Uber picks a CFO after 3-year vacancy: Merrill Lynch veteran Nelson Chai
Uber Technologies Inc. has selected Nelson Chai, a longtime banking executive who weathered the 2008 financial crisis, as its chief financial officer. Chai will help guide the ride-hailing company through a planned initial public offering late next year.
Uber hasn’t had a CFO for more than three years. After Dara Khosrowshahi took over as chief executive in September, finding an experienced financial executive became one of his top priorities. When Chai starts on Sept. 10, Khosrowshahi can finally cross this item off his list.
Although Khosrowshahi has said Uber is targeting an IPO in the second half of 2019, Chai declined to comment on timing until he has had a chance to dig through the books. “The timeline has been dictated by the board, and Dara has made public statements,” Chai said Tuesday after Khosrowshahi announced his hiring. “Let me sit in the seat a little bit, for a little while, before I answer that question.”
Until recently, Chai was CEO of Warranty Group Inc., a provider of insurance services to automakers and consumer-goods manufacturers. He sold the company, owned by TPG Capital, to Assurant Inc. for $2.5 billion. TPG, an investor in Uber, suggested he apply for the job at the ride-hailing company, Chai said. John Thain, an Uber board member and longtime colleague of Chai, set him up for a meeting with Khosrowshahi in early June.
“I’m incredibly excited to bring on someone as experienced and thoughtful as Nelson,” Khosrowshahi said in an emailed statement. “He will be a great partner for me and the entire management team as we move toward becoming a public company.”
Chai and Thain have a long history together. During the financial crisis, which led to instability and government bailouts at many of the world’s largest banks, Chai served as CFO of Merrill Lynch, where Thain was CEO. They sold the ailing firm to Bank of America Corp. in what was seen as a coup to avoid possible collapse.
The management of Merrill Lynch was the subject of criticism for the billions of dollars in bonuses it handed out to executives when the company — and the global economy — were in turmoil. In 2012, Bank of America agreed to pay shareholders $2.43 billion to settle allegations that they had been misled during the acquisition of Merrill Lynch about the state of the firm’s finances. Thain and Chai also worked together at NYSE Euronext, the parent company of the New York Stock Exchange, and at another bank, CIT Group Inc.
Chai’s appointment at Uber ends a labored search for Khosrowshahi. In the spring, Uber zeroed in on VMware Inc.’s Zane Rowe as the top candidate for the job, but negotiations fell apart. In the meantime, senior finance executives left the company at a steady pace. At one point, Khosrowshahi hoped to recruit a woman for the CFO job. He said at a conference in April that he was more focused on developing women who already work at Uber and avoiding the “sugar high” of recruiting.
At $62 billion, Uber is the most highly valued U.S. private technology start-up, but it has serious challenges. A series of political, human resources and legal scandals last year led shareholders to oust co-founder Travis Kalanick from the CEO post. Uber is working to rehabilitate its image before selling shares to the public.
Even if it can fix its reputation, Uber has another problem: It loses enormous sums of money. The company has burned through more than $11 billion in its lifetime, and the trend continues today. In the second quarter, Uber posted a loss of $891 million on $2.8 billion in revenue.
Some investors are privately advocating for Uber to shed its costly autonomous-vehicle unit. Chai said he doesn’t have a strong point of view on that proposal.
Uber regularly reports limited financial information publicly, but Chai said he hadn’t gotten an opportunity to scrutinize more detailed data before taking the job. “When you’re interviewing for a job, you get the information you get,” he said.
“I understand there are lots of challenges,” Chai said. One thing will continue to be a priority throughout the company, he said: “My hope and expectation is that it continues to grow.”
