A venture capitalist who helped his company make $1 billion off Uber based on a single $26 million investment from 2011 still has regrets about some recent developments at the startup. In a Monday interview with The Information, Menlo Ventures partner Shawn Carolan explained that he now believes investors should have approached the ride-hailing firm differently and made sure it has much more corporate governance than it did over the troubled period leading up to the resignation of co-founder Travis Kalanick from the position of Chief Executive Officer.
"We were forgiving," Mr. Carolan said of investors' approach to Mr. Kalanick's loose management style that prioritized aggressive growth above everything else. The strategy saw the company burn through billions of dollars while still seeing its valuation skyrocket, having reached what's still considered its peak in 2015 when Uber was said to be worth $68.5 billion, thus earning the title of the world's most valuable startup. In the years that followed, the firm was drawn into a wide variety of scandals involving federal lawsuits, accusations of nurturing a predatory working environment hostile to women, and trade secret theft allegations made by Alphabet's Waymo which ended up costing Uber $245 million. "I had never experienced anything like Uber's situation before," Mr. Carolan told The Information, referring to how investors were too lax toward the company's missteps because its overall growth had them hopeful of massive payoffs which they ultimately ended receiving after SoftBank approached the firm and ended up conducting the largest private stock purchase in the history of trading early this year valued at over $9 billion.
The $1 billion Menlo Ventures ended up receiving from SoftBank accounted for only half of the Uber stake remaining from the 2011 investment, with the company already breaking even on the move in 2014 after it sold $200 million worth of shares as part of an earlier funding round. Mr. Carolan is now looking to apply the lessons learned from the Uber episode to the firm's other investments, with one of them being Roku that's now also said to be in a position to generate a $1 billion return for Menlo Ventures based on a $16 million round. Uber itself is still in a transitional period under the new leadership of Dara Khosrowshahi, with the company facing its last obstacle just yesterday after one of its self-driving vehicles ended up being involved in the world's first autonomous car accident with a pedestrian fatality, prompting it to halt all of its driverless tech testing in the United States.