Binary co-founder blames "corrupted" media for his resignation offer - Axios
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Binary co-founder blames "corrupted" media for his resignation offer

Binary Capital co-founder Jonathan Teo slammed the media, investor leaks and at least one of his portfolio companies in an email sent to all Binary portfolio CEOs on Saturday, more than two weeks after his former partner, Justin Caldbeck, resigned over allegations that he had sexually harassed female founders. Axios has obtained the email, which is reprinted in full after the jump.

Some highlights:

  • Teo remains managing partner of Binary Capital, as its limited partners have not yet accepted his offer to resign.
  • Teo says that his resignation offer was not based on any personal failings, but rather was intended to stop a news cycle "by giving the blunt-tooled media activists what they wanted." He also writes: "The news we read and have access to is a problem. Media has been corrupted."
  • Teo claims only one entrepreneur has asked to buy back shares from Binary, and says that those who choose that route are engaged in "opportunistic grandstanding."
  • Teo lashed out at an investor who he believes has been leaking information to the media (psst Jon, it's more than one), and repeatedly complains about "whiners" who want to be "coddled."
  • He says he is "angry" that women have been hurt, although he also says it is "moronic" that some believe only a woman should be chosen as Binary's next general partner.

Below is the email sent to portfolio company CEOs by Jonathan Teo, followed by a letter he previously sent to limited partners in Binary funds. Both were provided to Axios by a source:

Thank you for being so patient with me.

I just hit send on the email I've copied below this to the Binary Capital LPs. Given the leaks, the best way to ensure everyone feels up to date is for me to send out simultaneous updates.

First of all, thank you to all of you who have written such strong messages of support to our Limited Partners. I really appreciate it. It's important that the entrepreneurs we work with have a voice and that voice is heard. We are all doing what we can in the capacity we are in and again, I thank you for being so honest yet supportive in all this. I could not even attempt to continue doing what I feel is the right thing here if it were not for your support. I will never forget that.

The news we read and have access to is a problem. Media has been corrupted. The voice of many have been diluted by the agendas of a few. My offer of resignation was made to quell a news cycle that we are almost positive was exacerbated by a leak from someone in our investor base that had an agenda not in the best interest of the entrepreneurs we work with. Nor the value of the portfolio we are committed to building. I did it so attention was on what matters and not a distraction based on my personal life. Yes my offer quelled the cycle by giving the blunt-tooled media activists what they wanted. Yes it made me have to come across as someone with something to hide. No I do not have anything to hide. And no, my resignation has not been accepted. Yet. If the most that the sensationalism press has on me is my personal life, so be it. The leaks however had their intended effect. It panicked an already nervous LP base, drove rash decisions, and in effect has left us all worse off.

The story in the public that you are all trying to buy back shares should be revised. Not for my sake. If that's what any of you want, ok, but know this. I strongly urge you not to be considered part of a group of entrepreneurs that would, at the first sign of trouble or opportunity, choose to renege. It is dishonorable. And it is opportunistic grandstanding. It will hurt the perception of your integrity and it will hurt your ability to raise capital down the line. No investor seeks out that risk. It's not an action of integrity. I would urge you to separate yourself from that narrative if it isn't true of your intentions. If it is, I hope you have a very credible reason to do it besides just doing a shakedown, or to stand outside your integrity for the sake of media perception. I also recommend you speak to each reporter who has quoted that erroneous article and have it corrected.

What I think is that we are an industry full of entitled human beings. Particular to silicon valley but not exclusive to it. There are victims out there paying for oppression with their lives. As for the people here that whine that they aren't taken care of, who have not to worry about their lives being taken from them or their basic needs met, who owes them more than the voice they already have access to? To these whiners who want me to constantly address their questions preemptively, I say that we all have priorities. Even I do. I spend my time working through those priorities. And maybe there are priorities beyond your personal feelings. I would love to get to them, but maybe I just have not prioritized it high enough. If you feel that, reach out, don't whine about what you expect me to do. Ask it. The world is better off when we take control of our own voice, and fight for those who have truly none. Most in silicon valley have a voice, not everyone in the world does. I learned the power of my voice again this past week when I allowed my trust in Justin to enable him to retain control of the voice of the firm, and gave my input up. I didn't claim it back fast enough, up till the prior Saturday night. Yes Binary had a statement conflict. And yes I'm responsible for allowing that to happen, as a co-founder of the firm. But we have a division of responsibilities. That is how partnerships work. And I was late in dissolving it in my heart and mind. The minute I did, I dissolved it in action.

