MORE TROUBLE FOR UBER
Benchmark Capital Sues Kalanick
Benchmark Capital sued Uber Technologies Inc.’s former chief Travis Kalanick in an effort to oust him from the board, exposing a clash between two of the ride-hailing company’s most powerful and contentious shareholders during the middle of a CEO search. The lawsuit on Thursday alleges Mr. Kalanick defrauded directors into giving him more control over the board by hiding a range of “inappropriate and unethical directives.”
In a Delaware Chancery Court filing, the suit alleges that Kalanick committed fraud, breach of contract and breach of fiduciary duty. Accusing Kalanick of being “selfish” by packing Uber’s board with “loyal allies,” Benchmark alleges that the ousted CEO broke the law by trying to pave the way for his own return. Reports have suggested that Kalanick has been telling people that he’s “Steve Jobs-In it” and will be back at the helm. If successful, the Benchmark lawsuit could kick Kalanick off the board of directors, making his return impossible.
The suit revolves around a June 2016 decision by Kalanick to increase the size of the board by 3 seats, from 8 to 11. Kalanick named himself to one of those seats after stepping down as CEO earlier this year. Benchmark says they never would have allowed the expansion if they’d known about widespread allegations of sexual harassment within the company, and the pending conflict with Alphabet subsidiary Waymo over the alleged theft of trade secrets related to self-driving cars.
In a statement, Mr. Kalanick’s spokesman said the lawsuit is without merit and “riddled with lies and false allegations.” He said Benchmark is attempting to deprive Mr. Kalanick of his rights as a founder and shareholder and silence his voice. I keep writing about Uber for all the wrong reasons. This is yet another step in a very tumultuous 2017. After a former Uber employee wrote a story detailing sexual harassment and an environment that discriminated against, former U.S. Attorney General Eric Holder oversaw an investigation into the company’s culture. This ultimately led to a series of executive departures and Kalanick’s resignation.
The stakes are so high in this lawsuit because Uber is one of the most valuable private company in the world at $70 billion. This is significant, not only because of Uber’s size but because Benchmark is considered one of Silicon Valley’s top venture firms, with the team including noted investor Bill Gurley. Venture capitalists typically cultivate a “founder friendly” image when competing to invest in the most promising startups; but it seems like benchmark decided the ouster and lawsuit are worth it.
Keep those stops tight
Todd “Bubba” Horwitz
IN ASSOCIATION WITH