Uncrunched

I was in Dubai a couple of weeks ago on business for my new crypto-focused fund. It is one of my favorite cities (although the Internet blocking can be annoying), and each time I visit I receive a warm welcome from friends and friends of friends. This trip was no different.

I tweeted that the highlight of my trip was a visit to local venture capitalists Wamda Capital where I had the opportunity to meet many area entrepreneurs. However, there was another totally serendipitous meeting I had as well, that I was asked not to mention – but I’ve finally convinced the company to let me talk about it a little bit.

The company is called bgX (link will be live shortly if not already). They are a tech spinoff of a local home beauty company called Blowout&Go. I met one of the investors, an American living in Dubai, via an entrepreneur from San Diego. He invited me over to their office and I went.

I didn’t expect much. The company is aimed at the womens’ beauty market, not something I normally consider riveting. It has absolutely nothing to do with crypto-currencies, my current focus.

So I was only half listening for the first few minutes as the CEO and investor were politely walking me through the business. They provide blowouts and makeup for clients, including some of the most famous people in the world when they visit Dubai.

“I’m sorry, what is a blowout?” I asked. They explained the general idea. The company basically offers blow-dry, hair styling and makeup services.

So I’m looking for a quick way to end the conversation and get to that restaurant we were talking about trying out, because I can’t think of much I’d rather do less than talk about hair and makeup stuff.

But I kept listening. And that’s when it got interesting.

First, the company is expanding to Europe, like right now. There will be a ton of press about them soon. It’s not a Dubai startup, it’s a world startup that just happened to start in Dubai. Also the founders are a husband and wife team with a fascinating background, but that’s for another time.

Second, the logistics around the business are cool. Super cool.

Today when women want these services they generally go to a salon. The very wealthy have people come to them to do hair and makeup before events, of course.

bgX is bringing these services directly to your home or hotel. A hair person and a makeup person comes. They work on you simultaneously and apparently that’s a big deal and increases efficiency. But it’s not what I found most interesting.

No, what I love is two things. First, the people they bring are from local salons – existing businesses. This brings new customers to existing salons. bgX simply delivers these people directly to the customer instead of the customer coming to the salon.

It’s that part about delivering the service providers to the customers on demand that’s the second interesting thing. This is a really hard thing to do. bgX could hire drivers to move people around, but that’s expensive and makes expanding geographically more costly and slow. They could rely on people moving themselves around, but that would risk loss of control and these guys are laser focused on quality and process control.

What the company basically wanted was a way to engage ride hail or fleet drivers but on an API level, and invisible to the end user who just wants hair and makeup people to show up at their house. So without Uber’s permission they found a way to use the Uber service in their own app via existing but unpublished Uber APIs. Then they approached Uber for permission and to Uber’s credit were given an enthusiastic yes.

Uber of course is already using their own service as a sort of utility for things like Uber Eats and the newly announced Uber Health. This is the first time that I’ve heard about a third party using Uber as an invisible transportation utility in that third party’s service.

As an Uber investor, I LOVE THIS. Uber is great as a consumer brand and is becoming ubiquitous around the world. But having it be an invisible but super useful back end transportation utility for third party apps and services will help cement it and beat upstart competitors. When a company needs to quickly expand to big worldwide cities, instead of working with a different local Uber competitor in each city they can just work with Uber and it’ll work in each of those cities. It’s an exploitation of the network effect and one of the main ways that Uber can stay ahead of the competition.

But back to bgX. Not only is it great that they will be the first company using Uber in this way, but it also provides them with an easy way to expand to additional services if they want (think in home haircuts, massage, etc.) I’d much rather use one service for all of my home delivery needs than ten different ones, and I think there is a chance that bgX could go in that direction.

First, of course, they will need to conquer the hair and makeup markets. They are launching in Paris and London soon. Keep an eye out for press.

Update: Keith and I have had a private email exchange and conversation about this. With his permission I’ve included his email in full below this post. I don’t agree with parts of it but we have come to a general agreement on a key issue. Keith will refer to himself as a “Founding Shareholder” in the future instead of a co-founder and will ask companies he is advising to update their websites and documents accordingly. I can live with this compromise and appreciate his willingness to figure this out.

“Victory has a hundred fathers and defeat is an orphan”

If you’ve founded a company, or created something else in your life, you know the emotional attachment that people have to those things. It is part of who you are, part of your history. It helped define the person you are now, in large ways or small. You also understand the amount of labor and emotion people put into their creations, sometimes over years.

