VC Firm Benchmark Capital Sues to Oust Kalanick From Uber's Board

Gwen Vasquez
August 12, 2017

The lawsuit also reveals how much stock and voting power are held by Benchmark, one of Uber's early investors, which provides a good comparison.

A group of Uber shareholders is revolting against Benchmark Capital, the ride-sharing app's biggest investor, which filed a surprise lawsuit on Thursday that seeks to oust former CEO Travis Kalanick from the ride-sharing app's board.

The suit contends Kalanick essentially duped Benchmark into agreeing to expand the Uber board by three seats to 11 people, giving the then chief executive the power to appoint members.At the time, Kalanick hid information about mismanagement, including acquired self-driving vehicle firm Otto was suspected of having trade secrets swiped from Google-owned Waymo and that an Uber executive had wrongly gotten hold of medical records of a woman in India raped by an Uber driver there, according to the suit.

"The Board of Directors is disappointed that a disagreement between shareholders has resulted in litigation", the directors wrote. Uber Technologies is valued at $68 billion with Benchmark Capital share totaling $9 billion.

The investors are Sherpa Capital's Shervin Pishevar, Yucaipa Companies' Ron Burkle and Maverick's Adam Leber.

"We have investors ready to acquire these shares as soon as we receive communication from Benchmark that they are willing to withdraw their lawsuit and sell a minimum of 75 percent of their holdings", the email said, according to Axios.

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Reuters could not confirm email and representatives for the three investors and Benchmark did not immediately respond to a request for comment.

"The combination of this lawsuit and his cofounder's statement that he's not coming back are pretty strong statements", said Ben Narasin, a Silicon Valley venture capitalist.

They added that they feared the lawsuit will "cost the company public goodwill, interfere with fundraising and impede the critical search for a new, world-class chief executive officer".

The email from the board of directions was signed by Yasir Al-Rumayyan, Ryan Graves, Arianna Huffington, Wan Ling Martello and David Trujillo. Instead, the suit says that Kalanick appointed himself to one of those board positions and has refused to fill the others. It assured staff that there were "several outstanding candidates" for the CEO job.

Kalanick, who had been the driving force behind Uber's massive global expansion and whose brash style had made him a liability, still holds a large voting stake in the company, whose United States dollars 68 billion valuation makes it the world's largest venture-backed startup.

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