Rizvi Traverse, DOJ, Eighty Eighty Percent discussed on Recode Decode

Recode Decode


And this was an this is an interesting lesson candidate for for entrepreneurs. And this is where one of the big mistakes that we made as an organization me, you know, as companies had two offers on the table, one was at call it, you know to two billion. And then we had another one that was like, you know, three point two to three point, five billion dollars in depending on how you sort of looked at how the deal was structured. So obviously big delta. And we had a big split in the organization at the board level shareholder level, some of the folks that had come into the last round obviously wanted us to take the the larger markup. And earlier folks were saying, hey, you know, we might not be ready. We're not stable enough to take. So high valuation, etc. Ultimately, we ended up taking the larger evaluation that deal for a variety of reasons didn't work in a broke apart. So we actually who is the big funder, they're the lead on the financing was Rizvi traverse. And so again, for variety reasons, like defiance broke. We never actually completed it. And that puts into a tailspin right in two thousand fourteen because we had capital. You know, with all these things, there's maybe a thousand reasons and ultimately non give me too. So there's so many things that went wrong. One of the things was that the capital that we were expecting to get, didn't all show up right to pieces. It wasn't that they were giving into some pieces. There was a sort of a syndication model, and I think there was misunderstanding on how the timing and how that all process would work. And I think there was just, you know, again, it happened in the past and it's it's one of the things at the time. We were all very frustrated and I think there was a lot of anger on on all sides of the equation, but it broke. It didn't happen. The syndicate didn't come together the weight intimated at the time. It was expected to be company felt like it wasn't the company's fault, of course. Right? And so it wasn't. The capital wasn't all there in the way that the deal had been signed up to do. So then all of a sudden now we found ourselves in a scramble and effectively you're trying to sort of duck tape and bailing wire this thing up. And so I talked a lot of entrepreneurs now about be really careful how you structure these deals, the capital you. Take in what you agreed to an is the business ready for it, right? Because when you raise money, those kinds of prices, it's really hard to move and recover and sort of be nimble. You've got a big scale organization just things get really, really complicated. So what ended up happening is when that financing broke, we all the management team had to go out of the building to go raise capital and try to hold things together. And that's when you start, you know, law things started to crack. Like if we're not in the building, there's not direction. You know our product 'execution suffered are in market execution suffered. Obviously a lot of our competitors surge at the time started catch us in the various markets in in terms of market street because v others even the speaker space. I mean, you know, so we in a lot of these spaces, we had, you know, eighty eighty percent market share. But as these things evolved like people start to chip away from you. And then the other thing that happened to us in early fifteen is that we realize that six of our ex employees had stolen, you know, sir systematically stolen three. And sixty five thousand documents, which was basically all of our trade secret information and gone to fit. So we got into this very expensive legal battle to protect ourselves since then. Actually the DOJ just a couple of months ago criminally charged all six of those people for that. So sort of, you know, alternately showed why we had to protect ourselves because there was pretty massive criminal activity around that, so that that was happening the same time. Then what ended up happening is in order to sort of salvage ourselves from that situation. We had to do a bunch of structures ultimately, including a bunch of debt structures that the company frankly just wasn't tooled two desperate for money. Yeah. I mean, you're trying to hold it together. There's all this cool promise of the technology..

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