Uber’s Travis Kalanick Plumbs New Depths As Silicon Valley’s Biggest “Jerk”

Even in the early golden years of Silicon Valley, there were “Silicon Valley Jerks,” and unpleasant corporate cultures.  Larry Ellison and Oracle are the first to come to mind. Oracle was known as a very hostile, unpleasant place to work and there was a revolving door of senior executives who were fired by Ellison or who resigned. Microsoft has always been known as something of a “sweatshop,” with an excessively competitive and hostile culture, which may finally be changing with the new CEO, though his comment about women and promotions caused a flap.  We now know about the “Bad Steve” Jobs, though Apple has not had the kind of negative reputation of some of the other companies.  The late Jeanette Symons of Ascend Communications was notorious for her anti-social behaviour but also founded one of the most successful Internet infrastructure companies in history.  Even Intel, which has been generally regarded as a very positive corporate culture has had its share of “jerks.”  Former Intel VP Jack Carsten had the perverse reputation for being the catalyst for numerous resignations from Intel, and new startup companies that resulted.

But those examples pale in comparison to the current crop of new Silicon Valley entrepreneurs.  Travis Kalanick, CEO of Uber has transformed himself into the poster child for this problem. What is most disturbing, perhaps for Uber’s investors, is a stunning lack of attention to the perceptions around Uber’s brand image. Last week, Buzzfeed broke the story of an Uber senior executive who apparently planned a smear campaign against journalists, in particular, Sarah Lacy of PandoDaily.  The exec spoke of internal Uber meta data known as “Godview” that would be used, which raised questions about personal data privacy, and has now led to a formal inquiry from U.S. Senator Al Franken.  SFGate, the Web arm of the San Francisco Chronicle has also posted an article posing questions about Uber’s employment and “partnership” arrangements with drivers.  Kalanick may now have a headache, but he is not alone.  Who can forget venture capitalist Tom Perkin’s statement that the treatment of the rich in the United States was like the persecution of the Jews by Nazi Germany? The infighting among founders at Twitter has been an ugly airing of dirty laundry, and the ostentatious “nouveau riche” behaviour of others has caused ripples of resentment though the Valley and San Francisco.  Much of the criticism seems to center on the venture capitalists who have encouraged these personality types, but in fairness there are venture capitalists who are as appalled as everyone else, and refuse to invest in arrogant “God’s gift” personalities. I have also written two earlier blog posts about this problem, from my own personal perspective, having survived one of Silicon Valley’s jerks.  Links to my two previous posts are shown below.

From SFGate, via Business Insider, Saturday November 23rd, 2014, by Alyson Shontell

There’s a notion that some people become successful company founders because they have the right “Startup DNA.”

The DNA is comprised of characteristics like “resilience” and “ability to accept risk.”

Another characteristic many top entrepreneurs share is arrogance. Or worse, just being a huge jerk.

While reporting a long profile of Travis Kalanick last winter, Business Insider found a lot of people who thought Kalanick was a legendary CEO.

Friends compared him to Steve Jobs and Larry Ellison.

But some who were in awe of Kalanick also said he was a jerk.

“Sometimes,” one acquaintance said of Kalanick, “–holes create great businesses.”

Inside Silicon Valley, arrogance runs rampant and investors seem to reward ruthless behavior with piles of cash.

There are numerous examples of founders who have had moments of terrible behavior that later became infamous. The founders might not be jerks all the time, of course. Everyone has moments when they behave boorishly. But sometimes the stories are so unbelievable, it can leave a lasting negative impressive of the person — that whether criticism is deserved or not.

For instance, Mark Zuckerberg, who is now worth tens of billions, famously ousted his friend Eduardo Saverin from Facebook. He also stole his business idea from the Winklevoss twins. “Yah, I’m going to f– them,” he told a friend over IM about the pair. “Probably in the ear.”

Snapchat CEO Evan Spiegel wrote a number of misogynistic-sounding emails when he was in college to his fraternity brothers. Once, Spiegel was so angry with his parents, he reportedly cut himself out of family photos.

