Exclusive: Uber shareholder group wants Benchmark off board - Axios
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Exclusive: Uber shareholder group wants Benchmark off board

Sam Jayne / Axios

A group of Uber investors has asked that venture capital firm Benchmark step down from the company's board of directors, Axios has learned. It also wants Benchmark to divest enough shares so as to no longer have board appointment rights, claiming to have enough investor interest to handle more than a $6 billion sale. The move comes one day after Benchmark sued former Uber CEO Travis Kalanick for fraud, in an attempt to have him removed from the board.

Benchmark has not yet responded to a request for comment.

  • Details: The shareholder group communicated its request via a petition-style email sent earlier this morning to other Uber investors and its board of directors, which has a meeting scheduled for today. Its basic argument is that Benchmark's action only complicates the company's already-troubled search for a new CEO, and effectively violates Benchmark's fiduciary duty to the company.
  • Who signed the request? Shervin Pishevar (Sherpa Capital, although signed as an individual), Ron Burkle (Yucaipa Cos) and Adam Leber (Maverick).
  • Why it matters: It was shocking enough for a major venture capital firm to sue the CEO of a highly-valuable portfolio company. For other VC firms to then make this sort of counter-move against a peer is similarly unprecedented. It's a brave new world in Silicon Valley.

Below is full text of the email, which was obtained by Axios:

As a group of shareholders of Uber Technologies, Inc. (the "Company") we were surprised and distressed to learn through the media of the lawsuit brought by your firm against the Company, and its founder and former Chief Executive Officer Travis Kalanick.

Naturally, we share your concerns about the problems that the Company has
confronted in recent months, but we are greatly concerned about the tactics employed by
Benchmark to address them, which strike us as ethically dubious and, critically, value-destructive
rather than value enhancing.
Specifically, we do not feel it was either prudent or necessary from the standpoint
of shareholder value, to hold the company hostage to a public relations disaster by demanding
Mr. Kalanick's resignation, along with other concessions, on a few hours' notice and within
weeks of a personal tragedy, under threat of public scandal. Even less so your escalation of this
fratricidal course – notwithstanding Mr. Kalanick's resignation – through your recent lawsuit,
which we fear will cost the company public goodwill, interfere with fundraising and impede the
critical search for a new, world-class Chief Executive Officer. Benchmark has used false
allegations from lawsuits like Waymo as a matter of fact and this and many actions has crossed
the fiduciary line.
Benchmark's investment of $27M is worth $8.4 billion today and you are suing
the founder, the company and the employees who worked so hard to create such unprecedented
value. We ask you to please consider the lives of these employees and allow them to continue to
grow this company in peace and make it thrive. These actions do the opposite.
Accordingly, we would request that Benchmark help the Company realize its
full potential by allowing the necessary work to be done in the Board Room rather than the
Courtroom. To this end, at this point, in light of your suit against the Company, we believe it
would be best, and hereby request, that Benchmark remove its representative from the
Company's Board and move promptly to divest itself of enough shares in the Company so as to
cease to have Board appointment rights. We have investors ready to acquire these shares as soon
as we receive communication from Benchmark that they are willing to withdraw their lawsuit
and sell a minimum of 75% of their holdings.
We are also asking for a symbolic Board of Directors vote on this matter at
today's Board meeting to show how the Board of Directors stands on this lawsuit brought against
the company, its founder and the 15,000 employees of Uber who have all worked so hard in
concert to create the fastest growing company in history.
Many other shareholders share our views and will be adding their names in the days ahead. Any shareholders who want to join this letter and petition may email one of our signatories of this letter so that we can submit a final list of shareholders who support this request. Emails can be addressed to Shervin Pishevar at UberShareholderAlliance@gmail.com.

Sincerely,
Shervin Pishevar
Personal Investor, Advisor and Former Uber Board Observer (2011-2015) Coordinator, Uber Shareholder Alliance
Ron Burkle
Chairman
Yucaipa Companies
Adam Leber
Partner, Maverick
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Farenthold faces new allegations from male staffer

Texas Rep. Blake Farenthold. Photo: Jacquelyn Martin / AP

A former communications director for Rep. Blake Farenthold told CNN that the Texas congressman's office was such "an intensely hostile environment" that he was "[driven]...to physical and emotional distress."

