The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified Investor Stories 454: When There Are No Good Choices: Navigating Ethical Dilemmas, Founder Splits, and Existential Company Threats (Cohen, Effron, Austin)
Jan 22, 2026
In this engaging discussion, David Cohen shares a gripping tale of a company held hostage by hackers, illustrating how values can guide difficult decisions. Jacob Effron delves into the evolving world of AI investing, questioning how traditional VC models must adapt for unique funding rounds in this field. Meanwhile, Ethan Austin highlights the frequent issue of founder splits, offering insights into resolution strategies like buybacks and arbitration. Together, they navigate the complexities of ethical dilemmas and the dynamic landscape of venture capital.
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Company Held Hostage By Hackers
- David Cohen described a company held hostage by a hacking group that seized its domain and threatened service outages.
- The board met constantly and the company made a values-aligned but uncomfortable choice to recover services and domain.
Return To Values Under Duress
- David Cohen said companies should return to their values when facing impossible choices.
- Pick the option most aligned with your values even if neither choice feels good.
AI Forces Fund Model Reconsideration
- Jacob Effron observed AI is changing fund models with larger, earlier rounds and unfamiliar deal shapes.
- Firms must decide where to adapt versus where to remain disciplined in their strategy.