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2.9 Avoid Benchmark: the Scoprion and the Frog
Fund: Benchmark Capital
Posted by SuperUber on 2017-08-24
The behavior of Benchmark with Uber and Travis Kalanick is repressible, and no good entrepreneur should work with this firm. Someone needs to speak out. Leaving aside allegations of sexism within the company, a closer look at the "invisible hand" of Benchmark is needed.
Why did Benchark give Travis key Board allocations if he were so bad? Why did they orchestrate a maneuver to kick him out after his parents suffered a terrible accident? Why have they been meddling in day-to-day operations at the company? Why are they suing with defamatory and knowingly false allegations lifted from another lawsuit? Why are they tormenting other Board Members?
Travis himself may have the answer in a 2011 video, in which there is a slide titled, "VCs tend to kill founding CEOs:"
It's time that the true inside story gets told. The Board Members do not like Benchmark, and with good reason. Everyone is sitting on a diamond, and, like the scorpion and the frog parable, Benchmark had to kill the frog. It's in their nature.
Why did they kill the frog? There are three reasons:
1. Liquidity - Each Benchmark partner will make $250 MM to $500 MM on Uber. Tnis is more profit more than many of the founding engineers and executives. Any of the sexism scandals have delayed an IPO, so why not create turmoil to get bought out?
2. Liability - Bill Gurley is the first institutional investor. He was a close advisor and mentor. Lawyers at Benchmark warned that the fund may be liable for the actions within Uber. So, why not blame the CEO as you boot him out the door to shift the blame and the liability?
3. Bank Heist - Benchmark owns only 13% of the business. By removing Travis and opening the three Board Seats that he controls, this allows Benchmark to gain control of the business. If they can not get bought out at a high price by threatening other Board Members, then why not control one of the largest private companies in Silicon Valley and do as you please?
Abuse of power has returned to the world of venture capital, and Uber is the poster child of this new movement. Their Machiavellian schemes are reprehensible. Over the coming days, the story will start to come out. Chris Sacca is involved. False stories have been planted. It's ugly.
"A scorpion asks a frog to carry it across a river. The frog hesitates, afraid of being stung, but the scorpion argues that if it did so, they would both drown. Considering this, the frog agrees, but midway across the river the scorpion does indeed sting the frog, dooming them both. When the frog asks the scorpion why, the scorpion replies that it was in its nature to do so."
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