How did the founder manage to build a company of 70 employees without a product and securing 30 million fundings after 2 years of not really showing anything? And to top that of, it didn't look like the founder has any track record before this company.
I'm not interested in mocking or bashing the company, I just wanted to know the possible mechanism that would result in such ... unexpected scenario. Is hustling really that effective and I have been underestimated that all along?
As someone who was there for a very long time -- "without a product" is not at all an accurate reflection of the state of things (as the TechCrunch article and plenty of other sources can corroborate).
There was a functional product in beta (as in: being used by non-employees) in early 2012. The issue was that Lucas was unable to secure appropriate relationships with banking partners such that the product could actually launch to the mass public until the end of 2014. Both attempted banking partners had extreme restrictions on the number of users allowed on the system until their legal teams signed off on it (due to the timely influx of new regulations from the CFPB), and both times this took more than 9 months to go through their bureaucracy.
Even while these public-launch-restrictions were in place, obviously it was possible to demo investors on the real product that moved real money between real bank accounts using real ultrasound technology to buy from real merchants, etc. These features were all also in beta tester hands.
As far as why investors were willing to invest in the product.. that's its own discussion that I don't feel like typing up at 6:30 on a Friday. Short answer: mobile payments were hot, the product really was pretty and functional, the go-to-market strategy (assuming a banking license deal went through) was rather pragmatic (debit cards to be backwards compatible & get data from day one), the team (other than the CEO) top-tier, no investor invested particularly much, etc.
It sounds like the deal didn't work out, which the company was unofficially banking on, so the rest of the time has been the leadership frantically trying to figure out what to do with all of the resources so as to not turn tens of millions into complete worthlessness.
I wouldn't wish that position on my worst enemy. I know nothing about what the CEO is like, and he apparently has plenty of flaws, but I think I would be an awful CEO in that situation, too.
The CFPB is doing its job. Things like these are very complicated and I'd much rather the CFPB take as much time as it needs with financial matters than let any little startup through or let banks and other institutions do whatever they want.
"Move fast, break things" is great when you want to create a social networking app and the worst thing that can happen is that somebody isn't reminded to congratulate your friends on their birthdays. With payments systems people can lose lots of real money and there are literally millions of people always looking for ways to game the system - that's why regulation and moving slowly enough is a painful necessity.
The money system, especially for all us little folk, is far too important to be messed about with. More barriers is good. This is one place where a conservative approach is the right one.
Is hustling really that effective and I have been underestimated that all along?
There are different kinds of hustle. The good kind, which means working hard to reach a goal. The not so good kind, which means working hard and doing some not so nice things to reach a goal. Finally, the bad kind, which involves doing anything to anybody in order to get something. There is a difference between the not so good and the bad kind. In the not so good you are trying to reach a goal. In the way, you might get lost or not notice that you are doing some things wrong. After all, it is not simple to keep track of how your decisions impact the world over the long term. I'm not trying to excuse anyone here. Just stating that good people with good intentions sometimes do things that hurt others without even noticing. The bad kind of hustle is the one where you dont care who gets hurt or what gets broken. It does not take into account anybody but you. Always do your best to huslte the good way. Keep track of how your decisions affect others. Make a point about reaching goals in more than one way, i.e., not only financially, but morally and/or socially.
The good kind of hustle is the one you see baseball players do all year long. They train hard. They play hard. Above all, they go out to do their job as its supposed to be. All while giving fans something positive to look forward to. :)
Was The Uber guys doing bad hustle then... not knowing who gets hurt...
The nature of disruption is that some people will get hurt.. Taxi medallion/Hotel owners folks think they are playing by the rules while others aren't...
The market seems to have rewarded the bad hustlers here then as per your definition or have I got it wrong.
It's interesting how via the "sharing" industry the term "disruption" has now devolved into simply breaking the law in a highly predictable manner.
(Predictable as in: doing exactly what the law was meant to put a stop to in the first place, so obviously not "innovative". And in many cases, like for instance UberPop, not even creative enough to find an actually loophole, but blatantly breaking the law.)
