A decade-old drama involving VC David Sacks and Rippling founder Parker Conrad over their former company Zenefits exploded this week into an all-out accusation battle with many members of Silicon Valley’s elite taking sides.
But, as entertaining as it may be for observers, some have said that such fighting becomes detrimental to all VC.
The brouhaha began after Sacks posted a political opinion about Republicans and Democrats in an X-rated post Wednesday using the words “fake coup.” Conrad threw a dig in reply“Let me tell you, coups are this man’s specialty.”
Conrad was referring to the collapse of Zenefits, the former HR technology company he founded. Sacks was an investor in Zenefits and had joined the company as COO. Conrad was ousted from Zenefits after allegations of improper employee licensing arose, and Sacks took over as CEO. (Sacks left Zenefits shortly afterward. In 2022, the company was sold to TriNet.)
Conrad Apparently, Sacks never forgave him for not issuing a friendly announcement of the founder’s departure. The press release at the time accused Conrad for governance issues. Conrad then launched another HR technology company that he leads as CEO, Rippling, and grew it to a valuation of $13.5 billion.
Sacks responded to Conrad on X: “You were sanctioned by the SEC. No one else, just you. But you’ve spent the last decade trying to blame others for your own lack of ethics.”
It should be noted that Conrad and Zenefits settled an SEC investigation and paid fines without admitting wrongdoing. But regardless, almost immediately after Sacks posted his response, swords were drawn all over Silicon Valley.
Y Combinator co-founder Paul Graham weighed in, writing, “Do you really want the full story of what you did to Parker to be told publicly? Because this is the worst case of an investor abusing a founder I’ve ever heard, and I’ve heard pretty much all of them.” In another post, he called Sacks “evil.”
Sacks wrote a lengthy and scathing response claiming that the two men had never met, referencing the SEC investigation, and accusing Graham of underhanded behavior toward Jewish VCs, though Sacks (who is Jewish) provided no evidence to support these allegations.
Then co-founder of Cloudflare Mathew Prince gave his opinion, He sides with Conrad against Sacks, whom he says he knew in college. “I know that story. It’s very bad. I don’t know if David is the meanest person in SV. There’s a lot of competition.”
Other VCs stressed that founders should be conscious of who they’re allowing into their company. “VC Twitter has been like a walking advertisement for self-funding this week, lol. There are a lot of people you never want to be in the same room with, let alone on your cap table. Maybe the best differentiator is just being a decent human being!” Jason Jacobs, a climate-focused VC, MCJ Collective founder wrote.
HustleFund’s Eric Bahn responded to Jacobs“Venture capital has a serious brand problem. All the bickering, finger-pointing, name-calling, and ad hominem attacks within the industry are noticed by founders. There are good venture capitalists on this side of the table, but this buffoonery makes us all look bad.”
This is certainly not the image that venture capitalists usually try to present. Silicon Valley venture capitalists typically bend over backward to present themselves as “founder-friendly.” They have to do so if they want to attract the best entrepreneurs to work with them. Venture capitalists buy stakes with voting rights, sometimes board seats, and often do so on the assumption that they won’t use that power to oust founders from their own companies.
Of course, boards that include VCs can still exclude founders, something many fear. (That’s why Peter Thiel called his company Founders Fund, because one of its principles is to never vote against founders.)
Indeed, such public exchanges would have been shocking in a bygone era. But today, some of Silicon Valley’s most successful founders and investors are systematically distancing themselves from them.
The latest spat follows one over the weekend between Democratic VC Vinod Khosla and Trump supporter Elon Musk who were fighting over their political choices with words like “depravity” being thrown around. And it follows one in march between Khosla and Vice Chancellor Marc Andreessen over AI regulation that has entered the territory of “patriotism.”
Maybe they want a public spectacle. While they were fighting with Sacks, VC Jessica Livingston’s husband Graham managed to sneak into the room. a publicity stunt for his podcast Social Radar.
And the Graham/Sacks fight culminated in Sacks’ friend Chamath Palihapitiya stepping in, not to lend vocal support, but to promote the popular podcast the two do with fellow VC Jason Calacanis, All-In. Palihapitiya posted on X“There’s so much to say about this. We’ll be documenting and talking about it all this week on @theallinpod. PS – with receipts (even the deleted ones!).”
