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Benchmarks in a bind and at war with travis; they need to liquidate their stake in next year or two. Softbank deal to buy out their shares fell apart in part b/

Benchmarks in a bind and at war with travis; they need to liquidate their stake in next year or two. Softbank deal to buy out their shares fell apart in part b/c no CEO. Benchmark wants safe-hands leader who will cost-cut firesale their way to quick IPO. travis + allies being more long term; blocking benchmarks CEO picks (meg). so board civil war continues with benchmarks dirty tricks like this sour grapes lawsuit and selective leaks to undercut and force mgmt's hand in cost cuts (the lease car data earlier this week)

gjem97 9y ago
Why do they "need" to liquidate in the next year or two?
- cft 9y ago
  Prob because the lifetime of the fund that invested is coming to an end? It's usually 10 years
  - gjem97 9y ago
    What is the lifetime of the fund? Just the amount of time that the VC firm has said they would have all the money (and more!) back to the limiteds? Clearly that's not a hard deadline, right?
    - pge 9y ago
      It is a hard deadline because it is in the deal documents when the fund is formed. It is relevant because the fund management is guaranteed fees for that period. Extending it is usually straightforward, but the compensation of the fund management team during the extension is open for negotiation.
  - philsnow 9y ago
    VC fund lifetimes put a hard time frame of <= 10 years on required liquidity, forcing founders (who have given up board seats to get those investments) to do things they wouldn't ordinarily do. It's a pretty perverse incentive, and I see the attraction of not taking outside money.
  - surfearth 9y ago
    While most venture funds have a 10 year term, almost all are extended for at least an additional two years. The GP, together with the LP's, have lots of flexibility to extend beyond then if necessary, although there are typically negotiations around fee reductions and clarifying the path to liquidity. I have no insight into this particular fund, but it is very unlikely that it is purely fund term motivating Benchmark's desire to exit.
  - prostoalex 9y ago
    It is perfectly reasonable to distribute illiquid shares of a private company at the end of the fund lifetime.
- calpaterson 9y ago
  From crunchbase (https://www.crunchbase.com/organization/benchmark/investments https://www.crunchbase.com/organization/benchmark/investment...) it looks like Benchmark made three investments in Uber, the last of which was in 2013. The funds that VCs raise normally only operate for a specific term of eg 5 years, so now is the kind of time they will want to get out. Incidentally from what I can make of their investments in Uber on crunchbase, they need Uber's market cap to be $31bn just to break even on their investment (13% of the business for $411m). That's probably what they're fighting for.
  - iamtherhino 9y ago
    I think you dropped a 0. 0.13*31BN = ~$4BN, still a 10X return if they've invested $400M.
    - prostoalex 9y ago
      It's likely not distributed evenly between their three investments (and perhaps three separate funds), and with the late-stage checks typically being larger, it might impact the ROI of that late-stage fund more severely. I don't really think the urgency is there, though, VCs have been dealing with illiquid companies for decades, if they need to wind down the fund, they will either distribute the shares directly to the LPs or create a placeholder SPV and distribute partnership interests.
    - calpaterson 9y ago
      Yes I did! Thanks. Can't edit it now, unfortunately.
uhhhhhhh 9y ago
>travis + allies being more long term His actions and bad management hardly seem long term based thinking. While you could be right that is his intention, his actions to date, the bad management issues well documented, or his possible participation in fraud, to the antagonistic business practices hardly seem the best "long term" approaches.
- geofft 9y ago
  I was gonna say. Surely Travis and his allies are interested in Uber's long-term success, yes, but that's a very different claim from them being good for Uber's long-term success.
  - blazespin 9y ago
    It's possible that Travis wants to regain control and suck out equity into this personal stake. Greedy mofo.
  - forapurpose 9y ago
    > Surely Travis and his allies are interested in Uber's long-term success Why is that certain? Many people are interested in their own success at the expense of their companies. Kalanick in particular seems to celebrate selfishness.
    - thanksgiving 9y ago
      As far as I understand, Uber IS Travis. I'm not trying to say he is God or anything. This "generation" (Uber, snap) to me seems adamant in fixing the errors of the last generation where founders lost control too quickly (Angie's list). I'm not saying Travis is a good person. I'm just saying that in a war between founders and investors, it is usually a safe bet to side with founders.
    - geofft 9y ago
      Yeah, you're right - I should say rather that Travis and his allies presumably have no interest in a firesale and definitely have no deadlines like people are claiming the VC firm has, and also have no interest in a "safe-hands" leader, because that's never the sort of leader Travis has been. But yes, Travis' interest is likely to be his own over Uber's if they come into conflict. I just think he believes that they're aligned. (And I also think he's wrong.)
foobarian 9y ago
How in the world do you have this kind of detailed insight?
- arkitaip 9y ago
  the call is coming from inside the uber
deleted 9y ago
[deleted]
calafrax 9y ago
I don't think this is just one party. Kalanick has rubbed a lot of people the wrong way. The only reason he has been around for so long is because people have been waiting to use him as the fall guy for all of Uber's misconduct. Apparently that day is now here. His voting rights aren't worth the paper they are printed on unless he can raise more money so my guess is he will be signing those away shortly if he wants to walk away with anything.
samstave 9y ago
Brings up a fun thought: "What do with all the Uber fragments I can't keep in my arms grip!?!?" --- So what do? How harvest. (Think of this as a thought experiment) --- Uber collapses: As an outsider, what are perceived assets and what are perceived risks/liabilities What are perceived opportunities: how to harvest them NOW?? Experiment 1: Uber shall die in x months; thus need to take action y now, at cost of x with projection z... resulting in A. What is A? 2: Uber will not die but morph... Ned to take action x at y cost resulting in A? 3: Uber won't die at all - and will continue perpetuitiously - A - how profit? 4: ??? 5: Profit.
- ionosphere 9y ago
  Is this in English? Are you ok???
  - cowpig 9y ago
    https://www.youtube.com/watch?v=udNHsk57f24 https://www.youtube.com/watch?v=udNHsk57f24
- deleted 9y ago
  [deleted]
HNNoLikey 9y ago
This is no excuse to sue their investee. WORST VCs ever. This will serve as a cautionary tale to avoid working with benchmark.
- jforman 9y ago
  A humiliating year of PR that makes it impossible to fill the empty executive ranks, followed by a crippling power struggle because I submitted a resignation I didn't mean? I would 100% have expected Sequoia to sue me after I took their money if I had done the same. We are not kings. At some point misalignment with your board is your responsibility. This isn't some Series B spat.
  - HNNoLikey 9y ago
    > I submitted a resignation I didn't mean? Consider his mental state during this time. He lost his mother for crying out loud and all these things were happening at the same time. Now the VCs want to pile on to that with a lawsuit. I lost my mom 3 years ago and I wasn't in a good place for months. I'm surprised he was able to even function whilst the weight of the world was on his shoulders. I'm not saying that he should be CEO again just yet (he can take a break and recover) but to sue him at this time like he wasn't directly responsible for the billions they're now so eager to cash out on...? Don't forget the toll entrepreneurship can have on someone's personal life: you know it from experience and you can also read on how Travis had to move back home in the early days because things didn't work out with initial projects. This is why I would always give first priority of investment to someone like Vinod Khosla who says, 'in 30yrs, I have never once voted against an entrepreneur in a board meeting'. He goes further to criticize most of these VCs as incredibly unsympathetic towards entrepreneurs because they don't know the pains of building a company. Benchmark are exactly the type of VCs Vinod Khosla warns entrepreneurs to avoid. > I would 100% have expected Sequoia to sue me Don't know much about Sequoia but I have never seen an article where they've sued an investee.
    - _jal 9y ago
      There have been multiple times that I have protested an action taken by executives; sometimes the action harmed me, sometimes I just thought it was shady/immoral because it was unnecessarily hurting someone else. Every time, I heard some variant of "that's just business." I wonder how often Kalanick has used that phrase.

