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

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.



Scaramucci goes full Breitbart

Breitbart / YouTube

Anthony Scaramucci gave his first interview as White House communications director to Breitbart's Matt Boyle. The two sounded like old friends, with Scaramucci kicking off the Saturday morning Breitbart radio interview by jokingly asking Boyle, "Did you send your job application form in yet, Matt?...Do you need my email so I can get your resume over here?"

Boyle laughed and replied: "Anthony, I'm honored, maybe we can talk about that later." Scaramucci praised Breitbart for capturing "the spirit of what is actually going on in the country, where there's a large group of people...who've been disaffected from the economic franchise."

FWIW: I asked Boyle whether he'd seriously consider a job in the White House press shop and he declined to comment.

Between the lines: Sean Spicer had a terrible relationship with Breitbart, the right-wing outlet whose alumni, including Steve Bannon, now work in the White House. Scaramucci now appears to want to elevate the outlet in general, and Boyle in particular. By giving Boyle (Breitbart's most unrestrained attack dog) such prominence from the outset, Scaramucci is signaling that the President wants to make better use of conservative/friendly media outlets to transmit his messages without a critical filter.

Interview highlights:

  • Breitbart First: Scaramucci told Boyle that he and the President talked Friday about the fact that there are "enough outlets, whether it's Breitbart, the President's social media feed, all of the different apparatus that we have where people will allow us to deliver our message to the American people unfiltered."
  • Fresh start: Scaramucci also called his appointment a "fresh start" and said he wanted to see if he could "de-escalate" tensions with mainstream media outlets.
  • Bonding over "fake news": At the end of the interview Boyle asked Scaramucci how he planned to "combat" the "fake news" given he was a "victim of fake news" recently on CNN. Boyle was referring to CNN's recent retraction of a story about Scaramucci, which resulted in CNN management firing three employees. Boyle wrote more than a dozen pieces bashing CNN during that period. Scaramucci said to Boyle: "You've also been a great help in terms of exposure and I do appreciate what you did for me during that incident...I want to thank you publicly in front of your listeners."

Inside the White House "rival gangs"

Mark Von Holden/Invision via AP

On this week's episode of The New Yorker Radio Hour, Editor David Remnick talks with the N.Y. Times' Maggie Haberman (transcript here):

  • On the White House atmosphere: "We're used to a team of rivals. We are not used to a team of the Bloods and the Crips. ... [T]hese are rival gangs. ... I need to add in some new gang names, too, because Bloods and the Crips makes it sound like there are only two teams. There's something like six."
  • On Trump's mental state: "I think that he has an amazing belief in his own ability to will what he thinks into reality. And I think that he thinks of reality as something that is subjective. So I think that what people characterize as 'he's out of touch' or 'he's not understating this' or 'he seems off,' or whatever — I think he has an amazing capacity to try to draw the world as he wants it."
  • How Trump really feels about the press: "I think that he loves the press. I think he lives, at least loosely, by the theory that, if not all press is good press, that most press is good press. I think you find the press has been his nurturer and validator for thirty to forty years."
  • "This is a person who courted the tabloids aggressively in New York City in the nineteen-eighties. He found a way to make himself a commodity for the gossip pages and play the tabloids off each other. He likes attention, and he likes media. He loves to manipulate the media. He's a master at it."

Spicer: resigning was "the right thing to do"

Alex Brandon / AP

After his sudden resignation yesterday, former press secretary Sean Spicer sat down for an interview with Fox News' Sean Hannity. The one exchange you need to know:

HANNITY: Have you been thinking about this for a while?


HANNITY: So it was really sudden?

SPICER: Well, I knew what the right thing to do is. I think I have a pretty good compass, and I made a decision that it was in the best interest not of just myself, but ... for the President and for this administration, was to step aside and let Anthony and Sarah lead the team.


Trump finds a new favorite member among divided WH

Laurent Gillieron / Keystone via AP

The day's stunning dominoes ("Abrupt chain reaction for Trump" is the five-column head in the WashPost):

  • Trump, backed by Jared Kushner and Ivanka Trump, settles on "Mooch" to head comms, largely because he likes the financier's feistiness defending POTUS on cable.
  • Trump doesn't consult his senior aides. They flip out, both because of personal grievances with Mooch, and their belief that heading White House comms requires Washington skills and experience. Some staff learns about the move when Axios' Jonathan Swan pops the story Thursday night.
  • In a 10 a.m. meeting, chief of staff Reince Priebus, chief strategist Steve Bannon and press secretary Sean Spicer object vehemently. Trump ignores them.