For now, trust that I want to do what's right. My job is not to make you all feel good, or keep you updated on things that I have no clarity on (many decisions are now outside my control). My job is to preserve the integrity of the portfolio we built up and the value in it, and to ensure the resources you count on do not dematerialize. It is at risk of that. So forgive me if I have not prioritized pandering to the people that feel entitled to be coddled. From the entrepreneurs to the LPs to the public to the reporters.

Some ask what else has not come out. I will say that nothing will come out that truthfully points to me abusing my professional capacity to further any social agenda. I do not need to do that. And I will fight any attempt to paint me as such. Even if it takes time to do so. To my core I believe in respecting each our right to live the way we want to on this planet Earth, and do it without hindering another's.

I'm hopeful we all come out of this stronger than before. I am angry about this situation. I am angry that women have felt hurt. I am angry that many have been hurt. That we have allowed this hurting to go on for so long is inexcusable, and it is now changing. Fast. This situation has ripped apart something I have built with an intention to bring good into the world. I let it get ruined because of poor choices in people. I regret that and won't forget that lesson.

Now we move ahead, now I am committed to finding someone to carry on the work (when the LPAC decides to remove me). And to chart a plan that is not about some reactive pledge. Or some silly framework. I want to institute a set of metrics that measure impact on equality, in the companies we back, in the firm I will build or rebuild, and in the world we touch with our work. And when we find the right metrics, and understand how we can influence them positively, hopefully we show the rest of the industry and the world what can be done.

As for those who are moronic enough to ask for a general partner replacement as long as it is a woman, please question their motives. We must choose the best person, male or female. But that net must be cast wide. Far and wide. Talent is universal if we only choose to recognize it. Anything else is again grandstanding for a personal agenda. You want someone who understands your vision and your motivations. Anything else would not tide you through the tough times that will be ahead. Anything else will be negative to the value the companies we back can generate.
There is a sea change coming, away from concepts of ownership into concepts of access. Everything we've learned to believe about equity is going to be turned on its head. We will build this new world together. Either with this platform or the next.
I'm tired and I'm indignant. But I'll do what needs to be done to the best I'm able to. I'm committed to that for you all.



Dear Binary LPs,

Thank you so much for your patience as we work through the events of this past week. I wanted to send you a formal update as well as give you an idea of what are the plans moving forward.

As you know, we have had a number of leaks to the press and are keeping written updates to a minimum till we feel we have a bit more control of the situation. I understand it is frustrating so please do feel free to reach out to me directly for a verbal update if questions arise.

As of now, we are in Limited Operations Mode for both Fund I and Fund II. This has two primary consequences. First, the Management Fee rate is reduced. Second, the Funds will not make any investments into new portfolio companies without LPAC approval. We expect that future capital calls will be made solely to cover: (i) follow-on investments into existing portfolio companies; and (ii) Fund expenses.

My offer to resign still stands, but contrary to news reports, has not yet been accepted. I am committed to carrying out my responsibilities to you, to the entrepreneurs we work with and to the Binary Capital staff, and generate increasing value of the portfolio we have worked so hard to build up. In the event that the LPAC chooses to replace me, I will work cooperatively with my replacement to transition these responsibilities in a way that maintains the integrity of the mission the entrepreneurs have and the resources we have committed to them. I have advised the LPAC to choose a replacement solely on merit and not based on convenience or for appeasing any public perception. Doing anything less will be irresponsible.

A capital call was sent out yesterday. The call was accompanied by an explanatory memorandum which highlighted the limited uses to which proceeds will be applied. A copy of that memorandum is attached to this e-mail for your convenience.

The portfolio remains strong. We have a number of companies that no longer require support from Binary as they did in their earlier days. We also have a significant number of companies that are already profitable. We also have a portfolio company that has recently filed for an IPO on the HKSE. I am committed to ensuring the portfolio will be a driver of returns for you.

The news media reporting that all our entrepreneurs are looking to buy back their equity is utterly misleading. That is simply not true. I would be disappointed if you as a group believe that we have invested in entrepreneurs that would take advantage of such an unfortunate situation without knowing full facts to renegotiate and do a shakedown. I am aware of one single entrepreneur who has done this, and only 2 others who have asked to have a discussion regarding it.

