Some companies go out with a whisper, others with a bang. In the case of online animation community MyToons, we’d call it the latter.
Not only do we know the startup has laid off its entire staff except for the founders (which equals 20 to 27 people depending on who you ask) because the lead investor refused to pony up more cash, but we’re also hearing stories from multiple sources who claim that the company’s management has all but thrown VC money out the windows, leading to the current unfortunate situation.
Among the allegations put forward by former employees who wish to remain anonymous: grave mismanagement, a complete disinterest from the company’s co-founders to turn MyToons into a revenue-generating business along with more serious accusations that the executives have been misrepresenting the company’s financial and operational status to their investors and moreover wasting VC money on personal purchases like trips to Hawaii, fancy dinners with relatives, home electronics for personal use and so on. We realize this could be simply a case of disgruntled ex-employees looking to discredit their former employers, but we currently consider the tips to be as reliable as they are detailed.
We tried calling the MyToons office for more information but nobody is answering the phone, apparently because the receptionist has been let go and there’s simply no one to handle inbound calls at the moment. We have e-mails in with all 3 co-founders of MyToons to get their side of the story.
The San Antonio Express-News has also picked up the news and apparently already got in touch with MyToons CEO Dan Kraus today. He blames the economy for the startup’s ill fate but says the company is still operational and planning new service features. Kraus reportedly claimed that any allegations about mismanagement and disrespectful behavior towards employees and investors are completely unfounded, deeming the information that was received by the newspaper unreliable because it comes from—wait for it—disgruntled ex-employees.
Either way, we’re putting MyToons in the deadpool, and along with the millions of venture capital it raised from investors like The Texas Emerging Technology Fund, Barshop Ventures and Syncom Venture Partners.
How much money went into the company was never disclosed, but our sources say $6 million went down the drain.
Update: MyToons CEO Dan Kraus responds:
Given the current economic climate, MyToons, like many other companies, has reduced its staffing and is re-structuring its operations. MyToons continues to be in business, remains committed to the platform it has built and intends to pursue all opportunities for growth.
As to the other allegations of misuse of VC funds for personal purchases and trips to Hawaii, the allegations of money missing from bank accounts, and the lack of a working business model, he says, “Not true.”
Wow, $6 million? Twitturly could have used some of that…
Not unheard of. I once worked for a startup who’s founder was seemingly satisfied with just having founded a startup. The money was burned through quickly…err, wasted…and he seemed to relish the short lived limelight rather than focus on building a viable business. I hope this news about MyToons is untrue, but I wouldn’t be surprised if it were.
Oouuch! This is how not to start up a startup!
“We tried calling the MyToons office for more information but nobody is answering the phone, apparently because the receptionist has been let go”
hahaha….This is one of the funniest posts I have read on tech crunch. Nice writing Robin.
THANK YOUR for not naming the disgruntled employees, thank you for focusing on the company rather then wrecking someone’s life. THANKS… for writing something that matters and has news value. I hope others in your editorial team take an example of that. WELL DONE.
http://kisalt.net/eq
The site is still up and VERY active. You may want to take it out of the deadpool until they officially shut down.
The website being up outweighs 95% of jobs cut for a small company, how?
response from CEO: While it’s true that – due to the current economic climate, MyToons has
downsized and is restructuring. MyToons continues to be in business and
intends to grow into the future based upon its business plan
The other allegations are not true.
Dan
CEO/MyToons
I hope that helps you, Robin!!!
I still haven’t heard back from them, but I would never call axing all employees except the founders ‘restructuring’.
I DID work there. They brought us into a room, told us they most lay all of us off with no severance and to consider our last 2 days of the week off with pay our severance. Pretty much everything said in the article is true, i did not write in to techcrunch. Now i kinda wish i had thought of it first….
Robin, I contacted them about it and Daniel Kraus, the CEO responded. That’s what I meant by my last comment: “I hope that helps you, Robin!!!”
Adam Robertson, are they paying you to be a shill?
LMAO… even a child would know that a company without employees is dead.
Game of Quake 4 anyone??
How about a game of Clue 2.0?
“The killer was the economy, with the checkbook, in the conference room.”
Makes you wonder about the due diligence process at some of these VC firms. Shoot I could use some of that process. At the end, the story is just plain sad if true.
If by active you mean they have had one comment in the last 24 hours, then yes, they are very active. I say they are dead.
Did you even care to check some of the claims this person is making? Or you always write anything that anyone tells you that sounds dirty about a company?
Do you always comment before reading the article?