Twitter’s co-founders back-stabbed each other repeatedly: Founder Noah Glass was booted out of the company. Ev Williams and Jack Dorsey were both given, and then stripped of, the CEO title. And Jeff Bezos, who runs Amazon, wreaks havoc in his organization by sending a single-character email: “?”

Even Steve Jobs, one of the world’s most-praised entrepreneurs, was said to have two sides. Jobs’ biographer, Walter Isaacson, portrayed the late Apple CEO as “Good Steve” and “Bad Steve.” An example: Jobs once stormed into a meeting and called everyone “f–ing dickless –holes.”

Robert Sutton spent a lot of time conducting research for his book, “No –hole Rule: Building a Civilized Workplace and Surviving One that Isn’t,” What he found was disappointing.

“Even people who worked with Jobs told me that they’d seen him make people cry many times, but that 80 percent of the time he was right, ” Sutton said. “It is troubling that there’s this notion in our culture that if you’re a winner, it’s okay to be an –hole.”

It is troubling that there’s this notion in our culture that if you’re a winner, it’s okay to be an –hole.

The Atlantic’s Tom McNichol agrees. He wrote an article titled: “Be a Jerk: The Worst Business Lesson from the Steve Jobs biography.”

Here’s an excerpt:

The ease with which people can possess astonishingly contradictory qualities is one of the mysteries of human nature; indeed, it’s one of the things that separates humans from, say, an Apple computer. Every one of the components that makes up an iPad is essential to the work it produces. Remove one part and the machine no longer performs its job, and not even the Genius Bar can fix it. But humans are full of qualities that are in no way integral to their functioning in the world. Some aspects of personality have little or no bearing on whether a person performs well, and not a few people succeed in spite of their darker qualities.

So, is it possible to be nice and to be wildly successful in business? And in Silicon Valley, where people praise Steve Jobs’ bad habits and founders rag on the homeless, can you be financially rewarded if you’re nice?

One venture capitalist whose firm implemented a “no –holes policy” passed on an investment in Uber. This person said Kalanick didn’t click with any of the partners and that he acted like he was “God’s gift.”

Other investors struggle with the decision to invest in personalities over returns.

“I want not to invest in jerks,” says former Silicon Valley investor, Eileen Burbidge. Burbidge is now a VC at London’s Passion Capital, which has invested in startups like Lulu and Go Cardless.  “Personally I believe life is too short. [But] I have wondered if this is actually a bad philosophy as an investor. I’d like to think not but I’m supposed to back founders for the best ROI, not personality.”

I want not to invest in jerks …But I have wondered if this is actually a bad philosophy as an investor. I’m supposed to back founders for the best ROI.

Mark Suster, a Los Angeles-based investor, also isn’t sure what to make of jerks in business. He lists “integrity” as a bonus characteristic when it comes to top entrepreneurs’ DNA.

“I believe that integrity and honesty are very important to most venture capital investors,” he wrote on his blog, Both Sides of the Table. ” Unfortunately, I don’t believe that they are required to make a lot of money.”

Many agree that being an overly aggressive entrepreneur tends to pan out.

“As much as [Travis] is inspirational, he is controversial,” a former colleague of Kalanick’s said. “If he were less brash, I don’t think he would get half as far as he did.”

Adds another Kalanick acquaintance: “There is absolutely no way [Uber] would have gotten where it is without Travis and his arrogance. Not without him being like, ‘I’m going to take over the world.’ He has the Steve Jobs mentality that ‘It’s my way or the highway.'”

One person who firmly believes you can be nice and succeed is Paul Graham. He runs top startup accelerator Y Combinator and he’s made Sutton’s “no –hole” rule popular in tech. He has backed billion-dollar startups such as Dropbox and Airbnb.

Graham says well-known founders like Jobs and Bezos can’t be judged by their terror tales. “Famous founders who seem to be –holes might not be,” Graham told Business Insider via email. “I’m not saying they are or they aren’t, just that it is extremely hard to tell what a famous person is really like. You can’t judge them based on anecdotal evidence, which is all you ever have.”

