The saga between the powerhouse venture firm Benchmark and former Uber CEO Travis Kalanick continues. Following last week’s lawsuit revelation, Benchmark penned a public letter to Uber employees explaining why it is taking legal action against Kalanick, who remains on Uber’s board and controls two other, empty board seats.
Today, Benchmark doubled down on its decision, writing a note addressed to Uber employees, saying that not only should it sue, but “perhaps the better question is why didn’t we act sooner.” The firm said that when the CEO search began more than 50 days ago, Kalanick agreed in writing to “modify the company’s voting agreement to ensure that the board was composed of independent, diverse, and well qualified directors.” Benchmark is alleging that Kalanick has not followed through on this agreement and that he was warned more than a month ago that he would be subject to potential litigation.
The lawsuit and Kalanick’s resignation have been controversial in Silicon Valley. The former Uber CEO resigned in June amid board pressure, following months of turmoil at the most valuable startup. Allegations of sexual harassment, discrimination and law-breaking led to a company investigation by former U.S. Attorney General Eric Holder.
Benchmark claims it was necessary for Kalanick to step down. “We acted out of a deep conviction that it would be better for Uber, its employees, and investors to have a fresh start. We believed then, as we believe now, that failing to act would have meant endorsing behavior that was utterly unacceptable in any company, let alone a company of Uber’s size and importance.”
Through a spokesperson, Kalanick responded to the Benchmark letter. “Like many shareholders, I am disappointed and baffled by Benchmark’s hostile actions, which clearly are not in the best interests of Uber and its employees on whose behalf they claim to be acting. Since 2009, building Uber into a great company has been my passion and obsession. I continue to work tirelessly with the board to identify and hire the best CEO to guide Uber into its next phase of growth and ensure its continued success.”
It’s true that not all of Uber’s investors are in agreement that Kalanick should be sued and pushed off the board. Sherpa Capital, founded by early Uber investor Shervin Pishevar, has come out against Benchmark, demanding that it should be the one to leave the board and should also sell most of its shares.
There have been several other proposed scenarios. First reported by The New York Times, we’ve confirmed that Dragoneer Investment Group has discussed leading a coalition to buy some of Uber’s shares at a discount and would also buy some new shares at the $68.5 billion valuation the company was assigned during its last private round of funding to maintain that valuation. No formal offer has been made, but the Uber board has agreed to move forward with the discussion.
There have also been various reports about SoftBank and the possibility of the Japanese investment firm buying up shares.