I also want to remind everyone that we have always invested in great entrepreneurs, regardless of gender or race. We have 7 female led companies in a portfolio of 18. Far greater a number than the industry average. And there have been zero incidents of inappropriateness reported by any of them to me, and in contrast I have been constantly reminded of how positive the working relationship has been, barring some natural disagreements on business decisions.

We will continue in limited operations mode until the LPAC has confidence on next steps.

My plans for next steps are firstly to ensure a smooth transition away from the recent events, and to find a good partner or replacement to support making good decisions on behalf of you our investors, and the entrpreneurs who are working hard to build value that will ultimately benefit all of us.

I am also putting together a set of metrics we will use internally to measure the impact that our work has in encouraging equality of access both within the portfolio and at Binary itself. We will monitor these metrics and interate on them, and expect that when we do have a set of practices that can positively impact them, to publish them as findings on practical work that can be done. I do not plan to grandstand with public statements of a pledge or platitudinal suggestions driven out of reactionary dynamics to take advantage of the current press cycle. Sustainable change comes from understanding the real levers, which comes only from knowing what does actually work. And this needs to be measured to be discovered credible.



Trump administration backs Obama-led climate effort

Obama and Trump meet at the White House after Trump's election. Photo: Pablo Martinez Monsivais / AP

A career State Department official speaking at a conference Thursday on behalf of the Trump administration backed a climate policy then-President Obama pursued shortly before he left office.

The policy phases down powerful greenhouse gases found in a range of everyday appliances. This is the most explicit and public the Trump administration has been about supporting it.

The big picture: The conference, held this week in Montreal, is about a recent amendment to the Montreal Protocol, a global treaty created 30 years ago to fix the hole in the Earth's ozone layer, which is now it's achieving its goal. World leaders, led by the Obama administration, agreed in October 2016 to the Kigali amendment, which would phase down emissions of powerful greenhouse gases in refrigerants called hydrofluorocarbons (HFCs). HFCs are used in many appliances from air conditioners to refrigerators.

Quoted: "The United States believes the Kigali Amendment represents a pragmatic and balanced approach to phasing down the production and consumption of HFCs, and therefore we support the goals and approach of the Amendment," said Judith Garber, Principal Deputy Assistant Secretary of the State Department's Bureau of Oceans and International Environmental and Scientific Affairs.

What's next: Rhetorical backing for the amendment is one thing, but to have it actually take effect, the administration needs to send it over to the Senate so it can vote on its official ratification, as the Senate has done on other amendments and the original treaty 30 years ago. "There is no timeline currently determined for these steps, but we have initiated the process to consider U.S. ratification of the Amendment," Garber said.

Fast facts: The Montreal Protocol is a treaty about the ozone layer, but this latest amendment from Kigali represents an evolution to concerns about climate change. The 2015 Paris climate deal, which is a non-binding treaty that didn't require congressional input, is mostly about cutting other greenhouse gases from energy and land use. It's wholly separate from the Montreal Protocol.

Bottom line: Process matters a lot here. One of the biggest complaints of Trump administration officials about the Paris deal is that Obama circumvented Congress (because he knew he wouldn't get support from the GOP-controlled Senate). The Kigali amendment backers, which include chemical makers like Honeywell and Chemours, are emphasizing how this is a collaborative process with Congress and is about the Montreal Protocol, not climate change per se.

My thought bubble: If/when you see this process unfold further, don't expect congressional Republicans and the administration to focus at all about the climate change angle. It'll be all about collaboration and protecting the environment and creating business opportunities for industry.

Go deeper:

  • Read my two Harder Line columns on this topic: Why industry is backing the policy, and how your air conditioner is caught up in all this.
  • The amendment is set to go into force (for those that have officially signed onto it) in January 2019, thanks to Sweden just recently signing on and meeting the ratification threshold, per the NYT.

A new bird species is seen emerging in real-time

A medium ground finch, one of the two Galapagos finches that led to the new lineage.

Photo: Uwe-Bergwitz / iStock

Scientists have directly documented a new species evolving in the wild for the first time, according to the BBC. Fittingly, the event was seen in Galapagos Island finches, the same group of birds that helped Darwin solidify his theory of evolution. The research, published Thursday in the journal Science, started in 1981, when a single male from a different finch species came to the tiny island of Daphne Major.

