had fairly small boards. Stitch Fix currently has five members, CarGurus has six and Blue Apron has eight. Looking more broadly, the median for the S&P 500 is 11, putting Uber’s 17 members far above the average for even actively traded companies, and even companies with market caps above $50 billion.

And just as a fun comparison, Uber’s board will be larger than the UN Security Council, which has 15 members, five permanent and 10 non-permanent. (One wonders which has the more difficult agenda next year.)

With all of the challenges that Uber faces, the question isn’t whether it has enough supervision, but whether a board of that size has the coherence and force to discipline the company and ensure that the constant drumbeat of scandals in the past few years can be rectified while improving the company’s long-term prospects.

More to the point: The only traditional Silicon Valley VC on that massive, sprawling board is Benchmark, and the actual person in that seat got replaced amid last year’s turmoil.

If Uber is the big winner of the mobile revolution, it’s worth noting just how different that “victory” has been, and the diminished role that traditional Silicon Valley king makers have played in it.

It’s also worth noting that Asian powerhouses-- not American ones-- are poised to run the table as this market matures, and even enters the autonomous phase. Softbank is afterall also a large investor in Didi, which we’ve long argued will eventually be the global leader here. China is the largest market for ridesharing, Didi has no meaningful competition there, Didi has far more cash on its balance sheet than Uber, and Didi itself has investments in all the major global players… including Uber.

We’ve long argued consolidation was inevitable, and today, it began: Didi just announced it has acquired 99 in Brazil. “Globalization is a top strategic priority for DiDi. With enhanced investments in AI capabilities and smart transportation solutions, we will continue to advance the transformation of global transportation and automotive industries through diversified international operations and partnerships,” said Didi CEO Cheng Wei in a statement.

Yep. You and your top investors having all the money helps too. Watch this space.