facto cofounder, was leaving the company and selling most of his
founder’s shares back to Elizabeth. She needed the board to waive the
company’s rights to repurchase the stock. Avie didn’t think that was a
good idea but told Don to have the board vote the motion without him
since he was resigning.
“One more thing, Avie,” Don said. “I need you to waive your own
rights to buy the shares.”
Avie was starting to get ticked off. He was being asked to put up with
a lot. He told Don to have Michael Esquivel, Theranos’s general
counsel, send over the requisite documents. He would review them but
made no promises.
When the documents arrived, Avie read them carefully and
concluded that, once the company itself waived its rights to repurchase
Shaunak’s shares, it was entirely within his and other shareholders’
rights to buy some of them. He also noticed that Elizabeth had
negotiated a sweetheart deal: Shaunak was willing to part with his 1.13
million shares for $565,000. That translated to 50 cents a share, an 82
percent discount to what he and other investors had paid more than a
year earlier in Theranos’s last funding round. Some discount was
warranted because Avie’s shares were preferred shares with higher
claims on the company’s assets and earnings while Shaunak’s shares
were common ones, but a discount that big was unheard of.
Avie decided to exercise his rights and told Esquivel he wanted to
acquire the pro-rata portion of Shaunak’s stock he was entitled to. The
request did not go down well. A tense email exchange ensued between
the two men that stretched into the Christmas holiday.
At 11:17 p.m. on Christmas Eve, Esquivel sent Avie an email
accusing him of acting in “bad faith” and warned him that Theranos
was giving serious consideration to suing him for breach of his
fiduciary duties as a board member and for public disparagement of
the company.
Avie was astonished. Not only had he done no such things, in all his
years in Silicon Valley he had never come close to being threatened
with a lawsuit. All over the Valley, he was known as a nice guy. A teddy
bear. He didn’t have any enemies. What was going on here? He tried