Andreessen Horowitz Comes to Deel’s Defense in Spy Battle

The spy scandal has put billions of dollars in potential profits at risk for Andreessen, which is Deel’s biggest investor. There’s also a personal element to the fight: Deel is accused of spying on Rippling, whose chief executive, Parker Conrad, has said he was pushed out of his previous startup, Zenefits, by Andreessen Horowitz nearly a decade ago.

The battle escalated Friday when Deel said in a Delaware Superior Court filing that Rippling defamed it for years by making allegedly false and misleading statements about the company to the press, government officials and others. It said in the lawsuit that Rippling CEO Conrad “has made it his life’s goal to exact misguided and petty revenge on those connected with Andreessen.”

In the middle of it all is a top partner at the VC firm, Anish Acharya, who is the only venture capitalist on Deel’s six-member board. In internal meetings at Deel a few weeks ago, Acharya argued against singling out any Deel executives, a person with direct knowledge of the meetings said. He argued that Deel’s board should take no immediate action, make no public statement and deny any wrongdoing at that time. The company hasn’t announced an investigation into the allegations. It is unclear whether the board is investigating the matter.

Deel said in its response to Rippling’s lawsuit that Rippling failed to show that any information obtained by the spy was valuable enough to constitute a trade secret. Deel also characterized the Rippling employee as a whistleblower, rather than a spy. The employee, Keith O’Brien, admitted to spying on Rippling for Deel in a sworn statement in a court in Ireland, where he lives.

(Deel alleged that O’Brien took directions from Michael Roddan, one of the authors of this story, who was working on an article about Rippling and Deel. The Information previously reported that Roddan didn’t know O’Brien existed until the accused spy was named by Rippling in a lawsuit.)

Andreessen Horowitz helped bring in its favored advisers. Deel replaced its law firm, Paul Weiss, with Skadden Arps, which has worked with Andreessen Horowitz, to prepare a legal defense and countersuit against Rippling. Paul Weiss would not comment. Andreessen also helped bring in a new crisis public relations representative, Michael Sitrick, to handle the fallout.

A Deel spokesman, who also represents CEO and board member Alex Bouaziz, said the details of the internal discussion are inaccurate but would not comment further. Earlier, the spokesman said: “As you know, information concerning any of the types of communications with counsel you allege is confidential and privileged and the company has no interest in litigating this matter in the media.”

Andreessen Horowitz did not comment.

Huge Investment at Risk

The VC firm owns about 20% of Deel, the company said in a lawsuit against Rippling Friday. That likely would be among the largest percentage ownership stakes any single VC firm has in a private company valued over $10 billion. The stake would be worth more than $2.5 billion based on Deel’s most recent valuation of $12.6 billion.

Deel said in the lawsuit that Rippling had already done it harm. It claimed Rippling launched a campaign to defame Deel in 2022 by allegedly planting false and misleading claims about Deel in the media and with regulators.

Bouaziz on Friday told Deel staff that he appreciated his employees’ patience as the legal team worked on the company’s “response to Ripping’s smear campaign” in a slack message to staff. “Thanks for hanging in there,” he said.

A victory in Rippling’s California lawsuit against Deel would be payback for Conrad, who said he was pushed out as head of an earlier startup, Zenefits, by Andreessen Horowitz nearly a decade ago.

Zenefits laid off half its staff soon after and was later sold to a competitor at a fire sale price. Since then, Andreessen Horowitz and other VCs have more firmly backed their founders.

Deel, which helps companies pay remote employees and do other back office tasks, was Acharya’s first investment after he joined Andreessen. He courted Bouaziz before investing in 2020 and has remained close with him.

Acharya’s strategy for handling Deel’s crisis came as the alleged espionage scandal dramatically escalated. Board members learned that the accused spy alleged that he was paid by Deel executives.

Soon after, the alleged spy made a sworn confession in court saying that he was personally recruited by Bouaziz and his father, Philippe, who is also the company’s chairman and chief financial officer. When Rippling caught the spy in a honeypot trap, Deel’s lawyers allegedly coached him to destroy his phone and offered to fly him and his family to Dubai where he would be financially supported by the company, according to the alleged spy’s sworn statement.

In addition to Philippe and Alex Bouaziz, other board members are Acharya, former Illumina boss Francis D’Souza, former Coupa Software CFO Todd Ford and ex-SAP executive Franck Cohen.

VCs Back Their Founders

Acharya’s support for Deel follows a recent playbook by Andreessen and other VCs to more aggressively support even the most embattled founders. In 2022, the firm backed a new real estate venture, Flow, by Adam Neumann, the disgraced WeWork cofounder. The next year, it worked to keep in place the CEO of Synapse, a fintech startup that later collapsed, owing customers tens of millions of dollars.

Another Andreessen-backed founder who won the firm’s support amid controversy was Henry Ward of Carta, whose startup secondary trading business was accused of misusing customer data last year. “Everyone stuck with me,” he said in an interview Monday. “I think the world quadrupled down on founder-led companies.”

He added the VC firm “had a history” of pushing out founders in the past, referring to Conrad and Zenefits. “My view is they probably learned from that.”