It's not black and white. I'm not for or against Uber. Have never used the service and know very little about the actual company. Markets are irrational. They are a collection of people who need/want something. They will buy without much thought to the moral status of the seller. You are not wrong, but not exactly rigbt. We can't judge a whole company for the actions of some members. That's why I said there is some not so good hustling. It's hard to figure out this sort of things because you never know the while story. If you feel like this is something worth pursuing over a period of time longer than what this thread will allow feel free to email me. In hardly have all the answers, but I can definitely come up with some good questions. And no, I didn't answer your question because I just don't know.
I'm not entirely sure about the hotel industry, but for the most part the taxi industry in most cities lobbied for the laws, which restricted competition. They had dug their own grave by the time Lyft launched (and subsequently UberX).
In an earlier article I think it said his dad was the VP of a large bank, possibly Bank of America. I am sure that makes it easier to put together a nice seed round.
> Clinkle’s first investors were Duplan’s parents. His father is a well-respected software entrepreneur. They told him they’d back his startup as long as he agreed to get a college degree, so Duplan kept his promise, obtaining his bachelor’s in computer science in three years.
Thanks for the link, sorry if it was misinformation in my post but I still could have sworn that round had something to do with a high profile family member who was a banker. It stood out as a very annoying advantage and has stuck with me as a data point the past few years.
Is it an advantage? Getting investment is a good step towards validation. If you get funded for free, you lose that signal, and might just be extending the runway of your death march.
I'd guess it slightly increases your probability of success, but greatly increases the cost of failure.
It's not only good for the direct money (though that's nice), but also the connections to potential customers, if the source of the money is also well-connected (not all wealthy people are well-connected too, but many are). For example, somewhat famously, Bill Gates's mother served on the board of directors of the United Way at the same time that John Opel, chairman of IBM, also served on that board, which was instrumental in getting the young Bill introduced to the right people.
Basically income inequality and a fading middle-class causes a downward spiral of the rich having too much money to care and taking ever greater risks for rewards.
I know of several other founders who have a tremendous knack for selling a vision to investors. The same strength works on employees as well, especially after you have raised a round.
Imagine a Steve Jobs-like reality distortion field. People are drawn in by that.
I too am baffled by this, since it suggests a complete lack of due diligence on the part of VCs.
By a massive coincidence, I'd like to mention that I'm taking a hiatus from strategizing about how to raise money for a feature film to launch a very hot startup that will be disrupting the messaging, retail and payment spaces - simultaneously. It will be like Uber for money, or maybe like AirBNB for shopping. Anyway I urge people with more money than sense to get in on the ground floor of this smoking hot opportunity right now. For every extra digit on your initial investment that separates you from your more timid peers, I will supply a luxurious, hour-long ego massage.
Probably not a popular opinion to pin this against someone nobody knows... but just that photo they used to headline the article makes the guy look like a typical sociopathic marketing type who talks smoothly but has no real game. He probably sold investors with fancy dinners and a great pitch with no tangible skills to back it up with. Just saying.
Picking a picture of a person is an indication of how fair the article is going to be. If a publication uses unflattering photos of people they have an angle. It's generally a good tell of what way an outlet leans. Basically the same scheme as showing a child / baby picture of someone accused of something to make you lean towards that someone's innocence.
> How did the founder manage to build a company of 70 employees without a product and securing 30 million fundings after 2 years of not really showing anything? And to top that of, it didn't look like the founder has any track record before this company.
Welcome to the tech industry! We're not in a bubble, it's different this time...
Can't speak with authority about Clinkle, but I strongly suspect that the founders have an "extreme alpha" personality type.
I have seen people with that personality type be able to just basically tell people what they want and get it. It's really a sight to behold.
"I need 50 million." "Okay boss.
I think there's two mechanisms at work. One is what you might call the "reptile brain," which reads such signals and simply interprets them as "this is my pack leader." The other mechanism is I think a cargo cultish belief in the power of those personality types to just always succeed no matter what. "Man, he seems like a winner." (This personality type seems to almost always be male, at least in my experience. Definitely not trying to be sexist. Might be being a bit reverse sexist though, since I do not find this trait redeeming.)
You would think that VCs would be inoculated against this kind of thing. You would think. But I personally know of two examples of people with off the charts alpha personalities who were sort of serial killers of wealth. Raise, burn, raise again. Their alpha personality trumped any notion of merit or track record.
