Benchmark says it’s suing Uber’s ex CEO because of ‘behavior that was utterly unacceptable’

“We believed then [in June when asking for his resignation], as we believe now, that failing to act would have meant endorsing behavior that was utterly unacceptable in any company, let alone a company of Uber’s size and importance.

… the better question is why we didn’t act sooner … “

Benchmark is referring the allegations of sexual harassment and the many other charges leveled at the company. It also pointed out that Uber has been operating without a CFO for over two years.

Needless to say, it’s highly unusual that an investor sues a founder and fellow board member of a company that it is heavily invested in. Benchmark currently owns about 13% of Uber’s stock and has 20% of its voting power.

Blowback risk

Benchmark’s decision to declare war on a high-profile tech entrepreneur like Kalanick could have serious repercussions for the firm. Like all VC firms, Benchmark aggressively tries to cultivate an “entrepreneur friendly” reputation in the hopes that it will help the firm sign the founder of the next Facebook…or Uber.

Seen in that light, Benchmark’s efforts to explain itself to the engineers and product managers who work at Uber is not surprising.

In the letter to Uber employees, Benchmark insisted that this lawsuit isn’t about a typical battle of egos in a boardroom and apologized to the company’s employees:

“It’s easy to reduce this situation to a battle of personalities. But this isn’t about Benchmark versus Travis. It’s about ensuring that Uber can reach its full potential as a company. And that will only happen if we get rid of the roadblocks and distractions that have plagued Uber, and its board, for far too long. We need to focus on the work ahead — on building a company that everyone is proud to be associated with: employees, riders, drivers, and the cities you serve. You deserve that. You have always deserved that. We are sorry that it has taken us so long to do the right thing.”

In response to the suit, Kalanick on Monday said that he is “baffled” by Benchmark’s “hostile actions.” Here’s his full formal statement:

“Like many shareholders, I am disappointed and baffled by Benchmark’s hostile actions, which clearly are not in the best interests of Uber and its employees on whose behalf they claim to be acting. Since 2009, building Uber into a great company has been my passion and obsession. I continue to work tirelessly with the board to identify and hire the best CEO to guide Uber into its next phase of growth and ensure its continued success.”