8 ms·

Star of “Startup.com” Charged with Accounting Fraud

87 points by harold 11y ago

tgb 11y ago
Next they'll be investigating Tup.
deleted 11y ago
[deleted]
- 83457 11y ago
  oh wait... googling shows it as a real documentary. Could have sworn when I saw it so many years ago that it was not a real company
  - jason_slack 11y ago
    it's real, I just watched this again a few days ago.
    - 83457 11y ago
      When I watch it back then I wasn't sure and it just felt a bit staged but I guess not.
mikek 11y ago
It's sad when people who are talented and driven and successful decide that their success isn't good enough and they have to take it to the next level by dishonest means.
dpcan 11y ago
Watched the film in 2001, still waiting for USPS to start scanning my PO Box mail and email it to me. Actually, they don't have to go that far. I'd take a simple email notifying me that I HAVE mail in my PO Box, and maybe who it's from. Would save me a trip a week probably.
- ibejoeb 11y ago
  Have you considered using a registered agent service, e.g., Virtual Post Mail and Earth Class Mail? They do this, along with other services like check deposit, and it's only marginally more expensive than a PO box.
  - strictnein 11y ago
    Earth Class Mail filed for bankruptcy recently http://www.geekwire.com/2015/heavily-funded-earth-class-mail-files-for-bankruptcy-leaving-ignition-as-largest-creditor/ http://www.geekwire.com/2015/heavily-funded-earth-class-mail... Edit: They're also who I thought this was about. I get Startup.com and Start-up Junkies mixed up. Start-up Junkies followed Earth Class Mail, and was also pretty interesting.
    - lpsz 11y ago
      ECM is still very much functional, fortunately, this seemed like some kind of a restructuring move. Disclaimer: customer for many years
  - dpcan 11y ago
    Yes and no. I really want the service as part of my local post office. I wish I could keep my current PO Box that I've had for years but still have some of these features. It would be awesome if the Post Office could: A) Let me know mail has arrived, and from whom. B) Mail be a box full of my mail once a month to my physical address. That way I can either drive in and get it, if it's urgent, or just wait for the box.
- ryanhuff 11y ago
  http://thewhineseller.com/2012/03/usps-adds-needed-features-po-box-service-emailtext-mail-notifications-street-addressing-signature-file/ http://thewhineseller.com/2012/03/usps-adds-needed-features-... I remember seeing this on the USPS website a while back, but I haven't tried it myself yet.
  - 11y ago
drpgq 11y ago
I can't say I'm surprised. If you haven't seen it, Startup.com was great. Tuzman came across as about as likeable as Billy Mitchell.
mikeryan 11y ago
Oh man KIT Digital was one of the stranger companies I've run into over the years. They were in the process of buying everything they could get their hands on from Broadcast streaming to social games. Had some initial conversations about them acquiring my small dev shop at the time (we were too small for it to make sense), then they became a client. Even at that point as an outsider the whole thing seemed a little off. At one point I was supposed to meet Kaleil at CES and our plans kept falling through. Finally as I was waiting for my plane back to SF I got a call from his admin asking if I wanted to join him at his table for the AVN awards that night (the CES dates always butt up against the AVN (porn) awards). I ended up passing....
jrcii 11y ago
One of my favorite all-time movies, even though their plan ultimately failed Kaleil and Tom were my heroes as a teenager. Really sad to see this.
kragen 11y ago
Have you seen the movie? There is ZERO evidence in the movie that either Kaleil or his co-founder Tom are talented or successful. They're certainly, as mikek says in his comment at https://news.ycombinator.com/item?id=10547832 https://news.ycombinator.com/item?id=10547832, "driven"! But that's why they were seeking success by dishonest means in the first place. As IMDB says: > The process of building the business focuses on obtaining venture capital based solely on the idea, with the actual mechanics of the website seemingly almost an afterthought, or at least one left primarily to the hired help. Basically they were two guys who tried to capture a lot of value without creating any, basically by world-beating levels of hustle. That describes the story of KIT Digital, too. (Don't forget that Kaleil stabs his cofounder in the back in the middle of the film, too — metaphorically, fortunately.) I think this is a big problem with the current "entrepreneurial" ethos: you have people out there who are really honestly creating a lot of value, and then you have people like those guys who see a big pile of money and try to scheme up a way to skim a bunch off the top, making life harder for everyone who's actually contributing.
- jacquesm 11y ago
  The problem is that some of the stories of great success are actually quite close to the ones that are outright scams. It's harder to tell the difference than it probably should be. Around the 2000's there were a number of acquisitions of companies that were mostly hot air. It's a game of hot potato (don't pick it up!), if the investors make bank on your BS company then nobody will complain (except for the acquiring party, but hey, that's their problem...). It is also hard to tell which companies are actually contributing and creating value and which companies are simply pumping money around. See: groupon for instance.