Graham chooses not to invest in jerks because he doesn’t want to be around them. Investors and founders end up spending a lot of time together. Getting rid of one or the other can be more difficult than getting a divorce from a spouse.

“The reason we tried not to invest in jerks initially was sheer self-indulgence,” says Graham. “We were going to have to spend a lot of time with whoever we funded, and we didn’t want to have to spend time with people we couldn’t stand. Later we realized it had been a clever move to filter out jerks, because it made the alumni network really tight. We’ve funded over 630 startups now, and when founders of different startups meet there is an automatic level of trust and willingness to help one another. Much more than alumni of the same college for example.”

His take: Be nice and you can find success.

“It’s certainly possible to build a multi-billion dollar startup without being a jerk,” Graham says. “We’ve funded several, and the founders are all good people.  In fact, based on what I’ve seen so far, the good people have the advantage over the jerks. Probably because to get really big, a company has to have a sense of mission, and the good people are more likely to have an authentic one, rather than just being motivated by money or power.”

What are the historical shrines of Silicon Valley?

The answers to this question make a great tour of Silicon Valley history. I added my own answer: the historic bronze plaque commemorating Bob Noyce’s invention of the integrated circuit. It is outside the front of the old Fairchild Semiconductor building, at the corner of Ararstradero Road and Charleston Road, and is almost completely forgotten. Probably the most important invention in our generation. Like so much of Silicon Valley, it is very difficult to easily visit the most important sites or get any sense of their significance. But this list is very good.

The historical significance of some of these places will be instantly obvious, others less so. They are all important, so it’s your homework assignment.

i.e. the places of great historical significance to the technology industry … HP Garage, Googleplex, Shockley Semiconductor office, etc.

The Top 20 to my mindonScaruffi’s list include these (using his words here):

1. Stanford’s building 50, where the Physics Dept was (1891),
   next to the Memorial Church in the “quadrangle”
2. Stanford’s “Engineering Corner”, where Fred
   Terman used to work (1902)
   
3. The site where in 1909 Charles Herrold established the
   first radio broadcasting station in the world: Fairmont Tower, 50 W. San
   Fernando St & First St, San Jose
4. The site of the laboratory and factory of Federal
   Telegraph Company (1911), where Lee de Forest worked: 913 Emerson St &
   Channing Ave, Palo Alto
5. Philo Farnsworth’s laboratory (1927), where television was
   invented: 202 Green Street & Sansome, San Francisco
6. Fisher Research Laboratories (1931) was based in this
   house: 1505 Byron St, Palo Alto
   
7. Hewlett-Packard’s garage (1937), where William Hewlett and
   David Packard started their business: 367 Addison Avenue, Palo Alto
8. U.C. Berkeley campus and Lawrence Berkeley National Lab
9. The location of Hewlett-Packard’s first building (1942):
   395 Page Mill Road, Palo Alto
10. Ampex’s original building (1944): 1313 Laurel St., San
    Carlos
11. The street where Varian (1948) was started: Washington St,
    San Carlos
12. IBM’s Western Lab (1952), where the Random Access Method
    of Accounting and Control (RAMAC) was built: 99 Notre Dame Street, San Jose
13. Shockley’s Laboratory (1956): 391 San Antonio Road,
    Mountain View
14. NASA Ames (1958): Moffett Blvd./NASA Parkway, Mountain
    View
15. Fairchild (1959), the site where Robert Noyce and others
    co-invented the integrated circuit: 844 E Charleston Rd, Palo Alto
16. The building that became the corporate headquarters when
    HP moved to the Stanford Industrial Park (1960) and then HP Labs (1966): 1501
    Page Mill Road, Palo Alto
17. Venture capital’s headquarters in Menlo Park (1969): 3000
    Sand Hill Rd, Menlo Park
18. Kleiner Perkins Caufield Byers, where Genentech’s first
    office (1975) was located and where countless start-ups were funded: 2750 Sand
    Hill Road, Menlo Park
19. Xerox PARC (1970): 3333 Coyote Hill Road, Palo Alto
20. Four Phase Systems, which started out in a former
    dentist’s office (1969): 991 Commercial St, Palo Alto

View Question on Quora

Tom Perkins of KPCB, Another Silicon Valley Jerk. Where Have We Gone So Wrong?

