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I'm sure this will be an unpopular opinion since most of us agree with what Mitch is saying and rightfully want change, but as a founder, this sort of behavior

I'm sure this will be an unpopular opinion since most of us agree with what Mitch is saying and rightfully want change, but as a founder, this sort of behavior from an investor seems to be a giant breach of trust. In early rounds, founders are looking for investors who will trust management to make decisions in the best interest of the company. EVEN if they don't agree with those decisions, it's expected that they'll be a team player and provide support in whatever way possible. I'm sure Mitch thinks what he's doing is in the best interest of the company (and it probabily is!). But, he surely doesn't have perfect information on what's going on (only management has a full picture).

RodericDay 10y ago
As a citizen, I'm frequently told to "vote with my wallet". Therefore, I would hope that people with way bigger wallets than me would be held to the same standard.
ethbro 10y ago
"In early rounds, founders are looking for investors who will trust management..." And by "early rounds" you mean $2B, correct?
powera 10y ago
As an investor, I'd never give money to a founder who exhibits this sort of attitude. Uber is facing a catastrophic crisis. This could kill the company, or at least cause massive attrition. If Uber isn't willing to take advice on how to get out of this terrible situation that it has created, it may well die. And in situations like this, I find it a general rule to never give management the "benefit of the doubt". Of course, I'm not trying to give you money, but I'd hope other founders don't learn from your behavior.
- WalterSear 10y ago
  >...or at least cause massive attrition. https://twitter.com/physicsNcoffee/status/834566962998960128 https://twitter.com/physicsNcoffee/status/834566962998960128 Blind app is anonymous, so obviously this is yet to be substantiated. If this attrition is actually taking place, we'll know very shortly.
- pjdemers 10y ago
  Maybe massive attrition is the goal. Encourage employees with lots of unvested stock to quit to reduce dilution. Since earlier hires tend to be higher up the chain, creating a culture of insubordination and winner-take-all politics makes it hard to "vest in peace".
- naravara 10y ago
  >This could kill the company, or at least cause massive attrition. They might have been safer if they were a snowflake. But the ride-hailing market has competition. Both from Lyft and just regular cab companies that are (slowly) starting to up their game.
- argonaut 10y ago
  Well that's the problem, isn't it? A founder looking for your money is not going to go out and say that they want investors who give them a blank check. But the fact is if they're deciding between you and another investor that is more "founder-friendly," all else being equal, they are going to pass on you.
mindcrime 10y ago
only management has a full picture From the sounds of things, management has anything but "a full picture". Which is apparently part of the problem.
- groby_b 10y ago
  Oh, management has a full picture. It's exactly what they encouraged. HR doesn't just decide on their own to ignore the issue. That tone is set right from the top. It's just that the full picture turns out to be a giant dumpster fire, and they don't want to admit that publicly.
  - deleted 10y ago
    [deleted]
  - x0x0 10y ago
    I disagree; management is very very carefully making sure they do not have the full picture :) Because at this point there's a good chance principals are going to be telling a jury what did they know, and when did they know it.
    - ska 10y ago
      That's almost never an exercise in not having the full picture, it's an exercise in not having it on paper.
zelon88 10y ago
I think the author realizes they don't have a full picture. They never claim to know all the facts. They even say in so many words that Uber has been unwilling to share it's internal corrective actions or have executives discuss with investors the sort of issues they're dealing with. There seems to be a veil of secrecy between management and these particular investors. I don't think being a founder should mean that once the check clears your free to do whatever you want and answer to nobody. I don't think that's a very common arrangement. These investors are looking for actionable steps that Uber is taking to improve. Not a one-size fits all band-aid PR statement or middle-management meeting.
- rhizome 10y ago
  They even say in so many words that Uber has been unwilling to share it's internal corrective actions or have executives discuss with investors the sort of issues they're dealing with. Not only that, Uber wouldn't even give investors their revenue numbers: http://www.businessinsider.com/morgan-stanley-didnt-give-basic-financials-to-uber-investors-2016-11 http://www.businessinsider.com/morgan-stanley-didnt-give-bas...
kafkaesq 10y ago
EVEN if they don't agree with those decisions, it's expected that they'll be a team player and provide support in whatever way possible. Up to certain limits, and respecting certain ethical norms. Apparently the Kapors came to the conclusion that those limits had been reached, and that Uber's behavior ultimately failed to meet those norms. Or in their own words: "We are speaking up now because we are disappointed and frustrated; we feel we have hit a dead end in trying to influence the company quietly from the inside." And so they felt it was time to act by other means.
Analemma_ 10y ago
> this sort of behavior from an investor seems to be a giant breach of trust. I agree with you here, but I'm drawing a different conclusion. I think investors publicly taking their company to task should be an absolute last resort, but that it's justified in this case, because Uber's behavior is just that egregious.
