In this interview, Silicon Valley veteran and Lyft investor Keith Rabois discusses the unprecedented lawsuit filed by Benchmark Capital against Uber co‑founder Travis Kalanick. Rabois characterizes Uber as a "mess" due to its lack of a CEO and a fragmented board of 14 operating executives. He critiques the legal merits of Benchmark's fraud and breach‑of‑contract claims as weak, while acknowledging the lawsuit may serve a strategic purpose. Rabois reflects on the delicate calculations VC firms face when considering actions that could lead to a CEO's ouster, citing historical parallels such as early‑2000s tensions between Google’s founders and Sequoia/Kleiner Perkins. He emphasizes that VC involvement in CEO removal typically stems from a loss of confidence by the management team or a founder dispute, and warns that such moves can affect a firm’s reputation among entrepreneurs.
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Keith, and I always have to couch the fact that you are a Lyft investor when I ask you about Uber. But what do you make of the latest benchmark capital suing Travis Kalanick, also explaining why it's suing Travis Kalanick to Uber employees?
Well, it's pretty unprecedented. Obviously, you're asking all the easy questions to me today. But I've served as a director of companies for 14 years in Silicon Valley, only the last four as a VC. So I think I have a somewhat detached perspective. But it's clear that Uber is a mess. I mean, first of all, running a company with 14 operating executives and no CEO is a disaster waiting to happen. Secondly, it's clear that they have somewhat unsolvable issues, you know, in the current board composition, which is why people always caution their founders and board members to pick their companies and colleagues carefully. It's very hard to get divorced in business, especially when you're on the board, and they're going to have to reconcile this. I think the lawsuit is very weak. I mean, it's clearly a strategy and maybe a very effective strategy, but the substantive claims, the fraud claims, are pretty weak. The breach of contract, the breach of contract has a weak case. I think the case substantively, at least what's in the public domain, now there's some stuff that's not in the public domain yet, like what's in the Holder report, what concessions Benchmark may have made to give those board seats or to get Travis to resign, there may be a lot of new information that comes out. But in the public domain, the case is pretty weak. That said, it may be very effective.
In terms of coming to a compromise.
Where everybody is hopping can move on with a CEO.
Now, no venture capitalist wants to be considered the investor who's going to oust the CEO. Right. So if Benchmark is doing this, it must have been a very difficult calculation. I mean, what does this mean for Benchmark and its reputation among entrepreneurs?
Well, I think it's always difficult, difficult calculation when you remove a CEO. I mean, the two times and then sue them. Well, that's a little bit different. But I do do you remember that Google the Google founders were almost sued by Sequoia and Kleiner Perkins back in 2000? 2001 along the similar reasons for not hiring a CEO aggressively like they promised. It didn't come down to that, but they got very close to suing them. So it's not completely unprecedented. But in terms of removing a CEO, the only times I've ever seen it in my career is the management team loses faith with the CEO and lobbies the investor to get rid of the CEO. So it's a bottom up groundswell or number two, founders, two co-founders get in a massive dispute and someone needs to mediate. And that's when the venture capitalists gets caught in the crossfire. Those are the only two things I've ever seen.
I've never seen this.
I've seen ethical issues lead to a CEO departure.
Do you think this will hurt Benchmark's reputation among entrepreneurs?
I don't know. It's definitely controversial. It's definitely something everybody's talking about. But it depends how things play out. So for example, if Uber ends with a great CEO and has a successful outcome, and there's more stuff that comes out in the public domain about problems at Uber, I think it'll be fine for Benchmark. If not, for example, if Travis comes back and takes over and rides Uber to its glorious victory, there'll be a lot of people, shooting at benchmark, totally unpredictable. And it's a very difficult job, so I'm not criticizing them at all. Because being in the middle of that crossfire when you're on a board, you're making hard trade-offs when half the team is saying do X and the other team is saying do Y, and they're saying, you, got to solve this.
