You are blacklisting someone because he reports being harsh with a subordinate who was not doing his job?
Luckily, VCs don't really get to tell you how to run a company.
I'm quite certain someone who holds a very large equity share in your company and who has enormous influence over your future prospects at funding, can really tell you how to run a company.
A VC is really unlikely to get involved with the details of how your corporate culture works, provided the business works. The board-level decision they could ultimately force is replacement of founders/CEO, corporate events (financing, M&A, etc.), and really high level strategy.
Wait, is this guy the A16z Horowitz? Not a time to flout obnoxiousness and ruthless disregard for staff, in the middle of the OnLive situation.