  - kragen 11y ago
    Oh, yeah, I worked at a startup at the same time whose founders were super brilliant technical people. We went to go see the movie when it came out (we'd all left the company by that point IIRC), and we recognized a lot of common experiences with what we saw on the screen. I don't know about Groupon. Group buys have been very successful in China but I have the sense that Groupon has institutionally evaded the accountability to its product buyers that is required to make a group buy into a net-positive interaction, let alone a win-win. (Amusing sidenote: in Groupon's heyday I met a US spy (who of course didn't admit she was a spy) here in Argentina whose cover story was that she was coming here to open up a local presence for a more exclusive Groupon-like company called Theliste, which turned out not to exist. We had a good time at dinner talking about Arabic grammar and morphology, which she had been studying at a language school in Monterey, California; her boyfriend and my wife were unfortunately a bit left behind by the conversation.) Pumping money around can contribute and create value — consider Bitcoin, where the question is not whether Bitcoin creates value, which it clearly does, but rather whether its potential to destroy civilization (through prediction markets and tax evasion) is more or less significant than the value that it creates. Also, there are plenty of great successes that are outright scams. The British East India Company, for example, or the Congo Free State, or the police department of Ferguson, MO, or Bernard L. Madoff Investment Securities LLC, or the Treaty of Guadalupe Hidalgo, or the divine right of kings, or the sale of indulgences. Heck, we could even include those guys who robbed me on the train a couple years back.
deleted 11y ago
[deleted]
rajacombinator 11y ago
Looks like Preet Bharara has found tech headlines even juicier to chase than hedge funds. Unicorns beware.
dberg 11y ago
I worked at ROO Media (which KIT Digital acquired) and met with Kaleil a number of times. None of us who worked there are even remotely surprised. No signs of revenue, yet we would spend like crazy and even acquire companies with magical "stock money". It was the most corrupt place I have ever worked in my life. The COO was a ghost who just spent money (like staying at hotels all the time, even though he lived an hour away by train) making 400K+ at a startup with no revenue, the CEO (who Kaleil replaced) drove the company into the ground and subsequently started another startup that is now under lawsuit as well after lying to his employees and not paying them for months. Absolutely crazy stories. Happy to answer any questions :)
- late2part 11y ago
  Why did you keep working there?
  - dberg 11y ago
    I worked with some great people, and we all had hope we can jointly help turn things around. Obviously , we were wrong. In retrospect, we should have went to the board like we discussed and tried to salvage the company which could have had a decent product, were it not for the constant corruption and idiotic decision making.
- tristan_b 11y ago
  Hey Alan! - Tristan here... I remember those times.
- api 11y ago
  "like staying at hotels all the time, even though he lived an hour away by train" Who invests in these things? Even more puzzling: how is it that these hucksters keep raising money to found another startup? I've seen this phenomenon before. I called them "financial serial killers" -- hustlers who raise money, vaporize it all, then raise again. They're "serial failed entrepreneurs," and we're not talking failures where they legitimately tried. We're talking failures that involve lots of stupid asshat money-burning and nothing much of substance at all. My mind boggles. It's like there's some clique of investors out there who believe in supporting sociopaths as some twisted form of philanthropy. Either that or they're making money too through some as-yet-mysterious means. I do have one total speculation: Is it possible that there could be some kind of money laundering going on here? Are these money-burning "investments" actually something else? Sometimes stupid things actually aren't stupid if they're viewed from the right perspective, and things that make no business sense might actually make a lot of sense in some other way.
waterlesscloud 11y ago
Wasn't that the movie with the scene where the founders are presented with deal terms and given X hours to decide and they think they can't consult with any outside people (attorneys, etc) during that time? Does that ever really happen? My instant answer would be "No" if I was seriously given that restriction.
tristan_b 11y ago
I too can add another testimony to just how mad KIT Digital and ROO both were. But goodness me it gave me some stories for the diary. The C level was nuts, but everyone else, goodness they were good, hardworking people.
bsdpython 11y ago
I wonder if Tom Herman (Kaleil's partner at GovWorks and partner at KIT) is going to get wrapped up in this too. I hope not since Tom came across as a nice enough guy in the film. https://www.linkedin.com/in/tomherman https://www.linkedin.com/in/tomherman

