7 ms·

The Sex Scandal That Toppled SoFi’s C.E.O

104 points by s73ver_ 9y ago

calvinbhai 9y ago
Can the startup employees sues such founders for screwing with their stock option value?
- huac 9y ago
  There's an argument that basically every crime involving a company or officers of a company is a financial crime, so theoretically the SEC could bring securities charges...
  - rhizome 9y ago
    That might make more sense if Fiduciary Duty was ever prosecuted (in the general sense) in reality.
horsecaptin 9y ago
Am I the only one who takes objection to associating a creeper CEO with everyone else who is happily getting laid at SoFi? Isn't there a difference between mutually agreed upon sex vs. unwanted advances? Just because others are shitting where they eat doesn't mean you have to. It happens in every company. The bigger the company, the more it happens.
- TwelveNights 9y ago
  The problem here is that there's a distinct balance of power that a CEO can take advantage of. People may feel extra pressure to maintain their position in companies as a result.
  - hoxinot 9y ago
    I actually had similar thoughts reading the article as the OP. Not sure why it was flagged. This case seems totally different from consensual relationships per se (e.g., bonuses to employees for losing weight is clearly inappropriate, among many other things reported on in the article), but there was something about the coverage in this article that seemed off the mark to me. There were enough problems to report on that I didn't like the implication that it was all equally problematic. Equating serious problems with more minor ones obscures discussion of what matters.
    - ams6110 9y ago
      My company gives incentives for losing weight, stopping smoking, and other "healthy living" criteria. What's inappropriate about it?
      - Raz2 9y ago
        What if I'm already in a good shape and don't smoke? If a company gives incentives for being healthy it is fine. Otherwise, it is quite demotivating for others.
    - aaron695 9y ago
      > Not sure why it was flagged. The conversation has become a lost cause for reason on HN. Follow the mob.... > Equating serious problems with more minor ones Whats the problem with employees having sex in a car or car park at all? One assumes it was not directly in public. On what planet outside of 'frat' movies do people have sex obviously in front of random co-worker going to drive home. Lets take what is said here in context. Firsty one must assume it was all hearsay and gossip, the statement itself is nonsensical unless the carpark was full of trees? It is obviously also a selective statement with the person not actually claiming to have seen it themselves. Like, it defies all logic, but people eat up these crazy narratives to mob follow, even if it goes against their base morals. Sex is ok. It's not an evil sin. So what if a story went around about two people having sex, possibly in the carpark. Dam those young people and their hormones, shaking fist. Should someone even suggest it's ok, flag them down into the ground, sex rhymes with sexual harassment, it must be bad.
- rconti 9y ago
  "... caught colleagues having sex with supervisors..." which is also a problem. It seems like overall the culture was toxic.
  - deleted 9y ago
    [deleted]
- deleted 9y ago
  [deleted]
icantdrive55 9y ago
1. They were having sex in vechicles. 2. There was nepotism in hiring. 3. The founder "hit" on employees. The founder also has a hedge fund in the city? What a guy. Quite the go getter. BOD gave him the boot, but will be at the end of the year. 4. The Vice President supposedly paid women to loose weight, and he kicked garbage cans. (He denied everything, except kicking the cans. 'There's So much stress in a start up!' 5. I still don't know what the company does, nor care. I don't know what allegations are true, or false. 6. Moral of story--don't say anything off color, sexually suggestive at work. That goes for females too. Don't have sex at work--ouch! Gotta be hard being a CEO in this bubble? So many difficult rules! So much stress for the Founder! (I hope this dudes wife has a prenup? Then again I'm still not exactly sure what crime he committed, other than being a privileged white male, with poor social skills? 7. I'm still kind interested in his hedge fund. I'm astonished over the money certain white males can accumulate in America. 8. If I owned any company. My first speech would be, "Don't use this bubbly job as a place to socialize." And that's the rub. So many people use that bubbly job as their hatching ground for socializing. My ex went to work daily in SF, and complained the gay men at work wouldn't hit on her. I once told her that if she's using work to socialize, it's pathetic. She read me the riot act. Never said anything about her job again. I need to say this-- San Francisco runs very low on available straight men to socialize with. I've seen women throw themselves at average dudes. Average in all categories. For one--stop it. To the guys who get the big egos; stop it. Or, keep it up, and get kicked out of your own company.
noobermin 9y ago
This is a random thought, I'm not sure where this can or should go, but this article made me think of universal healthcare. One of the arguments for a single-payer is that it takes the burden of understanding healthcare and health insurance issues from employers. One of the general issues with corporate structure is that corporations are machines that are to prioritize profits above all else, hence, their turning a blind eye to his issues. This is because a CEO isn't just an administrator for a money making organization, but is a caretaker of culture, ethics, and morality of a company. Work is so much a part of our lives that a person in a supervisor position over us actually has a lot of power in other aspects of our lives: food, shelter, healthcare, future work opportunities, even access to a social life given our work centered culture; and this gives them power to leverage it to hurt others. This isn't to alleviate any of his guilt, but somewhere in here is a larger comment on our culture and how many jobs should not be the "best welfare program" (or shelter program, or food program, or social program, or networking program, or etc.) that our lives should not be dominated by work only.
- ams6110 9y ago
  It's not a good argument for single payer health care, because any alternative to employer-provided health insurance would do that. But I do agree that would be beneficial.
JSONwebtoken 9y ago
