Saturday, January 26, 2013

Resignation of Square COO another example of poor executive relationship decision-making

Square's Chief Operating Officer Keith Rabois resigned from the mobile-payments company on Thursday, due to accusations from a Square employee of sexual harassment. A day later, on Friday, Rabois took to his Tumblr blog to explain his side of the issue.

It's a case reminiscent of the events that took down HP's former CEO Mark Hurd, but in Rabois' case, he issued no denials about the relationship. Instead, he confirmed that there was a relationship, though no harassment.

Rabois' blog post said:
In May 2010, I met someone via mutual friends. With increasing frequency, we hung out, drank wine, and I helped prepare him for interviews with tech startups. As our friendship deepened, we spent more time together, and our relationship became physical. We regularly worked out at the gym, occasionally hung out at my home, and exchanged intimate, personal information, as people in similar relationships often do.

Several months after our relationship began, I recommended that he interview at Square. He went through the interview process and was ultimately hired. I had no impact on his potential success at the company. At no point did he ever report directly to me, and I have seen his work product less than a handful of times.

Last week, a New York-based attorney threatened Square and myself with a lawsuit. I am told this lawsuit would allege that the relationship was not consensual, and would go on to accuse me of some pretty horrible things. I was told that only a payment of millions of dollars will make this go away, and that my career, my reputation, and my livelihood will be threatened if Square and I don’t pay up.

I realize that continuing any physical relationship after he began working at Square was poor judgment on my part. But let me be unequivocal with the facts: (1) The relationship was welcome. (2) Square did not know of the relationship before a lawsuit was threatened; it came as a complete surprise to the company. (3) He never received nor was denied any reward or benefits based on our relationship. And (4), I did not do the horrendous things I am told I may be accused of. While I have certainly made mistakes, this threat feels like a shakedown, and I will defend myself to the full extent of the law
It's somewhat ironic that the blog post mentions Square and Rabois "paying up." After all, Square is a mobile-payments service. The company has created a platform that allows consumers to pay for goods or services using a mobile device. The platform, quite naturally, also allows merchants to accept payments using mobile device.

Square spokesperson Ricardo Reyes confirmed in a statement that Rabois' departure was due to the sexual harassment allegations. He said,
The first we heard of any of these allegations was when we received the threat of a lawsuit two weeks ago. We took these allegations very seriously, and we immediately began a full investigation to ascertain the facts. While we have not found evidence to support any claims, Keith exercised poor judgment that ultimately undermined his ability to remain an effective leader at Square. We accepted his resignation.
Square Chief Financial Officer Sarah Friar was named acting chief operating officer. No formal claim or lawsuit against either Rabois or Square has yet been filed.

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