An employee who exposed Rothenberg Ventures to the SEC
bloomberg.com
bloomberg.com
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 company called River Studios to create virtual reality videos for the likes of Coldplay and Björk, funding it with $5 million from Rothenberg Ventures. Many investors say they did not know — nor was it disclosed in annual reports — that he was founding and funding his own business with their dollars, despite the fact that the investment was roughly 50 times the size of the seed investments the firm normally makes."
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 and D to A, where it was used for nonsensical stuff.
There's nothing at all illegal about that. If a fund has a 10% of holdings management fee, the fund has zero obligation or "fiduciary duty" to the charged fund holders in how they use that money. They can use it on a mountain of blow, or a room of strippers. Or they can invest in dubious investments. Whatever. If investors don't like the returns relative to the management fees, they redeem.
This whole story is very offputting. The individual is talking about various completely uncriminal emails that he read in podcasts, itself arguably criminal and with profound civil liability. And that's the hero of the story? Eh.
> 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...]
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.
"Several former Rothenberg Ventures and River Studios employees now say they didn’t understand why River Studios was green-lit. One former employee noted that River Studios also competed for clients and market share with at least two of Rothenberg Ventures’ portfolio companies that were already in VR film production, Triggar and vantage.tv. (Triggar didn’t respond to requests for comment, and vantage.tv’s CEO Juan Santillan wrote in an email, “I don’t agree with many of the things that were going on at RV…” but added, “RV[’s] extended team has been great to us.”)"
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 forms of government.
And of course, there's Snowden who basically had to flee the country to reveal his findings, lest he suffer the consequences of prosecutorial abuse of the Espionage Act in the United States.
[1] = https://www.nytimes.com/2015/09/30/nyregion/officer-who-disc...
[2] = https://www.thisamericanlife.org/radio-archives/episode/414/...
Shouldn't the SEC or whichever agency they came clean to foot those bills?
> 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 thing to do.”
Do I think there are a lot of companies in the first category? Yes (I also think there are a lot in the other two though).
Do I think it's remotely reasonable to automatically assume every place that doesn't call you back after you mention being a whistleblower isn't calling back because you mentioned that? Not at all.
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.
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.
Of course the SEC is mostly a toothless worm so while he did the right thing, I doubt much will ever happen to the company or its founder.
Now I get the opening scene in Silicon Valley Season 2 Episode 1 where they're at the baseball stadium.
That's kind of troubling, depending upon the details.
If I hire someone and he starts fishing around on the servers that he has access to, looking to put together a case, that could easily be a violation of trust. I could maybe even see if the SEC had contacted him and asked him for information as an informant in something ongoing. But Riordan initiated this - and it wasn't like the Uber example where Susan Fowler was exposing company culture information that was more public in the first place.
Granted, Rothenberg looks pretty dirty and I have personal experience with a CEO diverting company funds and priorities away from the supposed corporate mission. It's no fun and I have sympathy for stopping him.
If I hire someone to do some server work, I want him to do the job I'm paying for - not spend my money trying to build a case against me.
I don't care how much you're paying me; if I see you punch a guy in the break room, I'm calling the police. This is more like that than it is an employee shirking his duties.
Who's the "I" here though, the CEO or the investors? Fundamentally it's their money. Would you also want an employee that turned a blind eye to other employees stealing from the company?
Hired for web development, they go trawling through the network finding any insufficiently secured material they can access to appease their sense of justice (and have since used various emails of other people's for media discussions to bolster their case, while ironically talking about email security -- ala "defend against me"). Then they continue working while acting as an agent of the government. Or such is what I take from this article.
As good as it seems that the company and "frat" brothers (always a wonderful word in these articles to prejudice the reader) were brought down, does this article give anyone any comfort about hiring this person?
To make it even worse (regarding the "side with criminals" nonsense), thus far nothing criminal has even been demonstrated. For instance a core contention is that they used management fees for separate investments. There is nothing illegal about that. Investors are partners of specific funds, and management fees are the fees and profit to the management company for running that fund. It just sounds like a shitty company shittily run, but running around exposing various emails that were arguably criminally accessed just smells really stinky.
Quite aside from what looks like a gross abuse of access (again, and maybe the article is representing it wrong, but I'm pointing out why the article does them no favors), which itself is ironically criminal, society in general looks unfavorably on "tattle tales" for a reason.
If you didn't cross all t's and dot all i's when creating your DR strategy, will they call the BSA on you? If a painter's van partly blocks a handicap space, will they report you to the city? Etc.
Everyone breaks the law to some degree. If this person were your passenger on a commute and they called 911 to report that you were 10 over, would you say "Well that's fair. I understand why they don't side with the criminal.".
Again, my core point is how this article does them no favors.
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: is it my business to know this information? And if so, do I face penalties or a jail time if I don't report it?
That guy shouldn't even have been reading those e-mails, which were not for his eyes. Of course someone might not want to hire him; he sticks his nose where it doesn't belong.
Suppose the company hadn't done anything wrong? Will he reveal in future interviews, "I was an almost-whistleblower at my former employer; working a simple web developer, I got into private executive memos that weren't CC'd to me and luckily found no evidence of wrongdoing".
Unethical actions which uncover crime are still unethical.
That is why we have warrants, and wiretap laws and all that; how information is obtained matters.
"Any way to nail a criminal" is end-justifies-the-means questionable ethics.