Homepage / Technology / Some start-up founders are ‘nervous’ about dealing with Benchmark after it sued Uber
Facebook slams former exec Palihapitiya, saying it 'was a very different company back then' 80% of Wall Street economists, strategists believe bitcoin is a bubble: Survey Facebook to book advertising revenue locally amid political pressure Strategist Tom Lee: Young people will drive bitcoin gains just as boomers boosted stocks in the '80s This founder started in his parents' garage—now his company does over $100 million a year Activision shares to get a boost from Overwatch, Diablo sequels, Goldman says Verizon will launch over-the-top service before year-end with NFL as key piece, analyst predicts Chamath Palihapitiya: Apple is 'no different than Louis Vuitton or any other luxury good' Passport's flagship fund to close after 'unacceptable' returns Apple's powerful new computer launches December 14 Despite a deluge of criticism, Mark Zuckerberg had a bountiful year Chamath Palihapitiya says Elon Musk is the 'most important entrepreneur of our generation' Senior Australian politician resigns over China ties scandal Forget bitcoin, one of its biggest cryptocurrency rivals is up nearly 5,800 percent this year Bitcoin futures fall on second day of trading on very low volume as interest wanes Bitcoin millionaire: Don't buy bitcoin Stocks making the biggest moves premarket: PEP, MAT, VZ, MYL & more Tech high flyers could soar 10% or more next year, investor Paul Meeks says Goldman Sachs predicts bumper returns for commodities next year Amazon is not a monopoly but there's no question why it's so dominant, tech investor Palihapitiya says Starbucks customer laptops hacked to mine cryptocurrency Fed Survey: Tax cuts and rate hikes on the way Social Capital's Palihapitiya says bitcoin is going to $1 million in the next 20 years Bitcoin bulls looking to diversify can now put money in a crypto-index fund Ex-Facebook executive Chamath Palihapitiya: Social media is creating a society that confuses 'truth and popularity' More American jobs? Broadcom deal might mean the opposite The bull case for gold as bitcoin captivates America One person reported dead after Austrian gas hub explosion Bitcoin bubble could lead to 'destructive' consequences, UBS says While you were watching bitcoin, the world’s second-largest cryptocurrency hit a big milestone French retail giant to buy mall operator Westfield in the biggest takeover of an Australian company ever Bitcoin futures launch is not taking away demand from gold, Goldman Sachs says Germany outpaces UK for commercial real estate investment, survey finds UK inflation comes in at 3.1 percent, highest since March 2012 Amazon expands its cloud presence in China as it battles the country's internet giants Robert Gates says a North Korean nuclear warhead will soon be an accepted reality European markets set to open higher as investors look ahead to Fed, ECB meetings Cryptocurrencies could be rocked by major hacks next year, expert warns Trump's 'ill-advised' move over Jerusalem has set back peace process, former secretary of defense says Four charts from Google make the argument for a growing, $50 billion e-commerce bloc Corporate deals slowed dramatically in 2017, but at least one country bucked the trend The 'alt-right' created a parallel internet. It's a holy mess Google eclipses Facebook as the top source of traffic for online publishers Cramer Remix: Acadia is the most volatile stock I’ve ever covered — and it’s worth speculating on Topgolf CEO sees 'real growth' in golf, says he's 'winning' with millennials Cramer: Auto parts stocks like O'Reilly wrongly sold off and are buys Asian markets look to follow Wall Street's strong lead, and New Zealand dollar firms Cramer tackles the question of why the market has been so positive for 2017 Electric vehicle