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Benchmark Capital Sues Travis Kalanick for Fraud

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Re: Benchmark Capital Sues Travis Kalanick for Fraud

#81

Post by spitfire »

cbtacy wrote: post #59
ardit33 wrote: post #23

Earlier quoted context omitted.

Board seats are part of bargaining chip during funding rounds.... they are very very important. If you lose control of the board as a founder, you basically are another employee at the company, at the mercy of your investors, who can choose to bring "adult" supervision anytime they seem it is fit to them. Having the founders control of the board did well to both facebook and google on the long term. On the other hand…

So you're saying Uber would have been in worse shape if the founders had been replaced by adults?

Not that I'm totally agreeing with him. But we saw how the "adults in the room" approach worked in the first dotcom bubble.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#82

Post by baccheion »

Uber, AirBnb, Snapchat, Dropbox, etc will all crumble. They may continue to exist, but they'll be more like Twitter than Facebook. None of them are anything special.

Maybe Dropbox will get acquired after their failed IPO. Snapchat could also get filed away in a similar fashion, but it may be too late.

I wonder why they invested so much in a taxi company. It only makes sense if all cars are replaced with Uber autonomous vehicles, but what are the odds that will happen? Uber only makes sense in larger cities.

The "brain" trust may as well get started on teleportation or something else deserving of billions in blind/naive/"stupid" faith.

Is this the mobile bubble forming and collapsing live? As suggested by historical timings (8 <= year_ipod - year_founded <= 12), IPOs for all "big bets" should technically happen within the next year. I strongly doubt it's going to be pretty.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#83

Post by okuyiga »

pfarnsworth wrote: post #17

Who in their right mind, except for the utterly desperate, would accept money from Benchmark? Talk about letting the fox into the henhouse, you can't trust those guys whatsoever.

You're fucking high if you think any VC is going to choose to protect their "founder-friendly" reputation over their $9BB investment. Any institutional investor would be making the exact same decisions as benchmark here.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#84

Post by PhantomGremlin »

arglebarnacle wrote: post #19
PhantomGremlin wrote: post #7

In my best Nelson Muntz voice: "Ha-ha". The VCs have done this to themselves. They put up all the money, they should have never allowed themselves to be put into this situation. Decades ago, when I was at startups, this was 100% clear, cut and dried. The Golden Rule. People who have the gold make the rules. I'm sure this won't be a popular opinion, since more HN readers are founders and employees than are VCs. But do…

Nobody put a gun to Benchmark's head and forced them to take a deal that left so much control in Kalanick's hands. It was a reflection of the relative strengths of their negotiating position at the time. Kalanick is owed control because Benchmark agreed he had control. The legal question is whether the various scandals that followed show in some way that Kalanick made that deal under fraudulent conditions. It has not…

Kalanick is owed control because Benchmark agreed he had control.

I agree. Given what was negotiated, the default starting position for the lawsuit is that Kalanick is owed control.

so many VCs wanted in, that they were able to dictate very favorable terms.

That is what I failed to fully appreciate. There is so much dumb money sloshing around that it forces smart VCs like Benchmark to agree to dumb things.

Here's now a Fortune pundit described the investment a Saudi Arabian sovereign wealth fund made in Uber last year:

Uber needed the money, and where else are you going to get $3.5 billion? No doubt, it must be tough to fundraise after you've already tapped out venture capitalists, private equity firms, mutual funds, hedge funds, Wall Street high-net worth clients, and strategic corporate and other sovereign wealth funds (yes, including from noxious Qatar).

http://fortune.com/2016/06/02/ubers-no-good-very-bad-deal-wi...

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#85

Post by nthcolumn »

Before Travis got booted some Techcrunch article or other was submitted here on an almost daily basis about him and other issues Uber were having, some days two! I thought to myself: 'Boy! Techcrunch really have it in for Uber and Travis' (mit einen kleine schadenfreude, me being no fan of either). Once he left though, the posts seemed to me to end rather abruptly even though there were still newsworthy shenanigans at Uber. Has anyone else noticed this? Why? Cui bono?

