An employee who exposed Rothenberg Ventures to the SEC • Hacker News Board

Re: An employee who exposed Rothenberg Ventures to the SEC

#41

Post by endorphone » Tue, May 09, 2017, 2:45 PM UTC

jartelt wrote: post #37

endorphone wrote: post #34

Earlier quoted context omitted.

I'm taking a beating in another comment (it's one of those ridiculous discussions where everyone can demonstrate how righteous they are), but I listened to the podcast and the argument was that the management company (e.g. not the actual funds) used management fees to pay for their own investments. Ala the frat bros owned A. A had funds B, C, and D. Investers are LPs of B, C and D. Management fees flowed from B, C an…

Well, if the management company didn't use any of the fees to pay employees, credit card companies, other vendors, etc. and instead used the fees to buy a "mountain of blow", I think that qualifies as an issue.

In the wake of controversy they saw mass redemptions, fees obviously collapsed, and the company became essentially insolvent. There is nothing criminal about that, and it happens to funds as a regular event, and it came much later than the events around this purported whistleblowing.

Re: An employee who exposed Rothenberg Ventures to the SEC

#42

Post by manigandham » Tue, May 09, 2017, 2:55 PM UTC

frgtpsswrdlame wrote: post #40

manigandham wrote: post #36

Earlier quoted context omitted.

As an employer, whistleblowers are not something to fear unless you have something to hide. What exactly is he going to expose if everything is legit? Better to have honest employees than those would do otherwise without question.

>As an employer, whistleblowers are not something to fear unless you have something to hide. We don't let that logic slide when it comes to individual privacy and I'm not sure we should for corporate privacy. Even a company completely on the up and up may have privacy concerns that deter them from hiring someone like this.

Illegal vs private is a different discussion. Some companies like transparency, some don't, and that's fine.

Proper security protocols are probably a better model for that since everyone is naturally curious and info tends to spread at even the most secret of companies.

Re: An employee who exposed Rothenberg Ventures to the SEC

#43

Post by gregshap » Tue, May 09, 2017, 3:24 PM UTC

endorphone wrote: post #34

dmschulman wrote: post #22

Interesting timing, I had just finished reading this Backchannel article regarding Rothenberg Ventures from September: https://backchannel.com/mike-rothenbergs-vc-firm-was-young-s... Just an excerpt, an example of what I'd imagine some of the unwise personal projects regard: "Most troublesome are questions about how Rothenberg managed investors’ money. Specifically, in 2015 he founded a virtual reality production com…

I'm taking a beating in another comment (it's one of those ridiculous discussions where everyone can demonstrate how righteous they are), but I listened to the podcast and the argument was that the management company (e.g. not the actual funds) used management fees to pay for their own investments. Ala the frat bros owned A. A had funds B, C, and D. Investers are LPs of B, C and D. Management fees flowed from B, C an…

I haven't listened to the podcast, but according to the backchannel article linked above, the money came from the funds themselves

> The $5 million that went into launching River Studios came from Rothenberg Ventures’ second and third funds...One LP says that in a phone call with investors in August after Rothenberg had told them about the River Studios investment in an email, one grilled him on why River Studios wasn’t in the annual reports, and says Rothenberg responded that he was still getting around to the disclosures. Rothenberg’s employees also say they were kept in the dark. Two former employees tell Backchannel that when they asked Rothenberg how River Studios was funded, he told them only that there were outside investors. Another recalls Rothenberg saying he paid for it himself. Rothenberg disputes this, saying that all investors had been made aware, adding, “We’ve been very public about it.”

[https://backchannel.com/mike-rothenbergs-vc-firm-was-young-s...]

Re: An employee who exposed Rothenberg Ventures to the SEC

#44

Post by smcl » Tue, May 09, 2017, 3:29 PM UTC

colmvp wrote: post #27

ghc wrote: post #15

Good for him. That's why we have whistleblower laws in the first place. Most of us have a lot to lose by doing the right thing: damaged job prospects may equate to a large future loss of earnings over your career. Still, history shows plenty of people have paid (and continue to pay) a far higher price than that.

Yup. Whistleblowers are severely disadvantaged. The Theranos whistleblower has had to endure about 400k in legal fees. I also recall reading a story about two police officers (can't remember the city) who tried to reveal corruption in their department, only to be vilified by superiors/fellow officers, have their career trajectory torpedoed, and see people who treated them like garbage eventually elevated in various f…

For the Police whisleblower I'm not sure if it's the same one, but Adrian Schoolcraft's[1] case was pretty awful. He was mostly documenting relatively mundane (but still nasty) things like being given targets for the amount of littering, jaywalking, open-container etc arrests by the superior officers. However things took a bit of a weird turn, and he ended up with some recordings of the Police harrassing him at his home (including them basically abducting him under false mental health issues, and destroying what they thought was the only mic recording them doing so) are pretty awful - This American Life did a piece on this [2].