I don't understand the value of this company. What services do they provide that existing internet companies don't provide at a lower price and higher level of quality in its separate service lines (personal loans, student loans, mortgages)? In offering so many products, what economics of scale do they bring over established banks and credit unions? If there are any newly discovered efficiencies, they certainly aren't passed down to the consumer as the rates I've been quoted for their loan products are terrible; it's shocking that they get any organic business at all. They call themselves "a new kind of finance company" but there's literally nothing new to benefit the consumer. If anything, they've taken multiple steps back because they're a 1990s boiler room down to their culture, their management, and especially their channel of sales: they masquerade as an "tech company," but really they're just a web form that prints leads to their sleazy call center. If you tick the boxes of the specific demographic they're going after (High Earners, Not Rich Yet - as they call them at SoFi) and you make the mistake of giving them your information by applying for any one of their products, all the mini-Belforts at the company will relentlessly pitch you over the phone to trust them to manage all of your wealth... for a princely return of 1.18%. They have no defensible moats, they have no IP, they have no talent on staff. Their Chief Technical Officer is the CEO's wife, who has a 1 year remote degree from Stanford and no prior experience in software. Seemingly her job is just to stand around and pretend everything is "normal" while her husband sexually assaults girls half her age in the room across. How sad.
- t0mbstone 9y ago
  Speaking as someone who has multiple loans from SoFi (consolidated credit card debt, and then re-financed a couple of times as my credit score improved), getting a loan from them was remarkably painless. Their online application was easy to use, and once it was approved, an electronic deposit for the amount simply appeared in my bank account a couple of days later. The interest rates were low, the terms were easy to understand, and there were no gotchas like front-weighted interest or unexpected fees. If another company exists that will happily give me a hassle-free, unsecured loan for $50,000 at 5-6% interest, via an easy to use online form, and then deliver the funds in only a couple of days... please, by all means, let me know!
mi100hael 9y ago
Seriously, how are these people raising so much money?? Scandals & impropriety of one sort or another among execs are becoming par for the course in SV, and yet investors seem perfectly happy to throw cash at any half-baked "disruptive" idea (where "disruptive" simply means "brick-and-mortar business moved entirely to an app"). Are investors really that dumb?
- JSONwebtoken 9y ago
  Sunk cost fallacy. Investors put in $100 million in 2011 when the mere concept of Fintech would give venture capitalists chubs. Back then, it wasn't so clear that millennials and personal finance are like water and oil -- and that you would need more than a landing page and a webform to drive organic growth. SoFi would also feed investors both false information (as mentioned in the article), and inflated user growth numbers fueled by their freedom as a "startup" to spend insane amounts of money on customer acquisition with no regard for profitability. Basically, SoFi spent all their money convincing people through advertising that they were "a new kind of finance company", all without actually creating anything new. Turns out the company stops growing if you stop giving them money, and VCs didn't want to lose their $100 million commitment or admit that the company was DoA, so along came more rounds of funding. There you go, that's the path to a $4 billion tech valuation with no actual tech product.
seasonalgrit 9y ago
> "About 10 SoFi executives met to discuss the situation; it was then that some of them learned Mr. Cagney had not actually secured the $90 million for the loan product, according to people who were at the meeting. Some attendees said they were dismayed at the possibility that they had made material misstatements to investors." The litany of business misdealings detailed in this article makes me wonder how SoFi hasn't been fined out of existence by now.
deleted 9y ago
[deleted]
cantseemyposts 9y ago
Anyone else notice that this guy's wife (June Ou) is also Asian? So we have Dave McClure of 500 Startups, Justin Caldbeck of Binary Capital, and now SoFi's CEO. And I'm sure there are a dozen others.
hyad 9y ago
I had been meaning to refinance my student loans with them, but now I have second thoughts. However, they seem to have better customer service than their competitors such as Darien Rowayton Bank. Just wondering about the company's finances.
- ams6110 9y ago
  What does it matter? If they refinance your loan, and then go out of business, your loan is still a contract and you'll just make the payments to whomever ends up buying the loan portfolio.
somberi 9y ago
Arc of the story in three phases; all from one magazine: 1. https://www.bloomberg.com/news/articles/2015-12-03/this-lender-lures-millennials-with-free-cocktail-parties https://www.bloomberg.com/news/articles/2015-12-03/this-lend... 2. https://www.bloomberg.com/news/articles/2017-02-24/sofi-raises-500-million-led-by-silver-lake-for-global-expansion https://www.bloomberg.com/news/articles/2017-02-24/sofi-rais... 3. https://www.bloomberg.com/news/articles/2017-03-13/sofi-s-loan-losses-pile-up-as-even-wealthy-borrowers-default https://www.bloomberg.com/news/articles/2017-03-13/sofi-s-lo...
zaroth 9y ago
I dunno... this article is certainly colorful but I can only imagine there is some embellishment going on here. No facts or evidence to support any of it. And just to clarify, there isn't actually any sex in this particular CEO's sex scandal? But believe me, this was a wine-soaked orgy of a frat house. Used condoms in the staircase, sex in the parking lot level crazy.
svskeptic 9y ago
Why are the investors involved with this company, specifically the board members, that allowed the sexual harassment to go on unchecked not being named and shamed? It was their job to keep the CEO in check. If they looked aside, in the pursuit of a unicorn, then they shouldn't be allowed to pass off all blame to the CEO. What were they doing? Where is their accountability in all this? Most people at that level do not change their behaviour unless they have a financial downside. If we keep looking at CEOs while the board/investors/VCs are not called out, nothing is going to change.

