VC Firm Benchmark Capital, An Early Investor In Uber, Sues Travis Kalanick For Fraud

Dan Primack, reporting for Axios: The battle between Benchmark Capital and Travis Kalanick just went nuclear, with the venture capital firm suing the former Uber CEO for fraud, breach of contract and breach of fiduciary duty. The complaint was filed earlier today in Delaware Chancery Court. Key graph, per the suit: "Kalanick, the former CEO of Uber, to entrench himself on Uber's Board of Directors and increase his power over Uber for his own selfish ends. Kalanick's overarching objective is to pack Uber's Board with loyal allies in an effort to insulate his prior conduct from scrutiny and clear the path for his eventual return as CEO -- all to the detriment of Uber's stockholders, employees, driver-partners, and customers." Why it matters: If Benchmark's suit is successful, Kalanick would be kicked off Uber's board of directors -- thus eliminating any faint hopes of him returning to the company in a substantial role.

Nice try, Benchmark.

[cunina]

There are few organizations on Earth I hate more than Uber (see Disney), but in this case, Kalanick is right. An investor isn't entitled to every piece of information one of its assets has, and even if it did, rolling back a shareholder vote is a way, way too extreme measure to deal with it.

Re:

[HornWumpus]

Even if they both lose, the lawyers win. So there is nobody to cheer for in this fight. Maybe if the lawyers agree to get paid with options there's a lose, lose, lose proposition (good outcome). But I don't see it happening.

Re:

[fustakrakich]

Even if they both lose, the lawyers win. So there is nobody to cheer for in this fight.

Unless you're a lawyer...

Re:

[lactose99]

From the article, he was making an end-run around Benchmark. I can certainly see them suing him.

Re:Nice try, Benchmark.

[Luthair]

There are issues with boards - something I hadn't realized prior to listening to Planet Money #594 new board members must be approved for voting by the existing board. So if you're in control of a board you can ensure perpetual control.

Re:

[loufoque]

The reason you give people voting rights is that they usually ask for it in exchange of bringing new capital.

Re:

[JohnFen]

Web 2.0 can't die, because it never actually meant anything.

It's too late

[JohnFen]

I don't see any way that Uber could become a non-evil company without, at a minimum, replacing all of management and the board of directors.

Uber can't become a non-evil company

[rsilvergun]

because their business model is predicated on shifting the cost of doing business onto their employees which is in turn made possible by those same employees economic desperation. They're inherently evil.

Re:

[mjwx]

I don't see any way that Uber could become a non-evil company without, at a minimum, replacing all of management and the board of directors.

Or changing their business model.

Here in the UK, Uber is legal but they still aren't making a profit (or any cheaper than a minicab). Their business model relies on ignoring costs that other providers have to bear, right now they cant even make a profit by ignoring private hire laws, how can they make a profit when they abide by the same regulations as regular private hire cars (which in the UK, are minimal).