Rivian hit with Gender Discrimination Lawsuit by ex-sales and marketing head, Laura Schwab

[Zac]

Former sales executive at electric-truck startup, which is seeking a valuation of more than $60 billion, says her concerns were ignored and she faced gender discrimination

A former sales and marketing vice president at Rivian Automotive Inc. has sued the electric-vehicle startup, alleging that she was fired last month after telling a human-resources executive that she had been subjected to gender discrimination.

The complaint, filed Thursday ahead of Rivian’s hotly anticipated initial public offering, details concerns she allegedly raised internally, including that the company underpriced its vehicles, had manufacturing-quality issues and set unrealistic delivery targets.

Laura Schwab, who joined Rivian in November 2020 and left the company in October, filed the lawsuit in California Superior Court in Orange County. She also filed a statement of claims Thursday with the American Arbitration Association.

The lawsuit alleges that Ms. Schwab was fired after describing to a human-resources executive a “toxic ‘bro culture’ ” that excluded her from executive meetings and stopped the company from acting quickly on concerns she raised about Rivian’s business plans.

“The culture at Rivian was actually the worst I’ve experienced in over 20 years in the automotive industry,” Ms. Schwab said in an interview. Before joining Rivian, she had been president for the Americas at British luxury brand Aston Martin Lagonda and was an executive at Jaguar Land Rover before that.

A spokeswoman for Rivian declined to comment, citing a quiet period ahead of the company’s public offering.

Rivian, which has been backed by companies including Amazon.com Inc. and Ford Motor Co., plans to go public next week and is seeking a fully diluted valuation of just over $60 billion, The Wall Street Journal reported Monday. The company recently began production on its first model, an electric pickup truck called the R1T, and plans to begin making an SUV model later this year.

According to the lawsuit, Ms. Schwab raised concerns about the business with other executives at the Irvine, Calif.-based startup, but her observations were initially dismissed and she was told not to share them with Chief Executive RJ Scaringe.

The lawsuit claims several other executives at first brushed off her statements about Rivian’s vehicles being underpriced, only to agree later that prices would need to be increased post-IPO after a male executive raised the issue.

Ms. Schwab also raised concerns internally about the manufacturing process and Rivian’s ability to assure vehicle quality and safety to customers, the complaint alleges. She said she suggested that the first deliveries go to Rivian employees and alleges other executives initially dismissed the idea, then later adopted it.

The lawsuit further says that Ms. Schwab was skeptical about the company’s ability to achieve certain delivery targets and that she advised it to set a more realistic objective. Rivian said in a securities filing Monday that it plans to deliver just over 1,000 vehicles to customers by the end of the year, while earlier filings didn’t include a year-end production target.

Ms. Schwab declined to provide the Journal further details about her concerns regarding Rivian’s business, citing nondisclosure agreements she signed with the company.

She alleges in the lawsuit that she was cut out of critical strategy meetings involving her team and that other female executives were similarly excluded from sales-projections meetings.

As Rivian started production and as preparations for the IPO picked up in recent months, Ms. Schwab alleges that her responsibilities were transferred to other male executives and that her superior canceled weekly one-on-one meetings with her. Last month, she claims, she pushed to meet with her boss and he told her that she should contact him after work hours to communicate using the messaging platform Slack.

According to the complaint, Ms. Schwab told a human-resources executive the following day that she was being marginalized and felt it stemmed from the company functioning like a “boys’ club.” She claimed that important projects were assigned to men by default and that women were excluded from important meetings.

Ms. Schwab was fired two days later because, the complaint alleges, the company told her that even though she had a positive performance review in June, it was restructuring and eliminating her position.

The lawsuit alleges that no other executives were fired due to restructuring and that her dismissal cost her millions of dollars in unvested equity.

Ms. Schwab is being represented by Rudy, Exelrod, Zieff & Lowe LLP. Last year, the same law firm represented Françoise Brougher, a former chief operating officer at Pinterest Inc., who settled her gender-discrimination and wrongful-termination case against the social-media company for $22.5 million. Pinterest later pledged to take steps to improve its culture, including by creating a team to investigate workplace concerns and increasing transparency around employee pay and promotions.

Allegations of gender bias have been widespread among American companies for years. More than 392,000 workplace-discrimination charges—pertaining to sex, race, age and more—were filed with the U.S. Equal Employment Opportunity Commission from fiscal 2016 to 2020, according to the federal agency.