104 points by s73ver_ 9y ago

calvinbhai 9y ago

Can the startup employees sues such founders for screwing with their stock option value?

huac 9y ago
There's an argument that basically every crime involving a company or officers of a company is a financial crime, so theoretically the SEC could bring securities charges...
- rhizome 9y ago
  That might make more sense if Fiduciary Duty was ever prosecuted (in the general sense) in reality.

horsecaptin 9y ago

Am I the only one who takes objection to associating a creeper CEO with everyone else who is happily getting laid at SoFi? Isn't there a difference between mutually agreed upon sex vs. unwanted advances? Just because others are shitting where they eat doesn't mean you have to. It happens in every company. The bigger the company, the more it happens.

TwelveNights 9y ago
The problem here is that there's a distinct balance of power that a CEO can take advantage of. People may feel extra pressure to maintain their position in companies as a result.
- hoxinot 9y ago
  I actually had similar thoughts reading the article as the OP. Not sure why it was flagged. This case seems totally different from consensual relationships per se (e.g., bonuses to employees for losing weight is clearly inappropriate, among many other things reported on in the article), but there was something about the coverage in this article that seemed off the mark to me. There were enough problems to report on that I didn't like the implication that it was all equally problematic. Equating serious problems with more minor ones obscures discussion of what matters.
  - ams6110 9y ago
    My company gives incentives for losing weight, stopping smoking, and other "healthy living" criteria. What's inappropriate about it?
    - Raz2 9y ago
      What if I'm already in a good shape and don't smoke? If a company gives incentives for being healthy it is fine. Otherwise, it is quite demotivating for others.
  - aaron695 9y ago
    > Not sure why it was flagged. The conversation has become a lost cause for reason on HN. Follow the mob.... > Equating serious problems with more minor ones Whats the problem with employees having sex in a car or car park at all? One assumes it was not directly in public. On what planet outside of 'frat' movies do people have sex obviously in front of random co-worker going to drive home. Lets take what is said here in context. Firsty one must assume it was all hearsay and gossip, the statement itself is nonsensical unless the carpark was full of trees? It is obviously also a selective statement with the person not actually claiming to have seen it themselves. Like, it defies all logic, but people eat up these crazy narratives to mob follow, even if it goes against their base morals. Sex is ok. It's not an evil sin. So what if a story went around about two people having sex, possibly in the carpark. Dam those young people and their hormones, shaking fist. Should someone even suggest it's ok, flag them down into the ground, sex rhymes with sexual harassment, it must be bad.
rconti 9y ago
"... caught colleagues having sex with supervisors..." which is also a problem. It seems like overall the culture was toxic.
- deleted 9y ago
  [deleted]
deleted 9y ago
[deleted]