Why it matters: This is the first time the formation of a new species has been observed in real-time in the wild. More than that, it shows how just a single individual can breed with one from another species, leading to the creation of a new species.

For several decades, scientists have been meticulously documenting minute changes in different finch species on the Galapagos Islands, an archipelago that's been referred to as a "natural laboratory for evolution."

How it started: The initial hybridization event happened in 1981 on the Galapagos island of Daphne Major, where evolutionary biologists Peter and Rosemary Grant conducted most of their research. They studied the group so closely that they noticed when a male large cactus finch, native to a different island 65 miles away, arrived on the island and began breeding with a local population.

What happened: Native females didn't recognize the songs of the new hybrid males, so instead of breeding with the local population as expected, the hybrids bred within their population. This paper shows that after just two generations, they stopped breeding with other populations and have remained reproductively isolated ever since.

Taking off: "In most cases, the offspring of cross-species matings are poorly adapted to their environment," writes Rory Galloway for the BBC. But the large size of these hybrids has allowed them to exploit resources the native birds weren't using, so the birds have flourished.

Go deeper: It just so happens that Darwin's personally annotated copy of The Origin of Species is up for auction. The Guardian has the story.


Swedish power plant burning H&M clothes instead of coal

Frenzied customers grab clothes, shortly after H&M opened a new store in Los Angeles. Photo: Damian Dovarganes / AP

A Swedish power plant is burning H&M clothing as a way to move closer to becoming "a fossil-fuel free facility by 2020," according to Bloomberg.

Why it matters: Per Bloomberg, Sweden runs on "an almost entirely emission free-power system," and moving plants to burning only trash and biofuels will hopefully "edge out the last of its fossil fuel units."

  • Head of Communications for H&M in Sweden, Johanna Dahl, told Bloomberg: "H&M does not burn any clothes that are safe to use...However it is our legal obligation to make sure that clothes that contain mold or do not comply with our strict restriction on chemicals are destroyed."
  • The Swedish plant has reportedly burned 15 tons of H&M clothing in 2017 thus far.

More young people are becoming farmers

Photo: LM Otero / AP

"For only the second time in the last century, the number of farmers under 35 years old is increasing, according to the U.S. Department of Agriculture's latest Census of Agriculture," the WashPost's Caitlin Downey reports in a front-pager with the lovely headline, "A growing movement":

  • 69% of the surveyed young farmers had college degrees — significantly higher than the general population.
  • Why it matters: "This new generation can't hope to replace the numbers that farming is losing to age. But it is already contributing to the growth of the local-food movement and could help preserve the place of midsize farms in the rural landscape."
  • Where it's happening: "In some states, such as California, Nebraska and South Dakota, the number of beginning farmers has grown by 20 percent or more."
  • The millennials are "far more likely than the general farming population to grow organically, limit pesticide and fertilizer use, diversify their crops or animals, and be deeply involved in... farmers markets."

Uber's data breach cover-up could be the last straw for some riders

Photo: Richard Vogel / AP

Uber's "latest misbehavior involving a data breach cover-up revealed this week could be the impetus for people to ride elsewhere," according to AP's Tom Krisher in Detroit and tech writer Barbara Ortutay:

  • "[R]iders have fled from the service before, but enough have stayed because of the Uber's convenience."
  • "[T]his week the state of Colorado fined Uber $8.9 million for allowing employees with serious criminal or motor vehicle offenses to drive for the company. Then came the stolen data, which has touched off more government inquiries."
  • Why it matters: Polling by Brand Keys Inc., a New York-based customer research firm, "found that in 2015 Lyft passed Uber as the most trusted of ride-hailing brands, and trust in Uber has been eroding ever since."