[1] = https://www.nytimes.com/2015/09/30/nyregion/officer-who-disc...

[2] = https://www.thisamericanlife.org/radio-archives/episode/414/...

Re: An employee who exposed Rothenberg Ventures to the SEC

#45

Post by endorphone » Tue, May 09, 2017, 3:41 PM UTC

gregshap wrote: post #43

endorphone wrote: post #34

Earlier quoted context omitted.

I'm taking a beating in another comment (it's one of those ridiculous discussions where everyone can demonstrate how righteous they are), but I listened to the podcast and the argument was that the management company (e.g. not the actual funds) used management fees to pay for their own investments. Ala the frat bros owned A. A had funds B, C, and D. Investers are LPs of B, C and D. Management fees flowed from B, C an…

I haven't listened to the podcast, but according to the backchannel article linked above, the money came from the funds themselves > The $5 million that went into launching River Studios came from Rothenberg Ventures’ second and third funds...One LP says that in a phone call with investors in August after Rothenberg had told them about the River Studios investment in an email, one grilled him on why River Studios was…

Later information is much more vague about this, and one of the core complaints is that he used the management fees of his funds to sponsor companies that arguably competed with holdings of the funds - a serious conflict of interest.

This fund was started with a ridiculous fee structure of 17.5% of total investment upfront, and then apparently no going forward fees. Like a "lifetime VPN" subscription, the economics don't make sense and it is a folly arrangement for all sides.

Re: An employee who exposed Rothenberg Ventures to the SEC

#46

Post by cavanasm » Tue, May 09, 2017, 3:47 PM UTC

colmvp wrote: post #27

ghc wrote: post #15

Good for him. That's why we have whistleblower laws in the first place. Most of us have a lot to lose by doing the right thing: damaged job prospects may equate to a large future loss of earnings over your career. Still, history shows plenty of people have paid (and continue to pay) a far higher price than that.

Yup. Whistleblowers are severely disadvantaged. The Theranos whistleblower has had to endure about 400k in legal fees. I also recall reading a story about two police officers (can't remember the city) who tried to reveal corruption in their department, only to be vilified by superiors/fellow officers, have their career trajectory torpedoed, and see people who treated them like garbage eventually elevated in various f…

That's Chicago based. They were actually secretly working for CPD Internal Affairs, and their CO (who knew of their side work for IA, but not who the subject of the investigation was) leaked it to everyone, which made it nearly impossible for them to actually investigate the particular officer who was suspected of being a local drug kingpin / murderer (convicted much later of a small fraction of the stuff he's alleged to have done). The Intercept ran one of their big series on it. It's definitely an interesting read, but it's lengthy.

https://theintercept.com/series/code-of-silence/

Re: An employee who exposed Rothenberg Ventures to the SEC

#47

Post by [deleted] » Tue, May 09, 2017, 3:47 PM UTC

kazinator wrote: post #39

If I found out that someone I know (friend, family member, ...) were being deceived by the company, I'd pass the info on to that person (not the government). Otherwise, none of my business. Of course, unless I'm in a position where I'm legally required, like an officer of the company, or accountant or whatever. As someone just doing in-house development or IT work or whatever, no way. The litmus test for whistling is…

[deleted]

Re: An employee who exposed Rothenberg Ventures to the SEC

#48

Post by tremon » Tue, May 09, 2017, 3:58 PM UTC

mnw21cam wrote: post #6

tremon wrote: post #3

So, where's the blowback? I feel like half of the story is missing...

From the article: > Riordan is trying to start a company that improves email security. Partly, he says, that’s because blowing the whistle on Rothenberg dinged his career prospects. After once telling a job interviewer he was a whistleblower, he didn’t get a call back. Still, he says, the cost was worth it. “I knew that to some extent I would be damaging my career,” he says. “I was just so sure that it was the right…

My point was that those events are positively minor, compared to what others have experienced. I think the term "blowback" is severely out of place here.

Re: An employee who exposed Rothenberg Ventures to the SEC

#49

Post by obiefernandez » Tue, May 09, 2017, 4:56 PM UTC

aphextron wrote: post #38

I have to say this isn't surprising from my personal experience with Rothenberg. I attended their "Founders Field Day" event last year and it was the most surreal, over the top, "Silicon Valley" thing I have ever witnessed. They must not be in too hot of water though, as they're holding another puppy petting/VR party in the city this Friday.

Mike Rothenberg is one of the executive producers of Silicon Valley!!

Re: An employee who exposed Rothenberg Ventures to the SEC

#50

Post by joshdotsmith » Tue, May 09, 2017, 5:39 PM UTC

joshdotsmith wrote: post #28

GrumpyNl wrote: post #18

Earlier quoted context omitted.

With those ethics, you would be a great soldier.

I'm sorry, what?

Okay, so I got downvoted for clarifying why the now flagged post said the parent "had the ethics of a soldier." Maybe at least explain why?