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[Dark-Fx]

This isn't some rando in middle management. Her hiring made big headlines last year and it couldn't have been easy to get her to leave Aston Martin. I'm somewhat blown away that the guy who was keeping her out of meetings wasn't reporting to her based on their LinkedIn profiles. She was at Land Rover for 15 years. She was a big deal at Aston Martin for 5.

This is an embarrassing waste of talent.

That could have been part of the problem. It sounds like she was trying to be involved in far too many aspects of the business they didn't sign her up for. Objectively, if she was the head of sales and marketing, she should have been the one calling the shots on information disseminating to the public about the vehicles. Lots of people on the board here are upset about how badly they feel it has been handled.

That alone should be just cause for her firing in the eyes of a lot of this board. I wouldn't be surprised if they hired her because of her lux brand experience and she just didn't fit in at Rivian because their focus on lux was tertiary.

 

[Rivian_Hugh_III]

It is possible that Ms. Schwab was accustomed to being CEO of an auto company and couldn’t handle being reduced to a VP of Marketing & Sales, that she demanded access to meetings she had no right attending and was constantly offering advice on Operations that she had no authority or responsibility to make, nor the information to make, frankly, because she was rightly not invited to those meetings, because they weren't in her lane.

Obviously she was qualified to be hired into any position at Rivian, including CEO. You know why you don’t hire an MBA to work the register at McDonald’s? Or a CEO as VP In your start-up? Because they become a pain in the ass, telling everyone what to do when it’s not their job.

Being overqualified is real, and real grounds for not-hiring, or firing.

 

[Zoidz]

I'm somewhat blown away that the guy who was keeping her out of meetings wasn't reporting to her based on their LinkedIn profiles. She was at Land Rover for 15 years. She was a big deal at Aston Martin for 5.

This is an embarrassing waste of talent.

Her success and experience at Land Rover and Aston Martin could have been part of the problem. By all reports, she was very successful at those companies and kudos to her for that. But those companies were well established brands with a well established niche customer base in a well established market (ICE vehicles). Rivian is none of that. Just consider the possibility that she was out of her league and unable to apply her skills to a startup. There are tons of examples of superstar executives crashing and burning at startups and young, challenged companies - the John Scully era at Apple is a textbook example. When you consider this, along with the sales and marketing communication from Rivian over the past year, there's potential for a different reality than her version.

(edited to fix spelling)

 

[Craigins]

If so, is that the majority of the media or just certain sites?

All media.

There are opinion pieces, misleading (out of context or leaving out facts) stories and just a recounting of known facts about something.

So the issue is if they wanted to write a news article, it would state:

Former Rivian VP writes blog post about her gender discrimination lawsuit.

Rivian has not responded to requests for more information citing the IPO quiet period.

Then link to the blog.

That is reporting the facts of the situation. Paraphrasing her blog and repeating select sections of it while using terms of uncertainty, such as alleges, is just gossip. We've seen it in other articles where playing the phone game construes the original text.

And as we have seen on this forum (and on the fb rivian groups), people ignore the uncertainty of the word alleges and take it for truth. If the wsj says it, it must be true.

Sensationalize the headline, paraphrase the most emotion generating parts of the source using language keyed to evoke an emotional response. Slap some ads on the page, and profit. That's the key to the current media culture.

 

[electruck]

Regardless of the truths here, it should come as no surprise that every company, no matter how virtuous, has their dirty laundry.

 

[Swilly]

I err towards believing the majority of her story. The only thing I can be sure of though, is all of the questions being asked here and across the industry right now about this situation, will not be resolved/answered by the IPO on the 10th. With the allegations extending beyond company culture and into transparency and honesty with regard to the S-1 production targets, investors are not going to be as bullish on a company with no product yet delivered to a “3rd party”. Feeling like the DSP is more of a chance to fund employee stock options and “hold the bag” for Rivian. I am now thinking a first day dip is a real possibility if valuation isn’t adjusted downward.

 

[Blueassassin]

So because of all this bad press and what's going on with no delivery's to customers yet does the IPO price drop? or when it hits the stocks and all the bad press comes out our IPO drops? Never done an IPO and generally have no idea.

 

[JayinNJ]

Looks like she is out of Rivian.

What gave it away? The fact she was fired?

