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Benchmark Capital Sues Travis Kalanick for Fraud

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Re: Benchmark Capital Sues Travis Kalanick for Fraud

#101

Post by SomeStupidPoint »

abiox wrote: post #77
SomeStupidPoint wrote: post #24

Earlier quoted context omitted.

It seems like newspeak to call people "greedy" for suing someone despite that they (nominally) made a lot of money for those people. It seems like the fund is insisting that its investments follow the law, not indemnify criminal actions, etc. Doing that to an investment that made you money seems the opposite of greedy. How are we seeing this so differently?

> It seems like the fund is insisting that its investments follow the law the fund is not the police or courts, though... right? it's not their "job" to ensure the law is asserted upon the land - at least not beyond their own avoidance of wrongdoing. > not indemnify criminal actions IANAL, but the state is the plaintiff in criminal cases. this case just seems to be benchmark asking that newly added board seats be rem…

> at least not beyond their own avoidance of wrongdoing

Such as enforcing that people contracted to carry out work on their behalf do so in a manner that conforms to their ethical stands?

A fund policing the habits of an investment is literally the people who own the business policing the actions of their employees -- I think most of us agree that a business has the right to enforce ethical standards on employees.

> not the police or courts

Both of these institutions are primarily complaint driven -- the fund filed a complaint that people they employed violated the rules of their employment and is asking the courts to make it right. (Slight more convoluted, but that's the gist of it.)

> state is the plaintiff in criminal cases

That has nothing to do with indemnifying someone from the financial consequences of their actions -- a third party can offer to pay your penalties.

> seems to be benchmark asking that newly added board seats be removed

Are there no prior cases where board actions to create board seats were reverse because of fraud? I'm skeptical.

But more to the point -- so what? We have well established law that you can revisit agreements made on a fraudulent basis and they're asking the courts to mediate just such a dispute.

I'm actually unsure how you think any of this should work based on your objections, aside from that corporate managers shouldn't be liable, even to the corporate owners, for their actions.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#102

Post by iamtherhino »

calpaterson wrote: post #90
gjem97 wrote: post #62

Earlier quoted context omitted.

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 $…

I think you dropped a 0.

0.13*31BN = ~$4BN, still a 10X return if they've invested $400M.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#103

Post by baccheion »

emrekzd wrote: post #96
baccheion wrote: post #82

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 autonomo…

> Uber, AirBnb, Snapchat, Dropbox, etc will all crumble. None of these companies are anything special. Lol. Please share some of your wisdom with us. Leaving aside taxi companies like Uber and useless things like Airbnb, can you tell us what companies do anything special these days Master Foo?

There's nothing going on; therefore, these companies aren't going to fail?

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#104

Post by angersock »

sah2ed wrote: post #33
bearcobra wrote: post #20

Earlier quoted context omitted.

A question I've been pondering since the Martin Shkreli verdict, is fraud OK if the deceived parties still profit?

Fraud is never OK. The end does not justify the means.

What a small-minded view. Our entire runs on fraud of one degree or another--sometimes it's just more than people are willing to bear.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#105

Post by abiox »

SomeStupidPoint wrote: post #101
abiox wrote: post #77

Earlier quoted context omitted.

> It seems like the fund is insisting that its investments follow the law the fund is not the police or courts, though... right? it's not their "job" to ensure the law is asserted upon the land - at least not beyond their own avoidance of wrongdoing. > not indemnify criminal actions IANAL, but the state is the plaintiff in criminal cases. this case just seems to be benchmark asking that newly added board seats be rem…

> at least not beyond their own avoidance of wrongdoing Such as enforcing that people contracted to carry out work on their behalf do so in a manner that conforms to their ethical stands? A fund policing the habits of an investment is literally the people who own the business policing the actions of their employees -- I think most of us agree that a business has the right to enforce ethical standards on employees. >…

> A fund policing the habits of an investment is literally the people who own the business policing the actions of their employees

this seems to be equivocating on "policing".