gjem97 9y ago

Why do they "need" to liquidate in the next year or two?

cft 9y ago
Prob because the lifetime of the fund that invested is coming to an end? It's usually 10 years
- gjem97 9y ago
  What is the lifetime of the fund? Just the amount of time that the VC firm has said they would have all the money (and more!) back to the limiteds? Clearly that's not a hard deadline, right?
  - pge 9y ago
    It is a hard deadline because it is in the deal documents when the fund is formed. It is relevant because the fund management is guaranteed fees for that period. Extending it is usually straightforward, but the compensation of the fund management team during the extension is open for negotiation.
- philsnow 9y ago
  VC fund lifetimes put a hard time frame of <= 10 years on required liquidity, forcing founders (who have given up board seats to get those investments) to do things they wouldn't ordinarily do. It's a pretty perverse incentive, and I see the attraction of not taking outside money.
- surfearth 9y ago
  While most venture funds have a 10 year term, almost all are extended for at least an additional two years. The GP, together with the LP's, have lots of flexibility to extend beyond then if necessary, although there are typically negotiations around fee reductions and clarifying the path to liquidity. I have no insight into this particular fund, but it is very unlikely that it is purely fund term motivating Benchmark's desire to exit.
- prostoalex 9y ago
  It is perfectly reasonable to distribute illiquid shares of a private company at the end of the fund lifetime.
calpaterson 9y ago
From crunchbase (https://www.crunchbase.com/organization/benchmark/investments https://www.crunchbase.com/organization/benchmark/investment...) it looks like Benchmark made three investments in Uber, the last of which was in 2013. The funds that VCs raise normally only operate for a specific term of eg 5 years, so now is the kind of time they will want to get out. Incidentally from what I can make of their investments in Uber on crunchbase, they need Uber's market cap to be $31bn just to break even on their investment (13% of the business for $411m). That's probably what they're fighting for.
- iamtherhino 9y ago
  I think you dropped a 0. 0.13*31BN = ~$4BN, still a 10X return if they've invested $400M.
  - prostoalex 9y ago
    It's likely not distributed evenly between their three investments (and perhaps three separate funds), and with the late-stage checks typically being larger, it might impact the ROI of that late-stage fund more severely. I don't really think the urgency is there, though, VCs have been dealing with illiquid companies for decades, if they need to wind down the fund, they will either distribute the shares directly to the LPs or create a placeholder SPV and distribute partnership interests.
  - calpaterson 9y ago
    Yes I did! Thanks. Can't edit it now, unfortunately.