demand is driving huge jump in number of battery factories around the world Bitcoin has aspects of a bubble, but it's OK to 'play' with it: Economist Robert Shiller Icahn wages new fight with Xerox with plans to nominate 4 to board Cisco CEO Chuck Robbins thinks he's finally found the key to growing in China Why Apple just spent up to $400 million on song-identification app Shazam Trump orders NASA to send American astronauts to the moon, Mars People are taking out mortgages to buy bitcoin, says securities regulator Here are JPMorgan’s favorite chip stock picks for the next year Ford says hybrids beat electric for self-driving cars Zuckerberg's purchase of Instagram was the perfect 'teen and millennial hedge' for Facebook Shares of retailer-turned-bitcoin-play Overstock.com rocket higher after Morgan Stanley reveals stake Amazon has sharply curtailed hiring in Seattle as it seeks second headquarters Start-up Fuzzy offers house calls for your pets for $468 a year Manufacturing CEO survey shows record high optimism on prospect of tax reform A top VC explains which technologies will change society the most in 10 years American Express is getting rid of signatures for credit card purchases Bitcoin futures up and running but trading is light Apple to buy music recognition app Shazam The smart play on bitcoin: Don't mine the gold, sell the picks and shovels Cramer: Bitcoin's futures launch is a 'very big victory' for the digital currency If Tim Cook is right about AR, Lumentum is a buy On Main Street the bigger you are, the better tax reform looks: CNBC/SurveyMonkey Ethereum creator compares crypto mania to world’s biggest art auction UBS: Cryptocurrencies like bitcoin are ‘the bubble to end all bubbles’ Google's high-end smart speaker, which rivals a Sonos, is now available Bitcoin futures launch could be bad for bitcoin’s price, tech analyst Gene Munster says Bank of America analyst predicts EA will bring back 'Star Wars' micro-transactions despite uproar European finance ministers call for US tax reform rethink Goldman upgrades ADP, says it will be 'outsized beneficiary' of GOP tax cuts iPhone X supply has improved, with most models now shipping in 2-5 days Former Facebook exec Chamath Palihapitiya says social media is ripping apart society Investors 'haven't missed the train' on bitcoin yet, but it could be a wild ride, analyst says Stocks making the biggest moves premarket: ADP, FIT, X, LKQ & more Vladimir Putin orders Russian forces to start pulling out of Syria NFL and Verizon strike a mobile deal to expand live game streaming Fueled by investor taste for liquid alternative investments, hedge fund conversions skyrocket Uber’s fight for survival in London is pushed to 2018 but another key Europe ruling is imminent Bitcoin price jumps $2,000 after Cboe futures launch Contenders emerge for the No. 2 Fed job as search narrows Investors are dumping gold to buy bitcoin, says strategist Currency expert says there's one fundamental reason behind bitcoin's runaway rally Global arms sales rise for first time since 2010 Trader who called bitcoin rally says cryptocurrency will surge above $100,000 in 2018 Chinese drone maker wants to fly people around, and it says it will turn a profit in two years European markets set to start week higher ahead of Fed, ECB meetings New Zealand's central bank just got a new governor How Chinese spies used LinkedIn to snoop on German politicians Instant noodle giant aims to boost paltry market share in China with healthy ramen Rohingya curries and Syrian sweets from refugees are making start-up a hit A Muslim country that isn’t even in the Middle East says it’s willing to send troops to Jerusalem One of the world's largest shipbuilders names a new CEO days after dire warning on losses Rubber farmers are getting slammed by low prices — but one company wants to fix that

