Entrepreneurship · Startups

Is it ok to have your early investors rebuke your company publicly?

Abhinandan Chada Android Developer at Code Brew Labs

Last updated on February 27th, 2017

Not sure how many of you read the blog post of Mitch and Freada Kapoor, early investors of Uber. It was an open letter where they addressed their concerns about Uber's culture after former employee Susan Fowler detailed via a blog post (see it here) the sexual harassment and overall toxic culture that she had experience while working at the company.

To provide some background, Fowler was sexually harassed by a manager and human resources and upper management refused to punish the offender and even threatened her with a bad performance review.

From the Kapoor's blog post, which you can read here in full, there is an excerpt that states:

“Uber’s outsize success in terms of growth of market share, revenues and valuation are impressive, but can never excuse a culture plagued by disrespect, exclusionary cliques, lack of diversity, and tolerance for bullying and harassment of every form,”

I totally get that goals need to be aligned with investors. Uber's CEO is also a phenomenal salesman and fundraiser. In fact the CEO at Uber convinced the Kapoor's how they would contribute to social good with the company which was one of the main reasons behind such investment in first place.

Are the Kapoor's right to force change by publicly stating all the concerns at a time when Uber is being hit left and right by the press on not such a positive light? Seems like they have lost $1B+ in value in a week as a result of this...

Look forward to your thoughts.

Michael Bittle Operating Partner - Independent Sponsor - Polymath

February 28th, 2017

The fact that "Uber is being hit left and right" has implications for the value of the Kapoor's investment as you've stated. I would submit that the decreased valuation is due to actions of the firm as reported, rather than the reporting itself. The goal for the investors is to become a public company. That means you are subject to public pressures. The executive team needs to demonstrate it is capable of handling these pressures effectively and responsibly. The Kapoors are right to exert whatever influence they can to improve the situation, and the value of their investment. If, in their view, the executive team needs a little public wake-up call to get their act together, so be it.

Gopi Mattel General Partner. Lifeboat Ventures

February 27th, 2017

Venture Capitalists will be the first to say that they look for integrity in their founders. Integrity is beyond money. And the Kapors are showing their integrity by taking to task a CEO that they have invested in, for morally repugnant company culture. I applaud them for putting their money second.

Henry Daas Coach-Approach Strategic Advisor

February 28th, 2017

They are trying to get out in front of a story that has already left them behind. A PR nightmare, no doubt, and only so much anyone can do to reshape the narative. A bit of a fools errand if you ask me but they have to try. Fortunately, the news cycle being what it is, some event will - dare I say it - trump this and shift the microscopic attention span of the vox populi for a time. Hopefully long enough that members of the inner circle can put some structure in place to change the corporate culture thus molifying past, present and future investors. All, of course, in hopes of protecting the liquidity event that awaits...

Rupert Meghnot MBA CXO, Burnout Game Ventures, LLC

February 28th, 2017

While it's easier said than done, just don't do stupid shit in the first place. When your startup becomes a unicorn, be prepared for the storm inexperience causes (Uber's not the only one). The other 99.99% of us can make mistakes under the radar.