Uber investors call for Benchmark to forfeit board seat after Kalanick lawsuit

In yet another plot twist, Silicon Valley VC firm Benchmark Capital, that was one of the earliest investors in Uber, has filed a suit against ex-CEO Travis Kalanick accusing him of fraud, breach of contract and breach of fiduciary duty.

In court papers filed in DE on Thursday it was revealed that Benchmark Capital Partners (an Uber investor) is suing Kalanick over allegations of fraud, among other things.

While Benchmark's voting power nominally gives it the clout to outvote Kalanick, Kalanick now controls three out of 11 board seats, his own and two vacant seats.

The suit contends this was done to "clear the path for his eventual return as CEO - all to the detriment of Uber's stockholders, employees, driver-partners and customers".

Benchmark owns 13% of Uber and controls 20% of the voting power, as per the lawsuit.

A spokesperson for Kalanick dismissed the claims in a prepared statement, saying that the lawsuit was without merit and "riddled with lies". Uber's self-driving vehicle tech is at the center of an ongoing lawsuit with Alphabet's Waymo. He added that Benchmark was acting in "its own best interests" instead of those of Uber, and added that Kalanick "is confident that these entirely baseless claims will be rejected".

It lost another key member of its personnel on Thursday when its senior vice president of global operations, Ryan Graves resigned, although Uber's first ever employee will keep his seat on the board. Investors presented Kalanick a letter with a list of demands in June, one being that he step down as CEO. In previous reporting, it's been noted that Kalanick's long tenure at the helm of the ride-hailing startup is a result of abetting by a board that has allowed many of his indiscretions to pass without comment because of the expectation of high profits. A firm that represents Kalanick did not immediately respond to The Hill. On the other hand, Kalanick controls about 16% of the voting rights and holds 10% of the ordinary shares, notes FT.

"Kalanick's continuing efforts to insert himself into Uber's board and business, even after embroiling Uber in multiple scandals and being forced to resign as CEO, have further depressed the value of Uber stock on the secondary market", the filing said. At the time, Kalanick inserted a provision that gave him the "absolute right" to select three directors to fill the seats.

The lawsuit comes just days after reports that Kalanick told people he's "Steve Jobs-ing it"-meaning Kalanick would return to Uber in a similar fashion to Jobs, who returned to Apple as its chief executive in 1997". "Our priority remains to select Uber's new CEO as quickly as possible".

The VC firm says it never would have agreed to let Kalanick expand the number of board seats if Kalanick had disclosed the extent of his mismanagement.

Vanessa Coleman

Comments