Early Uber investor Shervin Pishevar sent Benchmark Capital another letter asking the firm to step away from the company’s board of directors. In the letter, which Recode obtained, Pishevar claims that Benchmark is working with another major investor — Lowercase Capital — in its effort to remove former CEO Travis Kalanick from the board.
Pishevar also claims that Benchmark and Lowercase are seeking to remove Arianna Huffington from the board of directors.
“Based on a conversation with a representative of Lowercase Capital, we have learned that Benchmark also desires to remove Arianna Huffington from the Board of Directors and have made quite derogatory remarks about her,” Pishevar wrote. “The Lowercase Capital representative also said he coordinated with Ryan Graves on writing his announcement of his departure from his operating role at Uber and released it the same day of the Benchmark lawsuit.”
Benchmark, which sits on Uber’s board, is suing Kalanick for fraud, breach of fiduciary duty and breach of contract, claiming he was attempting to control the board for his own “selfish needs.”
Benchmark has about 13 percent of Uber and has been approached to sell some of the stock it holds in the company. A constellation of outside investors, including Dragoneer Investment Group, General Atlantic and SoftBank, have been talking to Uber and shareholders like Benchmark about buying a large chunk of stock, although it is unclear if that will occur.
Pishevar also has offered to buy 75 percent of Benchmark’s stake, but sources close to the firm said it is not interested in selling to him.
This is the second letter Pishevar has sent to Benchmark; the first was signed by a few other Uber investors. In the first letter, the group of investors asked Benchmark to divest its shares in the company.
“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% of their holdings,” the first letter read.
This time, Pishevar is accusing Benchmark of threatening to block investments in the company.
“Benchmark has threatened to block investments that could bolster Uber’s competitive position in global markets by bargaining over board seats and its own control,” he wrote.
“It’s a stunt,” said one person familiar with the situation. “It’s laughable.”
Pishevar, Huffington, Benchmark and Lowercase Capital did not immediately respond to a request for comment.
Here’s the full letter:
August 15, 2017
Many investors and shareholders are confounded by Benchmark’s behavior regarding Uber Technologies. The lawsuit filed by you last week against our co-founder, the company and the thousands of hardworking employees is irrational in the extreme, seemingly designed to achieve the exact opposite of the goals expressed in your recent letter to the Uber family. Furthermore, your position on the board gives you privileged access to facts that you know are counter to what you state in your own complaint. The litigation is making it difficult for the company and its employees to move on and hire a world class CEO and raise additional funds from strategic investors that would create tremendous value for all.
It has also come to our attention that Benchmark has been conferring with Lowercase Capital in their efforts that are adverse to Uber. Based on a conversation with a representative of Lowercase Capital, we have learned that Benchmark also desires to remove Arianna Huffington from the Board of Directors and have made quite derogatory remarks about her. The Lowercase Capital representative also said he coordinated with Ryan Graves on writing his announcement of his departure from his operating role at Uber and released it the same day of the Benchmark lawsuit.
Benchmark is holding the company hostage and not allowing it to move forward in its critical executive search. The claim in your letter that your litigation efforts speed up on-boarding a CEO disingenuous or delusional.
Benchmark has threatened to block investments that could bolster Uber’s competitive position in global markets by bargaining over board seats and its own control.
Benchmark has turned their $27M investment into a $8.4B position in the company. Benchmark’s stake in Uber is worth as much as every exit Benchmark has had in the last 10 years combined. Those are historic potential returns, however, your litigation and letter to employees is unprecedented in the history of Silicon Valley.
We beseech you to take the right and moral action by stepping off the Board of Directors of Uber, divest your shares and drop your ill-advised lawsuit and public campaign against the founder and the company. We also request that you desist from further communications with the company’s employees, which is the province of the Board of Directors as a whole, as it may so choose, and authorized officers; your transparently destructive ululating missives continue to hurt morale and execution of the company’s strategy. The irony of your self-described criticism of Uber’s governance is that you have broken all governance protocol by 1) pressuring the founder and CEO to resign without the Board’s support and 2) communicating unilaterally with the employees of a portfolio company. A venture capital firm communicating with the employees of a portfolio company in such a way is unheard of.
Please leave the employees alone and let them be at peace so that they can continue to build a a great company without these unnecessary obstacles. Your actions are culpably wrong-headed and can only be corrected by ceasing and desisting from any further interference with employees and the business of the company.
Uber Investor, Former Uber Board Observer (2011-2015) and Advisor
Coordinator, Uber Shareholder Alliance