It's a figure of speech. It's also a bit derisive, since we humans like to think we are so much more rational than that. A more accurate term would be primate social instincts. But this stuff I suspect predates the neocortex.
I have an incredible amount of difficulty believing this, and do not think this accurately reflects what took place with Clinkle (or many other failed startups, including even the examples you've provided).
That people try to dominate and manipulate others for business gain? Is that what you have an incredible amount of difficulty believing?
Well, I can tell you based on my experience in startups going back to the early 1990s that it happens and it happens a lot. Particularly with VCs.
In fact, one of the reasons I'm pretty down on VCs (vs, say angels or syndicates) is their desire for "alpha male" types, their hiring of them, their funding of them, etc. They all think they are alpha males of course, and they act like it (which is often perceived, correctly, as being complete jerks) but they also respect it as well.
It is totally plausible to me, and I believe I've seen it happen, that the difference between being funded and not being funded was the perception that the lead of the company was an alpha male.
I none early experience, the CEO was brilliant technical guy but he was quiet and contemplative. You asked him a question and sometimes he'd think for 30 seconds before answering.
Once we were funded, after taking forever and putting us over the barrel, the VCs brought in an alpha male asshole who had not real people skills or business knowledge. They forced us to accept him as our new CEO. He's gone on to have quite a career doing nothing but being a personality type. You know the CEO who delegates everything because he knows nothing, for whom its hard to please because he can't tell the difference between good and bad and just demands more, etc. But at the same time somehow takes credit for everything.
The one who gaslights people, initiates charm offensives when he needs something, and when you accidentally show he was wrong, you become persona non grata.
Based on your response, I can't tell if you are one of those obnoxious alpha types that just hasn't been able to use it to get money out of an investor, or if you really are just some guy on the internet trying to humble brag about being around so few people in life that you've never met an obnoxious, alpha male in the tech industry.
There are certainly alpha leadership types, and some of them are obnoxious, but I don't buy the whole pop psychology rationalization of their supposed ability to halt critical thinking in otherwise rational people. That just reads as a dudebro power fantasy to me.
Cult of personality may pull some strings, but sooner or later the company needs to function and those people either steer the company in the right direction or capsize the ship because they're hot air.
I've met this guy many times over. The late 90s early 2000s version usually came from Cisco/Oracle/IBM/etc and had no idea how to sell a new product, let alone run a business. At least VCs seem to have mostly come to their senses.
Please read the book Rocket Fuel if this is really your current situation. It might just be that your co-founder is a visionary with the wrong responsibilities and you're the perfect integrator. Or your co-founder might just be an asshole period. If that's the case, jump ship now.
Just read it. Looking at the partnership in a new light now, and will work towards breaking up. I'm the visionary, and my partner is not the right integrator, if one at all. Thanks for pointing me in the right direction.
> You would think that VCs would be inoculated against this kind of thing. You would think. But I personally know of two examples of people with off the charts alpha personalities who were sort of serial killers of wealth. Raise, burn, raise again. Their alpha personality trumped any notion of merit or track record.
I am about as cynical as they come on this topic but I myself have been sucked into that cult of personality, with disastrous effects. It's easy, even when cynical, to fall into a Keynesian beauty contest mentality where you assume everyone else will fall for it even if you can see through it.
There are enough suckers out there to make this possible I suppose.
It's not just an alpha male thing. I've seen this on the female side as well. As a photographer I've worked with porn stars and I've seen them get tons of cash and even cars just by asking a sugar daddy or through "financial domination" (usually over the phone and not even in person). It's really a sight to behold. Overhearing it, you're like, "did that just happen?".
You don't have to be dumb, or a sucker. Anyone can be conned. In fact, con artists rely on this overconfidence to blind their victims. They flatter your ego, making you think you're too smart... to be their victim.
I think that he's oversimplifying the dynamic, and I don't think that the emotional/"reptile" dynamic is the only one. Some people (even very powerful people) respond to posturing and dominant/submissive relationships and some don't. Not everyone is going to respond well to "You need to give me $50 million now", but some people will.
I can believe it. I once worked at a place where it took me three tries to quit. To this day I don't know how he talked me out of it the second time, and the third time I psyched myself up and just kept repeating like a mantra that I was leaving.
