Bad Blood

(Axel Boer) #1

In late October 2007, he attended a meeting of the board’s
compensation committee. Don Lucas, the board’s chairman, told the
committee members that Elizabeth planned to create a foundation for
tax-planning purposes and wanted the committee to approve a special
grant of stock to it. Avie had noticed how much Don doted on
Elizabeth. The old man treated her like a granddaughter. A portly
gentleman with white hair who liked to wear broad-brim hats, Don
was in his late seventies and was part of an older generation of venture
capitalists who approached venture investing as if it were a private
club. He’d mentored one famous entrepreneur in Larry Ellison. In
Elizabeth, he clearly thought he’d found another.


Except Avie didn’t think it was good corporate governance to do
what Elizabeth wanted. Since she would control the foundation, she
would also control the voting rights associated with the new stock,
which would increase her overall voting stake. Avie didn’t think it was
in other shareholders’ interest to give the founder more power. He
objected.


Two weeks later, he received a call from Don asking if they could
meet. Avie drove to the old man’s office on Sand Hill Road. Elizabeth
was really upset, Don informed him when he got there. She felt he was
behaving unpleasantly during board meetings and didn’t think he
should be on the board anymore. Don asked if he wanted to resign.
Avie expressed surprise. He was just fulfilling his duties as a director;
asking questions was one of them. Don agreed and said he thought
Avie was doing an excellent job. Avie told Don he wanted to take a few
days to think things over.


When he got back to his house in Palo Alto, he decided to go back
and look at all the documents he’d been given over the previous year
as a board member, including the investment materials he’d received
before he bought his shares. As he read them over, he realized that
everything about the company had changed in the space of a year,
including Elizabeth’s entire executive team. Don needed to see these,
he thought.


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