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Comment by throwawy11111 | Hacker News Reader

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 and selective leaks to undercut and force mgmt's hand in cost cuts (the lease car data earlier this week)

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>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.

What ultimately got him wasn't his "maverick rule-bending to compete against the establishment".

He created this bro-themed caricature of a corporate culture, and he did so for no reason other than enjoying that sort of atmosphere, or being incompetent to stop it. Or both.

Let's not start some sort of myth of martyrdom around Kalanick by conflating these two. Although, yes, this strategy of braking local regulations and expecting to win a power struggle with every government anywhere was also on its last leg when he left, and would've gotten to him as well, sooner or later.

"maverick rule-bending to compete against the establishment" seems like a really complementary way to say "lawbreaking company".

I mean, their whole model was to go places, ignore the law and continue operating until they either got thrown out, or they pumped money to the right places to get the law changed.

Scofflaw corps get nailed sooner or later, and a corp the is built on breaking laws might break some laws investors care about...

Perhaps, but I've heard politicians on the national level talk about this as just business as usual. If the system creating the laws sees "move fast and break things (like laws)" as the norm, then we can scold and shame all we want, but it's not going to change things. Regulatory capture and law-breaking startups seems to be what's expected out of American business by the very people doing the legislation.

Which politicians said what exactly? I read a lot of U.S. national news and I've never heard that.

Certainly regulatory capture is a thing, as is law breaking.

Regulatory capture doesn't do you much good if nobody cares when a business breaks regulations, though :)

I think American society does care about businesses following laws and regulations. I think a narrow segment of the press is wowed by 'outlaw cool' and investor funding, but that is not the same as America as a whole.

Obviously corps are gonna lobby, but I think we as a society should and do draw a distinction between lobbying to change a law that you are not breaking and lobbying to change a law you are breaking. I am pretty sure most legislators who aren't closet anarchists take a dim view of things like that. I will wager a large amount that a vast majority of regulators take a dim view of things like that.

I haven't really paid close attention. Are we basing our assumption that Uber was a "bro-themed caricature of a corporate culture" off the sexual harassment claim that kicked off the uproar a few months back?

While sexual harassment is, of course, indefensible, that story didn't really make Uber sound like the frat house implied by "bro-themed caricatures", it just makes them sound dryly indifferent to the employee's complaint. Are there other events that gave Uber that title?

I would disagree with the order of events here. His actions and business practices directly led to 'a world allied against uber', and getting kicked out of cities. That wasn't incidental, it was a direct result of their choices and behavior. You can't use the results of his actions to explain his actions.

The alternative would be licensing as a taxi company everywhere, which would invite the same political battles with entrenched operators (only with less leverage, since you'd be fighting the battles before you had the user base). So conflict is inevitable with this business model.

Ubers legal battles were because they didn't license, and thus got kicked out of multiple cities by violating their requirements.

By working with licensed drivers/companies or licensing their drivers, they would have avoided much of that problem, admittedly that would add to their revenue vs profit/yearly loss issues they have now. Lyft is in a similar boat, trying to lower loss-per-ride and get to a profitable state. It appears based on media reports that Lyft, despite not sharing many of the conflicting business approaches Uber used, is actually ahead of Uber at working its way to profitability.

> If regardless of what you do you lose a bit of PR here and there, you get kicked out of cities here and there, [...]

...which is because the company was built on ignoring laws and regulations to the detriment of both employees (not called employees by the company) and outsiders (competitors) from the very start, so no wonder that nobody is sympathetic to the company.

I was gonna say. Surely Travis and his allies are interested in Uber's long-term success, yes, but that's a very different claim from them being good for Uber's long-term success.

> Surely Travis and his allies are interested in Uber's long-term success

Why is that certain? Many people are interested in their own success at the expense of their companies. Kalanick in particular seems to celebrate selfishness.

Yeah, you're right - I should say rather that Travis and his allies presumably have no interest in a firesale and definitely have no deadlines like people are claiming the VC firm has, and also have no interest in a "safe-hands" leader, because that's never the sort of leader Travis has been.

But yes, Travis' interest is likely to be his own over Uber's if they come into conflict. I just think he believes that they're aligned. (And I also think he's wrong.)

As far as I understand, Uber IS Travis. I'm not trying to say he is God or anything. This "generation" (Uber, snap) to me seems adamant in fixing the errors of the last generation where founders lost control too quickly (Angie's list).

I'm not saying Travis is a good person. I'm just saying that in a war between founders and investors, it is usually a safe bet to side with founders.

It's possible that Travis wants to regain control and suck out equity into this personal stake. Greedy mofo.

How in the world do you have this kind of detailed insight?

the call is coming from inside the uber

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.

I think you dropped a 0.

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

It's likely not distributed evenly between their three investments (and perhaps three separate funds), and with the late-stage checks typically being larger, it might impact the ROI of that late-stage fund more severely.

I don't really think the urgency is there, though, VCs have been dealing with illiquid companies for decades, if they need to wind down the fund, they will either distribute the shares directly to the LPs or create a placeholder SPV and distribute partnership interests.

Yes I did! Thanks.

Can't edit it now, unfortunately.

Prob because the lifetime of the fund that invested is coming to an end? It's usually 10 years

While most venture funds have a 10 year term, almost all are extended for at least an additional two years. The GP, together with the LP's, have lots of flexibility to extend beyond then if necessary, although there are typically negotiations around fee reductions and clarifying the path to liquidity. I have no insight into this particular fund, but it is very unlikely that it is purely fund term motivating Benchmark's desire to exit.

