The Forgotten Founder: A Silicon Valley Tale of Humiliation and Revenge

Memo: when writing an antidisparagement agreement, the first rule of antidisparagement agreements is that you agree not to disclose the existence of the antidisparagement agreement.

Fundamental to them all is the idea that being "funded" equals "arrival." It doesn't. Revenue and customers equals arrival. Ideally it would be best not to be "funded" at all, since OPM == debt.

"Eventually, after months of negotiation, Shaikh says, he got a $50,000 severance payment. He agreed to sell his 317,000 shares in the company for $73,000, less than a fourth of what they had been worth in the Series A round."

Does this mean the company was uncertain about whether he was really stealing? I don't think it is normal to pay someone a severance payment when they've been fired for good cause. I think one would have to conclude that the company was unsure of how much it could make stick, and therefore paid some small amount simply to make him go away. Or possibly the severance was in exchange for his agreement to sell his shares at a discount? That would make more sense to me.

The FBI was not involved over this incident. Instead the FBI was involved over this:

"So, on a chilly Tuesday morning in December, Shaikh ran a piece of testing software, called ApacheBench, that flooded YouSendIt's servers with traffic. The servers keeled over immediately. Later that day, a sentence appeared on YouSendIt's Wikipedia page: "Looks like the company may be out of business, their site is down." (Shaikh says he didn't write it.)"

The FBI took this very seriously, and got a friend of Shaikh's to wear a wire and get him talking.

I appreciate that the FBI needs to look into any incident where there has been hacking, but it strikes me this cooperation between the FBI and the various corporations is open to abuse.

I once had a bad breakup with a company, and the ending was frightening to me. This was in 2009.

There was a fellow acting as impresario for a startup. He called himself the CEO, though he also ran a small investment firm, and he had multiple investments that he had to keep an eye on.

The goal of the startup was to build something like Quora, but find a way to get people pay for information (they would pay to ask questions).

The CEO lined up 4 investors who put in a total of $100,000 to get the operation going. 4 programmers were hired, including me. 3 of the programmers were remote, and I was in the New York, where the CEO and project manager were. The other 3 programmers were in the USA and Europe.

We worked hard during the spring and early summer of 2009 to get to the point where we could launch.

Half way through the summer, the decision was made to hire an Indian firm to do the development. They were much cheaper. I would be the technical point of contact. We relied less on the programmers in the USA and Europe and more on the team in India. However, we had very serious problems with the quality of the code coming from India. Almost every time something got checked into Subversion, something broke. I raised my concerns to the project manager, and I cc'ed the project manager on several emails to the team in India, where I tried to educate them on the mistakes they were making. I was inclined to get rid of the team in India, although the CEO and the project manager liked how cheap they were. I suggested we find a different company in India. We all knew that firms in India were of uneven quality -- some good and some bad. If you want to hire a team in India, one often has to do a lot of digging to find a good team.

I tried selling the project manager on implementing unit tests and functional tests, and he suggested that we wait till the site was launched. There was an attitude that we could clean things up once we launched.

There was some funny business with the money that I never fully understood. I was working as a contractor. I was billing at the end of each month, and the company had 30 days to pay, so it was a 60 day cycle from start to finish (from the 1st of one month to the end of the next month).

They only paid me for June at the very end of July, which made me wonder about their money. However, the project manager and his wife invited me to their house upstate, and we spent a week working together, and the project manager assured that there was enough money to pay me. They cooked some wonderful meals and it was a pleasant week and we got a lot of work done. At that moment, I thought of the project manager as a friend, and our work relationship seemed very positive. I was single at the time, and his wife said she had a friend that she wanted to set me up on a date with.

Still, I was suspicious about the money, so half way through August I stopped putting in billable hours. I trusted the project manager, but I did not trust the CEO.

As of September 1st and they had not yet paid me for the work I did during July. This was in violation of the work agreements that we had signed.

I demanded to know whether they had the money to pay me. I wrote to the other contractors and asked if they'd been paid. None of them had. Most of them were only owed small amounts. At this point, the company owed me $10,000. I had been the main programmer for most of the summer.

September gave way to October. For awhile they made vague declarations about paying me part of the money. I began to suspect that they had no intention of paying. I found out that they were still using the team in India, and apparently the team in India was being paid.

In November I had my lawyer send them a letter, urging them to send me the money. I notified the other contracts in Europe and the USA of what I was doing.

After that, everything changed. They had their lawyer write up a counter letter that basically said that all of the bugs on the site were my fault. There was a suggestion that I had maliciously tried to undermine the site, and that I had interfered with the team in India and damaged their ability to move the site forward. The CEO was apparently especially angry about the fact that I'd contacted the other contractors in the USA and Europe, and their lawyer's letter referred to this as tortious interference with their contractors.

The purpose of that counter letter was to frighten me, and to some extent it worked. I realized that if I wanted to get my money, it would involve an ugly fight, with a lot of ugly accusations. I gave up the fight.

I never got paid.

After reading this article at Inc, I have to wonder how far the company could have gone, if they had wanted to take a very aggressive approach with me. On the personal level, I could wonder: If they had made accusations to the FBI, would the FBI have investigated me? What would that entail, and would I have the prove the bugs in the code were not my fault? But aside from the personal level, there is the general issue: companies with aggressive lawyers could potentially use these aggressive tactics to get out of paying contractors. I wish that I could have faith that the folks at the FBI are smart enough to avoid being suckered by these companies, but I don't really have such faith.

It says that the company couldn't figure out how to grow without bringing in a bunch of financiers, who have a low hit rate (3 go north, 3 go south, 4 turn into the living dead), who provided negative 10 yr returns even with Google in the portfolio, and who take 2-3% + 20% of exit from their own investors.

Definitely an excuse to drink, but not for reasons of celebration.