This weekend, the media and blogosphere have been ignited with reaction to the open letter to the Wall Street Journal by venture capitalist Tom Perkins, founder of Kleiner Perkins Caufield & Byers, and the blowback from Atlantic Magazine writer Jordan Weissmann. The overwhelming reaction has been disbelief and outrage at Perkins comments.

I am so angry and sad to see this article and interview of legendary Silicon Valley venture capitalist, Tom Perkins. It is further evidence to my earlier post on the “Silicon Valley Jerk Conundrum.”  Mr. Perkins and his firm, Kleiner, Perkins, Caufield & Byers, better known in the Valley as KPCB, have spawned some of the best and most famous companies in Silicon Valley. Former Intel colleagues, Jim Lally and John Doerr partnered there. Vinod Khosla, co-founder of Sun Microsystems made his mark there, and is now the leading clean tech VC in the Valley. But Mr. Perkin’s public claim in his interview with the Wall Street Journal that there is a “war” on the rich, which is like the Nazi’s extermination of the Jews, is just too much for any decent thinking person.  Where has Silicon Valley gone so terribly wrong as to create a plutocrat like this?  As the writer says, “This is the reductio ad absurdum of a rich-guy’s persecution complex. The Jews were a minority. The rich are a minority. Therefore, criticizing the rich is akin to committing genocide against the Jews.”

Read more: The Silicon Valley Jerk Conundrum

As a Silicon Valley veteran I am deeply ashamed of this man and his thinking.

Venture Capitalist Says “War” on the Rich Is Like Nazi Germany’s

War on the Jews

In a letter to the Wall Street Journal, Tom Perkins makes the worst historical analogy you will read for a long, long time.

JORDAN WEISSMANNJAN 25 2014, 12:34 PM ET

Venture capitalist Tom Perkins (Reuters) of Kleiner, Perkins, Caufield & Byers

Tom Perkins is known is a founder of one of Silicon Valley’s top venture capital firms,  Kleiner Perkins Caufield & Byers. He is not, however, a very adept historian.

In a letter to The Wall Street Journal, he suggests that progressives protesting income inequality are today’s equivalent of Nazi’s persecuting Jews.

Regarding your editorial “Censors on Campus” (Jan. 18): Writing from the epicenter of progressive thought, San Francisco, I would call attention to the parallels of fascist Nazi Germany to its war on its “one percent,” namely its Jews, to the progressive war on the American one percent, namely the “rich.”

From the Occupy movement to the demonization of the rich embedded in virtually every word of our local newspaper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent. There is outraged public reaction to the Google buses carrying technology workers from the city to the peninsula high-tech companies which employ them. We have outrage over the rising real-estate prices which these “techno geeks” can pay. We have, for example, libelous and cruel attacks in the Chronicle on our number-one celebrity, the author Danielle Steel, alleging that she is a “snob” despite the millions she has spent on our city’s homeless and mentally ill over the past decades.

This is a very dangerous drift in our American thinking. Kristallnacht was unthinkable in 1930; is its descendent “progressive” radicalism unthinkable now?

Kristallnacht was a rash of anti-Jewish riots that swept Germany, Austria, and the Sudetenland in 1938, in which ordinary Germans, with Nazi support, destroyed Jewish shops and burned synagogues. As the U.S. Holocaust Memorial Museum notes in its online encyclopedia:

As the pogrom spread, units of the SS and Gestapo (Secret State Police), following Heydrich’s instructions, arrested up to 30,000 Jewish males, and transferred most of them from local prisons to Dachau, Buchenwald, Sachsenhausen, and other concentration camps. Significantly, Kristallnacht marks the first instance in which the Nazi regime incarcerated Jews on a massive scale simply on the basis of their ethnicity.

This is the reductio ad absurdum of a rich-guy’s persecution complex. The Jews were a minority. The rich are a minority. Therefore, criticizing the rich is akin to committing genocide against the Jews. QED.

