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Movie studio takeover

cobaltix.com

59 pointsdhruvkar28 comments

So, assuming that certain details might have been changed "to protect the identities of those involved," it may in fact have been Gaikai, a video-game streaming startup acquired by Sony for 380 million in 2012.

Check out this article, http://www.cnet.com/news/sony-to-buy-cloud-gaming-firm-gaika... , in which the CEO denies two weeks before that there is any deal with Sony, and reportedly "expected well in excess of 500 million" for the company. Incidentally, Gaikai has an office in Berlin, according to https://www.crunchbase.com/organization/gaikai and their main office is in Orange County, just outside of LA.

EDIT: Gaikai's CTO, Andrew Gault departed some time in the same year as Sony takeover.

EDIT 2: The CEO of Gaikai said in an interview,“To give you my real take on it, I honestly can’t think of a future for the console companies that don’t include cloud gaming at some point. They can hold out as long as they want to, but at some point, you don’t want to be the console that can’t do this. To some extent, I expect all three of them will have this. But we have to stay Switzerland – we can’t end up competing with anyone. I would like to see all of them use Gaikai, that’s my fantasy, right? It would be cool.” Source: http://www.vg247.com/2012/06/07/dave-perry-shoots-down-gaika...

Sorry this article was quite confusing to understand. Who hired them to do this? What was the goal? I think i'm missing the connection between the firing at the end and the initial need to do this...

Same, here's what I gather:

- Author is at Cobaltix, tech consulting company.

- Cobaltix has a Client, unnamed.

- Client bought 51% of a Studio, unnamed.

- Sony wanted to buy the whole Studio for $100M

- Original founders of Studio wanted to hold out for more

- Client rooted all of Studio's computers and fired CTO and strongarmed CEO into complying

It's super weird to me, like, why not just tell them you are voting your 51% shares to sell?

Perhaps they feared the CEO would lock them out of their assets (the servers and render farm).

I assumed the original founders were holding access to the servers hostage. A prolonged litigation could have soured the $100M Sony deal.

Because the original founders have taken the passwords as hostage.

Ahhh, this was sort of hard to decipher.

+1. I had to re-read it. The founders thought they were in a position to get more money. We smiled, then broke countless laws laying waste to their foreign and domestic systems. We sat down with them on monday smiled, and told them to sign the paperwork.

I had to go back to figure out how this wasn't a host of felonies.

So without asking, Cobaltix just broke in and rooted a bunch of systems to show they were vulnerable? Still sounds like something is missing

No, Cobaltix was hired by the people who bought 51% of the movie studio

It is quite poorly written, but you are wrong to allegen numerous felonies.

On Wednesday, we reviewed the articles of incorporation, confirmed the ownership of the company with the CFO, talked to the board, put indemnification and release of liability agreements in place, and agreed on a course of action.

They acted with permission of the beneficial owners of the company. The CEO and CTO mentioned at the end were presumably minority shareholders,a nd were leveraging their custody of the security keys to negotiate a better deal in their own interests, and were thus in breach of their fiduciary obligations.

Right, I read it quick. I thought they were talking about closing the initial deal to buy the company. It sounded like some off-boarding of the original contract, I realized (on second read) that this was the sale-prep for the second deal.

"We smiled, then broke countless laws laying waste to their foreign and domestic systems."

They explain pretty clearly at the front that they verified the ownership of the company and were hired by the group that owned 51%. What they did was the IT equivalent of a repo job. Doing this sort of hacking on your own equipment by yourself or a hired third-party is legal.

"On Wednesday, we reviewed the articles of incorporation, confirmed the ownership of the company with the CFO, talked to the board, put indemnification and release of liability agreements in place, and agreed on a course of action."

So, presumably this was all "okay" (or legal at all), because "the client" owned 51% of the company.

Would it have all suddenly been illegal if "the client" only owned 49%? I'm very curious about how this all works.

Would it have all suddenly been illegal if "the client" only owned 49%? I'm very curious about how this all works.

In my non-lawyerly understanding, basically yes. Here is the theory.

If I own something, and you act to deprive me of my rights, then you are a thief and I am allowed to take certain kinds of action to assert my rights. But if I take action and you dispute that I have those rights, then you are allowed to take action of your own up to and including invoking the legal process. What kinds of action are allowed is a matter of local law. For instance threatening bodily harm is not allowed, but taking control of key systems is.

In this case, the act of selling 51% of the company that you run means that you have agreed that the buyer can make decisions under specified conditions, even though you created it and may still be running it. That agreement is why you were paid a (hopefully large) sum of money.

By contrast if you sell 49% of the company, you have agreed to many things, but not that.

There are many cases where sales might come with complex conditions about when someone has veto power over certain decisions. That is why a legal review would have been needed in this case to verify that they were OK to proceed. But fundamentally you agree to a contract about how decisions will be made, and are then bound by it.

Specifically, in certain states, my understanding is that a majority of the shareholders could take action at any point to permit any actions taken by Colbaltix, amending bylaws as necessary to bypass, say, any requirements for unanimous board decisions. I am not a lawyer, but there's a huge difference between 49% and 51%.

I would hope that votes to amend the company charter would be subject to quorum requirements.

You shouldn't be able to have one faction of the company ownership hold a board meeting, not allow the rest of the board to be represented, and declare all of your subsection's decisions as being unanimous.

>> ...rendering servers, as they were earning $1m/day...

So the company was pulling in at least around $365M a year... sounds like it could have been sold for more.

Potentially. It really depends on what the margins were on the ~$1M/day.

You should fire whoever wrote this for communication shortcomings that will eventually damage the company.

That's ridiculous, but it is poorly written. The article should explain the legal situation clearly at the outset, before going on to the entertaining business of how it conducted its digital repossession operation.

Writing a blog post can have many correlations to how a person works in a company/team.

This post has no time put into it at all. The author may be lazy or not committed to any work/quality.

The blog post has no effort at all put into explaining the circumstances, making it convoluted. The author cannot clearly communicate context, making it painful to work with the author on a team that shares complex ideas (such as algorithms, or system wide changes).

There has clearly been no editing on this post. The author is sloppy, and does not research what goes into good work.

The story is poorly written, even around simple details. The author cannot communicate simple ideas clearly.

That this article got through any sort of PR shield at all (likely they have none?) is strange enough, but it may also imply the author does not care/seek out team feedback, and may not be willing to entertain the ideas of colleagues.

It actually seems like typical founder writing (and behavior). A quick, efficient one-off, with just enough information to get by.

Making some frivolously high-effort blog post would only signal that the company's desperate for business and that would hurt them.

I understood it fine, and found it infinitely more pleasant to read than the post I'm replying to since your excessive use of italics made it read more like terrible marketing copy than a critique.

Just because you own it doesn't mean you are free to do whatever with it. Your pet is property but you still can't torture it.

They have an obligation to all shareholders, 49% or 1. What happens if this little stunt goes haywire?

Wondering if this was Left Bank Pictures [1].

[1] http://en.wikipedia.org/wiki/Left_Bank_Pictures

This seems all sorts of shades of unethical.

If they had a deal in writing, and the partners were trying to squeeze more out by threatening, that's certainly unethical on their part.

This company was just doing their job.

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