It's spooky. One of the examples I'm thinking of was basically crazy, not to mention a sex offender to boot. He had an endless track record of failures too.
But when he walked into a room, you sat up a little taller. You felt better about yourself. When he spoke, it took an act of will not to start to believe.
I was not the only person who experienced this. Many people did. We had a postmortem about it and just couldn't figure it out.
That's why I suspect this stuff is pushing some ancient primate dominance buttons. It is so irrational.
edit: thinking on it more, one thing he did to great effect was to project this aura of invincible confidence and then extend it around others through subtle flattery. They call them "confidence men" for a reason. It is devastatingly effective, even when your rational mind knows better. It seems to speak to something deeper and more ancient.
This is a really good point. I've heard the term Chicken Hawking in a very, very different context but it works here as well.
I think the illuminating bit of information is there is a real difference between the worldview of a VC and a founder. VCs have no clue what's possible or not (and in my experience don't actually understand businesses because most haven't run thenm- they went to Biz School, got their MBAs and that's it.)
So, in todays environment where "founders" are usually kids right out of college with no actual business experience, then their perfect "mate" is a VC who also has no experience. The kid is young and ambitious and has no clue on the limits of his own possibilities-- and the VC is just looking for a payoff without real work the size of the kids ego.
IT's a great match and it explains a lot.
Like why real engineers and real business people building real businesses have a lot more trouble raising money.
I don't doubt the existence of clueless VCs who throw their money around, but that's no different from any other form of business. They'll soon lose that money.
The problem is that, given the anecdote of another commenter with intimate knowledge of the situation, Michael's explanation doesn't match reality. I suspect cases like this often defy simple rationalization, but as outsiders we don't have the facts to correct our theories.
As your claims get more and more lurid, they get less and less persuasive. This chicken-hawk sociopathy stuff may be fun to write, but it isn't doing you or the site any favors.
Your use of psychiatric language is annoying. Especially because, as you admit, you don't know what you're talking about.
You seem to think it's acceptable to call someone a psychopath because of the way you perceive their behaviour.
It is not.
You clearly mean to use the term psychopath as an insult, and as dang has repeatedly told you personal insults are not allowed. But I don't care what you say about some rich guy. I do care how your lazy, careless, ignorant use of psychiatric language perpetuates stigma against a wide range of disenfranchised powerless people.
I don't think that psychopathy is necessarily a mental illness. I would never encourage harassment or stigma toward people with biological mental illness.
Psychiatry is still trying to understand why some people are bad. Psychopathy is some attempt at a post facto analysis. Personally, I'm not convinced that a biological "bad person" gene or experience pattern exists. I think that free will exists and that some people (some with mental illness, most without, and those we call "psychopaths" being typically in the latter category) are just rotten.
> I do care how your lazy, careless, ignorant use of psychiatric language perpetuates stigma against a wide range of disenfranchised powerless people.
This does not seem fair. We're talking about people like Zuck and Spiegel who actually are screwing up people, who literally joke about peeing on women and literally brag about violating people's privacy purposely. We're talking about founders of companies whose primary means of income is duping people by advertising. Calling them psychopaths is not unfair by any stretch of the word. Personally I'm not a fan of michaelochurch's wild outbursts either, but it's clear he isn't the one attacking powerless people, the situation is actually quite the opposite of that.
> Calling [founders of advertising businesses] psychopaths is not unfair by any stretch of the word
That's beyond unfair; it's absurd. But yes, of course calling individuals psychopaths with no substantive basis is a personal attack, and a nasty one. Many people enjoy that kind of thing. Many also enjoy the Jerry Springer Show. It doesn't belong on Hacker News. This is not a borderline call!
More generally: the problem with the comments we're objecting isn't that they're untrue. The odds of this type of thinking arriving at truth don't seem high, but I don't know, and neither do the commenters. The stuff isn't verifiable. What is verifiable is that the signal/noise ratio is low. Why? Because the excitement of indignation is noise, and when you take that out, and take out persuasive-sounding but empty rhetoric, there's nothing or almost nothing left.
I have no problem with critiques of VC as such and have made my own share of digs against suits. But shrill, vacuous rhetoric is outside what the HN guidelines call for, regardless of what it advocates. Repeating it often and loudly doesn't change that.
