4 ms·

Naive question: when does the executive and cultural behavior represent enough of a risk to be a tipping point for investors to completely pull their investment

Naive question: when does the executive and cultural behavior represent enough of a risk to be a tipping point for investors to completely pull their investment?

garmaine 9y ago
And have the limited partners pull their funds and/or file lawsuits because you backed out if one of the few out of the park financial successes your fund had?
- jacquesm 9y ago
  Calling Uber a financial success at this stage is a bit of a stretch they certainly are a success in terms of traction and volume.
  - garmaine 9y ago
    They are an investment success in terms of their share price.
    - chrismcb 9y ago
      What share price?
austincheney 9y ago
I would say that is likely the wrong question. Investment is a matter of giving up money in the expectation it will return value. If the morality or ethics of a company are so utterly repulsive that this question should be raised the investor has to ask if they can throw their investment money away. Most people are not willing to throw money away even if disgusted.
- anarchimedes 9y ago
  I was thinking along the lines of the recent payoff for the data breach, the myriad of sexual harassment claims.. etc. Each of those represent a legal risk with a financial impact that, to someone ignorant about the VC space, would make me think twice about the going concern of the business.
gaius 9y ago
Evidently, repeated incidents of rape are OK with these investors. But on the other hand, their hands may be tied; once you have invested how do you then back out? Your investment bought you X shares in the company, so the only way out is to find another investor to take them off your hands, and this is an illiquid market.
- misun78 9y ago
  Repeated incidents of rape? Firstly, no Uber employee was actually involved in the rape. This case was about a rogue Uber driver. When Uber starts operating at the scale it currently does, all sorts of bad actors end up as Uber drivers. Of course this doesn't justify Uber's investigation into the rape, but please stop spreading misinformation and paranoia.
  - gaius 9y ago
    no Uber employee UK courts have ruled that Uber drivers are employees. So that dodge won't work anymore.
    - misun78 9y ago
      Point still stands. When you have x million users on some platform and these users are a normal representation of the populace, an equal proportion of bad actors (with no prior records of such) will end up on that platform.
icebraining 9y ago
What does "pull their investment" mean, though? Uber has burned through most of their cash, and the assets they have are mostly unsellable (name recognition, relationships with partners, workers with experience, etc). When you buy a lottery ticket, there's nothing to gain from ripping it apart before the numbers are called.
- tertius 9y ago
  So then pretend he/she said "stop investing more" instead of what you read that he/she meant.
- justboxing 9y ago
  > Uber has burned through most of their cash, and the assets they have are mostly unsellable Source?
  - icebraining 9y ago
    Regarding the first, this article says in August they only had $6.6B from the $15B they raised: https://venturebeat.com/2017/08/23/uber-is-still-burning-cash-at-a-rate-of-2-billion-a-year/ https://venturebeat.com/2017/08/23/uber-is-still-burning-cas... Regarding the second, it's my opinion based on what we know of them vs competitors. The software may be good, but it hardly justifies a difference of $60B compared to Lyft's $11B valuation, let alone Cabify's $320M. I'm pretty sure their offices are not worth that much either. So most of their worth comes from the stuff I mentioned in the previous post, but that can't be sold.
jacquesm 9y ago
The only normal way for an investor to 'pull their investment' is to sell their stock to another party. If the stock is worth more now than it was when they bought in then there is a chance the investors will be happy to sell but if the stock is worth less they are more likely to want to take the chance on the longer term to avoid the write-off. Of course that opens them up to an even steeper drop in value. And then there are the shareholder agreements that may limit what they can do with their stock as well as lock-up terms and the various authorities. Shareholders are usually not in a position to claw back their investment unless this has been agreed upon up front and the conditions for such a clawback have been triggered and the company still has the money. If the company does not have the money then some or all of the execs may be personally liable for it but I have never seen a case where that succeeded.

Naive question: when does the executive and cultural behavior represent enough of a risk to be a tipping point for investors to completely pull their investment?

garmaine 9y ago

And have the limited partners pull their funds and/or file lawsuits because you backed out if one of the few out of the park financial successes your fund had?

jacquesm 9y ago
Calling Uber a financial success at this stage is a bit of a stretch they certainly are a success in terms of traction and volume.
- garmaine 9y ago
  They are an investment success in terms of their share price.
  - chrismcb 9y ago
    What share price?

austincheney 9y ago

I would say that is likely the wrong question. Investment is a matter of giving up money in the expectation it will return value. If the morality or ethics of a company are so utterly repulsive that this question should be raised the investor has to ask if they can throw their investment money away. Most people are not willing to throw money away even if disgusted.

anarchimedes 9y ago
I was thinking along the lines of the recent payoff for the data breach, the myriad of sexual harassment claims.. etc. Each of those represent a legal risk with a financial impact that, to someone ignorant about the VC space, would make me think twice about the going concern of the business.

gaius 9y ago

Evidently, repeated incidents of rape are OK with these investors. But on the other hand, their hands may be tied; once you have invested how do you then back out? Your investment bought you X shares in the company, so the only way out is to find another investor to take them off your hands, and this is an illiquid market.

misun78 9y ago
Repeated incidents of rape? Firstly, no Uber employee was actually involved in the rape. This case was about a rogue Uber driver. When Uber starts operating at the scale it currently does, all sorts of bad actors end up as Uber drivers. Of course this doesn't justify Uber's investigation into the rape, but please stop spreading misinformation and paranoia.
- gaius 9y ago
  no Uber employee UK courts have ruled that Uber drivers are employees. So that dodge won't work anymore.
  - misun78 9y ago
    Point still stands. When you have x million users on some platform and these users are a normal representation of the populace, an equal proportion of bad actors (with no prior records of such) will end up on that platform.

icebraining 9y ago

What does "pull their investment" mean, though? Uber has burned through most of their cash, and the assets they have are mostly unsellable (name recognition, relationships with partners, workers with experience, etc). When you buy a lottery ticket, there's nothing to gain from ripping it apart before the numbers are called.

tertius 9y ago
So then pretend he/she said "stop investing more" instead of what you read that he/she meant.
justboxing 9y ago
> Uber has burned through most of their cash, and the assets they have are mostly unsellable Source?
- icebraining 9y ago
  Regarding the first, this article says in August they only had $6.6B from the $15B they raised: https://venturebeat.com/2017/08/23/uber-is-still-burning-cash-at-a-rate-of-2-billion-a-year/ https://venturebeat.com/2017/08/23/uber-is-still-burning-cas... Regarding the second, it's my opinion based on what we know of them vs competitors. The software may be good, but it hardly justifies a difference of $60B compared to Lyft's $11B valuation, let alone Cabify's $320M. I'm pretty sure their offices are not worth that much either. So most of their worth comes from the stuff I mentioned in the previous post, but that can't be sold.

jacquesm 9y ago

The only normal way for an investor to 'pull their investment' is to sell their stock to another party. If the stock is worth more now than it was when they bought in then there is a chance the investors will be happy to sell but if the stock is worth less they are more likely to want to take the chance on the longer term to avoid the write-off. Of course that opens them up to an even steeper drop in value. And then there are the shareholder agreements that may limit what they can do with their stock as well as lock-up terms and the various authorities. Shareholders are usually not in a position to claw back their investment unless this has been agreed upon up front and the conditions for such a clawback have been triggered and the company still has the money. If the company does not have the money then some or all of the execs may be personally liable for it but I have never seen a case where that succeeded.