Wow. Quite a comeback. I haven’t seen anything like that since junior high.
Robin, are you a dude or a chick, or a dude with a chick name. That might explain things.
Hmm… I don’t think the economic climate really affects companies that don’t actually make money, but I could be wrong.
THANK YOUR for not naming the disgruntled employees, thank you for focusing on the company rather then wrecking someone’s life. THANKS… for writing something that matters and has news value. I hope others in your editorial team take an example of that. WELL DONE.
Looks like a case of bitter beer face if you ask me??
Ah, another wannabe entrepreneur practicing up on his “employees are grunts” schtick.
I also worked there, and from what I know, these are valid allegations that I would love to see the owners fully disprove.
Not the least bit surprised that this company is tanking…will some of the disgruntled employees please post the sordid details of the wasted money?
Not exactly a stellar list of VCs there with Texas Emerging Technology Fund (good old TETF) and Barbershop Quartet ventures.
I can tell you right now that The founders are at the Annie Awards ceremonies going on up in LA. Mytoons is a golden sponsor ( a price tag of 15k). They flew up there today, presumably with their little girls.
Get those claims re-checked and checked again!
Lest I forget, Mytoons rocks!!
http://stuckinf...es.blogspot.com
We thought it rocked too until we lost our jobs. How bout numerous regular charges at local gas stations for around $30 on the company credit cards? An employee’s wedding was rumored to be paid for by the company, and countless personal packages went out via the company FedEx account. These people can ship!
It would have to be a lot of weddings to equal 1 week’s salary of 20-27 dead weights. You guys are counting $30 gas bills…LOL…if there is any fraud here, it’s you turncoats who claimed you were working when you were in fact looking for clues of a conspiracy to waste $30.00 on gas. Pathetic.
Be careful when making such harmful accusations. Especially, when they come from anonymous sources. I would expect you guys to do more research before accusing management of such atrocities. I understand that this story is “sexy”, but I would hope you would get facts before posting this type of story.
Please note that the sources weren’t necessarily anonymous, but that they requested not to be named in the post. Big difference.
And trust me, we don’t handle stuff like this lightly either.
TC may be sketchy about a lot of stuff, but when it comes to companies deadpooling or laying off stuff, they’ve been a 100% accurate.
It’s really the only area where TC has any journalistic integrity.
Might I suggest that inflammatory articles like this one are just the type of thing that gets you guys into trouble – as your Mr Arrington has just recently explained.
Perhaps if you were to take a little more of a professional approach to the way you handle these types of stories. For instance, don’t wave a big stick around at an entrepreneur just because a bunch of people who used to work for him now say he is unfit to run a company (which is what this really amounts to).
You guys need to get it right. You’re either all for entrepreneurs (read risk takers) and thus will support them (by not writing trashy articles like this) – or you’re against them – in which case go work for ValleyWag.
Grow some balls. Who other than an owner would be so peeved? Let’s see the credit card statements.
Ridiculous.
The biggest thing to harm tech entrepreneurship lately was the crash of the tech bubble. A big reason that the crash was so big was that not enough people were calling out executive misbehavior, puncturing absurdly inflated claims, and generally demanding responsibility and transparency.
This is exactly the kind of article I want to see more of in TechCrunch: one where people who claim to be entrepreneurs are called to account.
That and blatant fraud!
“You’re either all for entrepreneurs (read risk takers)”.
Good entrepreneurs don’t take risks.
Are you speaking from experience?
“Good entrepreneurs don’t take risks.” ?
So, if starting a new venture isn’t risky then why doesn’t every man and his dog go into business for himself?
I would think the very definition of an entrepreneur was a person who can make calculated risks – after all this is what is required in a competitive environment.
“I would think the very definition of an entrepreneur was a person who can make calculated risks”.
Exactly. Running onto the middle of a busy road is taking a risk. If you have the experience then a calculated risk isn’t really a risk, or else how did you calculate it? It is wrong to think good entrepreneurs are just taking a stab in the dark.
Maybe this was true after all:
http://www.tech...ckedcompanycom/
Unless you have ‘proof’ — and can, and plan to substantiate it — than it’s just a rumor that will get buried amongst the next few pages of TC and lost forever except in the google archives.
Just like Deep Throat fell into oblivion? These are serious charges that I don’t believe TC would post about on a whim. This is NOT braodcast media, it is a blog, a TWO_WAY medium. There is every opportunity for the named company to rebut these claims, and they did so (albeit indirectly).
Good article. Transparency goes hand-in-hand with a productive, online, social web.
