nervous about working with competent investors who aren't complete marks? somehow I doubt benchmark will have difficulty finding people to take their money.
It may matter, since VC returns are dominated by the outlier companies that return 100x.
If the next Slack (i.e. companies where VCs form a line to have them take their money) always pass on Benchmark after remembering this, instead choosing to take money from Sequoia/A16Z/NEA etc., who are also competent investors who aren't complete marks, then returns may take a hit.
I mean, maybe. But Benchmark is heavily bought into Uber. They've got a lot to lose/gain here. And they have a reputation to defend not just with future founders, but also future LPs. You can bet that there are a lot of potential LPs looking at VC behavior here, and that ones who are deferential to Kalanick will have a harder time raising future funds if this whole thing goes tits up.
Benchmark clearly believes that Kalanick is toxic to Uber's success. Given the amount of money they have in the game, and given the belief that Kalanick will sink Uber, it's pretty hard for me to come up with odds that future founders will be Benchmark-averse that overcome the amount of money they have in play with Uber plus whatever heat they'll take from their LPs.
tl;dr group of founders at epinions gets conned by the ceo, their partner - and they sue that guy (who has a dubious reputation on many counts) as well as everyone who touched the deal including benchmark. they got a settlement. they probably would have lost at trial. i don't see how that reflects negatively on benchmark.
They have really dropped the ball with this one. I know I wouldn't work with benchmark if I had a choice in the matter. A company is too hard to build - let alone a unicorn - to let investors treat you the way Benchmark have treated Travis. There are better ways to deal with such issues. They embarrassed him and left him out to dry at a time when they should have been most supportive.
I am severely disappointed in Benchmark and I hope they go away for good!
Benchmark board seat is the rumored anon source of several of the negative stories about the company the last few months. As Gurleys patience with Travis soured, their strategy shifted to stoking the PR crisis deeper so they can purge management and gain control. Other shareholders and employees should rightly be outraged.
Any evidence? The biggest crises seem to be outside of the board’s visibility: (1) Susan Fowler (2) TK berating a driver on video (3) TK and his exec team having a file on rape of someone in india (4) Greyball etc. etc.
I think it is hard to argue that Benchmark made Suzan Fowler write her blog post etc.
The counter argument is that Benchmark seems like the grown up and Uber is lucky to have them on their BoD.
careful with the libel there. that would be allegedly defrauded. the case was settled and it is highly unlikely that the plaintiffs would have succeeded at trial.
Yes and self-inflicted as well. Hard to blame on Benchmark.
I worry that HN is being astroturfed by TK and his buddies. When there is a negative Uber story a throwaway account emerges to present an implausible pro-TK angle.
Y'know, there is a third position where one can be in support of neither Benchmark nor Travis.
Benchmark obviously did not cause Susan Fowler, Waymo, Greyball or the rape-file.
Travis deserved what he got or worse.
What Benchmark has done is continue to leak negative stories and internal data to gain leverage in boardroom spats. Without pointing fingers this is more or less acknowledged internally. And now they've instigated a very public lawsuit to drag everyone back through the muck. It completely undercuts the majority of thousands of employees who were not complict in any of the above and having been fighting desperately to right the ship.
If Benchmarks position is so righteous and self-evident why can't they just convince the other board members to remove him? No one's that strongly allied with Travis anymore. Ryan Graves and Garrett Camp both publicly declared theyre not voting him back in. There hasn't been a peep from Arianna in months. All the other directors are independent or external investors.
And btw the real fire from Benchmark didnt start until Travis rallied to have Bonderman, Benchmark ally, immediately step down after making mysognist comments at the Holder report all-hands. A role reversal which epitomizes the deeper truth here -- none of this is particularly about ethics; its about money, control and liquidity.
Bonderman off the board after one insulting comment. Travis not off after "Susan Fowler, Waymo, Greyball or the rape-file." There is no equivalency here.
