From Being SoftBank’s Future CEO to Becoming an Outsider

The one tag we had started associating with Nikesh Arora was ‘Future CEO of SoftBank’. Famously flamboyant, hard-working and once world’s third richest executive, one would expect that Nikesh has the world at his beck and call.

But in a recent twist of fate, things have drastically changed overnight for Nikesh. It all started with a letter.

The Letter That Changed Everything

A letter dated January 20 was received by SoftBank in which certain unnamed shareholders of the company accused Mr. Arora of misusing his position while making certain investments. The letter came from Boies Schiller & Flexner, a U.S. law firm, which is representing the unnamed complainants.

Charges Against Him

The letter alleges him of misusing his position to get overpaid in the investment deals he struck with Oyo Rooms and Housing. Additionally, the letter also asked SoftBank and Sprint to appoint an independent board to review Mr. Arora’s conduct.

Although the board has now absolved Nikesh Arora from all the charges, it seems the waters have already been muddied. Let’s go back a bit to explain what we mean.

Murphy’s Law Strikes Again?

Sometime back, Mr. Masayoshi Son (Chairman & CEO), SoftBank, had announced publically about his retirement in next two years and had declared to leave the company’s reins in Mr. Arora’s able hands. He was about to be the CEO of world’s leading investment group. And then that letter came in.

Although, the allegations have been dismissed now, these events are speculated to have influenced Mr. Son to rethink his decision. He has now issued a statement saying he has some more plans and crazy ideas for SoftBank which need him to continue as CEO for about 5-10 years more. Speculations are ripe that this decision has caused Nikesh Arora to quit SoftBank and move on. There are also the speculations that the recent allegations against Nikesh led Mr. Son to rethink his decision.

Following Nikesh Arora’s announcement, market went abuzz with talks of bad blood between the once-close Nikesh and Masayoshi Son. Here are some of the tweets from Mr. Arora after announcing his departure from the company.

A Man in Making

Son of an Indian Air Force officer, Nikesh became the President and COO of SoftBank, and has earned about $200 million in last two years. But to reach here, he has put in over a decade’s hard work. Here is a brief history of his academic and professional associations.

Academics Background

• 1989– Completed his graduation from IIT (BHU), Varanasi, in Electrical Engineering.
• 1992-Completed MBA, Marketing from Northeastern University.
• 1994- MS, Finance from Boston University.

Professional Background

• 1992- Got associated with Fidelity Investments. Held positions in finance and technology departments. Later, became VP, Finance.
• 2000- Quit his position in telecom department at Putnam Investments and started his own company T-Motion PLC.
• 2002- T-Motion PLC merged with T-Mobile International.
• 2004- Until now, served as CMO of T-Mobile International. Left it and joined Google. Worked in various departments.
• 2007- Private equity firm, Silver Lake Partners, hire him as their Senior Advisor.
• 2011-2014- Nikesh held senior positions, namely, Senior Vice President and Chief Business Officer at Google until SoftBank CEO Masayoshi Son poached him for an unbelievable sum of Rs. 850 crore. 
• 2012-2014- Board of Director for Colgate-Palmolive.

Supporting Startups in India

Nikesh Arora is known for his love for startups. He is flocked by numerous young entrepreneurs at any given business convention. Now, the letter accuses him of making undue profit on Oyo and Housing deals. Let’s look at his investments in some of the famous Indian startups.

• Housing- Sometime back, Housing (housing.com) had raised $90 million from Softbank. This year, it again got a fresh funding of Rs. 100 crore from the same source.
• Grofers– It raised $120 million from SoftBank, Tiger Global, Sequoia Capital and Russian investor Yuri Milner in November 2015.
• Ola- In the same month, cab service, Ola, raised a whopping $500 million as Series F funding from a group of investors including SoftBank, which contributed Rs 384 crore.
• Snapdeal– In August, SoftBank and a couple of other investors gave $500 million in funding to e-commerce leader Snapdeal.
• Oyo Rooms- It raised $100 million from SoftBank and others in the same month. It is believed that Nikesh Arora convinced Masayoshi Son to invest more and more in Indian startups.
• Nikesh Arora personally invested around $483 million in SoftBank.

Now, with changed circumstances, Nikesh has announced to sell his shares back to SoftBank and walk out.

What’s next for Nikesh Arora? And how well will SoftBank fair after its lead player’s exit? We guess, we will have to wait and see how things play out from here on.

Takeaways:-

• Nikesh Arora, future CEO of SoftBank quits the company over an incriminating letter.
• The letter sent by US legal firm Boies Schiller & Flexner, accuses him of wrongful practices in investing and wrong conduct.
• Earlier present CEO, Mr Son had announced Nikesh as his successor. Following the letter controversy, Son’s plan to continue for additional 5-10 years seems to have made Nikesh take this decision.
• SoftBank had poached Nikesh from Google in 2014 for a staggering sum of Rs. 850 crore.