87 points by harold 11y ago

tgb 11y ago

Next they'll be investigating Tup.

deleted 11y ago

[deleted]

83457 11y ago
oh wait... googling shows it as a real documentary. Could have sworn when I saw it so many years ago that it was not a real company
- jason_slack 11y ago
  it's real, I just watched this again a few days ago.
  - 83457 11y ago
    When I watch it back then I wasn't sure and it just felt a bit staged but I guess not.

mikek 11y ago

It's sad when people who are talented and driven and successful decide that their success isn't good enough and they have to take it to the next level by dishonest means.

dpcan 11y ago

Watched the film in 2001, still waiting for USPS to start scanning my PO Box mail and email it to me. Actually, they don't have to go that far. I'd take a simple email notifying me that I HAVE mail in my PO Box, and maybe who it's from. Would save me a trip a week probably.

ibejoeb 11y ago
Have you considered using a registered agent service, e.g., Virtual Post Mail and Earth Class Mail? They do this, along with other services like check deposit, and it's only marginally more expensive than a PO box.
- strictnein 11y ago
  Earth Class Mail filed for bankruptcy recently http://www.geekwire.com/2015/heavily-funded-earth-class-mail-files-for-bankruptcy-leaving-ignition-as-largest-creditor/ http://www.geekwire.com/2015/heavily-funded-earth-class-mail... Edit: They're also who I thought this was about. I get Startup.com and Start-up Junkies mixed up. Start-up Junkies followed Earth Class Mail, and was also pretty interesting.
  - lpsz 11y ago
    ECM is still very much functional, fortunately, this seemed like some kind of a restructuring move. Disclaimer: customer for many years
- dpcan 11y ago
  Yes and no. I really want the service as part of my local post office. I wish I could keep my current PO Box that I've had for years but still have some of these features. It would be awesome if the Post Office could: A) Let me know mail has arrived, and from whom. B) Mail be a box full of my mail once a month to my physical address. That way I can either drive in and get it, if it's urgent, or just wait for the box.
ryanhuff 11y ago
http://thewhineseller.com/2012/03/usps-adds-needed-features-po-box-service-emailtext-mail-notifications-street-addressing-signature-file/ http://thewhineseller.com/2012/03/usps-adds-needed-features-... I remember seeing this on the USPS website a while back, but I haven't tried it myself yet.
- 11y ago

drpgq 11y ago

I can't say I'm surprised. If you haven't seen it, Startup.com was great. Tuzman came across as about as likeable as Billy Mitchell.

mikeryan 11y ago

Oh man KIT Digital was one of the stranger companies I've run into over the years. They were in the process of buying everything they could get their hands on from Broadcast streaming to social games. Had some initial conversations about them acquiring my small dev shop at the time (we were too small for it to make sense), then they became a client. Even at that point as an outsider the whole thing seemed a little off. At one point I was supposed to meet Kaleil at CES and our plans kept falling through. Finally as I was waiting for my plane back to SF I got a call from his admin asking if I wanted to join him at his table for the AVN awards that night (the CES dates always butt up against the AVN (porn) awards). I ended up passing....

jrcii 11y ago

One of my favorite all-time movies, even though their plan ultimately failed Kaleil and Tom were my heroes as a teenager. Really sad to see this.

kragen 11y ago

Have you seen the movie? There is ZERO evidence in the movie that either Kaleil or his co-founder Tom are talented or successful. They're certainly, as mikek says in his comment at https://news.ycombinator.com/item?id=10547832 https://news.ycombinator.com/item?id=10547832, "driven"! But that's why they were seeking success by dishonest means in the first place. As IMDB says: > The process of building the business focuses on obtaining venture capital based solely on the idea, with the actual mechanics of the website seemingly almost an afterthought, or at least one left primarily to the hired help. Basically they were two guys who tried to capture a lot of value without creating any, basically by world-beating levels of hustle. That describes the story of KIT Digital, too. (Don't forget that Kaleil stabs his cofounder in the back in the middle of the film, too — metaphorically, fortunately.) I think this is a big problem with the current "entrepreneurial" ethos: you have people out there who are really honestly creating a lot of value, and then you have people like those guys who see a big pile of money and try to scheme up a way to skim a bunch off the top, making life harder for everyone who's actually contributing.