Why it matters: The House Ethics Committee is already investigating Farenthold for separate sexual harassment allegations, which were reportedly settled by the Office of Congressional Ethics in 2014 for $84,000. Rekola shared his allegations with the office of Rep. Susan Brooks, the chairwoman of the committee.

  • In 2015, when the former staffer, Michael Rekola, was about to leave town for his wedding, Farenthold told him: "Better have your fiancee blow you before she walks down the aisle — it will be the last time."
  • Rekola said he was "disgusted," and gave his two weeks notice upon returning from the wedding. Farenthold denied making the comment.
  • Rekola told CNN that Farenthold called him a "f---tard," and another staffer confirmed that he regularly referred to aides that way. Farenthold told CNN he called aides that it "in jest," but that in hindsight, "it wasn't appropriate."
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PBS suspends "Tavis Smiley" for sexual misconduct

Tavis Smiley of PBS, talks with Lower 9th Ward resident Carolyn Parker for Smiley's late-night PBS program. Photo: Bill Haber / AP

The late-night show "Tavis Smiley" was suspended by PBS after an investigation of Smiley that resulted in "multiple, credible allegations of conduct that is inconsistent with the values and standards of PBS," Variety reports.

  • Per Variety, the investigation revealed sexual relationships with subordinates, and a "verbally abusive and threatening environment" created by Smiley.

Why it matters: Another powerful man has been taken down by allegations of sexual misconduct, joining dozens of other men.

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Microsoft taps AI, Reddit to make Bing smarter

Microsoft AI and Research chief Harry Shum, speaking in San Francisco Wednesday. Photo: Ina Fried/Axios

Microsoft announced a bunch of new partnerships Wednesday as it aims to show itself as a leader in the field of artificial intelligence. It's also adding a bunch of AI-powered features to its own products, including its Bing search engine along with a deep integration of content from Reddit.

Why it matters: AI is one of the hottest areas in tech and Microsoft is competing with Google, Facebook, IBM and others for talent, mindshare and deals.

Partnerships: Microsoft announced efforts with a range of companies, including Reddit, UPS and China's Cheetah Mobile. In the Reddit deal, Microsoft's Bing search engine will use content from the online discussion community, including its popular "Ask Me Anything" Q&As.

Internal efforts

  • On the Bing front, Microsoft is using AI to deliver answers that combine information from multiple sites. That can allow results that compare different arguments on an issue, explore the differences between two things or just deliver a summary of facts from more than one place, with footnotes showing where the information came from. It is also making Bing more conversational and allowing people to search within images.
  • With Cortana, Microsoft is trying to help its digital assistant stand out from a crowded pack that includes Apple's Siri, Google's Assistant and Amazon's Alexa. Microsoft's case is that it is the only digital assistant that stretches across work and personal life. To that end, Microsoft said Cortana can now understand calendar and other data from Google's Gmail. It's also building Cortana into Android apps, including the CM Launcher app from China's Cheetah Mobile.
  • Microsoft is also expanding its use of AI in Office 365. A new insights feature will automatically make charts showing trends within a complex spreadsheet. Within word, AI will help make sense of acronyms within a document using other documents within the company. Microsoft already prioritizes which e-mails to read first, but a new feature will help find the action items within Outlook.
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The debate over inequality

Last week, we reported that the wage inequality gap in the U.S., a primary source of the polarization among Americans, has been shrinking: For five straight quarters, wages have been growing the most for U.S. workers with only a high school diploma.

Data: Indeed analysis of BLS monthly jobs data; Chart: Axios Visuals

But readers pushed back:

  • "Surely you're kidding?" wrote James Harvey, executive director of the National Superintendents Roundtable. The percentage wage increase is better for high school graduates, he said, but the dollar increase still favors the rich: a 3.3% raise for someone making $20,000 a year is $660—only an eighth of the $5,000 raise going to someone earning $500,000 and getting a 1% increase.
  • In a phone call, Upwork CEO Stephane Kasriel told me, "The 1% is doing a lot better, and for the 30% and 40% at the bottom, it keeps getting worse."