Technology

Some start-up founders are ‘nervous’ about dealing with Benchmark after it sued Uber

Gabriel Puliatti is an up-and-coming company CEO who, at some point in his career, will need to raise money from investors.

Don’t count on Benchmark Capital being one of them.

After Benchmark filed an unprecedented lawsuit against Uber’s former CEO on Thursday, Puliatti now says there is “no way” that he will accept an investment from one of Silicon Valley’s most prestigious venture capital firms.

And he’s not alone. In the immediate aftermath of the suit, Benchmark is facing a sharp backlash from founders who are concerned that the firm is not as supportive of founders as all firms stylize themselves to be.

More from Recode:
What led to Benchmark’s ‘unprecedented’ lawsuit? Maybe founder-friendly provisions that made Uber founder Travis Kalanick king.
Can engineered ‘meat’ replace hamburgers?
We’ve studied gender and STEM for 25 years. The science doesn’t support the Google memo.

The lawsuit, which asks a judge to remove Uber founder Travis Kalanick from the company’s board, reflects an aggressive posture from a venture firm that thinks Kalanick is hurting the company’s bottom line.

But what could now hurt Benchmark’s business is a new fear factor that has gripped a young class of entrepreneurs, who perhaps see Kalanick’s ouster as a cautionary tale for their own companies down the road.

“I personally was very shocked by the timeline of affairs during the week (of) Travis’s resignation,” Puliatti, the founder of a startup called Emptor, said. “I empathized a lot with Travis then.”

Puliatti said that afer recent events, he and his co-founder are now more seriously considering not raising money from venture capitalists at all — and said that even if they did, he has decided that he won’t “ever sit down” with Benchmark.

Venture capitalists and entrepreneurs forecast the lawsuit will have a chilling effect on the next generation of talent, with one telling Recode that Benchmark will now undoubtedly have to answer “awkward questions in a lot of deals for the foreseeable future.” Hazem Awad, a Qatari investor, said that he understood that sort of thinking these days.

“Any entrepreneur would naturally feel nervous about working with Benchmark, at least for the time being,” said Awad. “Because in the back of their mind (mine included) will always be the question of, ‘What will happen if things get that bad?'”

To be sure, Benchmark remains one of the most prestigious firms on Sand Hill Road, so industry peers still predict that they’ll have young founders pounding at their doors regardless. And even if Benchmark’s relationship with Uber frayed at the end, their collaboration still produced billions of dollars for both parties — a success by the standard metrics of Silicon Valley that shouldn’t go unnoticed by the current crop of rising star founders.

But even the fact that some entrepreneurs are thumbing their noses at Benchmark speaks to just how controversial the lawsuit is in the industry.

No other prominent Uber investors have yet said they publicly support the lawsuit, effectively leaving Benchmark to fight this battle by itself. And Kalanick’s team of course has denounced it as an attempt to “silence his voice.”

Founders have long been encouraged to be choosy about the backers who serve on their boards, with savvier CEOs knowing full well that their investors could push them out of their own companies as they grow. But the fracas at Uber seems to have heightened the senses of some budding entrepreneurs.

“It would be naive to think that this won’t be front-of-mind for many founders raising in the very near future,” said Shayan Mohanty, a young founder.

As details of the unexpected lawsuit ricocheted through the tech community, several founders were quick to recoil on Twitter.

The “cost of accepting investment from Benchmark just went through the roof in minds of founders everywhere,” said one entrepreneur in Hong Kong, Larry Salibra.

“I can’t help but wonder how recent events will impact founders’ views towards raising capital from Benchmark. This shit is ruthless,” wrote Michael Boswell, the CEO of a design startup called Cue.

Benchmark did not respond to a request for comment.

Venture capital firms often now take pains to potray themselves as founder friendly, offering simpler term sheets and perhaps a suite of operations, marketing or financial services that founders can call upon to boost their products. But Benchmark’s — and any firm’s — ultimate obligation is to its shareholders, not the founders, and Benchmark argues in the lawsuit that Kalanick is hurting the company’s value.

And to be sure, this is not Benchmark’s first time legally jousting with a founder they once funded.

Yet several founders said that this unusual lawsuit could have lasting effects, even if it solves a short-term problem that is specific to Uber. Some of that anger centered personally on Benchmark’s Bill Gurley, who until recently sat on Uber’s board, for initiating the litigation.

“Man. I wouldn’t take @bgurley money to start a McDonalds franchise at this point,” wrote Rick Barber, a venture capitalist. “It’s a good last deal to do, though. Go out with a blaze of glory, Bill.”

By Theodore Schleifer, Recode.net.

CNBC’s parent NBCUniversal is an investor in Recode’s parent Vox, and the companies have a content-sharing arrangement.

Source: Tech CNBC
Some start-up founders are ‘nervous’ about dealing with Benchmark after it sued Uber

Comments are closed.