stale2002 10y ago
And what if Uber's management loses the trust of the investors? If management Fucks up, investors should NOT blindly follow the lead of poor decisions.
colinsidoti 10y ago
To me, the Kapor's are effectively claiming Uber has breached their trust. They also indicate they have been a "team player" during prior incidents: "As early investors in Uber, starting in 2010, we have tried for years to work behind the scenes to exert a constructive influence on company culture. When Uber has come under public criticism, we have been available to make suggestions, and have been publicly supportive, in the hope that the leadership would take the necessary steps to make the changes needed to bring about real change." So it's hard for me to fault them here. For the sake of more thought provocation, what do you think about YC's "Founder Ethics" rules, and how would you want YC to respond if Uber were a YC company? http://www.ycombinator.com/ethics/ http://www.ycombinator.com/ethics/
- kogir 10y ago
  One notable difference with YC is that when they cut ties for ethical reasons, they do it privately, and dispose of their ownership. It's a particularly principled stance.
  - andrewprock 10y ago
    It's not obvious that quietly separating is the principled stance when dealing with ethical issues.
  - deleted 10y ago
    [deleted]
  - oxryly1 10y ago
    Do you know of an example of that?
    - brudgers 10y ago
      If he knew, sharing such information would probably not be consistent with the practice.
    - argonaut 10y ago
      If you can't think/find an example of this happening, that would confirm the assertion that YC does this quietly and privately.
davidascher 10y ago
As others have said, management (in my experience) never has the full picture, it has its own perspective. I'm curious about the breach of trust you feel -- surely investors in a company don't relinquish their values or place unconditional trust in the company? The Kapors are not a PE firm, and their ethical stands have been known for decades. You can't on the one hand benefit from the brand value of investors like Mitch & Freida and not also expect such stakeholders to also expect a certain caliber of behavior by the company. I think investors in a startup are forgiving of early missteps. Uber is way, way past that stage.
jackmott 10y ago
I dunno man, maybe there are higher ideals than "the company". Ever thought about that?
- Fomite 10y ago
  Or that they view "the company" and "the founders" as separate entities.
erdojo 10y ago
Investors don't lose their right to an opinion. If anything, their opinion matters more because they've put their money on the line. Since it appears Uber only made token attempts to hear their feedback through past crises, it is entirely appropriate to take concerns public now. Founders don't get unconditional support from investors. They aren't therapists or doctors or lawyers. When you take money from someone, you're giving them a promise in return. Yes financial gains are part of that promise, but so is conducting yourself ethically and ensuring that the "business" is just as successful as the "product". Treating your people right is part of the contract.
- Fomite 10y ago
  And helping support and nurture the companies they invested in does not mean simply enabling whatever the founders do.
__jal 10y ago
> it's expected that they'll be a team player and provide support in whatever way possible The way I read it, it sounds like they tried that and found the approach didn't work. So they moved on to "tough love" and are trying an intervention. To turn that around, is there any situation in which you believe early-round investors can ethically discuss problems in public?
criddell 10y ago
Uber isn't some scrappy startup anymore, it's a giant company with a market cap comparable to Nike or Costco.
ryanSrich 10y ago
You're absolutely right it's a breach of trust. In the _worst_ kind of way as well. They're saying - I'm really upset about such egregious activities that took place at Uber, but here's why my continued investment is justified. It's pure posturing.
- zaphar 10y ago
  Nowhere in that letter did they discuss continued investing that I could see. This amounts to a wild accusation with no basis for it.
SilasX 10y ago
It looks like they've been trying the dignified, private route for seven years. How long should they wait?
daenney 10y ago
> In early rounds, founders are looking for investors who will trust management to make decisions in the best interest of the company. We're hardly in early rounds for Uber at this point. July 2016 was round 15 and Kapor's been invested in Uber since 2010 as angel investors (essentially round 1)[0]. [0]: https://www.crunchbase.com/funding-round/c76f9429692867636144a5f8d5168e0f https://www.crunchbase.com/funding-round/c76f942969286763614... > who will trust management to make decisions in the best interest of the company. And how is letting a culture like this go rampant "in the best interest of the company"? > EVEN if they don't agree with those decisions, it's expected that they'll be a team player and provide support in whatever way possible. I don't agree with you there either. It's not the investors responsibility or job to blindly follow the CEO. It's their job to advise them, to be asked for advise and to help correct course. But that also means you need to listen to them and when that's not happening investors need to ensure they're heard.
raleighm 10y ago
Being a "team player" often is shorthand for being willing to tolerate a bit of moral stench for the sake of everyone's economics - or to ignore the odor as long as the team member's heart isn't in the wrong place. Not everyone would accept that definition of team play. If the investor had sent this letter without engaging in private attempts first, that would have been a failure of team obligation, I agree. That wasn't the case here.