> That's beyond unfair; it's absurd. But yes, of course calling individuals psychopaths with no substantive basis is a personal attack, and a nasty one
I personally think monetizing via advertising is unethical, but I'll concede on this point. I realize I'm in the minority here so I accept that by currently ruling norms advertising is not a psychopathic activity.
> I'd say the odds of this type of thinking arriving at truth aren't high, but I don't know, and neither do the commenters. The stuff simply isn't verifiable.
Here, I strongly disagree. This stuff is very verifiable... by just going to news outlets (prestigious, established outlets, not just blogs) which have verified documentation of chats in which Zuck calls users of his site "dumb fucks" for having trusted him with private photos, SSNs, etc. We have documented proof of Evan persuading drunk women to perform sexual favors for his friends (no, it's not referring a friend to a friend, it's not innocently hooking up a date, it's getting drunk women to "give blowjobs" to his friends), in chats he is describing peeing on women, doing cocaine, about installing strip poles in places he owns, etc. This is documented in places like NYTimes: http://www.nytimes.com/2015/02/24/magazine/whats-really-at-s...
What's more, Spiegel himself admitted this, Zuck similarly has recognized the chats to be true (not that such proof was needed -- it was validated by prominent journalists independently).
These folks need to be called out. At present we see a pattern of young brash founders who are misogynistic and disrespectful getting their way. Per the persistence of the patterns this kind of behavior is becoming normalized as being okay in society's eyes, one way to stop this is to do anything we can to stigmatize the non-consensual peeing on women, the violation of people's privacy, etc. It's by saying it's bad. Otherwise, what would-be entrepreneurs are internalizing is they can get away with this, that hustling in this way is just part of the game, that it doesn't matter that you're living life without recognizing others' dignity.
But yes, of course calling individuals psychopaths with no substantive basis is a personal attack, and a nasty one. Many people enjoy that kind of thing. Many also enjoy the Jerry Springer Show. It doesn't belong on Hacker News. This is not a borderline call!
I had substantive basis: the history of how he ran his business is fairly public.
You have every right not to like what I say. You have every right to say that you don't like what I say. But your high horse posturing is tedious, counter-productive, and, because you are HN's moderator, it does more damage to this place than I ever could.
You see behaviour that you don't like and don't understand and your instinct is to ascribe that to mental illness / neuro-atypicality, rather than just call an asshole an asshole.
So, all those people who do have mental illness / neuro-atypicality now have to cope with the stigma of people thinking that their diagnosis means they are violent or assholes or whatever.
Don't sweat the down votes. You're describing real things.
A lot of people are still in denial about the fact that our industry has become populated in recent years by the sorts of high-powered uber-alpha sociopaths that dominate finance.
Only 20 years ago -- maybe less -- computing still had a "hobbyist and hacker" feel. People were making money, sure, but it wasn't a place where people go to become instant millionaires or billionaires. Finance and high corporate MBA stuff was where you went to do that.
Now that's changed. An app can make a fortune, quite literally. So now our industry is attracting an increasing number of "wolf of Wall St." types.
Nerds and old school hackers just don't know how to deal with this personality type, and many deny its existence outright. It's tough to even describe to someone who hasn't encountered it in its natural habitat. I also think people deny its existence because they want to believe in a rational, meritocratic world, not an irrational emotionally-driven shitshow like the real world we actually live in.
It's really nasty because our industry is not hardened against this stuff. In a way, those folks are less destructive in finance because the financial scene expects, understands, and knows how to deal with them. Your typical mildly Aspergers-ey nerd is fresh meat, and our industry's institutions aren't "psychopath-hardened" either.
I've been in a good number of VC pitches and have met many. They are not all bad people by any means, nor do they tend to be dumb. A few of them are "wolf of Wall St." types, but the negative dynamic I see more often is someone who wants to be this type but really isn't. This leads to what you humorously call "chicken hawking," and also to cases where VC types can themselves be taken for a ride by these predators. When you encounter a true high-powered psychopath, it's really dangerous not to treat them like a rabid mountain lion. Any affinity you might have, or naivete, or desire to live vicariously in some way through them is something they can "use."
