This story tells you a lot about how Silicon Valley really works.
It was a photo with Kevin Durant that appears to have led to the ouster of one of the founders of Silicon Valley’s most elite venture firms.
Weeks after prosecutors charged dozens of high-profile parents with crimes related to a massive college admissions scandal, a parent who wasn’t charged or even named in the complaint — Chris Schaepe of Lightspeed Venture Partners — has been ousted from his firm.
This is a story that tells you a lot about how the media, venture capital, and college admissions really works behind the scenes.
Here’s what happened:
Prosecutors in early March indicted Michael Center, the former men’s tennis coach at the University of Texas, in the admissions scandal that most of you are now familiar with. Center allegedly took about $100,000 from the admissions consultant Rick Singer in order to help an unidentified Los Altos Hills parent get his son — referred to merely as “Applicant 1” — into the Austin school in order to receive an athletic scholarship. That’s old news.
But what we now know, thanks to blogger Brooks Melchior, is that Singer on his website had featured a testimonial from a student named “Michael Chui Schaepe,” posing with Durant and thanking Singer for helping him to “secure a managers position with the UT basketball team.” That photo from Singer’s website, which has since been deleted, was excavated Monday.
So even if Chris Schaepe wasn’t fingered by prosecutors, he was fingered by the media. Schaepe informed his partners at Lightspeed that he was caught up in this scandal and then they fired him, a decision first reported by Axios.
“Chris Schaepe recently made the firm aware of a personal matter. We determined to separate from Chris to ensure this matter does not interfere with firm operations,” a Lightspeed spokesperson said. “The matter does not involve the firm, its personnel or its portfolio companies.”
It might be a little strange to hear that Lightspeed terminated one of its co-founders — who surely had a massive economic stake in the firm — when he isn’t charged with a crime. But venture capital firms live and die by their reputations and their brands, and it explains why media coverage is so important to them.
So as soon as anyone connects the dots, it imperils a firm’s ability to appeal to the next great entrepreneur. Lightspeed has had a very successful two years, with high-profile exits like Snap. But firms can implode quickly.
And as for the idea that this wouldn’t affect Lightspeed’s business? Well, the line between personal and professional for venture capital investors — who are some of the Valley’s celebrities — is very, very thin these days. That means a “personal matter” rarely, if ever, doesn’t reflect poorly on the firm.
Lightspeed has particularly acute reasons to be sensitive: The firm admitted to not sufficiently handling a complaint against venture capitalist Justin Caldbeck, a former Lightspeed investor, several years before he faced sexual harassment allegations in 2017 at his new firm.
But it’s still an enormous decision to suddenly oust a co-founder. Lightspeed is widely known in the industry for being a very hierarchical firm, where the firm’s founders and other leadership have tons of power. Though Schaepe had kept a low profile, he is described by sources as having wide influence at Lightspeed.
Schaepe, for what it’s worth, claims he was duped — despite the complaint showing the parent of “Applicant 1” allegedly funneled over $600,000 in stocks to Singer by retaining at least some of his services.
“The Schaepes were deeply disturbed that the person they had trusted to guide them through the college application process was engaged in inappropriate acts,” a spokesperson for the family said. “Like countless other families, they believed that his services and his foundation were all above board, and were shocked by his deception.”
And as for the photo with Durant that started dominos toppling? A source familiar with the matter says Singer wrote that testimonial himself. Singer even spelled the son’s last name incorrectly.
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