Mea culpa may be necessary at some point
Thank you for writing this article. I am one of the 20 or so MyToons employees who was laid off yesterday. None of us are “disgruntled” — we are blindsided. We were turned out with our last paycheck in our hand, no severance whatsoever, and ordered to be out of the office by 2:00pm. MyToons did not treat us “with the utmost respect” — they lied to us, led us on, and kicked us to the curb with no assistance. We all helped build that company, and Dan Kraus talking about proceeding with their plans without us is not only insulting, it’s a travesty. I hope no one else sees fit to invest in this company…our previous investors, who also gave so much towards its success, were just as duped as we — the laid-off employees — were. This is is tragedy for the many employees who sincerely believed in MyToons and gave it their loyalty and dedication. We were rewarded with nothing but our last paycheck. And constantly fed lies.
I fthey had just told us that the company was facing some rough times, I think that would have gone really far in helping us keep faith, and many of us would have gladly stuck it out with them, because of our dedication and belief in the company. However, they lied to us, repeatedly told us everything was great/awesome (lying to our face when some of us were scared and asking if we were gonna be ok), and literally threw us out with no warning.
To all those who are criticizing the authenticity of this article, or its author: wrong situation. I can’t confirm every incident mentioned in the artcle, but most of them I know are true. And the ones I can’t confirm don’t surprise me.
Based on your behavior I think it’s pretty obvious that had they ‘leveled’ with you guys that you would have ganged up on the management and stolen everything last thing that had value to you and destroyed everything else. It was probably a heart-wrenching decision to turf you like that but you are proving that it was the correct one.
I don’t understand how this is different than most of the companies that Techcrunch seems to cover. Most of the Silicon Valley-based companies don’t worry about making money – EVER until it’s too late.
It’s really unfortunate that the founders didn’t get rid of these prima-donna employees months ago, then they’d still have gas in the tank to keep it going. No, like most entrepreneurs they kept their employees as long as they could out of a sense of loyalty to them. The toughest part these founders will be going through right now is the realization that they spent most (if not all) of their remaining seed money on people who took less than a week to shove 20-27 knives in their back. Some of the best lessons unfortunately have to be learned in the toughest ways. Let’s hope the founders of this company learned it in time to make something of their company with the right kind of employees for their stage of development.
You are rabidly insane, as are many others who have commented on this article, to a greater or lesser extent. Michael’s recent story about spitting and death threats is starting to make sense.
Nice troll…Mom left the computer on again did she?
Hmm, my company’s going down the toilet, what should I do? I know, I’ll bin all my employees – this company can exist on my skills alone. What were they again? Oh yeah, pissing VC funding down the drain. Bring it on!
Genius.
I guess the 20-27 employees that couldn’t bring enough game to the table to make a business work are money well spent in your book. Newsflash: the entrepreneur came up with the idea, not any one of those dead weights. If they are not pulling their weight then they have to go. Here is what those entrepreneurs have learned and all entrepreneurs should know, solidified by your nonsense comments: keeping people to the last possible moment when you can keep them will bring you no good will whatsoever. They don’t appreciate the paychecks they got the last 8 weeks, all they want to bitch about is the two weeks they didn’t get now. It was the entrepreneur who built the idea, raised the money, put his reputation on the line and took the risks. What did these disgruntled employees lose exactly…two weeks? Are you kidding me? Two weeks was all it took to sabotage the whole deal. What a bunch of ungrateful _____. I checked out the site…it looks good, maybe not $6M good right now, but it looks like a site that ‘entrepreneurs’ could do something with. 10am-4pm, punch-the-clock, 2 hour lunch break and 30 minute session at the water cooler, self-serving check grabbers are not going to help anybody.
Unfortunate said above: “10am-4pm, punch-the-clock, 2 hour lunch break and 30 minute session at the water cooler, self-serving check grabbers are not going to help anybody.”
Let me introduce you to our executive staff. That was a perfect description of them, but a little generous on the actual time spent in office. Most of those laid-off would frequently work through lunch and after hours. You don’t know what you’re talking about here.
excuse me, but that site took them 2 years to set up, and it’s still not up to speed. The video player itself is terrible and where is the community?
The Dilbert pointy-haired boss speaks.
You know nothing about managing people, sir. Your attitude is that of bad leaders and exploitative bosses everywhere. You think it’s about management vs staff, and that becomes a self-fulfilling prophecy.
There are 2 kinds of companies- those that treat employees like children, slaves and criminals, and those that treat them like valued partners. In each company, the people policy becomes a self-fulfilling prophecy.