uhhhhhhh 9y ago

>travis + allies being more long term His actions and bad management hardly seem long term based thinking. While you could be right that is his intention, his actions to date, the bad management issues well documented, or his possible participation in fraud, to the antagonistic business practices hardly seem the best "long term" approaches.

geofft 9y ago
I was gonna say. Surely Travis and his allies are interested in Uber's long-term success, yes, but that's a very different claim from them being good for Uber's long-term success.
- blazespin 9y ago
  It's possible that Travis wants to regain control and suck out equity into this personal stake. Greedy mofo.
- forapurpose 9y ago
  > Surely Travis and his allies are interested in Uber's long-term success Why is that certain? Many people are interested in their own success at the expense of their companies. Kalanick in particular seems to celebrate selfishness.
  - thanksgiving 9y ago
    As far as I understand, Uber IS Travis. I'm not trying to say he is God or anything. This "generation" (Uber, snap) to me seems adamant in fixing the errors of the last generation where founders lost control too quickly (Angie's list). I'm not saying Travis is a good person. I'm just saying that in a war between founders and investors, it is usually a safe bet to side with founders.
  - geofft 9y ago
    Yeah, you're right - I should say rather that Travis and his allies presumably have no interest in a firesale and definitely have no deadlines like people are claiming the VC firm has, and also have no interest in a "safe-hands" leader, because that's never the sort of leader Travis has been. But yes, Travis' interest is likely to be his own over Uber's if they come into conflict. I just think he believes that they're aligned. (And I also think he's wrong.)

foobarian 9y ago

How in the world do you have this kind of detailed insight?

arkitaip 9y ago
the call is coming from inside the uber

deleted 9y ago

[deleted]

calafrax 9y ago

I don't think this is just one party. Kalanick has rubbed a lot of people the wrong way. The only reason he has been around for so long is because people have been waiting to use him as the fall guy for all of Uber's misconduct. Apparently that day is now here. His voting rights aren't worth the paper they are printed on unless he can raise more money so my guess is he will be signing those away shortly if he wants to walk away with anything.

samstave 9y ago

Brings up a fun thought: "What do with all the Uber fragments I can't keep in my arms grip!?!?" --- So what do? How harvest. (Think of this as a thought experiment) --- Uber collapses: As an outsider, what are perceived assets and what are perceived risks/liabilities What are perceived opportunities: how to harvest them NOW?? Experiment 1: Uber shall die in x months; thus need to take action y now, at cost of x with projection z... resulting in A. What is A? 2: Uber will not die but morph... Ned to take action x at y cost resulting in A? 3: Uber won't die at all - and will continue perpetuitiously - A - how profit? 4: ??? 5: Profit.

ionosphere 9y ago
Is this in English? Are you ok???
- cowpig 9y ago
  https://www.youtube.com/watch?v=udNHsk57f24 https://www.youtube.com/watch?v=udNHsk57f24
deleted 9y ago
[deleted]

HNNoLikey 9y ago

This is no excuse to sue their investee. WORST VCs ever. This will serve as a cautionary tale to avoid working with benchmark.

jforman 9y ago
A humiliating year of PR that makes it impossible to fill the empty executive ranks, followed by a crippling power struggle because I submitted a resignation I didn't mean? I would 100% have expected Sequoia to sue me after I took their money if I had done the same. We are not kings. At some point misalignment with your board is your responsibility. This isn't some Series B spat.
- HNNoLikey 9y ago
  > I submitted a resignation I didn't mean? Consider his mental state during this time. He lost his mother for crying out loud and all these things were happening at the same time. Now the VCs want to pile on to that with a lawsuit. I lost my mom 3 years ago and I wasn't in a good place for months. I'm surprised he was able to even function whilst the weight of the world was on his shoulders. I'm not saying that he should be CEO again just yet (he can take a break and recover) but to sue him at this time like he wasn't directly responsible for the billions they're now so eager to cash out on...? Don't forget the toll entrepreneurship can have on someone's personal life: you know it from experience and you can also read on how Travis had to move back home in the early days because things didn't work out with initial projects. This is why I would always give first priority of investment to someone like Vinod Khosla who says, 'in 30yrs, I have never once voted against an entrepreneur in a board meeting'. He goes further to criticize most of these VCs as incredibly unsympathetic towards entrepreneurs because they don't know the pains of building a company. Benchmark are exactly the type of VCs Vinod Khosla warns entrepreneurs to avoid. > I would 100% have expected Sequoia to sue me Don't know much about Sequoia but I have never seen an article where they've sued an investee.
  - _jal 9y ago
    There have been multiple times that I have protested an action taken by executives; sometimes the action harmed me, sometimes I just thought it was shady/immoral because it was unnecessarily hurting someone else. Every time, I heard some variant of "that's just business." I wonder how often Kalanick has used that phrase.