Nikesh Arora: Outsmarted by a wily entrepreneur

SoftBank's Founder-Chairman Masayoshi Son has had strong lieutenants in the past who have faded from view in no time, says Shyamal Majumdar.

Even the world’s third highest-paid executive can be hopelessly outmanoeuvred by a wily entrepreneur.

Ask Nikesh Arora, the super-smart former president and chief operating officer of SoftBank – Japan’s third largest public company which he joined two years ago.

The 49-year-old, who was Founder-Chairman Masayoshi Son’s pick to lead SoftBank’s expansion outside Japan, earned a whopping $135 million in 2014 and $73 million the next year.

But money wasn’t the only reason why Arora, once the “fourth-most important” global executive at Google, was feeling on top of the world at SoftBank.

Son, not known for his generosity with words, spoke more than once about his belief that Arora, who was 10 years’ younger than him, had “better abilities” and was the “most likely” candidate to succeed him.

Arora was seen grinning ear to ear and even told media that he feels very relaxed at SoftBank and that he would he “here for at least the next 10 years.”

He was obviously sure that Son would make him CEO after he reaches the age of 60 in two years.

The trust seemed mutual. Arora had pumped in an enormous chunk of his personal savings into SoftBank.

He purchased SoftBank Group’s shares worth over $482 million.

Things have obviously changed dramatically. Son now says he is “a bit too young” to retire and would like to stay on for five to 10 years, leading Arora with no other option but to quit SoftBank.

The terse press release from the company, acknowledging the differences in perceptions between Son and Arora, said it all. Add to that the fact that Softbank didn’t lose any time to name Arora’s successor.

It’s impossible that Son did not know that Arora would be left with no other option but to quit.

The India-born executive had made his ambition to reach the peak of the corporate ladder quite clear several times in the past. 

For example, Arora told Business Standard (he was still with Google at that time) that he “is a bad person for maintenance situations”.

Asked whether he would stay on in Google for long as even the founders were much younger than him and are in no mood to give the top job to anybody else, Arora said he “loves to do things to undo the pattern every time his life takes on a steady pattern”.

It’s difficult to say why Son did what he did, especially a day after his company announced that a special committee formed to investigate alleged wrongdoings by Arora found no merit in the allegations.

Arora was earlier this year accused of making bad deals, earning too much money and having potential conflicts of interest tied to his role as an adviser to a private equity firm. 

The unconfirmed theory doing the rounds is that Son’s advisors didn’t want Arora to continue on the ground that a person who holds such an important position in

Softbank should be like Caesar’s wife – that is beyond suspicion. The other theory is that Son was fed up with the constant barbs about paying Arora an astronomical amount without commensurate returns.

Since joining SoftBank, Arora has spent nearly $4 billion investing in start-ups around the world in a hunt for a break-through technology company capable of driving future growth.

Many said Arora was speed-dating with start-ups at a time when there is a perception that valuations are getting out of hand and a shakeout looms.

Yet another theory is that Son was getting uncomfortable with Arora’s ambitions.

Nobody knows the actual reason for his sudden exit, but Arora should have known better.

Son has had strong lieutenants in the past who faded from view in no time. Yoshitaka Kitao, Son’s right-hand man during the dotcom era, had suddenly left the company.

In a blog post, Kitao had said, “Nikesh Arora is not necessarily secure” and “it’s too early to appoint his successor.” 

Education: Master of Science in Finance from Boston College; an MBA in marketing from Northeastern University. He has a bachelor's in electrical and electronics engineering from Banaras Hindu University (IIT)

Career: Arora was poached by Softbank Chairman and CEO Masayoshi Son from Google, where he was the chief business officer. He was earlier the chief marketing officer of T Mobile.

Salary: With annual compensation of over Rs 850 crore, he was among the highest earning Indians globally