How Trump risked a key intel relationship

Trump meets with Russian Foreign Minister Lavrov, left, and Russian Ambassador Kislyak at the White House in May. Photo: Russian Foreign Ministry Photo via AP

Astonishing reporting from Vanity Fair's The Hive, by Howard Blum ... "What Trump ... told Kisylak after Comey was canned ... During a May 10 meeting in the Oval Office, the president betrayed his intelligence community by leaking the content of a classified, and highly sensitive, Israeli intelligence operation to two high-ranking Russian envoys, Sergey Kislyak and Sergey Lavrov":

  • Israeli spies and counterterrorism forces had discovered that "ISIS terrorists were working on transforming laptop computers into bombs that could pass undetected through airport security." That led to new U.S. and British restrictions on flights from abroad.
  • "[T]he Israeli mission was praised by [the American espionage community] as a casebook example of a valued ally's hard-won field intelligence being put to good, arguably even lifesaving, use."
  • "Yet this triumph would be overshadowed ... when ... Trump revealed details about the classified mission" to the Russian officials in the Oval.
  • Why it matters: "[F]resh blood was spilled in [Trump's] long-running combative relationship with the nation's clandestine services. Israel ... would rethink its willingness to share raw intelligence, and pretty much the entire Free World was left shaking its collective head in bewilderment."
  • Listen in.

P.S. Paul Manafort took at least 138 trips to Ukraine between 2004 and 2015 while consulting for Russian and pro-Russian oligarchs, McClatchy'sPeter Stone and Greg Gordon report:

  • "As the GOP platform committee drew up party positions a week before the Republican National Convention, a plank calling for the United States to provide 'lethal weapons' for Ukraine's defense was altered in a controversial and mysterious move."
  • An "American consultant in Ukraine said that Manafort ... had boasted he played a role in easing the language."
  • "Charlie Black, a onetime partner of Manafort's, says he remains baffled by the change. 'It was inexplicable to me that a majority of platform members would have taken a pro-Russian position on Ukraine.'"

More than 620,000 Rohingya Muslims have fled Myanmar

Photo: Bernat Armangue / AP

This aerial photo shows the Kutupalong Rohingya refugee camp in Bangladesh, housing Rohingya Muslims who fled across the border to escape violence. More than 620,000 Rohingya have fled from Myanmar into Bangladesh since Aug. 25, when the army began what it called "clearance operations" following an attack on police posts by a group of Rohingya insurgents.

Go deeper: The big picture on the crisis


Black Friday sales expected to grow due to healthy economy

Antsy shoppers wait for a Best Buy to open on Thanksgiving in Overland Park, Kansas. Photo: Charlie Riedel / AP

"With the jobless rate at a 17-year-low of 4.1% and consumer confidence stronger than a year ago, analysts project healthy sales increases ... The National Retail Federation ... expects sales ... to at least match last year's rise of 3.6% and estimates online spending and other non-store sales will rise 11 to 15%," per AP.

  • "Black Friday has morphed from a single day ... into a whole season of deals, so shoppers may feel less need to be out."
  • Stunning stat: "Analysts at Bain say Amazon is expected to take half of the holiday season's sales growth."
  • AP reports that Hatchimals are hot:

Franken apologizes over latest claims, cites "warm" personality

Al Franken at The BookExpo2017 in New York City. Photo: Dennis Van Tine/STAR MAX/IPx

Democratic Sen. Al Franken has issued a statement about the latest allegations that he groped women while posing for photographs, saying he has taken "thousands of photographs" and is a "warm person," but acknowledging he "crossed a line for some women." He says he is sorry he made "some women feel badly."

Why it matters: Franken is in survival mode after four allegations of unwanted contact, and facing an Ethics investigation and some calls to resign. He's walking a tightrope here, not denying the individual accusations while portraying them as rare missteps resulting from his "warm" personality, rather than a pattern of creepy behavior. He says he plans to win back the "trust" of his constituents.

Full statement

"I've met tens of thousands of people and taken thousands of photographs, often in crowded and chaotic situations. I'm a warm person; I hug people. I've learned from recent stories that in some of those encounters, I crossed a line for some women — and I know that any number is too many. Some women have found my greetings or embraces for a hug or photo inappropriate, and I respect their feelings about that.

"I've thought a lot in recent days about how that could happen, and recognize that I need to be much more careful and sensitive in these situations. I feel terribly that I've made some women feel badly and for that I am so sorry, and I want to make sure that never happens again. And let me say again to Minnesotans that I'm sorry for putting them through this and I'm committed to regaining their trust."


Trump's morning tweets: NFL protests, Middle East "mess" and golf

President Trump took to Twitter early on the Friday after Thanksgiving:

Worth noting: This White House treats golf as a clandestine operation, never saying whether or not Trump is actually playing, so this is a rare bit of candor.