 

[JayinNJ]

Does anyone else think this news makes the statement on "risks" in the S-1 page 28 stand out as a bit more creepy than it already was? That risk statement was:

​

We are highly dependent on the services and reputation of Robert J. Scaringe, our Founder and Chief Executive Officer. ​

We are highly dependent on the services and reputation of Robert J. Scaringe, our Founder and Chief Executive Officer. Dr. Scaringe is a significant influence on and driver of our business plan. If Dr. Scaringe were to discontinue his service due to death, disability or any other reason, or if his reputation is adversely impacted by personal actions or omissions or other events within or outside his control, we would be significantly disadvantaged.​

I just felt like that paragraph in the S-1 stood out to me the first time I read it, now even more so.
From past experience, I've seen Founders/CEOs in these positions act and behave in ways that are, less than honorable. This might not have anything to do with RJ at all, but he is still the leader of the organization and bears some responsibility for what happens. I really wish I wasn't getting a bad vibe right now. It will be interesting to see how this plays out. Rivian can't afford to be shielded by the quiet-period with regards to this, the IPO may need to be postponed in order to properly address this.

I think that is standard language for a founder CEO attempting a IPO.

 

[Pherdnut]

Her success and experience at Land Rover and Aston Martin could have been part of the problem. By all reports, she was very successful at those companies and kudos to her for that. But those companies were well established brands with a well established niche customer base in a well established market (ICE vehicles). Rivian is none of that. Just consider the possibility that she was out of her league and unable to apply her skills to a startup. There are tons of examples of superstar executives crashing and burning at startups and young, challenged companies - the John Scully era at Apple is a textbook example. When you consider this, along with the sales and marketing communication from Rivian over the past year, there's potential for a different reality than her version.

(edited to fix spelling)

She's not an idiot. She's suing for discrimination. Her account at her blog post is pretty WTF. When the guy you report to directly requires that you only communicate via text after hours, something is very wrong.

 

[KingofThorns]

Defaulting to suspicion actively harms people around you. Probably in ways that would surprise you.

Curious as to where the phrase "innocent until proven guilty" comes in here? Given your statement, I suppose this concept is also harmful.

 

[yizzung]

Her success and experience at Land Rover and Aston Martin could have been part of the problem. By all reports, she was very successful at those companies and kudos to her for that. But those companies were well established brands with a well established niche customer base in a well established market (ICE vehicles). Rivian is none of that. Just consider the possibility that she was out of her league and unable to apply her skills to a startup. There are tons of examples of superstar executives crashing and burning at startups and young, challenged companies - the John Scully era at Apple is a textbook example. When you consider this, along with the sales and marketing communication from Rivian over the past year, there's potential for a different reality than her version.

(edited to fix spelling)

Solid take. I worked at a “startup” that went from 7,000 to 25,000 employees is just over two years. We hired loads of industry experts with amazing resumes who simply had trouble keeping up with our breakneck speed and hyper aggressive culture. Could easily be the case here.

Her previous stops are dinosaurs by comparison and (if you watch the roadshow video) Rivian barely considers itself a car company. (“It’s a lifestyle wrapped in a data platform.”) Could have just been a bad hire.

Even if that’s the case, it still could have been handled poorly by management and could have been poorly timed. And she wants both her reputation to remain in tact and to be fairly compensated for her efforts. A lawsuit is an indication that she feels that possibly neither happened here.

Rivian could have negotiated more effectively to avoid a public suit, or maybe they felt strongly enough about their case and we’re willing to call her bluff, or maybe her manager is a doofus. All those things are possible.

 

[Zoidz]

She's not an idiot. She's suing for discrimination. Her account at her blog post is pretty WTF. When the guy you report to directly requires that you only communicate via text after hours, something is very wrong.

Of course she's not an idiot, that's obvious, and I clearly applauded her success. I have outdated old school values - it takes two people to create a conflict, and when you only hear half the story, you know less than half of what's actually going on. Today's values are believe whatever you read first on the internet, and credibility is judged by how juicy and controversial the story is.

 

[yizzung]

She's not an idiot. She's suing for discrimination. Her account at her blog post is pretty WTF. When the guy you report to directly requires that you only communicate via text after hours, something is very wrong.

I wouldn’t get too worked up about the specific claims yet. Totally plausible and believable to be sure. Alarming, if true. But nobody here knows. It’ll play out.

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