The decade-old drama surrounding venture capitalist David Sachs and Ripple founder Parker Conrad's former company, Zenephys, devolved into a blame game on X this week, with many of Silicon Valley's elite taking sides.
But while they may be entertaining to observers, some argue that these battles are damaging to all venture capital firms.
The controversy began when Sachs made a political comment about Republicans and Democrats on X on Wednesday, using the term “fake coup.” Conrad responded sarcastically, “I'm telling you, coups are this guy's specialty.”
Conrad was referring to the collapse of Zenefits, the HR tech company he founded. Sachs was an investor in Zenefits and joined the company as COO. Conrad was ousted from Zenefits after allegations emerged over the misuse of employee licenses, and Sachs became CEO. (Sachs left Zenefits shortly thereafter. The company was sold to TriNet in 2022.)
Conrad never appears to have forgiven Sachs for not announcing the founder's departure in an amicable manner — a press release at the time blamed Conrad for the governance issues. Conrad went on to found another HR tech company, Rippling, which he led as CEO and grew to a valuation of $13.5 billion.
Sachs wrote back to Conrad about X: “You were sanctioned by the SEC. No one else, just you. But you've spent the last decade trying to shift the blame for your own poor ethics onto others.”
Notably, Conrad and Zenephys resolved the SEC investigation and paid the fine without admitting any wrongdoing. But shortly after Sachs posted his response, outrage erupted across Silicon Valley.
Y Combinator co-founder Paul Graham weighed in on the conversation, writing, “Do you really want the full extent of what you did to Parker made public? This is the worst case of an investor mistreating a founder. I've heard just about every case of an investor mistreating a founder.” In another post, he called Sachs “evil.”
Sachs wrote a lengthy and scathing response, pointing to the SEC investigation and accusing Graham of misconduct against Jewish venture capitalists, saying the two had never met, though Sachs (who is Jewish) offered no evidence to support such claims.
Cloudflare co-founder Matthew Prince later sided with Conrad, saying he knew Sachs from college: “I know this story. It's a pretty nasty story. I'm not sure David is the most evil person on SV. It's a tough competition.”
Other VCs noted that founders should know who they allow into their companies: “VC Twitter this week was like a walking advertisement for self-funding. LOL. There are a lot of people you don't want to be in the same room with, much less on your cap table. Probably the best differentiator is being a decent human being!” wrote Jason Jacobs, founder of MCJ Collective and a climate VC.
HustleFund's Eric Bahn responded to Jacobs: “VC has a serious brand problem. All the bickering, finger-pointing, name-calling and ad hominem attacks within the industry are being exposed to founders. There are some great VC people on our side, but this stupidity brings us all down.”
Admittedly, this is not the image VCs typically try to project. Typically, Silicon Valley VCs go to great lengths to portray themselves as “founder-friendly” — they have to be if they want to attract the best entrepreneurs to work with them. Venture investors often do so by buying an ownership stake that comes with voting power and sometimes even a board seat, with the assumption that they won't use that power to drive founders out of their companies.
Of course, boards of directors, including VCs, can and do still oust founders, and many founders fear that. (Peter Thiel named his firm Founders Fund because one of its tenets is never to vote against founders.)
To be sure, such public exchanges would have been shocking in the past, but now some of Silicon Valley's most successful founders and investors routinely pull no punches.
The latest spat follows a weekend spat between Vinod Khosla, a venture capitalist and Democrat, and Elon Musk, a Trump supporter, over political choices that rife with words like “corruption.” Also, in March, Khosla and venture capitalist Marc Andreessen got into a spat over AI regulation that veered into “patriotism” territory.
Perhaps what they want is a public spectacle: While sparring with Mr. Sacks, Mr. Graham, who is the husband of venture capitalist Jessica Livingston, smuggled in a promotion for her podcast, “Social Radar.”
The feud between Graham and Sacks culminated with the intervention of Sacks' friend Chamath Palihapitiya, not so much to offer encouragement but to promote “All-In,” a popular podcast the two do with fellow venture capitalist Jason Calacanis.
Palihapitiya wrote to X, “I have a lot to say about this. I'll be documenting and discussing it all this week on @theallinpod. P.S.: receipts included (including the deleted ones).”