Clinkle Implodes as Employees Quit in Protest of CEO
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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?
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.
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.
"Still, there was no app, and Shontell reported that contributed to internal turmoil."
1.) Venmo launched, grew, and was acquired by Braintree (August 2012, then by Paypal, September 2013).
2.) Apple Pay launched to over 10M devices within the first 3 days - which also breathed a new life into NFC payments (October 2014)
3.) I'm guessing ultrasound became a lot less sexy technology in the face NFC and iBeacon/BTLE
Seems like it would have been great in 2012, but is "just another option" in 2014.
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. :)
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.
(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.)
http://www.businessinsider.com/inside-story-of-clinkle-2014-...
It looks like his father is Neno Duplan, who founded Locus Technologies.
I'd guess it slightly increases your probability of success, but greatly increases the cost of failure.
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.
The rich now are just "paper rich" (outside of bubbly-again real estate) and the physical portions of the economy remain stagnant.
Some kind person on HN actually clued me to this, and that was s serious penny drop. And of course I lost the post...
Could be wishful thinking on my part, but I read "Monetary History" years ago and it took root.
Imagine a Steve Jobs-like reality distortion field. People are drawn in by that.
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.
Back then, payments was an instant-fund space. Of course, it didn't work.
Welcome to the tech industry! We're not in a bubble, it's different this time...
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.
I'm curious to know, which reptiles live in packs?
However, this hypothesis is no longer espoused by the majority of comparative neuroscientists in the post-2000 era.
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.
You've never met this type?
I'm sorry you wrote all of that, but no.
I have a hard time believing in the existence of some "alpha male" type who can bend "lizard brains" to their will, even against all reason and logic.
Unscrupulous people exist, but not in this pickup artist übermensch form.
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.
What he is describing reminds me a lot of grad school (although that is a totally different context).
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.
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?".
Come on. The bar for your approval has to be higher than "derisive towards VCs and VC-funded founders".
How've you been? I've been well.
I also did not mean to imply that all "hot young founders" fit into this mold, or that VCa are all dumb, etc. But this stuff most definitely exists.
The real dynamic is a touch of so-called "reptile brain" plus a heaping portion of self-reinforcing cult of male ego.
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.
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.
"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."
In talking to people at work about it, there is a general sentiment of "haha, this is really funn....errhmm...that's a little to close to reality..."
Mike Judge is an absolute creative genius.
http://www.theonion.com/article/species-of-blue-green-algae-...
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.
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.
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.
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
https://twitter.com/cdixon/status/544570097465954304
crunchbase shows they have done 31 publicly known ones in 2015 so far
https://www.crunchbase.com/organization/andreessen-horowitz/...
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.
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.
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.
Why did you even stay for 3 months?
a nice juicy target of the state [anti-]gaming commission.
> “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?).
A couple years at FB does not a leader make.
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?
Apple, Google, Amazon, Samsung and Visa can't develop their own variable rewards systems?
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.
I mean that I am experiencing so much schadenfreude. I am not criticizing anyone else who is sharing in it.
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.
So, yeah, an apology for schadenfreude.
Cheers!
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.
capital is available and flowing towards people who shouldn't really have it.
but overall it is working for the smart investors.
but really, people are throwing money around for crazy returns.
I don't care if he went to Stanford. I went to Caltech. I didn't have the first clue when I was 24.
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.
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.