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TuSimple CEO and co-founder fired by board over ties to Chinese startup Hydron • ZebethMedia

By zebethcontrolPosted on October 31, 2022Posted in investigation, self-driving trucks, Transportation, TuSimple, xiaodi houNo Comments

TuSimple co-founder Xiaodi Hou was fired from his CEO, president and CTO posts by the autonomous trucking company’s board, according to a securities filing Monday. Hou, who co-founded TuSimple in 2015 with Mo Chen, was also removed from his position as chairman of the board and member of the board’s government security committee. The firing came a day after The Wall Street Journal published a report citing unnamed sources that TuSimple was facing concurrent probes by the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S. (CFIUS). The investigation is apparently focused on TuSimple’s relationship with Hydron, a hydrogen-powered trucking company led by TuSimple co-founder Chen and backed by Chinese investors. Hydron’s website lists its headquarters as Canada. It is incorporated in China, Hong Kong and Delaware. Shares of TuSimple plummeted more than 45% in trading Monday. The board said in the filing that based on information obtained in an ongoing investigation by its audit committee, employees spent paid hours working on matters for Hydron in 2021. That work had an estimated value of less than $300,000 and was not presented to, or approved by, the audit committee, according to the board. The board also believes that during 2022 the company shared confidential information with Hydron and its partners as part of an evaluation of Hydron as a potential OEM partner. Some insiders told ZebethMedia that the firing seemed more political and about Hou’s management style than news of an investigation. Sources, who asked not to be named, said they were unaware of any investigations. Hou defended himself in a post on LinkedIn, stating the board voted to remove him without cause. “My motivation has always been and continues to be chasing that visionary dream,” Hou wrote. “The painful truth is that on Oct. 30, the Board voted to remove me as CEO and Chairman of the Board without Cause. Unfortunately, the Board’s processes and conclusions have been questionable at best. As the facts come to light, I am confident that my decisions as CEO and Chairman, and our vision for TuSimple, will be vindicated.” CFIUS had investigated TuSimple in the past, largely over concerns of an investment by Sun Dream, an affiliate of Sina Corporation, which runs China’s biggest microblogging platform Sina Weibo. Sun Dream is TuSimple’s largest shareholder, with 20% Class A shares. Charles Chao and Bonnie Yi Zhang, respectively the CEO and CFO of Weibo, were both members of TuSimple’s board. In February, TuSimple entered into a national security agreement with CFIUS, agreeing to limit access to certain data, adopt a technology control plan, appoint a security officer and director, establish a government security committee of the board and periodically meet with and report to certain CFIUS monitoring agencies. Chao and Zhang also agreed not to stand for reelection as part of the agreement. TuSimple also set out to sell off its Asia operations. That unit has yet to be sold. Ersin Yumer, TuSimple’s executive VP of operations, will be interim CEO and president while an executive search is conducted, according to the filing. TuSimple’s lead independent director Brad Buss will now be chairman. The board said it is also actively engaged in the search to add new independent members. These actions have been taken in connection with an ongoing investigation led by the audit committee of the board that led the board to conclude that a change of chief executive officer was necessary.

Launch House splits with law firm conducting its harassment investigation • ZebethMedia

By zebethcontrolPosted on October 24, 2022Posted in Brett Goldstein, Enterprise, investigation, Launch House, startup lawNo Comments

It’s been a little over a month since Launch House, a buzzy venture-backed founder’s club backed by the likes of Andreessen Horowitz and Day One Ventures, publicly faced numerous allegations of harassment and assault. In response to the allegations first surfaced by the news publication Vox, the startup claimed that it would undergo an independent, third-party investigation. But as some former members of Launch House have noted, the company is using the same law firm for both its defamation warnings and its independent investigation. While it’s not a violation to have the same law firm handle two somewhat connected legal matters – one on behalf of Launch House for defamation and one to look into the allegations raised by victims – it is an optical challenge. After all, Launch House advertised that the firm was expected to conduct a neutral investigation, but it’s not really “third-party” if the same firm is going after employees, members and journalists speaking about the allegations. Indeed, the appearance of conflict of interest – or the idea that the law firm, Benesch Friedlander Coplan & Aronoff, LLP – could provide a more favorable outcome to Launch House due to its other work with the startup, was enough to rock the boat. After a ZebethMedia inquiry about Launch House’s heavy reliance on the outfit, co-founder and CEO Brett Goldstein said that the startup has asked the law firm to end its investigation into the company and is turning to another law firm for its fresh perspective. Goldstein said in a statement sent via spokesperson to ZebethMedia: “Launch House has asked Benesch Friedlander Coplan & Aronoff, LLP to end its investigation and will be engaging a new law firm, one who has never worked with Launch House before, to conduct a thorough and independent investigation.” Goldstein added that a completely separate team within Benesch Friedlander Coplan & Aronoff has been working on the investigation, and that Launch House “trusted their ability to remain impartial with those standard separation practices.” However, he said in his statement, “we do not want there to be even the appearance of any conflict, so a new law firm will be engaged as soon as possible to conduct this crucial work . . .We must learn exactly what happened, so we can best ensure it never happens again.” ZebethMedia reached out to an attorney at the law firm but did not immediately hear back. The company’s most recent town hall, conducted at the end of September, laid out a forward-looking plan to its community. Beyond the investigation, the firm claims it is working with a diversity, equity and inclusion firm to audit and update its processes. It also said it is expanding its zero tolerance policy to cover a broader range of misconduct. The full deck, titled “What’s next for Launch House”, is available publicly.