RodericDay 10y ago

As a citizen, I'm frequently told to "vote with my wallet". Therefore, I would hope that people with way bigger wallets than me would be held to the same standard.

ethbro 10y ago

"In early rounds, founders are looking for investors who will trust management..." And by "early rounds" you mean $2B, correct?

powera 10y ago

As an investor, I'd never give money to a founder who exhibits this sort of attitude. Uber is facing a catastrophic crisis. This could kill the company, or at least cause massive attrition. If Uber isn't willing to take advice on how to get out of this terrible situation that it has created, it may well die. And in situations like this, I find it a general rule to never give management the "benefit of the doubt". Of course, I'm not trying to give you money, but I'd hope other founders don't learn from your behavior.

WalterSear 10y ago
>...or at least cause massive attrition. https://twitter.com/physicsNcoffee/status/834566962998960128 https://twitter.com/physicsNcoffee/status/834566962998960128 Blind app is anonymous, so obviously this is yet to be substantiated. If this attrition is actually taking place, we'll know very shortly.
pjdemers 10y ago
Maybe massive attrition is the goal. Encourage employees with lots of unvested stock to quit to reduce dilution. Since earlier hires tend to be higher up the chain, creating a culture of insubordination and winner-take-all politics makes it hard to "vest in peace".
naravara 10y ago
>This could kill the company, or at least cause massive attrition. They might have been safer if they were a snowflake. But the ride-hailing market has competition. Both from Lyft and just regular cab companies that are (slowly) starting to up their game.
argonaut 10y ago
Well that's the problem, isn't it? A founder looking for your money is not going to go out and say that they want investors who give them a blank check. But the fact is if they're deciding between you and another investor that is more "founder-friendly," all else being equal, they are going to pass on you.

mindcrime 10y ago

only management has a full picture From the sounds of things, management has anything but "a full picture". Which is apparently part of the problem.

groby_b 10y ago
Oh, management has a full picture. It's exactly what they encouraged. HR doesn't just decide on their own to ignore the issue. That tone is set right from the top. It's just that the full picture turns out to be a giant dumpster fire, and they don't want to admit that publicly.
- deleted 10y ago
  [deleted]
- x0x0 10y ago
  I disagree; management is very very carefully making sure they do not have the full picture :) Because at this point there's a good chance principals are going to be telling a jury what did they know, and when did they know it.
  - ska 10y ago
    That's almost never an exercise in not having the full picture, it's an exercise in not having it on paper.

zelon88 10y ago

I think the author realizes they don't have a full picture. They never claim to know all the facts. They even say in so many words that Uber has been unwilling to share it's internal corrective actions or have executives discuss with investors the sort of issues they're dealing with. There seems to be a veil of secrecy between management and these particular investors. I don't think being a founder should mean that once the check clears your free to do whatever you want and answer to nobody. I don't think that's a very common arrangement. These investors are looking for actionable steps that Uber is taking to improve. Not a one-size fits all band-aid PR statement or middle-management meeting.

rhizome 10y ago
They even say in so many words that Uber has been unwilling to share it's internal corrective actions or have executives discuss with investors the sort of issues they're dealing with. Not only that, Uber wouldn't even give investors their revenue numbers: http://www.businessinsider.com/morgan-stanley-didnt-give-basic-financials-to-uber-investors-2016-11 http://www.businessinsider.com/morgan-stanley-didnt-give-bas...

kafkaesq 10y ago

EVEN if they don't agree with those decisions, it's expected that they'll be a team player and provide support in whatever way possible. Up to certain limits, and respecting certain ethical norms. Apparently the Kapors came to the conclusion that those limits had been reached, and that Uber's behavior ultimately failed to meet those norms. Or in their own words: "We are speaking up now because we are disappointed and frustrated; we feel we have hit a dead end in trying to influence the company quietly from the inside." And so they felt it was time to act by other means.