But even if, implausibly, Benchmark is the messenger, shooting the messenger is still wrong.
I realize the irony of this reply since there is in fact a throwaway account replying to you as well. That said, I think both things can be a problem. I'd consider all of the stories and leaks out of Uber to be problematic, I'm certainly not contesting that. But if they're coming in whole or in part from a board member, I would consider this a breach of that member's obligations because there are legitimate channels they could be leveraging instead of relying on leaks. I don't buy the Benchmark claim at face value, and it seems like you don't either, but if we're entertaining the hypothetical then that's my take-away on the subject.
look at the stories and when they're released... for example when travis was confronted in a hotel... there were like 4 people counting Travis.
so it was either one of them or someone they told that leaked... pretty simple regression analysis to eventually figure out that story after story with a certain group is getting out. then you have to figure out why and then it's... the present.
This lawsuit has a lot of ambiguity, but Benchmark is one of the more ethical firms in the valley. The idea that they would secretly and maliciously undermine their own portfolio company, then file this very public lawsuit about the same events, is crazy.
The suit claims the board did not know about the bad acts. If the board was the source of the press about the bad acts, surely the primary claim would instantly be disproven in discovery. Perhaps a better way for Uber to have avoided the many, many PR crises would have be to not have done the bad acts in the first place.
Good Day Uber PR. From the outside, this looks like investors siding with money over prior relationships. The existing Uber direction and leadership have taken far too few prisoners, and the money begins to talk.
With Mr. Kalanick, Mr. Gurley is said to have a tight relationship. He is Uber’s most engaged board member and the closest thing Mr. Kalanick has to a consigliere
Umberto Eco talks in Foucault's Pendulum about how when you believe a conspiracy theory, evidence against the conspiracy theory becomes evidence for the conspiracy theory because you believe it's part of the cover-up.
In this case, I think the easier dismissal would be to simply say, "I think that Kalanick's relationship with Benchmark soured over time."
Benchmark's suit against Travis is likely to increase Uber's value substantially (or at least protect it from collapse). Kalanick established very clearly he's a terribly incompetent CEO, anything that keeps him from ever regaining a position of authority is protecting every shareholder's investment.
Really? Travis built Uber from the ground up. Maybe you should build a billion dollar company before saying he is "clearly incompetent"? Because it's easy to "clearly" dismiss something from an ivory tower.
There is a great Warren Buffett quote, "I try to buy stock in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will."
Uber is a potentially wonderful business. The business model is so wonderful Travis was able to raise funds almost instantly. He deserves credit for recognizing that, pursuing the idea and building it quickly.
But while Uber has raised enormous amounts of investment, and used it to grow incredibly rapidly, it's never come close to making money. And worse, as it's grown management decisions have repeatedly damaged it. Given billions of dollars, anyone can hire tens of thousands of people and expand world-wide. Running a large organization so it protects the value that's already been created is a skill Travis clearly lacks.
The examples are so numerous it's hard to pick the worst. But clearly his leadership, especially his mantra of "always be hustling" led subordinates to constantly cross lines that gained Uber very little at the cost of great risk. That's terrible leadership.
His lack of focus has saddled Uber with many dozens of side businesses that suck resources and attention from their #1 and only important task, building Uber out world-wide. UberEats?
Even the autonomous car effort was dumb. Autonomous cars are coming at some point, and they will be fully available for purchase when Uber needs them. What's far more important is building the Uber brand so it's on everyones devices and is their first choice for summoning a ride. Autonomous competitors will have to surmount that huge obstacle to even have a chance to chip away at Uber's lead.
Uber is going to win, it's almost predestined at this point given it's enormous funding and market penetration advantage. The only way it can fail is if governments are convinced it should be reined in, and Kalanick's entire leadership has generated awful PR and made that possibility far more real than it ever should be. They continuously damage the one thing they are tasked with building, the Uber brand.
How can that be regarded as anything but incredibly incompetent?