Quick take: The times do indisputably favor the rich:

  • When adjusted for inflation, U.S. wages are up only 10% from almost a half-century ago.
  • Meanwhile, wealth held by the top 1% has surged: it rose to 38.6% of the total in 2016, from 36.3% in 2013, the Fed said in a report in September, while the bottom 90%'s wealth has fallen for almost three decades—last year, it was 22.8% of the total, compared with 33.2% in 1989.
  • FoW reader W.Spackman linked to this July report by Deloitte, which said income inequality today is comparable with the Gilded Age of robber barons, in the 19th century (Figure 3).

And Charlie Allenson, a FoW reader in New York, made another point: "Many of those chronically not working are not getting back to work. Namely, those more 'mature' workers. Ageism rolls on. Personal example: People look at my website and love my work. They meet me, see the gray hair and suddenly they're going in a 'different direction.' This is a constant for me. And it sucks."

But there are in fact signs of an improvement in the fortunes of ordinary people, and wages and salaries are among them, says Jed Kolko, chief economist at Indeed.com, the jobs listing website, who wrote the blog post on which we were reporting. In an email exchange, Kolko told me:

  • Harvey and Kasriel are correct to single out the vast concentration of income at the top, comprised largely of non-wage earnings like capital gains, interest and dividends—which combined are how the wealthy make most of their money.
  • But wages earned for work are another lens into the inequality story, and in that realm, the gap indeed has narrowed.
  • The shrinking wage gap is important to watch because wages and salaries are a large component of pre-tax money income, which includes interest, dividends and income from property. The Bureau of Labor Statistics puts the proportion at 76.8%. (see pages 8-9 in this BLS report).

The Fed, too, has noted the trend favoring less-educated workers. According to a Fed report released in September, income rose from 2013 through 2016 for all income groups, after accounting for inflation, which was a change from the prior three years, when income was stagnant. But the highest growth — an average of 25% — was among families without a high school diploma; in the 2010 to 2013 period, income fell for these workers, the Fed said.

Thought bubble: Inequality is not an absolute metric. If it were, ordinary people could legitimately lash out about wealth at the top regardless of how they themselves were faring. The rise of wages at the bottom and in the middle is slow, and the trend could halt—that is a point that Kolko makes. But it remains notable that the numbers are no longer going only in one, inexorable direction—there are metrics pointing to growing wages and salaries, and more jobs, for those whom the economy has been leaving behind.

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Bitcoin: 'This is a casino, not an investment'

Illustration: Lazaro Gamio / Axios

Bitcoin is up about 1,700% since the start of the year. Some attribute the surge to ordinary, if enthusiastic, investment, along with the forces of supply and demand. Others say it's a bubble, and that it will ultimately burst. Joe Borg, president of the North American Securities Administrators Association, a grouping of state securities officials, suggests it's the latter. "This is a casino," he tells Axios, "not an investment."

The bottom line: Borg, who is also director of the Alabama Securities Commission, says he could be wrong and that those who say bitcoin is just "another type of investment" will be proven correct. But he sees worrying signs of a classic investment mania.

Among the signs:

  • People have told him they have taken out home equity lines of credit to buy bitcoin.
  • Those doing so, he said, are mostly millennials and young baby boomers.
  • "They seem to think anything electronic is a game," Borg said. "There are entrepreneurs who run Facebook, and they put this in the same category."

Thought bubble: If bitcoin collapses, which has been the normal course in big, sudden investment manias, the price is highly unlikely to go to zero, meaning a lot of people will still be in the money. But lots of people will lose, too, including perhaps some who have taken out those home equity lines of credit.