> That has nothing to do with indemnifying someone from the financial consequences of their actions

you stated "criminal actions". if kalanick committed a crime, it is the state that pursues this in court. afaik all that is occurring is that benchmark is pursuing a civil case.

> Are there no prior cases where board actions to create board seats were reverse because of fraud?

are you referring to criminal or civil wrongdoing?

> I'm actually unsure how you think any of this should work based on your objections

it just seemed to me that you were suggesting private entities pursue criminals and "fight crime", perhaps as some form of vigilantism. ...perhaps like batman?

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#106

Post by eridius »

benmathes wrote: post #41
sillysaurus3 wrote: post #29

Stakes: Per the complaint, Kalanick currently holds around a 10% equity stake in Uber, which most recently was valued at around $70 billion. Benchmark holds approximately 13 percent. This is interesting. I thought HNers were saying Kalanick had the biggest stake, which is why the board couldn't fire him. How does this work? If someone only has 10% equity, why was it so difficult to remove them? This is a useful tool…

Uber has different share classes with different voting rights https://www.nytimes.com/2017/06/12/technology/uber-chief-tra... --------------------------------- Even if a worker sells only 10 percent of his or her stock back to the company, that worker agrees to give Mr. Kalanick the voting rights to 100 percent of his or her stock. Each share of Class A stock comes with one shareholder vote, while each share of Class…

> Employees must follow the “instructions of Travis Kalanick,” according to the buyback agreement, “with respect to any and all matters” that are submitted to a shareholder vote.

Wow. I knew about the super-shares, but giving Travis (not even Uber's CEO but Travis personally!) control over the voting rights of any employee who sells any of their stock back to the company seems pretty fucked up. Is this done at any other company?

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#107

Post by btown »

uhhhhhhh wrote: post #72
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…

>travis + allies being more long term His actions and bad management hardly seem long term based thinking. While you could be right that is his intention, his actions to date, the bad management issues well documented, or his possible participation in fraud, to the antagonistic business practices hardly seem the best "long term" approaches.

Not to defend his actions, but to consider his possible mindset in doing them: His actions could be explained as pushing hard to build a defensive moat against a world allied against Uber as quickly as possible. If regardless of what you do you lose a bit of PR here and there, you get kicked out of cities here and there, and you have to pay a few hundred million in settlements here and there, you might as well throw caution to the winds so that you still have plenty of market share left when you lose those things, right? It would seem that's the Uber way. Of course, breaking laws and conventional morality to do so is a slippery slope, and he severely underestimated how much those extremes would splash back on him personally. I hope that other excessive CEOs treat this as a wake-up call - limits and laws are there for a reason.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#108

Post by sah2ed »

angersock wrote: post #104
sah2ed wrote: post #33

Earlier quoted context omitted.

Fraud is never OK. The end does not justify the means.

What a small-minded view. Our entire runs on fraud of one degree or another--sometimes it's just more than people are willing to bear.

You are joking right?

The question about fraud was in the context of the misappropriation of capital from investors for a purpose different from what was initially agreed to, and not as a general catch-all term for posturing or affectation either by politicians or the general populace.

Re: Benchmark Capital Sues Travis Kalanick for Fraud

#110

Post by whbk »

PhantomGremlin wrote: post #87
voidmain wrote: post #70

Earlier quoted context omitted.

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 tha…

Yeah, they definitely put up their own money - it's also public record :)

This is how reporters know a firm is raising another fund (beyond just expecting them to every 2 years). The amount/percentage of the total fund that the partners pay in themselves varies by firm and fund.

Here's the records from Benchmark's Fund 7

Partners put up $80mm of their own cash, in a vehicle named Benchmark Founders' Fund VII, L.P.: https://www.sec.gov/Archives/edgar/data/1507661/000150766111...

They then raised $425mm from LPs through a vehicle named Benchmark Capital Partners VII, L.P.: https://www.sec.gov/Archives/edgar/data/1507669/000150766911...

So the Benchmark partners have 16% of that particular fund, though keep in mind VC funds have different economics than just a straight up equity split. 16% is pretty high compared to some other firms I've reviewed, but I admittedly haven't taken the time to sample widely.

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