“Parking” : The Crucial Venture Capital Skill No One Wants to Talk About

John Doerr, Parking Attendant, Senior Partner at Kleiner Perkins Caufield Byers, and former Intel executive

What is parking?  It’s finding a good acquisition for a startup that didn’t do as well as you expected.

A local Okanagan company has recently been “parked,” with great fanfare as if it were a major success, but also to obfuscate the reality of the situation.  This reality needs to be openly discussed, but it is unlikely that it ever will be.  It is more important locally to loudly tout the company’s exit, primarily because there really has not been much else to celebrate here over the last few years.  Locally, there has also been naivete’ about multinational corporate investment in a local startup.. Nobody wants to talk much about that either, but the stark facts are there.

Canadian Business has just published an excellent story about Ryan Holmes and Hootsuite, BC’s most recent “gazelle” startup, and current wild speculation about a $1 Billion valuation for Hootsuite. More importantly, the CB article confronts the deeply imbedded challenges and problems with Canadian innovation, investment, and the hope that somehow Hootsuite might avoid the sorry long history of Canadian high tech companies.

Is HootSuite Canada’s Next Billion Dollar Tech Titan?

Ryan Holmes, CEO of Hootsuite

Read more: http://www.canadianbusiness.com/technology-news/is-hootsuite-canadas-next-tech-titan/

Venture capital is described as a “hits business” and that’s true enough: a few exits produces the majority of the returns. 80% of VC profits comes from 2% of deals, a top European VC told the Business Insider.  Others have told me the same story.

But that’s only part of the story. A rule of thumb is that to be considered a good performer, a VC fund has to return three times its capital. But in many a VC fund, while 2X will come from the big hits, the third piece w ill come from smaller “long tail” exits, which individually might not make a big difference to the fund, but when added up can make or break it.  It is classic “marginal cost” thinking.   Said another way, better to come as close as possible to breaking even than to go bust. 

So “parking well” is a very important VC skill. And it comes down to the VC to park a company that hasn’t been performing as well as expected, because most often they’re the ones who have the industry relationships and the M&A experience, not the entrepreneurs. Cisco Systems has historically been the parking place for many unsuccessful startups. More recently, Google has enthusiastically joined the party, and their “parking” acquisitions have been labeled “acqui-hires.”  For Google, it has been a simple calculation.  Acquiring the target company, and tying up the key employees with a variety of incentives, versus the cost of an external hiring campaign, bonuses, relocation, and perhaps most importantly, excessive delays which negatively impact the acquirer’s competitive advantage.

VCs don’t like to talk about parking because they’d much rather talk about helping startups grow into huge blockbusters than mitigating losses on underperforming investments.

And Kleiner Perkins is known in the industry for being great at parking.

In a talk at Stanford, when talking about how VCs need to be good at finding exits for their companies, straight-talking VC Mark Suster phrased it thus: “Are you Kleiner? Can you get $400 million for ngmoco when it probably wasn’t worth it?,” adding jokingly: “Oh, maybe it was worth it.”

The point here isn’t to diss mobile gaming company ngmoco (your writer enjoyed many wasted hours on Rolando, one of their hit games), but it pivoted several times in search of a business model and when the acquisition happened, many eyebrows were raised at both the price and the acquirer, DeNA, a big Japanese gaming company that had done practically no US acquisitions to date.

In the case of Pelago, it probably works out for everyone. Groupon gets a great team who understands mobile, one of its big growth areas. The entrepreneurs get pre-IPO stock options into one of the hottest companies on Earth, and maybe even some cold hard cash if they weren’t too diluted and/or didn’t have too harsh liquidation preferences. Kleiner gets a small but valuable notch on its belt and helps talented entrepreneurs get a good save, who probably won’t forget that the next time they go raise money.

Parking is crucial for VCs, and Kleiner shows how it’s done.

Read more: http://www.businessinsider.com/whrrl-pelago-kleiner-perkins-2011-4#ixzz2HYMLaQUe