Waymo eyes raising up to $4 billion as leaders’ exits sow doubts

Waymo is talking to outside investors about raising as much as $4 billion in additional capital to fuel its self-driving efforts. And the company has discussed plans to eventually list publicly, spinning out from its parent Alphabet Inc., according to people familiar with the plans.

But Waymo must first quell concerns about a recent string of departures that have raised questions about its strategy and the size of its lead in the field.

Since February, Waymo has lost six key executives in rapid succession, including its chief executive officer, chief financial officer and several key lieutenants. John Krafcik, the outgoing CEO, had telegraphed his departure to some although it surprised many at Waymo and others at Alphabet, said the people, who asked not to be identified because the talks were private. Waymo appointed two executives as co-CEOs and is recruiting a new CFO.

These management shuffles come as Alphabet is tightening spending for costlier projects outside of Google. Waymo, born as a moonshot inside the search giant over a decade ago, has long been considered the standard bearer in autonomous driving and last year launched a ride-sharing service with driverless cars in Phoenix. Yet critics have pointed out the company hasn’t delivered on pledges to bring that service to more cities and settled on a commercial model.

“Waymo is stumbling and bumbling," said Raj Rajkumar, professor of robotics at Carnegie Mellon University. “Right now it looks like it’s moving toward nothing."

Suzanne Philion, a spokesperson for Waymo, said the company doesn’t comment “on speculation or rumors." Sundar Pichai, Alphabet’s CEO, has previously said that some company units raise outside capital to give them better industry expertise and corporate governance. Alphabet shares gained as much as 1.3% in extended trading after closing Wednesday at $2,271.50.

Last year, Waymo raised its first money from outside of Google’s Alphabet with a $2.25 billion financing round that included Silver Lake Management LLC and automotive companies as investors. That round later expanded to $3.25 billion. After Krafcik’s exit, Waymo named as co-CEOs Dmitri Dolgov, a longtime technical director, and Tekedra Mawakana, a policy veteran who joined in 2017. They told Bloomberg Television in an interview April 30 that Waymo was open to further outside investment.

“It just signals that developing this technology continues to be capital intensive," Asad Hussain, a senior analyst at PitchBook, said of the latest fundraising effort. “The enthusiasm may be greater outside its parent company than inside."

Silver Lake, a private equity firm, led the initial round, which included auto supplier Magna International Inc., car seller AutoNation Inc., Abu Dhabi’s Mubadala Investment Co. and the Canada Pension Plan Investment Board. Silver Lake and the Canada Pension Plan Investment Board declined to comment.

After news of Krafcik’s departure broke, he told employees in a memo that he was looking forward to a “refresh period" to connect with old friends and family. He and his wife, Leila, moved to Austin, Texas. After launching Waymo’s first truly autonomous ride hailing service in October, which was later than he thought, Krafcik said in a LinkedIn post that the time was right to move on.

“Like many things in life, and most things good, this took longer to get done than we’d planned," Krafcik wrote. After launching the ride-hailing service, “it’s the right opportunity for me to pass the baton to my wonderful successors."

Privately, Krafcik told some investors he had already stayed longer than he intended. The pandemic created issues and delays that he wanted to shepherd the company through. He remains an adviser to Waymo.

Krafcik, a veteran of Hyundai Motor Co. and Ford Motor Co., joined the self-driving upstart in 2015 with an edict to forge auto industry partnerships and transform the tech from a research project into a business. He cut deals with Fiat Chrysler Automobiles NV, now Stellantis NV, and Jaguar Land Rover to produce cars for a robo-taxi service, and inked agreements with Avis Budget Group Inc., Volvo Cars and the alliance between Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp.

At least six other top executives at Waymo have resigned recently. CFO Gerard Dwyer, investor relations head Sherry House and Adam Frost, who led automotive partnerships, all left in the past month. House went to Lucid Motors Inc., an electric vehicle company, as CFO. Philion, the Waymo spokesperson, said the company has named an interim head of treasury and appointed Mark Burton, a company veteran since 2016, as the new head of automotive.

Tim Willis, Waymo’s chief manufacturing and supply chain officer resigned in February, as did Gavin Nachbar, head of operations strategy. Willis, who is now at Aeva Technologies Inc., a lidar startup that listed via a special purpose acquisition company earlier this year, declined to comment, as did Dwyer and House. Adam Frost didn’t respond to a request for comment, and Nachbar didn’t immediately respond to a request for comment.

Recently, Waymo has poured money into self-driving trucks. In late 2019, Krafcik told reporters in Detroit that trucking might be a faster path to commercialization than taxi services. Last October, Waymo signed an agreement with Daimler AG’s trucking division to begin equipping trucks with its self-driving software. Among the recent departures was Vijaysai Patnaik, an executive who ran Waymo’s trucking product. Patnaik didn’t return a message seeking comment.

(Updates with extended trading in the sixth paragraph.)

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