  • Spicer quits ("the last straw," a source close to Spicer told me), drawing applause when he graciously tells his staff he wants Scaramucci to have a clean slate.
  • Scaramucci goes to the podium in the White House briefing room and announces that Sarah Huckabee Sanders (daughter of Mike Huckabee), who has been Spicer's top deputy, will be press secretary.
  • Asked by ABC's Jon Karl about the time on Fox Business in 2015 that he called Trump "another hack politician," Scaramucci parries: "[H]e brings it up every 15 seconds, OK? (LAUGHTER) ... So, Mr. President, if you're listening, I personally apologize for the 50th time for saying that."

Phew. As Spicer told Fox's Sean Hannity last night (not as a quip, but as part of an argument about working tirelessly to advance Trump's agenda): "We had a very successful Made in America week this week, garnering over millions of impressions."

Some atmospherics from all-terrain Jonathan Swan:

  • Trump thought Mooch killed it. He was pumped about it.
  • Very bipolar West Wing. Source tells me Reince's people seemed "kind of freaked" about what happened. And certainly in the dark.
  • They were trying to spin the new narrative that Reince and Anthony are BFFs and that Reince was "100%" supportive of Trump making Mooch comms director. The President would laugh if you told him that.
  • Jared, Ivanka and Hope Hicks were all pushing for Mooch and very happy with it.
  • Bannon went in hard, lost badly but seemed to have moved on very quickly. Doesn't want to dwell on it.
  • What we're watching: Will Mooch add to the team, and possibly some unexpected names from outside of politics?

What Trump's tweeting after a week of WH leaks

Pablo Martinez Monsivais / AP

President Trump knows how to use Twitter to his advantage, particularly when he wants to control the news narrative. After Press Secretary Sean Spicer abruptly resigned yesterday following Anthony Scaramucci's appointment as communications director, the news about the White House only got worse.

The Washington Post dropped a late-evening story claiming Attorney General Jeff Sessions — who Trump had dismissed earlier in the week, saying he wouldn't have hired Sessions if he had know he'd recuse himself from the Russia investigation — had discussed campaign-related issues with Russian Foreign Minister Sergei Kislyak during the 2016 election. Later, reports surfaced that the House Intelligence Committee (in addition to the Senate Intelligence Committee) is now inviting Jared Kushner to testify on Tuesday regarding the Russia probes. And, new reports detailed Kushner had failed to disclose more than 70 assets in his security clearance forms and that Ivanka Trump is benefiting financially while she serves in the administration.

Here's what President Trump has decided to focus on this morning:

  • "ObamaCare is dead and the Democrats are obstructionists, no ideas or votes, only obstruction. It is solely up to the 52 Republican Senators!"
  • "The Republican Senators must step up to the plate and, after 7 years, vote to Repeal and Replace. Next, Tax Reform and Infrastructure. WIN!"
  • "In all fairness to Anthony Scaramucci, he wanted to endorse me 1st, before the Republican Primaries started, but didn't think I was running!
  • "My son Donald openly gave his e-mails to the media & authorities whereas Crooked Hillary Clinton deleted (& acid washed) her 33,000 e-mails!"
  • So many people are asking why isn't the A.G. or Special Council looking at the many Hillary Clinton or Comey crimes. 33,000 e-mails deleted? ... What about all of the Clinton ties to Russia, including Podesta Company, Uranium deal, Russian Reset, big dollar speeches etc."
  • "While all agree the U. S. President has the complete power to pardon, why think of that when only crime so far is LEAKS against us.FAKE NEWS."
  • "This morning I will be going to the Commissioning Ceremony for the largest aircraft carrier in the world, The Gerald R. Ford. Norfolk, Va."
  • "The Failing New York Times foiled U.S. attempt to kill the single most wanted terrorist,Al-Baghdadi.Their sick agenda over National Security."
  • "A new INTELLIGENCE LEAK from the Amazon Washington Post,this time against A.G. Jeff Sessions.These illegal leaks, like Comey's, must stop!"

Dems want to rebrand as the economic party

Senate and House Dems, after an intensive process spanning seven months, on Monday will unveil a new economic agenda, Axios has exclusively learned, meant to counter the perception that Democrats are only the anti-Trump party, with no message of their own.

Top Dems see the new message as the key to turning things around after their losses in the presidential race and this year's House special elections.

An opening theme/frame: "excessive corporate power and its impacts."

Pollster Geoff Garin writes in a memo kicking off the project: "[T]he Democratic policies related to curbing excessive corporate power that are being highlighted in the first day of the rollout have real resonance with voters and are strongly supported by a significant majority of Americans."

The agenda's big idea: "Too many families in America today feel that the rules of the economy are rigged against them. Special interests have a strangle-hold on Washington — from the super-rich spending unlimited amounts of secret money to influence our elections, to the huge loopholes in our tax code that help corporations avoid paying taxes."

"If the government goes back to putting working families first, ahead of special interests, we can achieve a better deal for the American people that will raise their pay, lower their expenses, and prepare them for the future."

See Garin's two-page memo.