I actually don't blame people too terribly much for sort of wanting to be one of these predators... our culture glorifies it. How many movies do we have about the happy go lucky cop who blows people away and makes jokes, or the glamorous con man who pulls off the big heist, or the endearing mobster? In reality these sorts of people would all be monsters. There's no glamour, no romance, just ugliness and destruction.
Snapchat may not be useful to the world by your definition, or for that matter mine. But it provides enough value for 100-200mm people to regularly use.
I feel like this needs to be incorporated into an episode of Silicon Valley.
The bit about not actually having a real product in production reminded me of a recent episode of the show where it was mentioned that sometimes it is better to not have a real product and revenue because then valuations can be blown way out of proportion in the frenzy without any real revenue benchmarks to base them on.
I believe that derives directly from what people like Fred Wilson or Mike Arrington have been saying:
"As I was reading Josh Kopelman‘s excellent post on the seed boom and Series A bust, I got thinking of some words of wisdom Mike Arrington once shared with me. He said “numbers always ruin a good story.”
What Mike meant by this is you can raise a seed (or Series A) on a story. But at some point, you will have numbers; users, user growth, revenues, and revenue growth. You will also have a burn rate. And those numbers will become the thing you are judged on and your nice story will be “ruined” by the numbers."
Yeah, as usual, when I watched that episode, I'm turning to my wife and muttering "This is true." The writers may be story-driven, but it seems like Bad Money was introduced just to have an outsider who was in-the-know to be able to draw light on the VC machinery.
There is a good reason not to have a product: if you have a product, the smart money will sit back and watch what the product does. But, if you need money to complete a product, the investor knows what the funding is for and has no option to "see what happens."
After four years of work and ridicule, early employees at the company
are said to have been actively encouraging a sale, even if it didn’t
come with a massive acquisition price. Sources say that many employees
didn’t have much to gain anyways. Duplan had offered only tiny shreds
of equity, convincing hires that Clinkle could be a billion-dollar
company and their share could turn into tons of money.
A lesson I've learned the hard way is to never let your sense of greed impair your judgment, especially around the relative certainty of success of a startup. A stupendously well-funded startup indicates only that the founders are good at fundraising, not that they're good at building a product or a company.
"Yet suddenly, the startup was the talk of the town when it managed to raise $25 million in seed funding in June 2013 from top investors including Peter Thiel, Andreessen Horowitz, Marc Benioff, Jim Bryer, Accel Ventures and Index Partners."
These guys are all supposed to be amazing predictors of the future. Who really cares whether payment data is transmitted via ultrasound, bluetooth, NFC, or over the wifi/cellular data connection? How does adding ultrasound to the mix shape the future, as all of these guys claim they want to do?
I blame the investors in this case more than Duplan. There are 70 people that wouldn't have been hired and fired if those investors hadn't written this apparently very immature 21 year old kid a $25M check for some hokey technology. Duplan clearly had a knack for communicating a believable grand vision, but little ability to deliver on it. Investors at this level - allegedly some of the most sophisticated VC's on the planet - are supposed to be able to identify people like this.
I'm genuinely curious. Let's say things had turned out slightly different, he'd been able to negotiate the deals with the banks that he needed (let's say he had a Board Member who helped open a few doors, or perhaps a Sr. Executive who had deep experience with the banking industry/regulations, and could expedite) - and let's say that clinkle had taken off, and was generated sufficient revenue to be a $10B company. Would you still blame the investors, or would you be impressed by their willingness to take risk?
From the New Yorker article on Marc:
Each year, three thousand startups approach a16z with a “warm intro” from someone the firm knows. A16z invests in fifteen. Of those, at least ten will fold, three or four will prosper, and one might soar to be worth more than a billion dollars—a “unicorn,” in the local parlance. With great luck, once a decade that unicorn will become a Google or a Facebook and return the V.C.’s money a thousand times over: the storied 1,000x.
A16Z invests in 15 companies/year, knowing ahead of time that ten of them will fold. Being able to predict the future is hard.
A16Z invests in a lot more then 15 companies/year, that article is way off in that regard
here is a tweet from dec 2014 where Chris Dixon (General Partner) said they did 30 seed deals last year adding up A, B, C, etc. they do closer to 50-100
My point was that the odds of this particular individual pulling it off were near zero to start with. Calculated risks are fine. This "risk" had essentially no chance of success, both because the concept was not compelling, and because the founder was incredibly immature and had zero experience.
