Kara Swisher

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Interview: Keith Rabois Talks About Sexual Harassment Claim, Becoming a “Distraction” at Square and What’s Next

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Sitting in front of a spectacular view of San Francisco at his home this afternoon, former Square COO Keith Rabois looks spent.

He is just recovering from a bout of pneumonia, which would be bad enough, but it’s clear from his tense and unusually — for him — disheveled appearance that the sexual harassment claim made by a current male employee at the San Francisco payments startup has taken its toll on the typically hard-charging exec who is not known for suffering fools.

But, now, given a judgement he made to continue in a personal and physical relationship with that unnamed junior staffer after he was hired at Square, Rabois feels both foolish and also angry.

“At the end of the day, this is personally embarrassing to me, because when anyone’s life is exposed to a public forum, it creates quite a damaging situation,” said Rabois. “As we looked at it, it was going to become a distraction that was going to hurt the company.”

It appears as if he wanted to stay — he shrugs when directly asked about it, though he will not say so explicitly. But, Rabois finally agreed with Square’s top management, including CEO and founder Jack Dorsey, that is was better that he leave.

“It was very clear once this outrageous demand was made, instead of building great products, it would be all about that,” he said.

That said, after an internal investigation, the company is backing him in the expected filing of a lawsuit from the employee, who has threatened a panoply of explosive allegations against him and the company that Rabois said again are a “fiction.”

He declined to show me any texts or emails between the two, but did recount the relationship in a blog post on Tumblr earlier today.

Richard Curiale, outside counsel for Square and also Rabois, said that the company had been approached about two weeks ago by New York lawyer Steven Berger, claiming the company knew of and did nothing to stop sexual harassment by Rabois and demanding a multi-million dollar settlement.

Curiale said he found no evidence in his investigation so far of anything except a “welcome” relationship that ended. He had even agreed to make Rabois available for a deposition with Berger, but the offer was refused.

I have an email into Berger for comment, which has thus far been unanswered. But Square has said it will fight any lawsuit filed and is currently supporting Rabois.

“I have not as yet found any conduct that is illegal and therefore there is no adverse relationship between Keith and Square,” said Curiale. “We don’t pay for claims that have no merit to them, because it amounts to extortion.”

Perhaps so, but it also amounts to a very juicy story — the second such major blowup in Silicon Valley in a year. The other — now a lawsuit alleging gender discrimination and retaliation, and a countersuit — between the well-known venture capital firm, Kleiner Perkins, and former partner Ellen Pao, is ongoing.

The particulars of the Rabois situation, per his side of the story, which he claims is supported by much evidence, is of a social and physical relationship with a man he met several years ago.

While he would not call their relationship dating, it was close and personal, including taking this man out with him to social events.

The problem came when he recommended this man for a job at Square and he was hired. The company was much smaller then, about 30 people, but as it grew Rabois insists he had no direct oversight of the employee and also did not treat him differently from others he managed at the company.

Rabois claims he gave him advice, as he did other employees, but neither helped or hindered the man in his efforts to advance.

The man and Rabois were still seeing each other socially until December, when the relationship cooled.

And then came the lawsuit threat two weeks ago, which Rabois said “stunned” him.

Square says that it was not aware of the personal relationship until the threat of the lawsuit; the employee has never made any complaints about Rabois to management.

Spokesman Ricardo Reyes said that “what we have here at most is bad judgement and we will defend ourselves.”

In this Rabois agrees, as he fields emails of support from his wide range of friends and colleagues in tech, where he is well known as an entrepreneur and angel investor.

“I have several good ideas of what I want to do next,” he said.


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