jacquesm 11y ago
The problem is that some of the stories of great success are actually quite close to the ones that are outright scams. It's harder to tell the difference than it probably should be. Around the 2000's there were a number of acquisitions of companies that were mostly hot air. It's a game of hot potato (don't pick it up!), if the investors make bank on your BS company then nobody will complain (except for the acquiring party, but hey, that's their problem...). It is also hard to tell which companies are actually contributing and creating value and which companies are simply pumping money around. See: groupon for instance.
- kragen 11y ago
  Oh, yeah, I worked at a startup at the same time whose founders were super brilliant technical people. We went to go see the movie when it came out (we'd all left the company by that point IIRC), and we recognized a lot of common experiences with what we saw on the screen. I don't know about Groupon. Group buys have been very successful in China but I have the sense that Groupon has institutionally evaded the accountability to its product buyers that is required to make a group buy into a net-positive interaction, let alone a win-win. (Amusing sidenote: in Groupon's heyday I met a US spy (who of course didn't admit she was a spy) here in Argentina whose cover story was that she was coming here to open up a local presence for a more exclusive Groupon-like company called Theliste, which turned out not to exist. We had a good time at dinner talking about Arabic grammar and morphology, which she had been studying at a language school in Monterey, California; her boyfriend and my wife were unfortunately a bit left behind by the conversation.) Pumping money around can contribute and create value — consider Bitcoin, where the question is not whether Bitcoin creates value, which it clearly does, but rather whether its potential to destroy civilization (through prediction markets and tax evasion) is more or less significant than the value that it creates. Also, there are plenty of great successes that are outright scams. The British East India Company, for example, or the Congo Free State, or the police department of Ferguson, MO, or Bernard L. Madoff Investment Securities LLC, or the Treaty of Guadalupe Hidalgo, or the divine right of kings, or the sale of indulgences. Heck, we could even include those guys who robbed me on the train a couple years back.

deleted 11y ago

[deleted]

rajacombinator 11y ago

Looks like Preet Bharara has found tech headlines even juicier to chase than hedge funds. Unicorns beware.

dberg 11y ago

I worked at ROO Media (which KIT Digital acquired) and met with Kaleil a number of times. None of us who worked there are even remotely surprised. No signs of revenue, yet we would spend like crazy and even acquire companies with magical "stock money". It was the most corrupt place I have ever worked in my life. The COO was a ghost who just spent money (like staying at hotels all the time, even though he lived an hour away by train) making 400K+ at a startup with no revenue, the CEO (who Kaleil replaced) drove the company into the ground and subsequently started another startup that is now under lawsuit as well after lying to his employees and not paying them for months. Absolutely crazy stories. Happy to answer any questions :)

late2part 11y ago
Why did you keep working there?
- dberg 11y ago
  I worked with some great people, and we all had hope we can jointly help turn things around. Obviously , we were wrong. In retrospect, we should have went to the board like we discussed and tried to salvage the company which could have had a decent product, were it not for the constant corruption and idiotic decision making.
tristan_b 11y ago
Hey Alan! - Tristan here... I remember those times.
api 11y ago
"like staying at hotels all the time, even though he lived an hour away by train" Who invests in these things? Even more puzzling: how is it that these hucksters keep raising money to found another startup? I've seen this phenomenon before. I called them "financial serial killers" -- hustlers who raise money, vaporize it all, then raise again. They're "serial failed entrepreneurs," and we're not talking failures where they legitimately tried. We're talking failures that involve lots of stupid asshat money-burning and nothing much of substance at all. My mind boggles. It's like there's some clique of investors out there who believe in supporting sociopaths as some twisted form of philanthropy. Either that or they're making money too through some as-yet-mysterious means. I do have one total speculation: Is it possible that there could be some kind of money laundering going on here? Are these money-burning "investments" actually something else? Sometimes stupid things actually aren't stupid if they're viewed from the right perspective, and things that make no business sense might actually make a lot of sense in some other way.

waterlesscloud 11y ago

Wasn't that the movie with the scene where the founders are presented with deal terms and given X hours to decide and they think they can't consult with any outside people (attorneys, etc) during that time? Does that ever really happen? My instant answer would be "No" if I was seriously given that restriction.

tristan_b 11y ago

I too can add another testimony to just how mad KIT Digital and ROO both were. But goodness me it gave me some stories for the diary. The C level was nuts, but everyone else, goodness they were good, hardworking people.

bsdpython 11y ago

I wonder if Tom Herman (Kaleil's partner at GovWorks and partner at KIT) is going to get wrapped up in this too. I hope not since Tom came across as a nice enough guy in the film. https://www.linkedin.com/in/tomherman https://www.linkedin.com/in/tomherman