For comparison - the odds were probably against Uber succeeding, but it had a compelling value proposition for its customers: with a few taps, you can summon transportation anywhere. What was the value proposition that Clinkle offered? There really wasn't one that I can see. NFC already existed when they came out, and users weren't going to care which technology actually transmitted their data. Uber was a calculated risk; Clinkle was just a blunder of an investment. It wasn't even a gamble; the term "gamble" implies that you have a chance of winning.
At least a few years ago you could get ~$50k in seed funding from a16z really easily (just needed to seem promising, without needing to meet the general partners, etc.). It has probably changed now that a16z has shifted more towards the larger, later rounds. VCs do these deals because it costs them nothing and they now have their foot in the door for later rounds.
Entrepreneurs love these too, cause they can bandy about these big names. I wouldn't read too much into the big-shot names unless there's a $$ figure attached.
> At least a few years ago you could get ~$50k in seed funding from a16z really easily (just needed to seem promising, without needing to meet the general partners, etc.)
Nope, both Marc Andreessen and Ben Horowitz actually came to Duplan's office and had a long meeting with him. Marc and Ben agreed to invest in him after the meeting, likewise Peter Thiel invested after having a meeting.
Thanks for clearing that up. For the record, I didn't say that was what happened to Clinkle, only that a16z does (or at least used to) make many small spread-your-bets seed investments.
I worked for a company where this happened twice in three years.
I joined the company only to discover that the entire development team (sans one guy) had quit. We built up a new team, put up with an amazing amount of mismanagement, gas lighting, etc. For example: not only would they not make a spec, they wouldn't give us details about the features they wanted. We'd ask questions and they would be ignored. Then months later they'd chew us out for not building things they had never even mentioned wanting. And they installed an ex-navy seal who had 20 years in the military, a couple months n the business world and no understanding of (nor respect for) technology. He started finding people to hound out of the company and get fired-- because he always needed a scapegoat.
We put up with this for a year, and then all of us, quit again. (well the one guy who was there from the beginning is still there, and a couple people who don't have easy mobility are still there, moistly because they had been on the job only a month or two.)
And now they have a new team. Things have not improved at all... but so long as they can continue to hire people they will.
Management has decided that the engineering teams that quit "sucked" and that they're the reason there are "problems" today (like not implementing features that were never requested, etc.)
So long as they can keep hiring people, they're doing so.,
This while the glass door reviews are really terrible.
Most people don't read glass door.
So that's a lesson: Read glass door. Don't expect that even you and a bunch of others leaving will end the company.
Beyond that, read the whole history on glass door. If the ratio of reviews to employees is high, something is fishy.
A friend of mine worked at a company. He pointed out they had terrible reviews on glass door. So they started asking new hires to review the company. I think the ratio is now something crazy like 1 review for every employee who currently works there.
The company was comically evil. Among a sea of terrible stories, one of the worst I can think of is at a company party the CEO told the whole staff they didn't care about them and want to just get rich off their hard work.
I'm glad seven employees decided to quit a rude/poor boss. Although I'm only basing 'rude/poor' based on quotes from the article, not from personal experience, I think it might have some merit. Props to them.
"After approaching Google about a potential deal, a team of Clinkle’s top engineers visited Google to go through rigorous testing to see if the startup was worth acquiring. Sources say Google declined to issue an offer." I have a mental issue of a line of engineers on tables undergoing colonoscopies.
On a slightly (un)related note, clinkle.com doesn't even appear for me (based in SF) in the first page for a Google search on 'clinkle' https://www.google.com/search?q=clinkle
A bank that you could sign up for and use on your phone. You got a debit card with ATM access and rewards without a credit check. The app showed your payment history and let you send money to and request money from other Clinkle users.
yup, but that was dropped late 2012 in favor of debit cards for backwards compatibility, with plans to re-introduce merchant terminals once there was user adoption
>they could win a full refund of what they paid. Sort of like a social slot machine, Clinkle hoped to seduce users with the chance to win its little lottery.
a nice juicy target of the state [anti-]gaming commission.
it seemed like some combination of payment replacement + wallet, presumably eventually linked directly to bank accounts / venmo / loyalty program ala belly/punchd/punchtab
> “It’s not the kid’s fault,” McCarthy said, defending his flustered boss. McCarthy sometimes took over for Duplan during the weekly all-hands meetings on Fridays, correcting him and referring to him as “kid.”