icantdrive55 9y ago

1. They were having sex in vechicles. 2. There was nepotism in hiring. 3. The founder "hit" on employees. The founder also has a hedge fund in the city? What a guy. Quite the go getter. BOD gave him the boot, but will be at the end of the year. 4. The Vice President supposedly paid women to loose weight, and he kicked garbage cans. (He denied everything, except kicking the cans. 'There's So much stress in a start up!' 5. I still don't know what the company does, nor care. I don't know what allegations are true, or false. 6. Moral of story--don't say anything off color, sexually suggestive at work. That goes for females too. Don't have sex at work--ouch! Gotta be hard being a CEO in this bubble? So many difficult rules! So much stress for the Founder! (I hope this dudes wife has a prenup? Then again I'm still not exactly sure what crime he committed, other than being a privileged white male, with poor social skills? 7. I'm still kind interested in his hedge fund. I'm astonished over the money certain white males can accumulate in America. 8. If I owned any company. My first speech would be, "Don't use this bubbly job as a place to socialize." And that's the rub. So many people use that bubbly job as their hatching ground for socializing. My ex went to work daily in SF, and complained the gay men at work wouldn't hit on her. I once told her that if she's using work to socialize, it's pathetic. She read me the riot act. Never said anything about her job again. I need to say this-- San Francisco runs very low on available straight men to socialize with. I've seen women throw themselves at average dudes. Average in all categories. For one--stop it. To the guys who get the big egos; stop it. Or, keep it up, and get kicked out of your own company.

noobermin 9y ago

This is a random thought, I'm not sure where this can or should go, but this article made me think of universal healthcare. One of the arguments for a single-payer is that it takes the burden of understanding healthcare and health insurance issues from employers. One of the general issues with corporate structure is that corporations are machines that are to prioritize profits above all else, hence, their turning a blind eye to his issues. This is because a CEO isn't just an administrator for a money making organization, but is a caretaker of culture, ethics, and morality of a company. Work is so much a part of our lives that a person in a supervisor position over us actually has a lot of power in other aspects of our lives: food, shelter, healthcare, future work opportunities, even access to a social life given our work centered culture; and this gives them power to leverage it to hurt others. This isn't to alleviate any of his guilt, but somewhere in here is a larger comment on our culture and how many jobs should not be the "best welfare program" (or shelter program, or food program, or social program, or networking program, or etc.) that our lives should not be dominated by work only.

ams6110 9y ago
It's not a good argument for single payer health care, because any alternative to employer-provided health insurance would do that. But I do agree that would be beneficial.

JSONwebtoken 9y ago

I don't understand the value of this company. What services do they provide that existing internet companies don't provide at a lower price and higher level of quality in its separate service lines (personal loans, student loans, mortgages)? In offering so many products, what economics of scale do they bring over established banks and credit unions? If there are any newly discovered efficiencies, they certainly aren't passed down to the consumer as the rates I've been quoted for their loan products are terrible; it's shocking that they get any organic business at all. They call themselves "a new kind of finance company" but there's literally nothing new to benefit the consumer. If anything, they've taken multiple steps back because they're a 1990s boiler room down to their culture, their management, and especially their channel of sales: they masquerade as an "tech company," but really they're just a web form that prints leads to their sleazy call center. If you tick the boxes of the specific demographic they're going after (High Earners, Not Rich Yet - as they call them at SoFi) and you make the mistake of giving them your information by applying for any one of their products, all the mini-Belforts at the company will relentlessly pitch you over the phone to trust them to manage all of your wealth... for a princely return of 1.18%. They have no defensible moats, they have no IP, they have no talent on staff. Their Chief Technical Officer is the CEO's wife, who has a 1 year remote degree from Stanford and no prior experience in software. Seemingly her job is just to stand around and pretend everything is "normal" while her husband sexually assaults girls half her age in the room across. How sad.