VC fund lifetimes put a hard time frame of <= 10 years on required liquidity, forcing founders (who have given up board seats to get those investments) to do things they wouldn't ordinarily do. It's a pretty perverse incentive, and I see the attraction of not taking outside money.

It is perfectly reasonable to distribute illiquid shares of a private company at the end of the fund lifetime.

What is the lifetime of the fund? Just the amount of time that the VC firm has said they would have all the money (and more!) back to the limiteds? Clearly that's not a hard deadline, right?

It is a hard deadline because it is in the deal documents when the fund is formed. It is relevant because the fund management is guaranteed fees for that period. Extending it is usually straightforward, but the compensation of the fund management team during the extension is open for negotiation.

I don't think this is just one party. Kalanick has rubbed a lot of people the wrong way. The only reason he has been around for so long is because people have been waiting to use him as the fall guy for all of Uber's misconduct. Apparently that day is now here. His voting rights aren't worth the paper they are printed on unless he can raise more money so my guess is he will be signing those away shortly if he wants to walk away with anything.

This is no excuse to sue their investee. WORST VCs ever. This will serve as a cautionary tale to avoid working with benchmark.

A humiliating year of PR that makes it impossible to fill the empty executive ranks, followed by a crippling power struggle because I submitted a resignation I didn't mean?

I would 100% have expected Sequoia to sue me after I took their money if I had done the same.

We are not kings. At some point misalignment with your board is your responsibility. This isn't some Series B spat.

> I submitted a resignation I didn't mean?

Consider his mental state during this time. He lost his mother for crying out loud and all these things were happening at the same time. Now the VCs want to pile on to that with a lawsuit. I lost my mom 3 years ago and I wasn't in a good place for months. I'm surprised he was able to even function whilst the weight of the world was on his shoulders.

I'm not saying that he should be CEO again just yet (he can take a break and recover) but to sue him at this time like he wasn't directly responsible for the billions they're now so eager to cash out on...?

Don't forget the toll entrepreneurship can have on someone's personal life: you know it from experience and you can also read on how Travis had to move back home in the early days because things didn't work out with initial projects. This is why I would always give first priority of investment to someone like Vinod Khosla who says, 'in 30yrs, I have never once voted against an entrepreneur in a board meeting'. He goes further to criticize most of these VCs as incredibly unsympathetic towards entrepreneurs because they don't know the pains of building a company. Benchmark are exactly the type of VCs Vinod Khosla warns entrepreneurs to avoid.

> I would 100% have expected Sequoia to sue me

Don't know much about Sequoia but I have never seen an article where they've sued an investee.

I've lost a parent and left a startup I founded, so I can sympathize with how incredibly terrible it must be to deal with two huge losses at the same time.

But Uber has grown to impact an incredible number of souls. Gurley et al. have a serious fiduciary duty to exercise here, one not just aligned with their own greed.

Separately, Khosla is not a paragon of founder-friendliness despite his public attestations. No VC is. It is silly to think that 100% alignment can ever exist with an investor — they legally cannot abdicate their voice entirely. At some point Travis needs to recognize that he consciously took risks that diluted his power in exchange for funding. Had he run a profitable business that would not have needed to happen. You can't have your cake and eat it, too.

> Khosla is not a paragon of founder-friendliness despite his public attestations

There's no evidence he hasn't been anything but. I choose to trust him. If I had to choose between a VC leaving a company and the founder CEO leaving, I'd rather the VC left which is the mantra that Khosla advocates for. Before you say the VCs money is at stake, remember also the founders' and employees' sweat equity is also at stake - you can always make more money, but when time is gone, you can't recover it.

A VC's reputation is privately held data. The same for a founder's reputation. Public data is largely useless.

And there is, of course, evidence that Khosla is not 100% founder-friendly, as there is data for every other VC and every other founder out there. Every conflict is gray.

But choose as you wish, of course. That's capitalism.

There have been multiple times that I have protested an action taken by executives; sometimes the action harmed me, sometimes I just thought it was shady/immoral because it was unnecessarily hurting someone else. Every time, I heard some variant of "that's just business."

I wonder how often Kalanick has used that phrase.

> but to sue him at this time like he wasn't directly responsible for the billions

There are different intentions in lawsuits; You seem to think they're seeking damages, but it seems more likely they're just trying to prevent the torturous interference of uncertainty he is causing as news breaks that he wants to be CEO again.

Leaks of backchanneling directly affect their investment and exit strategy. Whether he is CEO, on the board, or "a trusted advisor" the investors and company want to have an appearance of solidarity and confidence.

Vinod Khosla's that guy that keeps illegally blocking off the public access to the public beach in California, right?

He claimed there was trespassing on his private property but I didn't follow the court case.

Brings up a fun thought:

"What do with all the Uber fragments I can't keep in my arms grip!?!?"

---

So what do? How harvest. (Think of this as a thought experiment)

---

Uber collapses:

As an outsider, what are perceived assets and what are perceived risks/liabilities

What are perceived opportunities: how to harvest them NOW??

Experiment 1:

Uber shall die in x months; thus need to take action y now, at cost of x with projection z... resulting in A. What is A?

Uber will not die but morph... Ned to take action x at y cost resulting in A?

Uber won't die at all - and will continue perpetuitiously - A - how profit?

???

Profit.

Is this in English? Are you ok???

https://www.youtube.com/watch?v=udNHsk57f24

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