Jared Kushner to testify before House Intelligence Committee

Susan Walsh / AP

Jared Kushner's testimonies about his potential ties to Russian officials just increased: he will now testify before the House Intelligence Committee on Tuesday, July 25, the committee announced last night. And Kushner's lawyer confirmed to ABC News that he will cooperate with their request for questioning.

This comes just days after news broke that Kushner (along with Donald Trump Jr. and Paul Manafort) were asked to testify in front of the Senate Intelligence Committee next week. Kushner's Senate hearing is on Monday.

Why this matters: Kushner is the first member of Trump's inner circle to face questioning in the ongoing Russia probes, and the additional testimony suggests both committees have questions about a number of things — his failure to disclose the June 9 Trump Jr. meeting, as well as issues with his security clearance forms (his revisions to them have retroactively revealed contacts with more than 100 people tied to foreign governments).


The companies that dominate Chinese internet

While companies like Google, Amazon and Facebook are favored by most of the world, they are blocked in China. There, the titans of the internet are Alibaba and Tencent. Below are some of the most popular social platforms in China and their U.S. equivalent.


  • U.S. equivalent: Facebook Messenger
  • Parent Company: Tencent — one of the two major companies in China.
  • # of users: 938 million (compared to 2 billion for Facebook)
  • Details: WeChat is the most popular messaging app in China, similar to iMessage, Facebook Messenger or WhatsApp.



  • U.S. equivalent: Google
  • Parent company: Baidu
  • # of users: 665 million active mobile users last December
  • Details: Baidu was the first Chinese company to be included in the NASDAQ-100 index. Microsoft is currently teaming up with Baidu to work toward autonomous cars.


  • U.S. equivalent: Amazon, Walmart
  • Parent company: Alibaba
  • # of users: 454 million over all three properties —, Taobao and Aliexpress. (Amazon has 65 million users who have bought Prime memberships.)
  • Details: Alibaba, founded by Jack Ma, is the 6th largest retailer in the world and the only foreign retailer to make it into the top 10, according to Forbes. focuses on businesses, connecting suppliers and buyers all over the world, while the company also owns online shopping companies Taobao and Aliexpress which oversees purchases by public consumers.


  • U.S. equivalent: Amazon, Ebay
  • Parent company: Alibaba
  • Stats: 40 categories of goods, buyers and seller send 100,000 messages on a daily basis.
  • Details: Taobao was founded 4 years after is a consumer-to-consumer retail website, similar to Ebay or Craigslist.


  • U.S. equivalent: Amazon
  • Parent company: Alibaba
  • # of users: 100 million in 2013
  • Details: Tmall allows brands to sell their products to consumers online and is the most popular B2C business in China.


Report: Sessions talked Trump campaign matters with Russian ambassador

Susan Walsh / AP

Jeff Sessions discussed campaign-related matters with Russian Ambassador Sergei Kislyak during the 2016 U.S. presidential campaign, including policy issues important to the Russian government and the potential relationship between the Russian government and a Trump administration, according to current and former U.S. officials, The Washington Post reports.

The evidence: This report is based on U.S. intelligence intercepts of Kislyak's accounts of two conversations with Sessions, who was a foreign policy advisor to Trump at the time of the alleged conversations.

One big caveat: Russia is known to create false intelligence reports to sow confusion in the U.S., and Kislyak may have exaggerated his meetings.

One U.S. official said that when Sessions testified that he had no recollection of an April encounter with Kislyak, he was giving "misleading" statements "contradicted by other evidence."

  • Sessions in March when he recused himself from the Russia probe: "I never had meetings with Russian operatives or Russian intermediaries about the Trump campaign."
Why it matters: Recent reports have shown that Trump is irritated with Sessions for recusing himself from the probe in the first place.

Some parts of GOP health bill violate Senate rules

Andrew Harnik / AP

The Senate parliamentarian ruled Friday that some parts of the Senate health care bill do not comply with budget rules, meaning that if they're included in the bill, they'll need 60 votes to pass. (They won't get 60 votes.)

The biggest provisions that will have to come out if the Senate follows past precedent: Planned Parenthood defunding, abortion funding restrictions, and funding for insurer cost-sharing payments. However, one of the most controversial amendments of the bill, Sen. Ted Cruz's Consumer Freedom Act, wasn't included in her ruling, as it only addressed an earlier version of the bill that didn't include it.

The big things she said don't comply:

  • The provision barring Planned Parenthood from receiving Medicaid funding for a year
  • The language preventing premium tax credits from being used for plans that cover abortion
  • Funding for insurer subsidies, known as cost-sharing reduction subsidies
  • The six-month waiting period for the individual market for people who haven't maintained continuous coverage
What's still under review:
  • Enhanced waivers for some Affordable Care Act regulations
  • A provision allowing small businesses to establish association health plans
  • The provision allowing insurers to charge older people more than younger people compared to the ACA
  • The option for states to receive a block grant instead of a per-person funding cap