In a podcast interview in 2022, Acharya was asked how he navigates conflict with Bouaziz. “Generally, the way I work is that we always defer to the founder,” Acharya said. “So whatever Alex wants to do, I always commit to giving him the strong form of the truth, and then supporting him in whatever he decides.”

It’s an industry trend that Bouaziz had noticed. He said in a separate 2022 podcast interview that venture capitalists had become “a lot more founder-centric than they used to be, compared to some super cutthroat investors that were in the past. It’s a luxury we have nowadays that a lot of previous entrepreneurs did not have.”

The strategy of always deferring to founders is being tested by Deel. In his confession in the High Court in Dublin, O’Brien said that Deel executives, including Alex and Philippe Bouaziz, arranged to pay him about $6,000 a month to pass on Rippling’s confidential business information.

O’Brien also laid out an alleged cover-up. He said that two of Deel’s most senior internal lawyers encouraged him to destroy his phone in spite of a court order and flee Ireland with his family to Dubai, where he would be financially supported by the company. One of those lawyers, Asif Malik, had moved from the UK to Dubai, Rippling’s lawyers said in court earlier this month. Deel’s board didn’t learn about the alleged cover-up until O’Brien’s affidavit was unsealed by an Irish court on April 2, a person familiar with the matter said.

Rippling is suing Deel over the alleged spying in U.S. federal court in California and in Ireland. The High Court in Dublin ruled earlier this month that Alex Bouaziz, and the lawyers Asif Malik and Andrea David Mieli could be added as codefendants to the case. Malik and Mieli did not respond to requests for comment.

Rippling’s lawyers told the court that they have had trouble serving summonses on Deel defendants in its Irish lawsuit. Rippling told the High Court that Deel’s law firm did not respond to requests that it accept service of the summons on behalf of Deel, while French bailiffs in charge of serving court summons on Alex Bouaziz have been unable to locate him at his Paris address, according to a person briefed on the matter. Bouaziz’s aunt told the bailiffs her nephew was in Dubai, the person said.

A Deel spokesperson said Bouaziz was in Dubai for a family holiday. The spokesperson said Malik’s move to Dubai had been planned for a year. (Malik registered a private consultancy in the UK with a registered address in the UK in March. The spokesperson didn’t respond to questions about this.)

Alleged Spy’s Confession

O’Brien in his confession claimed that money was transferred to him via a bank account held by Deel COO Dan Westgarth’s wife. Westgarth has resided in the United Arab Emirates since late 2024, according to documents filed with the UK companies registry. Westgarth’s wife was employed by broker Robinhood doing crypto compliance but left the company earlier this year, according to a Robinhood spokesperson. Philippe Bouaziz also resides in the UAE.

The Deel investment was the first and by far the best for Acharya, until recently a relatively low-profile consumer tech and fintech investor and weekend DJ who goes by the name illScience. He was promoted to be the firm’s head of consumer investing last year. A software engineer by training, he previously founded and sold two companies—one to Google and another to Credit Karma—before joining Andreessen Horowitz in 2019.

That year, he met Bouaziz in San Francisco’s South Park, in a meeting brokered by Deel angel investor Ryan Hoover.

Acharya has said he was drawn to Bouaziz’s energy rather than his technical knowledge. “We didn’t talk that much about the business,” Acharya later recalled in a podcast interview. “It was that feeling I remember—that feeling that this person is going to do something.”

The firm led Deel’s $16 million Series A round at a $60 million valuation, Bouaziz has said. It followed on with additional investments in later rounds.

Bouaziz later said he took Acharya’s initial investment offer at a discount to others. “​​I liked the fact that he was new at the firm, so tying his future to ours was a big part of my thinking process,” Bouaziz said.

Deel became one of Silicon Valley’s fastest-growing software startups in part by allowing companies to hire and pay software engineers in lower-cost countries. It charged customers fees to become the “employer of record” for employees based in countries where the customers didn’t have legal offices, and later expanded into running payroll for companies around the world.

Deel told investors last year in a presentation it was the fastest company ever to reach $500 million in revenue, and it forecast about $1.7 billion in revenue by 2026.

Andreessen Horowitz touted Deel and its CEO. The firm published a case study on Deel, saying it was “reshaping how businesses hire, pay and manage talent across 150+ countries.” Last month, Bouaziz had a headline speaking gig at the VC firm’s annual fintech conference in Park City, Utah. Ben Horowitz is also close to Bouaziz, people familiar with the matter said. Acharya’s personal X profile displays a banner picture of himself with Bouaziz.

Conrad started Rippling soon after his dismissal from his startup, Zenefits, and has since criticized Andreessen Horowitz for abandoning him. Zenefits never regained its previous startup sheen, and was sold to HR software firm TriNet in 2021.

Conrad’s resignation from Zenefits in 2016 came at a board meeting called by Andreessen Horowitz. Conrad, who was accused by the state of California  of breaking state insurance-broker licensing laws, rejected an offer to stay at the startup in a lower role. “I’m not going to fight it,” Conrad later said. He later paid a $350,000 fine to the Securities and Exchange Commission, without admitting wrongdoing.

In 2017, he announced he started Rippling, a company that would similarly focus on human resources software. He later said that part of what fueled his redemption effort was a comment from then-Andreessen Horowitz partner Lars Dalgaard, that Conrad wouldn’t succeed in founding another company. Dalgaard did not respond to requests for comment.