t0mbstone 9y ago
Speaking as someone who has multiple loans from SoFi (consolidated credit card debt, and then re-financed a couple of times as my credit score improved), getting a loan from them was remarkably painless. Their online application was easy to use, and once it was approved, an electronic deposit for the amount simply appeared in my bank account a couple of days later. The interest rates were low, the terms were easy to understand, and there were no gotchas like front-weighted interest or unexpected fees. If another company exists that will happily give me a hassle-free, unsecured loan for $50,000 at 5-6% interest, via an easy to use online form, and then deliver the funds in only a couple of days... please, by all means, let me know!

mi100hael 9y ago

Seriously, how are these people raising so much money?? Scandals & impropriety of one sort or another among execs are becoming par for the course in SV, and yet investors seem perfectly happy to throw cash at any half-baked "disruptive" idea (where "disruptive" simply means "brick-and-mortar business moved entirely to an app"). Are investors really that dumb?

JSONwebtoken 9y ago
Sunk cost fallacy. Investors put in $100 million in 2011 when the mere concept of Fintech would give venture capitalists chubs. Back then, it wasn't so clear that millennials and personal finance are like water and oil -- and that you would need more than a landing page and a webform to drive organic growth. SoFi would also feed investors both false information (as mentioned in the article), and inflated user growth numbers fueled by their freedom as a "startup" to spend insane amounts of money on customer acquisition with no regard for profitability. Basically, SoFi spent all their money convincing people through advertising that they were "a new kind of finance company", all without actually creating anything new. Turns out the company stops growing if you stop giving them money, and VCs didn't want to lose their $100 million commitment or admit that the company was DoA, so along came more rounds of funding. There you go, that's the path to a $4 billion tech valuation with no actual tech product.

seasonalgrit 9y ago

> "About 10 SoFi executives met to discuss the situation; it was then that some of them learned Mr. Cagney had not actually secured the $90 million for the loan product, according to people who were at the meeting. Some attendees said they were dismayed at the possibility that they had made material misstatements to investors." The litany of business misdealings detailed in this article makes me wonder how SoFi hasn't been fined out of existence by now.

deleted 9y ago

[deleted]

cantseemyposts 9y ago

Anyone else notice that this guy's wife (June Ou) is also Asian? So we have Dave McClure of 500 Startups, Justin Caldbeck of Binary Capital, and now SoFi's CEO. And I'm sure there are a dozen others.

hyad 9y ago

I had been meaning to refinance my student loans with them, but now I have second thoughts. However, they seem to have better customer service than their competitors such as Darien Rowayton Bank. Just wondering about the company's finances.

ams6110 9y ago
What does it matter? If they refinance your loan, and then go out of business, your loan is still a contract and you'll just make the payments to whomever ends up buying the loan portfolio.

somberi 9y ago

Arc of the story in three phases; all from one magazine: 1. https://www.bloomberg.com/news/articles/2015-12-03/this-lender-lures-millennials-with-free-cocktail-parties https://www.bloomberg.com/news/articles/2015-12-03/this-lend... 2. https://www.bloomberg.com/news/articles/2017-02-24/sofi-raises-500-million-led-by-silver-lake-for-global-expansion https://www.bloomberg.com/news/articles/2017-02-24/sofi-rais... 3. https://www.bloomberg.com/news/articles/2017-03-13/sofi-s-loan-losses-pile-up-as-even-wealthy-borrowers-default https://www.bloomberg.com/news/articles/2017-03-13/sofi-s-lo...

zaroth 9y ago

I dunno... this article is certainly colorful but I can only imagine there is some embellishment going on here. No facts or evidence to support any of it. And just to clarify, there isn't actually any sex in this particular CEO's sex scandal? But believe me, this was a wine-soaked orgy of a frat house. Used condoms in the staircase, sex in the parking lot level crazy.

svskeptic 9y ago

Why are the investors involved with this company, specifically the board members, that allowed the sexual harassment to go on unchecked not being named and shamed? It was their job to keep the CEO in check. If they looked aside, in the pursuit of a unicorn, then they shouldn't be allowed to pass off all blame to the CEO. What were they doing? Where is their accountability in all this? Most people at that level do not change their behaviour unless they have a financial downside. If we keep looking at CEOs while the board/investors/VCs are not called out, nothing is going to change.