The Real Reason Dave McClure Is Out at 500 Startups
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They say revolutions don’t happen overnight. They take years of anguish, and suffering, and hardship, until one day the dam breaks and a flood of people rise up together to create real change.

For years, the Venture Capital culture, with Silicon Valley as its nexus, has been rife with behavior that many consider abrasive and rude. However, looking only slightly under the surface, it has turned out that it goes far beyond that.

In the past weeks, we’ve seen the complete collapse of Binary Capital, a fund led by Justin Caldbeck, who allegedly assaulted multiple women, and Jonathan Teo, who allegedly assisted in covering up this behavior.

Dave McClure, Founder of 500 Startups, was forced to apologize for his lewd behavior, as well as resign from his role there, and as GP of the fund. Elizabeth Yin resigned in protest for his misconduct, and there are reports that others are not far behind.

Reid Hoffman, urged others in Silicon Valley to stand with him in signing a “Decency Pledge“, that would show which funds are allies to women, yet as more funds showed their support for this, other reports came forward against some of the people using this hashtag, which highlighted the point that the unethical behavior of certain VCs is unlikely to end anytime soon.

Since this story initially broke, more people have started to come forward. Cheryl Yeoh posted her experiences with Dave McClure, which may have been the lynchpin for his resignation. Comments made by Cathryn Chen, myself and others are eerily echoed in the words of Amy Varle, founder of the People’s Property Shop. “It actually makes me cry to read these comments and know I’m not alone. I have literally been stalked and bribed with a 100,000 investment via the latest guy. Its made me sick on a daily basis.”

There has been backlash against these women. VCs Sam Altman and Chris Swies got involved in the fray. Chris Sacca, himself named in the New York Times article, disputed the claim against him. As more women are coming forward, men are starting to fight back, turning this into a she-said, he-said.

Clearly, something isn’t working.

As I’ve been digging into this story since I started covering it, I’ve found that it goes deeper than simple gender bias. Not only have women come to me with their stories, I’ve heard from men who have had similar experiences of their being harassed while vulnerable – only they feel the repercussions for their coming forward would be too harmful for them to deal with.

Wherever there is a power imbalance, it is too easy for things to be misconstrued.

On the VC side, they may very well be innocently thinking: “Hey, this person is really fun to hang out with.” Unfortunately, they’re not taking into account the worldview of the person on the other side.

This other person is in an automatically vulnerable position. They’re not on the same level as the VC, because they have a fiduciary responsibility to their company to make payroll, pay vendors, get product out, etc. To them, at some level, the VC represents certainty, security. That person will never be “really fun to hang with.”

Chris Sacca, Dave McClure, even Justin Caldbeck and all the rest may well have had purely innocent intentions – in their own minds. Where they have failed is they did not take into account the other people around them.

I’m happy to talk to anyone in Silicon Valley or anywhere who would like help in understanding perspective. Maybe then we’ll start to make some progress.

Jul 5, 2017
John Bork and Stephanie Lynn, standing six feet apart.
John Bork and Stephanie Lynn, standing six feet apart.

Editor’s Note:Although the officialSmall Business Weekhas been postponed, we at Inc. feel it’s always appropriate to recognize the teams and companies that serve the needs of their communities and help keep Main Street humming–and not just for one week!

Sweet Spot Skirts and WellHaven Pet Health are just down the street from one another in downtown Vancouver, Washington. Until recently, location was about all they had in common.

Sweet Spot makes and sells derrière-cloaking skirts in funky colors and patterns for female bikers and runners to wear over shorts and tights.But despite owninga 12-year-old Australian shepherd, founder Stephanie Lynnhad never heard of WellHaven, a $50 million company operating 41 veterinary hospitals that employ 450 people in five states.

WellHaven founderJohn Bork was similarly unfamiliar with his neighbor.”I had seen Sweet Spot but I never used it,” Bork says. “I didn’t really know what it was.”

From the awarding of government loans to the designation of “essential” status, coronavirus frequently has set Main Street businesses at odds with larger companies. But in places like Vancouver, where a very active chamber of commerce is an enthusiastic yenta for its members, large and middle-market companies have formed surprising partnerships with mom-and-pops to fight the pandemic.

For example, when Chandelier Bakery was unable to obtain flour to fulfill all requests for bread donations for frontline workers, United Grain Corporation, among the Pacific Northwest’s largest grain exporters, supplied the wheat. Ryonet, a $50 million supplier of equipment to screen-printing businesses, not only stepped up to manufacture masks and face shields itself but has also contracted with two of its small local customers, Brainless Tees and Opake Screen Printing, to decorate them.

And in Lynn’s case,the larger companyhelped completely turn her business around. Sweet Spot does between $350,000 and $600,000 in annual revenue, much of itat sporting events. On March 12, Lynn was selling at a pickleball tournament in College Station, Texas, while thecountrywas rapidly shutting down.

“I got on the plane in Austin, and by the time I changed planes in Phoenix enough events had canceled to take $50,000 off my plate,” she says.

The next day, she was sitting with her landlord, in tears because she would not be able to make rent. The following Monday she laid off her entire staff of six.

Can you make this?

Bork, meanwhile, had approached the chamber for help. Government and industry leaders had begun asking veterinarians to donate their PPE to health-care workers who attend tohumans. Bork wanted to find a local business that could replace his surgical-grade masks and caps with something that would protect animals during procedures. The chamber quickly reached out to Sweet Spot.

The next morning, four days after Sweet Spot’s closure, Bork and his chief medical officer, Bob Lester, were at Lynn’s doorstep with a model surgical mask and cap. Lynn called in one of her seamstresses and over the next two days created prototypes from the fabric used for her skirts.

With check in hand for just over $10,000 to cover 500 masks and 500 caps,Lynn brought back her whole staff. “She would text me when she had 60 or 100 made,” Bork says. “I would walk over and fill up my backpack, bring them back to the office, box them up, and off they would go.” Sweet Spot filled the entire order in just under three weeks.

Bork ordered another 500 masks and caps, which he distributed to other veterinary hospitals in Vancouver and neighboring Portland, Oregon. With each donation, he included Lynn’s contact information.A few of those practices placed their own orders. Word spread, and other groups–Vancouver public schools, an organization of home inspectors–reached out.

With skirt orders down 90 percent, Lynn launched Facewear Fashions to go after the consumer PPE market. Those masks, with names like Pinch Me Pink Floral and Doilies for Your Face, retail for $14. (Businesses, which receive volume discounts, still account for 50 percentof mask sales.) Lynn plans to cross-promote her product lines. Buy a skirt, get a free mask made from the same material. “I match mine all the time,” she says.

The collaboration with WellHaven continues. Bork made an offer to match any donations of masks to worthy causes by other Vancouver businesses. When the Vancouver Farmers Market reopens, Sweet Spot will have a place in WellHaven’s booth.

“Had WellHaven not come about, I don’t know where I would be,” Lynn says. “They saved me completely.”

May 18, 2020

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