Analemma_ 10y ago

> this sort of behavior from an investor seems to be a giant breach of trust. I agree with you here, but I'm drawing a different conclusion. I think investors publicly taking their company to task should be an absolute last resort, but that it's justified in this case, because Uber's behavior is just that egregious.

stale2002 10y ago

And what if Uber's management loses the trust of the investors? If management Fucks up, investors should NOT blindly follow the lead of poor decisions.

colinsidoti 10y ago

To me, the Kapor's are effectively claiming Uber has breached their trust. They also indicate they have been a "team player" during prior incidents: "As early investors in Uber, starting in 2010, we have tried for years to work behind the scenes to exert a constructive influence on company culture. When Uber has come under public criticism, we have been available to make suggestions, and have been publicly supportive, in the hope that the leadership would take the necessary steps to make the changes needed to bring about real change." So it's hard for me to fault them here. For the sake of more thought provocation, what do you think about YC's "Founder Ethics" rules, and how would you want YC to respond if Uber were a YC company? http://www.ycombinator.com/ethics/ http://www.ycombinator.com/ethics/

kogir 10y ago
One notable difference with YC is that when they cut ties for ethical reasons, they do it privately, and dispose of their ownership. It's a particularly principled stance.
- andrewprock 10y ago
  It's not obvious that quietly separating is the principled stance when dealing with ethical issues.
- deleted 10y ago
  [deleted]
- oxryly1 10y ago
  Do you know of an example of that?
  - brudgers 10y ago
    If he knew, sharing such information would probably not be consistent with the practice.
  - argonaut 10y ago
    If you can't think/find an example of this happening, that would confirm the assertion that YC does this quietly and privately.

davidascher 10y ago

As others have said, management (in my experience) never has the full picture, it has its own perspective. I'm curious about the breach of trust you feel -- surely investors in a company don't relinquish their values or place unconditional trust in the company? The Kapors are not a PE firm, and their ethical stands have been known for decades. You can't on the one hand benefit from the brand value of investors like Mitch & Freida and not also expect such stakeholders to also expect a certain caliber of behavior by the company. I think investors in a startup are forgiving of early missteps. Uber is way, way past that stage.

jackmott 10y ago

I dunno man, maybe there are higher ideals than "the company". Ever thought about that?

Fomite 10y ago
Or that they view "the company" and "the founders" as separate entities.

erdojo 10y ago

Investors don't lose their right to an opinion. If anything, their opinion matters more because they've put their money on the line. Since it appears Uber only made token attempts to hear their feedback through past crises, it is entirely appropriate to take concerns public now. Founders don't get unconditional support from investors. They aren't therapists or doctors or lawyers. When you take money from someone, you're giving them a promise in return. Yes financial gains are part of that promise, but so is conducting yourself ethically and ensuring that the "business" is just as successful as the "product". Treating your people right is part of the contract.

Fomite 10y ago
And helping support and nurture the companies they invested in does not mean simply enabling whatever the founders do.

__jal 10y ago

> it's expected that they'll be a team player and provide support in whatever way possible The way I read it, it sounds like they tried that and found the approach didn't work. So they moved on to "tough love" and are trying an intervention. To turn that around, is there any situation in which you believe early-round investors can ethically discuss problems in public?

criddell 10y ago

Uber isn't some scrappy startup anymore, it's a giant company with a market cap comparable to Nike or Costco.

ryanSrich 10y ago

You're absolutely right it's a breach of trust. In the _worst_ kind of way as well. They're saying - I'm really upset about such egregious activities that took place at Uber, but here's why my continued investment is justified. It's pure posturing.

zaphar 10y ago
Nowhere in that letter did they discuss continued investing that I could see. This amounts to a wild accusation with no basis for it.

SilasX 10y ago

It looks like they've been trying the dignified, private route for seven years. How long should they wait?

daenney 10y ago

> In early rounds, founders are looking for investors who will trust management to make decisions in the best interest of the company. We're hardly in early rounds for Uber at this point. July 2016 was round 15 and Kapor's been invested in Uber since 2010 as angel investors (essentially round 1)[0]. [0]: https://www.crunchbase.com/funding-round/c76f9429692867636144a5f8d5168e0f https://www.crunchbase.com/funding-round/c76f942969286763614... > who will trust management to make decisions in the best interest of the company. And how is letting a culture like this go rampant "in the best interest of the company"? > EVEN if they don't agree with those decisions, it's expected that they'll be a team player and provide support in whatever way possible. I don't agree with you there either. It's not the investors responsibility or job to blindly follow the CEO. It's their job to advise them, to be asked for advise and to help correct course. But that also means you need to listen to them and when that's not happening investors need to ensure they're heard.

raleighm 10y ago

Being a "team player" often is shorthand for being willing to tolerate a bit of moral stench for the sake of everyone's economics - or to ignore the odor as long as the team member's heart isn't in the wrong place. Not everyone would accept that definition of team play. If the investor had sent this letter without engaging in private attempts first, that would have been a failure of team obligation, I agree. That wasn't the case here.