That there is a fever is indisputable. It is global, and especially heavy in Asia. Ordinary South Koreans are the most aggressive bitcoin investors, in addition to Hong Kong Chinese, Japanese and Vietnamese, report the WSJ's Steven Russolillo and Eun-Young Jeong. Together, they account for almost 80% of global bitcoin trading. Other reminders of fevers past:

  • Most of these Asians buying bitcoin are the general public, not professional traders.
  • At the point last week when bitcoin went above $17,000, it was almost $25,000 in South Korea, almost 50% higher, the WSJ said. In other words, the trade is chaotic to the point of irrationality.
  • At the FT, Izabella Kaminska writes today that even central banks are "getting drunk on the collective cryptocurrency/blockchain Kool-Aid."

A point that increasing numbers of observers are making is that bitcoin is only an investment, with no other real-life, large-scale utility, at least at present: bitcoin and other cryptocurrencies are too slow and cumbersome to serve as money, their original purpose.

  • In a speech today in Sydney, Phillip Lowe, the governor of the Reserve Bank of Australia, makes the point: "The current fascination with these currencies feels more like a speculative mania than it has to do with their use as an efficient and convenient form of electronic payment."
Featured

Jones gets 'gracious' call from Trump, invited to the White House

Doug Jones is greeted by a supporter before speaking during an election-night watch party Tuesday, Dec. 12, 2017, in Birmingham, Ala. Photo: John Bazemore / AP

Senator-elect Doug Jones of Alabama on Wednesday said had "a very gracious" phone call with President Donald Trump, in which he was invited to visit the White House and congratulated for his stunning campaign victory.

“It was a very gracious call. I very much appreciate it. He congratulated me on the race that we won. He congratulated me and my staff in the manner in which we handled this campaign and went forward. And we talked about finding that common ground, to work together. And he invited me over to the White House to visit as soon as I get up [to Congress],”
— Doug Jones at a press conference
Featured

Here's the DOJ's letter that delayed the Waymo-Uber trial

In a letter to the judge overseeing Waymo's lawsuit against Uber, the Justice Department says that a former Uber employee suspected the company helped its then-CEO covertly communicate with a startup the company eventually acquired. A document detailing the employee's original concerns will be released on Friday.

Why it matters: The Justice Department's notice to the court led to a second delay to the trial between the two companies. The ex-Uber employee's concerns, which he communicated to the company back in May after being fired, were never mentioned in the case until that point, raising questions about whether the ride-hailing company was purposefully hiding.

  • This is also the first confirmation of a Justice Department criminal probe into Uber, beyond rumors and media reports.

However: Another Uber employee testified last month in court that the presentation he gave on secretive communications, referenced by the former employee and Justice Department, was purely hypothetical. In fact, he and his team had no idea that Kalanick and the startup's founder communicated without leaving a trace until Bloomberg published an article detailing their tactics months later. Uber also argued in court that the former employee sought to extort money from the company after getting fired for poor performance.

Note: The case was referred in May to the U.S. Attorney's Office for a potential criminal probe.

Here's the full Justice Department letter:

Featured

Why Republicans should worry about 2018

Doug Jones is the first Democratic senator Alabama has elected since 1992. His surprising victory continues a trend we've seen in other elections this year — Democratic voters are turning out in significant numbers and independent voters are leaning more toward Democrats. Axios' Alexi McCammond breaks down why that should worry Republicans heading into 2018:

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Trump: We are "days away" from passing tax cuts

Screenshot

President Trump delivered his closing arguments on tax reform Wednesday afternoon, just hours after GOP lawmakers reached an agreement on an overhaul package. Trump emphasized how passing tax cuts was a key campaign promise, and said "now we're just days away" from keeping it.

Key quote: "But we need your help to get Congress across that finish line. We'll have very little Democratic support, probably none, and that's purely for political reasons. They like it a lot, and they can't say it ... some day we have to come together and do bipartisan — and hopefully it can happen soon."

More from Trump:

  • "I'm here today to tell you that we will never let bad things happen with respect to the economy of our country."
  • If Congress gets him a tax bill before Christmas, the IRS said Americans will start seeing lower taxes and bigger paychecks beginning in February.
  • "Somebody else called me and everybody else the 'Deplorables.' We're proud to be the Deplorables, and we're doing well."
  • Go deeper: The Republicans' looming Christmas deadline.