Its a bad play to join any company whose founder and chief executive is at his first leadership post (first real job?).
Both.
It's been a decade now. Mark, and others, have built one of the most valuable technology companies of all time. In my option that's a great leader.
> Mark, and others, have built one of the most valuable technology companies of all time.
Clinkle?
I am genuinely interested in the measure of value here. Multiple rounds of layoffs (and apparent mutiny), experienced management hires departing in days or hours, millions in investment resulting in what? An exit strategy?
> While Clinkle’s brand had been tarnished by reports of its internal troubles, the companies were said to eye the variable reward system as a way to differentiate their mobile wallets and get users to demand merchants get on board.
Apple, Google, Amazon, Samsung and Visa can't develop their own variable rewards systems?
I wonder if there's intellectual property at play that would prevent others from doing so. If it's even possible to end up in court it may be cheaper to acqui-purchase the intellectual property via the company.
Going to sound a bit cynical here, but really isn't $30 million just spare change to a VC?
To us we see $30 million and think "that's a ton of money!! how could he get that funding?" but to the VC it's like "Here's a bit of spare change, maybe you'll make something out of this, maybe not".
From that viewpoint alone I could understand why a VC would fund this. I mean, could you guarantee that it's NOT going to be some breakout hit? What if you did pass on that $30 million investment and the company did actually turn out to be valuable? It's easy to say post-hoc once the company has been stupid that the VCs ought to have known about it, but it looks different if you think back to what the VCs must have known when they were approached.
Alas, because we've been seduced by the promise of sweet sweet VC money + IPO's.
I'm a weird case, but maybe not that weird. I realized recently that I don't really even like programming. I mean, not as much as I like sitting on the beach, or hiking, or talking to a friend at a party. I'm in it for the money. I'd rather see the better technology/least sleazy company win, but if I had ten trillion dollars I'd go sit on the beach, not keep programming. I'm here for the money, I'm just determined to not be corrupted along the way.
So when I hear about the demise of Clinkle, I must admit I rejoice somewhat. Because their product was dumb, or at least unimaginative, and I know that funding is limited.
But I think technology used to have people more like Steve Wozniak, who really cared about the technology for its own sake. And someone like that would have no particular feelings about Clinkle, because they already got their wish of being able to hack around on tech all day.
Ok, I might be an ass for saying this but I find the fact that on their careers page literally everything is open now is funny is a righteous sort of way.
I knew this was going to be a grand failure by simple indications. Their "app" was a total waste of bytes on my phone, even for something as simple, it was buggy and wasteful. Also, their verification system was broken. Never got an SMS and I exceeded their limit of 3 (cheap bastards). I've sent numerous emails, never got a response. A real startup never does this!
Amazing that you can raise that kind of seed money without a working prototype. They must have been claiming some serious IP assets.
Also, $25 million seems like a lot for convertible notes. Each one probably didn't exceed a few hundred thousand a piece. This is an excellent example of how once you convince a couple key investors to join, there are dozens waiting behind to follow.
Oh, original. "Kids these days". Look around you, the "millenials" you are ridiculing are taking the tech world by storm, graduating at record rates with more advanced degrees than ever.
Who do you think you are debating with on HN? I would guess the average user here is under 30 and making twice your inflation-adjusted salary at 35.
Doubtful. Most millennials are graduating with unserviceable levels of debt, working jobs that pay wages that barely keep up with inflation.
For the small minority in the tech industry, the situation is much brighter, as long as the VC money keeps flowing. Those older have seen what happens when the music stops and not everyone has a seat.
I hope you have a sufficient emergency fund and something besides $tech_flavor_of_the_week under your belt. Enterprises that provide safe havens during tech bust periods hire a bit differently than tech startups.
I'm not interested in mocking or bashing the company, I just wanted to know the possible mechanism that would result in such ... unexpected scenario. Is hustling really that effective and I have been underestimated that all along?