If someone comes and takes credit for what you’ve built, it can be painful. If they take credit for what you’ve built to enrich themselves, it can be even more painful. If they are enriching themselves in a way that hurts others, it can be too much.

What Keith Teare is doing is too much.

The backstory of TechCrunch is described here on the TechCrunch site. In June of 2005 I founded TechCrunch. At the time I was working with Keith Teare on another project called Edgeio, a company that he founded. Keith had set up a holding company for what he planned to be a number of companies. He asked me to work with him on Edgeio and possibly other companies he was to start.

I agreed and began working with him. Soon afterwards I decided to start a blog to talk about some of the amazing companies being founded in Silicon Valley and around the world. I spoke to Keith about it and asked for his help. He declined, saying it was a waste of time and suggested I focus on Edgeio. I said I was going to do it anyway, and started writing on a WordPress site that I named TechCrunch. As TechCrunch grew he quickly recognized the value of being attached to it, and started hanging out at my house and at meetups. Unfortunately though I could never get him to write anything, or help pay any bills, or do much of anything. Time went on.

After six months or so Keith claimed he owned 75% of TechCrunch because that was the equity split on Edgeio. I objected obviously, and it nearly came to litigation. Ultimately Keith knew I could just walk away from it all and TechCrunch would lose all its value, so he relented and I agreed to pay Keith 10% of any value I received in the company eventually to avoid litigation. But he never invested any time or money, or took a paycheck, and he never worked for the company in any way. He took, but he never gave.

Keith has been expanding the myth of his contributions and role at TechCrunch ever since those early days, even (repeatedly) telling people that he founded TechCrunch and hired me to write it. When he thinks I’m paying attention he just says he’s the cofounder and that we started it together. It was annoying but, whatever. Other than scamming some money out of some conferences over the years who paid him to come as the “founder of TechCrunch” not much damage was done. I pitied him, and didn’t object. I sometimes even went along with it and let him say whatever he wanted because I was too busy with my life to object. That was a mistake, as I’ve watched Keith exaggerate his contributions to TechCrunch over the years until I’m not even sure he remembers what he actually contributed – nothing of substance.

As part of that 2005 discussion with Keith, I agreed to list him as an “editor” on the site even though he never wrote anything, and also mention his holding company Archimedes Ventures. It was very important to Keith to show some connection to the company, and now Keith likes to point to this old page when disputing his relationship to TechCrunch. I find this sad. Yes I knew Keith when I started TechCrunch and yes he had every opportunity to contribute to the project, but he never did any of the hard work needed to build a company.

But more recently Keith has gotten into the cryptocurrency world, and he has been wholesale selling out to advise, from what I can tell, over a dozen companies during their token sales. Sometimes they list him as the founder of TechCrunch (as above), sometimes as the cofounder.

Nearly every week, and at an increasing rate, I’m receiving questions or comments from people asking what my connection is to some ICO I’ve never heard of. Invariably these companies list that a founder or cofounder of TechCrunch is advising. Since I am the founder of TechCrunch, people get confused and reach out to me.

This is creating significant confusion in the marketplace and these companies or projects are misleading investors, sometimes purposefully.

As we’ve all seen, the SEC is taking a long look at a lot of ICOs that happened over the last year. I’m still gathering information on all of the ones that list Keith as a founder or cofounder of TechCrunch, and my lawyer will be reaching out to all of them to ask that they correct their documents and notify token holders. I’m also asking Keith to cease stating that he founded or cofounded TechCrunch, and donate any tokens or currency he has received while saying he did so to a mutually agreeable charity.

And to Keith I’ll say this…Please stop doing this. It isn’t honest to claim that you had anything (positive) at all to do with TechCrunch. If you had helped even a tiny bit during those early days I would gladly give you credit as I do with the whole amazing team that helped build that company. But you thought it was all a stupid idea until you didn’t, and even then you just tried to take credit without ever actually helping in any material way. Please stop. You’ve done interesting things in your career. You don’t need to take the things I’ve done, claim credit and use them to prey on unwitting investors, just for a few extra dollars in advisor tokens.