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#86

Post by joering2 »

tim333 wrote: post #74
joering2 wrote: post #65

Earlier quoted context omitted.

> Apparently unhappy with merely removing Travis from the CEO's chair Travis wasn't removed from CEO chair. He resigned temporarily due to passing of his late mother. He himself said multiple times once he is done greaving, he plans to come back.

"Travis Kalanick stepped down Tuesday as chief executive of Uber, the ride-hailing service that he helped found in 2009 and built into a transportation colossus, after a shareholder revolt made it untenable for him to stay on at the company." is how the NYT put it.

I didnt get this news. First when it broke he and board explained its due to his morher passing. Now im confused as of what really transpired.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#87

Post by PhantomGremlin »

voidmain wrote: post #70
PhantomGremlin wrote: post #7

In my best Nelson Muntz voice: "Ha-ha". The VCs have done this to themselves. They put up all the money, they should have never allowed themselves to be put into this situation. Decades ago, when I was at startups, this was 100% clear, cut and dried. The Golden Rule. People who have the gold make the rules. I'm sure this won't be a popular opinion, since more HN readers are founders and employees than are VCs. But do…

VCs don't invest their own money. As an LP actually putting up capital, do you prefer your portfolio companies to be run by founders (expert in their particular business, lots of skin in the game in the form of common stock, idiosyncratic compared to your other portfolio companies' leaders, sometimes a little too conservative for a well diversified investor like you), or VC partners (expert in capital allocation, som…

VCs don't invest their own money.

I haven't been privy to details of many VC funded companies, but the ones I saw definitely had the VC General Partners investing their personal money side by side with money from their Limited Partners. That was reflected in the names on the preferred stock certificates from day one. (Probably don't do paper stock certificates any more).

I agree with your statement that "it's not that obvious" as to who should have control, and there are good arguments both ways. My personal inclination would always remain that the people putting up the money should have the final say.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#88

Post by tim333 »

joering2 wrote: post #86
tim333 wrote: post #74

Earlier quoted context omitted.

"Travis Kalanick stepped down Tuesday as chief executive of Uber, the ride-hailing service that he helped found in 2009 and built into a transportation colossus, after a shareholder revolt made it untenable for him to stay on at the company." is how the NYT put it.

I didnt get this news. First when it broke he and board explained its due to his morher passing. Now im confused as of what really transpired.

There was talk about leaving temporarily before the shareholder revolt kicked in.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#89

Post by malandrew »

rmason wrote: post #8

If actual fraud is not found what sort of message does this send to entrepreneurs that Benchmark is founder friendly? Looks like a grudge match to me. Apparently unhappy with merely removing Travis from the CEO's chair they want to make certain he's never allowed to ever enter the building.

Benchmark and especially Bill Gurley have never been friendly to common shareholders:

http://blog.ericgoldman.org/personal/archives/2005/02/ravika...

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#90

Post by calpaterson »

gjem97 wrote: post #62
throwawy11111 wrote: post #61

Benchmarks in a bind and at war with travis; they need to liquidate their stake in next year or two. Softbank deal to buy out their shares fell apart in part b/c no CEO. Benchmark wants safe-hands leader who will cost-cut firesale their way to quick IPO. travis + allies being more long term; blocking benchmarks CEO picks (meg). so board civil war continues with benchmarks dirty tricks like this sour grapes lawsuit an…

Why do they "need" to liquidate in the next year or two?

From crunchbase (https://www.crunchbase.com/organization/benchmark/investment...) it looks like Benchmark made three investments in Uber, the last of which was in 2013. The funds that VCs raise normally only operate for a specific term of eg 5 years, so now is the kind of time they will want to get out.

Incidentally from what I can make of their investments in Uber on crunchbase, they need Uber's market cap to be $31bn just to break even on their investment (13% of the business for $411m). That's probably what they're fighting for.

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