TuSimple co-founder quits, accused of poaching staff for new venture

TuSimple co-founder Xiaodi Hou resigned from the company’s board of directors last week amid an internal investigation to verify claims that Hou approached TuSimple employees about quitting the company. company to join his new venture, according to an SEC filing.

Sources familiar with the matter told TechCrunch that a “whistleblower” informed senior management of Hou’s solicitations of employees over the past few months to join a company he was starting. Hou allegedly pressured some employees to stop working so hard, either because they would be joining his new company soon or because he wanted to see the self-driving trucking business fail without him, the sources say.

TuSimple launched an internal investigation, during which it confirmed that at least two employees – top talent from the “high tech” teams – had been approached by Hou, but the co-founder resigned from the board before that TuSimple cannot conclude the investigation.

TuSimple has not decided whether to move forward with the investigation, but if so, it will be to determine if other employees were compromised, according to a source familiar with the matter.

Portrait of Xiaodi Hou, co-founder of TuSimple. Image Credit: TuSimple

Hou didn’t respond to TechCrunch’s requests for comment, but the co-founder could certainly be accused of having an ax to grind. In November, TuSimple’s board of directors fired Hou from his positions as CEO, president and chief technical officer after the board discovered that TuSimple had transferred confidential information to Hydron, a hydrogen trucking startup led by co- founder and majority shareholder of TuSimple, Mo Chen, and backed by Chinese investors. .

At the time, Hou said he was fired “without cause” and called the board’s processes and findings “questionable at best.”

“As the facts come to light, I am confident that my decisions as CEO and Chairman, and our view of TuSimple, will be vindicated,” Hou said in a November LinkedIn post.

TuSimple’s board had conducted its own investigation in response to an investigation by the Committee on Foreign Investment in the United States (CFIUS). The CFIUS reviews foreign investments for national security reasons and can impose safeguards and recommend that the president block certain investments. The Biden administration is actively working to prevent American technology from advancing Chinese military power, including the use of autonomous vehicles.

This investigation is still ongoing and has resulted in potential criminal charges. Last month, representatives serving on the CFIUS review panel urged the Justice Department to consider economic espionage charges against Hou and Chen, as well as current CEO Cheng Lu.

Lu previously served as CEO of TuSimple from September 2020 to March 2022 before being ousted. He returned to the helm in November. At the same time, four independent directors were removed from their positions and Chen was appointed executive chairman of the board.

While TuSimple is likely hoping Hou’s resignation will help the company close the chapter on national security investigations, TuSimple has other concerns on its plate. Earlier this month, the company received a non-compliance warning from Nasdaq for failing to file its fourth quarter and full year 2022 financial results on time. TuSimple is still recruiting a new auditor after resigning from KPMG due to the risk factor of the business, sources say. The company hopes to report its results by May, the deadline set by the Nasdaq to regain compliance.