If you are 100% sure he is an "incredibly incompetent" founder, that must mean you have extensive training in knowing what it takes to be a good founder. How many billion dollar companies have you built? Because you sound like you know exactly what "competence" is for founders of billion dollar companies. You must have built many yourself, and experienced all the untold pains and frustrations that no one hears about. That's why you are in a position to judge Travis as "incredibly incompetent", right?
Lord, you are really married to the "how many billion dollar companies have you built?" straw man.
I've only built one $100M company (founded three VC backed startups that were valued at over $10M), does that make me unqualified or qualified? Travis has built a billion dollar company, but not yet made it successful, not only is Uber is hemorrhaging money but he was forced to resign out of fear his presence would queer their next round they'll desperately need.
My companies made it to profitability. So does that make me even more qualified than him?
When you are CEO, your job is to keep everyone focused on their jobs while you are focused on the big picture. You are allocating resources to increase the companies value, while also minimizing the biggest risks to that value.
When you are already the market leader, and already have billions in funding, you have created lots of value, and have minimized the risk of running out of cash before you're done building out your market. So what other risks do you have? Governmental regulation, brand damage, etc, hurting your growth and costing you installed base.
Travis led by telling people to take risks, to cut corners. The results were lots of damage to the brand and emboldening opponents who could push for government regulation.
Go through some examples
1) Threatening to surveil some inconsequential twit at Pando Daily so it could blow up into a big story about creepy Uber. Like Trump Administration level idiocy.
2) An HR staff that hid complaints of harassment to protect key engineers. When you have $7B in funding and a massive lead in app installs worldwide, no engineer is key, your brand is key.
3) Numerous instances of showing they can surveil people they don't like by tracking their uber rides.
4) He also distracted his teams, they have close to 100 different side businesses they've launched over the last few years, many of which have nothing to do with making the main Uber service you've been funded to build any better.
5) The Waymo suit. Autonomous cars right now a distraction, when they are finally ready they'll be freely available. The company with the largest market share and best brand should be able to easily adopt them. Travis poured a ton of resources into this acquisition and hired a guy who took the 5th amendment when deposed. Either Travis is duplicitous or he's incompetent for spending that much time and money on someone he didn't know was dirty and would possibly cost them an IP theft lawsuit.
6) Yelling at an Uber driver.
7) etc, etc, so many more examples in the same vein.
All of these hurt the brand, hurt the growth, hurt the installed base. It's his #1 priority to build all of those, and make Uber a service people are happy to have on their phones. Yet Uber is constantly in the news because of brand damaging behavior. Is your contention that because someone arbitrarily gave him a valuation over $1B that all this was good for Uber and he has some secret plan to generate horrible PR to improve the business?
Benchmark capital might not value their potentially most profitable investment so far; but if what you said is true, they don't just trash their investments but also their business ethnics and tarnish their reputation.
So Benchmark is suing Uber and Kalanick because they are worried about getting their money out- 13% of Uber is almost $9B.
Now Uber claims to have other investors ready, willing to buy back over $6B of that stock. If that were the case, then wouldn't Benchmark have already divested?
Who is willing to invest $6B into Uber when it has no CEO and such an astronomical valuation?
Latest news seems to indicate that Softbank is considering investing at a ~$40B valuation.. considerably lower than the $69B number floating around. And although it is probably just a negotiation tactic, they claim to be considering an investment in Lyft instead.
Well as much of a joke as it sounds...this is truely what I believe will happen.
1. Tech community initially embraced Uber, drank the cool aid and echoed: better service, disruption of existing industry highlighting the NY medallion system as the worst example of a taxi monopoly stifling innovation.
2. Uber lost its appeal with stories of their disgusting corporate culture and cut throat/intimidation practices at best and outright illegal practices at worst, just as block chain and smart contracts are hailed as a decentralized solution to the "sharing economy" for things just like Uber. The tech community fell in love all over again, despite the obvious problems and unrealistic expectations of smart contracts.
