Mystery shines light on Silicon Valley-Saudi ties
The fate of a prominent critic of Saudi Arabia has put a spotlight on the Middle Eastern kingdom’s relationship with Silicon Valley — and the oceans of venture capital dollars flowing into tech from its petroleum-infused fortune.
Saudi Crown Prince Mohammed bin Salman ordered an operation to detain Jamal Khashoggi, a Washington Post columnist who was critical of the Saudi government, the newspaper reported. Turkish officials say Khashoggi was killed, while the Saudi government maintains his fate is unknown. He was first reported missing after entering the Saudi consulate in Istanbul on Oct. 2.
In the most prominent public reaction, Uber CEO Dara Khosrowshahi, whose firm has taken billions of dollars in Saudi cash, said he would withdraw from a conference in Riyadh, the Saudi capital, where he was scheduled to speak this month. Another speaker, AOL co-founder Steve Case, also backed out, citing the events around Khashoggi. Virgin chief Richard Branson told
the Guardian newspaper Thursday he had suspended business talks over space and tourism projects with the kingdom. Others who had agreed to advise a planned development project said they would end their involvement.
Over the past few years, the Saudi government has announced a number of initiatives to lessen its economic dependence on oil. A key part of the plan is investing in tech, both in the kingdom and abroad.
Two Saudi funds have made investments of more than $100 million in U.S. startups dubbed “unicorns” — the industry term for privately held, venture-capital-backed companies worth more than $1 billion — according to Crunchbase, which tracks such financings.
The Public Investment Fund of Saudi Arabia, one of the largest sovereign wealth funds, put $3.5 billion into San Francisco’s Uber in 2016; $1 billion into Newark electric automaker Lucid Motors in September; and $461 million into Magic Leap, an augmented-reality headset maker in Florida, in March. In August, it bought approximately $2 billion in Tesla shares on the public market, and was involved in controversial talks to take the company private before those fell apart. The fund announced in September that it had borrowed $11 billion from banks to finance more tech deals.
The fund’s direct investments don’t account for the looming presence of Japan’s SoftBank, which has raised a substantial amount of capital from the Public Investment Fund. The fund has committed $45 billion to a second SoftBank Vision Fund, two years after investing the same amount in the original $100 billion “mega-fund.” Through the Vision Fund, SoftBank has invested in Uber; Santa Clara chipmaker Nvidia; GM subsidiary Cruise, the San Francisco self-driving car startup; and delivery company Doordash, also of San Francisco.
In 2011, Prince Alwaleed bin Talal’s international investment firm, Kingdom Holding, invested $300 million in Twitter. It later put $250 million in Los Angeles app maker Snap and $247 million in San Francisco’s Lyft. The company trades on a Saudi stock exchange and is worth $30 billion, according to Bloomberg.
Saudi Arabia is also seeking Silicon Valley’s advice.
The government named more than a dozen business and technology leaders, including a senior executive from Alphabet and the former CEO of Uber, to a new advisory board for the Saudi government Tuesday. They are to offer input on Neom, a futuristic mega-city in the northwest of the country that could someday have self-driving cars and passenger drones transporting people across the zone. The project is expected to cost $500 billion.
Named as board members by a Saudi news outlet were Uber co-founder Travis Kalanick; venture capitalist and Facebook board member Marc Andreessen; Dan Doctoroff, CEO of Alphabet’s urban planning unit Sidewalk Labs; Sam Altman, chief of the Y Combinator startup incubator; and Tim Brown, CEO of Palo Alto design agency Ideo.
Apple’s chief design officer Jony Ive appeared on an early version of the report naming board members. His name has since dropped off, and Apple has said that his inclusion was a mistake. Dan Levitan, a spokesman for Sidewalk Labs, likewise said Doctoroff should not have been on the list.
Andreessen Horowitz, Andreessen’s venture capital firm, declined to comment. Kalanick did not respond to requests for comment. A spokeswoman for Brown said he had decided not to participate in the advisory board. Altman told BuzzFeed News that he would suspend his involvement “until the facts regarding Jamal Khashoggi's disappearance are known.”
In two weeks, a group of business and technology leaders will arrive at the Saudi capital for the third annual Future Investment Initiative. Known among attendees as “Davos in the Desert,” the business conference is put on by the Public Investment Fund. The Saudi fund’s chief executive, Yasir Al-Rumayyan, is a member of Uber’s board.
“I’m very troubled by the reports to date about Jamal Khashoggi,” said Khosrowshahi, the Uber CEO, in a statement. “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.”
Case, the AOL co-founder, announced his withdrawal from the event on Twitter on Thursday.
Silicon Valley investors Vinod Khosla and Jim Breyer, Android creator Andy Rubin, Viacom CEO Bob Bakish, MasterCard CEO Ajay Banga, and executives from HP, WeWork and Lucid Motors are among the scheduled speakers. San Francisco Chronicle staff writer Carolyn Said contributed to this report.