Anything you manage will wilt and be blighted.
As bad as this sounds, these allegations still can’t touch RegisterFly from a couple years ago.
I’ve been an occasional adviser to MyToons since its founding as Bauhaus Software six years ago. I’ve also been dear friends with Dan Kraus since he joined the startup we both worked at in 1993.
It’s completely untrue that Dan or his co-founders spent monies with any intent other than making MyToons successful. When one is in a fast-growing market during a recession, spending aggressively or conservatively on channel development is a very tough call. Anger on the part of the terminated employees is completely understandable, but anger is all it is.
The company did layoff most of its staff today on short notice. I’m not an company insider, so I can’t go into the whys or wherefores. MyToons now has eight employees including its three founders. That’s enough to keep the existing service operating.
Comment appreciated Scott, but reading your comment and the one from ‘extooner’ above I think we’re right to publish both sides of the story here.
Robin, I’d never attempt to suggest editorial direction. It’s not my area of expertise.
There’s simply too much anonymous, untrue sniping going on, and I felt it important to write down what I knew to be accurate and stick my name on it.
No problem with you writing the article, but since the CEO gets named the employees should be named too. Fraud is a serious accusation, if I were the CEO you’d be getting a subpoena for those names right now. Actually I’d probably sue you guys for libel, but now we’re splitting hairs.
I made a comment on the mytoons website under the news section, in response to the layoff news and all of a sudden the comment, which was the only comment was removed and the thread was closed for comments. My comments must have been true….uuuummm go figure.
To all the commenters above complaining about the “journalistic quality” of this piece, if you have so many issues with TC’s stories, why do you continue to read them?
It’s clear that TC’s editors feel that stories of this nature are worth publishing, if offends you so, then surely moving on is the best option.
I’ve got no idea if the story is true, I don’t really care to be honest, but I like reading about the grittier side of start ups…
>MyToons now has eight employees including
>its three founders. That’s enough to keep the
>existing service operating.
So why did they need 20 more than that during the “boom time”?
Like all failed (or about to fail) start ups I guarantee that they have a foosball table in the office
And if you work for a start up that is still in business and has a foosball table – start looking for new work
Actually, it was a PS3.
Schadenfreud (which I have undoubtedly mis-spelled) is the emotion that is best explained as ‘delighting in the downfall of others.’ Some of the folks on this blog are certainly doing that. IF MyToons has to fold, that’s sad that someone’s business did not make it. Failure is tragic, especially when others are involved. It’s also sad to rip aprt the journalist who reported this story here. It seems anonymity brings outt he wolf in some people online!
You missed an ‘e’ it is Schadenfreude…Schade (harm, damage, detriment…also used like ‘das ist Schade’ = that’s too bad) and Freude = joy, happiness. People getting joy on the problems of others…clearly mental vibrations operating at a very low frequency that only serve to give the ‘delighter’ more of what the universe thinks they want i.e. ‘Schade’. Unfortunately too much journalism is devoted to this lately (and I’m not overly concerned with TC here more CNN…compare WSJ/IHT/NYT with CNN and tell me if I’m wrong). Maybe journalists could find a few more confidence-inspiring pieces out there or is that too much effin work. There are still tens of millions of people gainfully employed in the US and millions of successful entrepreneurs. Can we find the time to find a few of those happy stories?
@Scott Rafer
Seems as though the company may owe you some money. Do you have any open invoices with them?
The truth will come out. I’m setting my Google Alerts to the following keywords: [mytoons,founders, fraud, arrested]
p.s. I like the post
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Thanks, DailyBail
Reading all the comments from Unfortunate I’d bet a dollar that person is closely connected with the exec mgmt. Smells fishy to me.
I’m with Suspicious. I think it’s pretty obvious that Unfortunate is one of the founders.
I never understood why they got so much money in the first place. What was it *supposed* to be spent on? I’m in the animation world myself, and I never did get their business plan. It had “Dead Pool” written all over it from the start, I thought. Turns out I was right.
If I was one of the founders I’d be a lot more pissed about you communist layabouts than I am. And I’d name names…I was waiting for the first minimum-wager to make that dumbass comment. You win suspicious.
“Unfortunate” is obviously one of the founders or is close to the exec management team. The constant finger pointing and attacks on the employees and other people participating in the TC comments makes it clear. Only someone close to the story would be so emotional about it.