3. When a blockchain Uber competitor/replacement does come around, it is going to be token based and idiotically the tech community will fall in love all over again, no recognizing the irony of replacing a taxi medallion with a expensive token.
I've only discovered Axios in the past few days but I really like their writing style. It's quick and to the point. Reading their About Us section, it seems like this was the goal "Stories are too long. Or too boring."
Off topic: I love Axios - they have some top tier journalists, and I was introduced when Dan Primack (from fortunes termsheet originally) moved over. They do great newsletters on politics, m&a/VC, tech, and the future of work.
I remember once watching an interview with Travis talking about pitching Uber to Benchmark, and he talked about how they wouldn't let him leave the office until they agreed on terms.
This seems like fight between two fractions in the Uber. On the one side, it is Benchmark capital while the other side there is Travis and investors aligned with him.
What is uber ownership breakdown? What do you think who will win?
How much of Uber's income comes from the US market v. overseas? As long as Lyft is US-only, they're potentially going to have a hard time equalling Uber.
> But Lyft told CNBC, "Along with our international partners, we are updating how we serve our users traveling abroad. We will now direct them to download the partner's app in the country they are visiting."
This story was published 8 months ago and yet there is not a single other country where Lyft has expanded. Also Uber already faces heavy competition oversees. I suspect most of the money they are losing is because of their desire for world domination. It is going to be very hard for Lyft to enter or retain those markets.
This whole situation has to be impeding Uber's CEO search. Finding someone willing to step into this kind of circus, particularly when the circus is over there heads, is going to be very hard.
I wonder what it's like to work in Uber's PR department these days. Hopefully someone is setting aside a year end bonus for them since they don't likely qualify for overtime pay.
The story is as old as the world. Part investors are pushing the concern to the chagrin of other part investors. The letter seems pretty reasonable: the under-signers are pursuing what they see as their self-interest in offering their "fraternal" siblings a generous exit. Nothing to see here. If anything this is good news for Uber, some of its major investors still believe in the the company.
That's skeptical part of my brain sees "shareholders" and thinks "friends of Travis and / or Travis"... I mean if it comes to a vote his side still gets to vote right?
The full letter is included in the article, and the signatures are from three people (representing at least two VC firms). They claim others will be adding their names to the letter in coming days. From the article:
Who signed the request? Shervin Pishevar (Sherpa Capital, although signed as an individual), Ron Burkle (Yucaipa Cos) and Adam Leber (Maverick).
[Edit] According to Crunchbase [1], Sherpa Capital was involved in Series D and Series E funding for Uber, while Adam Leber was an Angel investor. I couldn't find info on Ron Burkle or Yucaipa Cos.
Ron Burkle is a billionaire based in LA who made most of his initial money from grocery stores (A&P). Yucaipa is his personal investing vehicle and has a fairly high profile in the relatively rarified world of private-equity-funds-that-invest-one-very-wealthy-person's-money.
That world is sort of the dark matter flip side of Venture Capital. A firm like Yucaipa doesn't need to blog or tweet -- doesn't need to market itself -- because it never needs to raise money from limited partners, and it's super flexible and agnostic about the kinds of investments it's looking for, time horizons, and how exactly it structures deals.
Thanks for that, fascinating! I searched a bit further and found out he is also co-owner of the Pittsburgh Penguins NHL team. He seems like an intriguing person.
This wouldn't be so much new funding as it would be swapping equity holders. It would be a great investment if Uber keeps growing and one day exits. And Uber will grow - I don't think they've even scratched the surface since logistics is still wide open, among other things. It could very easily be another Amazon-esque juggernaut 10-15X current value.
the statue of liberty would be a great investment if the government was planning to tear it down and sell it for scrap and you could buy it cheap before the word got out.
https://www.recode.net/platform/amp/2017/8/11/16130148/bench...