Hyperloop One accused of ‘mismanagement’

Hyperloop Tranportation System concept...epa03823637 A drawing shows the conceptual plans for passenger seating aboard the Hyperloop, a solar-powered, elevated, 800 mph (1287 Kph) tubular transportation system designed by Tesla Motors and SpaceX CEO Elon Musk, who estimates his visionary system would cost about 6 Billion USD (4.53 billion euro) to build. The system would transport people from Los Angeles, California, USA to San Francisco, California, USA in about 30 minutes. EPA/ELON MUSK / HANDOUT EDITORIAL USE ONLY/NO SALES©EPA

Conceptual plans for passenger seating aboard the Hyperloop


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A company formed to turn Elon Musk’s dream of a revolutionary high-speed transport system into reality has been hit with a lawsuit from four former top employees alleging “mismanagement and greed”.

The four claim they were sacked or forced to resign from Hyperloop One last month after they and seven others, representing most of the senior management, complained to the chief executive and outside investors about the way the company was being run.

A lawyer for Hyperloop One hit back on Tuesday, calling the lawsuit “bogus”, as well as “unfortunate and delusional”. In a statement, Orin Snyder, a partner at Gibson Dunn, added: “These employees tried to stage a coup and failed.”

The lawsuit, which involves allegations of nepotism and threats against some of the workers, comes at a sensitive time for the company, which has raised more than $ 100m and is in the process of trying to sign up international backers to build prototypes of its transport system.

The idea of a hyperloop, or high-speed system in a tube from which the air has been pumped out, was floated two years ago by Mr Musk, the Tesla and SpaceX chief executive. Although Mr Musk is not involved in trying to commercialise the concept, his promotion of it touched off a race to demonstrate that the idea is technically feasible.

The lawsuit, filed in the California superior court in Los Angeles, names two of Hyperloop One’s high-profile investors — Shervin Pishevar of Sherpa Ventures, an early backer of Uber, and Joe Lonsdale, a co-founder of Palantir — among the defendants.

Mr Pishevar is accused of increasing monthly payments to the company’s outside PR adviser from $ 15,000 to $ 40,000 after he started dating her, then only acceding to ending her contract after the romantic relationship ended. The lawsuit also questions his decision to hire his brother as general counsel despite his unsuitability.

Hyperloop tubes are displayed during the first test of the propulsion system at the Hyperloop One Test and Safety site on May 11, 2016 in North Las Vegas, Nevada.©Getty

Propulsion testing in May 2016

Included in the filing is an image, said to be taken from the company’s internal security camera, showing Mr Pishevar’s brother holding a rope, and another picture showing a rope in the shape of a noose placed on the chair of a former senior employee.

Mr Lonsdale, meanwhile, is accused of hiring his brother’s two-person investment firm to represent Hyperloop One, even though it had “no notable experience” with other companies working in hardware or infrastructure.

Internal tension at the company boiled over in May, when the 11 executives, who included co-founder and chief technology officer Brogan BamBrogan, as well as the heads of engineering, finance, business development and operations and the functional head of legal, wrote a joint letter alleging breaches of fiduciary duty.

Mr BamBrogan and the three others bringing the lawsuit said the letter resulted in retaliation and threats from the company and resulted in two being sacked and the other two forced to resign.

“Frivolous lawsuits like this one have become all too common against start-ups that achieve breakthrough success,” Mr Snyder said. “The claims are pure nonsense and will be met with a swift and potent legal response.”

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