Advice- Take a deep breath. Create an official blog post to tell your side. Don’t act like a child.
schadenfreude is such a delicious sensation…
So the ‘communist layabouts’ are vindicated and myToons bites the dust. Strange that should happen if everything is so rosy with the ‘founders’ and they were so good at what they did…
This certainly seems like it might be a case of employee bitterness. However, it seems equally suspicious for none of the management team to respond to TechCrunch.
It was very stand-up of Scott Rafer to do so, but where are the real stake holders?
Look up, Peter. Unfortunate is definitely one of them. He gave it away when he said, “They don’t appreciate the paychecks they got the last 8 weeks, all they want to bitch about is the two weeks they didn’t get now.”
To their credit, they decided not to lay everybody off before Christmas. But Unfortunate should shut his mouth, because he’s only digging a deeper hole for himself and the company.
I heard some stories about that gang over there.
Wasted $$, bags of coke, a couple of dead hookers buried in the desert. Those clowns ran that great idea into the ground.
Never should have had so many employees just sitting around working.
I am surprised they lasted this long.
To Unfortunate – if you are trying in any way to help the situation, you are only coming across as a bitter individual who has, for some reason, allowed this allegedly unrelated article to consume him/her.
The CEO’s name is posted because he is the CEO of the company, and it is his job to make a public statement. Employees are anonymous because they rightfully don’t want to put their necks out more than they already have.
To say that the employees put nothing in is SO far from the truth in this case, as many of us regularly came in early, opened up, made coffee, stayed late, and added new projects to our plates – often even working during weekends in order to best serve the animation community (while our leadership regularly arrived around 10 and checked out around 2-3 – which was fine…up until we really needed them…).
Perhaps it is exactly this dedication that has so destroyed the trust of these ex-employees – especially as they were all willing to stay on a sinking ship, even as the captains lied to their faces about it. So yeah, the way things were handled is going to upset some people…and rightfully so, but since direct communication has proven insufficient, we find ourselves turning to others to ensure that no more misdeeds are committed.
The scenario may seem inflammatory, but if the executives have nothing to worry about, then the employees come off as said “disgruntled employees,” while if there is something shady going on, then justice is served, money is saved, and integrity is upheld.
It’s society’s responsibility to look into these matters and hold each other accountable, and I, for one, would like nothing more than to see these allegations disproved.
Let’s just say that, when the president of the company doesn’t know how to login to his own site…that’s probably not a good sign.
So, it looks like the efforts here worked. The two primary culprits were fired, and some of the team hired back on – sounds like the investigation inspired by this entry turned up some pretty nasty truths…
This is great news for the future of MyToons though! With new CEO Scott Greenburg in place and all of the cancer removed, they might actually stand a chance to create and provide the kind of community that animators deserve!
Best of luck guys!
Sha na nah na
Sha na nah na
Hey Hey Hey
GOODBYE!
http://www.mytoons.com
Need I say more!?
How unfortunate…I was an avid user of the website!
This is all eerily reminiscent of when the same people repeatedly assured everyone at the Bauhaus/Mirage user community forum that everything was fine , the future was rosy, they were continuing to develop killer animation apps … then overnight the Bauhaus/Mirage site disappeared without warning, replaced by a link to MyToons.
I was also a victim of lies and false promises by Paul Ford a couple of years ago at Bauhaus/Mirage.
The description of the Mytoons management that former employees give in the article and in the comments sound very familiar. And actually… so do the anonymous defensive comments! i would not be the least bit surprised if poster’Unfortunate’ was Mr Ford himself.
I am a professional animator and have never even heard of this website until today! That surely says something about their ability to spread the word to their targeted audience.
@g man
Im not sure if there was ever even a target audience to begin with. One thing that all of us ex-tooners know is that there was not a solid business plan, if there was one at all. Im not the artistic type but its a shame that we could not reach talent like yourself, but looking back on it all, consider yourself lucky that we never reached you! Would have been a waste of your time.
take care man and keep animating!
@ abbeyjo – February 26th, 2009 at 7:57 pm PST -
I found this page googling for updates on MyToons.
Looking at this sad tale from the vantage point of several months later we see that the MyToons.com site is still closed and not a whisper that the company is still in business or “restructuring” . Where did you get the info that “the two primary culprits were fired, and some of the team hired back on … with new CEO Scott Greenburg in place and all of the cancer removed, they might actually stand a chance to create and provide the kind of community that animators deserve!” ?
I can find no announcement about “new CEO Scott Greenburg” in connection with MyToons.
It still looks dead , dead, dead. Robin Wauters is totally vindicated for breaking this story on January 29 . Everything in the story posted turned out to be true.