As a final note, I want to add that if anyone was a “cofounder” of TechCrunch it was Heather Harde. She joined in 2007 but she was in the trenches with the team until the very end, working 20 hour days, sacrificing her personal life and giving everything she had to make the company what it was. Heather never sells herself like Keith does, but she should. Unlike Keith, she helped build that company, and gave way more value than she ever took.

Update:

Dear Mike

I read your uncrunched piece today with a mixture of sadness and shock, and like you, probably a bit of anger.

I want to respond to you privately here and if you wish you can publish it and comment.

But first I want to say that my goal in doing that is to act like a friend who cares about preserving long held relationships.

I clearly have a different understanding than you of both the course of events and also my motivations. I know that isn’t a surprise, but actually if you peel away the anger we are actually quite close in our understanding.

Why do I say that?

Firstly – I give you all of the credit for TechCrunch. As the history bellow will show, I did not build it and even suggested you should not do it. I did help you – a lot. But you have always given credit for that, just not in this piece of writing.

Secondly – I do not, and would not, seek to claim credit for your work at TechCrunch. My linkedin – which I wrote a long time ago – is clear on that point.

“I co-founded TechCrunch through my friendship and business partnership with Michael Arrington. We started edgeio and TechCrunch simultaneously whilst cooperating through Archimedes Ventures LLC. I can’t claim a lot of credit for TechCrunch … I’m the one who advised him not to do it :-). I hope I helped Mike get to the point where he wanted to do it, and was able to help him be successful.” (https://www.linkedin.com/in/kteare/)

Finally, I do not want any of my activities related to ICOs to be based on any false credit for TechCrunch.

So the only thing we actually disagree on is the history. I say I was the co-founder of TechCrunch. You say not. That may be just words. If you are saying I didn’t build TechCrunch you are 100% right. If you say I was not a founding shareholder I have to disagree. It may be a small difference.

Possibly if I say “Founding shareholder” and not “co-founder” that would settle a very hurtful episode. I certainly want to be accurate, and I certainly do not wish to harm you. I’d like to believe we can put this behind us.

That said, why do I think co-founder is the right term? What was the history as I see it?

We formed Archimedes Ventures LLC in 2005 after completing a stint consulting at VeriSign together (we had known each other for about 8 years by then). Archimedes was an LLC with a Web 2.0 goal.

At that time we were partners in an LLC. As you say in your piece we were 75-25.

At the time you were quite insistent that we could not do anything independently. In other words, you would get 25% of everything we did. I agreed happily. I loved working with you and it seemed fair.

Shortly afterwards you started techcrunch.com as a blog – you called me from LA and were pretty excited about it. I tried to talk you out of it but you were insistent and so it went ahead and I backed you despite thinking there were bigger fish to fry. As the web site from 2005 says, it became part of Archimedes Ventures LLC.

TechCrunch started small, and at the time I definitely believed it was too small to be taking all of your time. Despite that I was very supportive. I spoke with you about it often, and attended every Meetup, including the first, second, third etc, often to flip burgers for the attendees.

A little later we started edgeio. This is the first blog post about edgeio – https://techcrunch.com/2006/02/27/edgeio-launches/. And this is when we sold it – https://techcrunch.com/2007/12/06/edgeio-to-shut-down-in-the-deadpool/ where you describe it as:

“Edgeio, a company I co-founded in 2005”

Edgeio got funded and you and I were co-founders, me with 75% of the founders stock and you with 25%, reflecting our agreement in Archimedes. TechCrunch was not funded, and was not formed as a corporation at that point, but we both understood it to have the same ownership.

As TechCrunch grew, due to your efforts, you clearly felt that my ownership position was inappropriate. You made the point that you could always start something else. I don’t recall any legal threats at all. At that time we met and we agreed we should fix the ownership. I was more than willing to do so as TechCrunch was clearly mainly benefitting from your effort. The 75-25 made no sense given the situation. We eventually shook hands on 90%-10% of shares in your favor. You kept your 25% in edgeio and you were always credited with being co-founder.

That is my thoughts Mike.

If we can agree to use a term to explain my relationship to TechCrunch that does not take away the enormous credit you get for building it I would be happy to try and correct that. Maybe “founding shareholder”. I do think we should remove hurtful Tweets and put this behind us. Friendship is not the same as the unconditional love one gives a child, but it is pretty unconditional in our case. I would like to remain a friend and have you be mine too.

—
Best Regards

Keith Teare
Chat with me instantly at https://chat.center/keith