Jeez, not trying to defend Travis, but the guy did create an umpteen billion dollar company in short order, creating absurd value for Benchmark's investment. The least they could do is start off with a hollow thank you and acknowledgement for that achievement. Apparently all Travis did was make mistakes. It really does smell more like a vendetta and less like them protecting their money.
If this letter's claims are true, Kalanick agreed, in writing, "to modify the company’s voting agreement to ensure that the board was composed of independent, diverse, and well qualified directors." He then defaulted on that written agreement with Uber's Board.
That's a pretty serious mistake.
Disclaimer: I am not a lawyer. This is not legal nor investment advice.
Is it? Does putting something in writing automatically force you to do it, legally, if that writing is not a contract?
Perhaps the mistake here is Benchmark's. If Kalanick agreed to do this in writing, and then didn't do it, that makes him look bad but it's unclear to me that Benchmark can do much about it. Maybe Travis has the last laugh.
> Does putting something in writing automatically force you to do it, legally, if that writing is not a contract?
It's unclear from the letter if this agreement was a contract or e.g. an email. If a contract, the answer is clear.
If something less formal, note that American courts tend to treat written communications between sophisticated parties as legally binding, particularly if it occurs around negotiating a contract [1].
There's the further distinction that these are written communications between a CEO and his Board. At the very least, Kalanick made untrue statements to his investors. If he did it intentionally, it could constitute fraud.
If that was in a contract, Benchmark wouldn't have to sue for 'fraud' - they can sue to enforce the contractual agreement. Sounds like what they have on paper isn't as solid as they'd like you to believe.
In the US, generally it is binding. Communications and agreements between parties are binding particularly if TK received something in return for said promises.
Even verbal agreements are binding in the US especially when dealing with parties such as these. If TK hopes to have any credibility moving forward, with the Board or in the courts, it would be in his best interest to keep commitments or he will be stuck in the "did you lie then or is this version a lie" mess.
If he wants to argue that he made the agreement under duress then he can argue that in court and the court may find the the agreement is not enforceable but duress can be a steep hill to climb without physical, or threat of physical, harm.
Generally, yes it does require you to do so unless you also have it in writing that whatever document you just signed is not in fact binding. Even verbal agreements can be enforced as a legally binding contract so having a written document is a pretty high barrier to overcome legally speaking.
So, this might be me just being dumb, but I don't understand how Benchmark has made any money whatsoever on this deal. Not yet.
And what I mean by that is this: they gave Uber money for shares. But they have not yet sold the shares to anybody, b/c no acquisition or IPO. Other investors buy more shares, but that's not a liquidity event, is it?
Benchmark has a whole boatload of paper profits that they can't return to their LPs, not yet at least.
Or am I crossed up here? Could they, or have they, done some kind of private sale? I kind of doubt it but could easily be wrong here. Is there some kind of financial instrument to cash out early I'm ignorant of?
That's why I said value and not actual return on investment. They have created an insane amount of value in the stock that Benchmark owns. If you were an investor would you rather take the money that Benchmark originally invested, or the stock they received for it? Pretty easy answer unless you think they will go bankrupt.
Discrediting Travis (read: vendetta) is the means through which Benchmark seeks to protect their investment.
In order to liquidate their investment, Uber needs to IPO or Benchmark needs to find another investor to buy them out.
Travis is a staunch opponent to an IPO. And, replacing Travis as CEO is a likely pre-condition to finding another investor who will buy Benchmark out. Either way, discrediting and removing Travis and protecting their money is more or less one in the same.
