TV advertising startup Spot Runner really is running on fumes. According to a lawsuit filed by one its irate investors, advertising giant WPP, Spot Runner has “expended all but approximately $20 million of its investor capital, while losing money at the rate of $35-$45 million a year.” The company has raised $100 million since 2006, and at one point employed more than 500 people before a string of layoffs cut that number down significantly.
The lawsuit states that the company had a loss of $45 million in fiscal 2008, on revenues of only $9 million. And in fiscal 2007, it lost $35 million on revenues of $5 million.
And here’s the zinger. While Spot Runner was losing all that money, its founders and two early investors (Index Ventures and Battery Ventures) sold shares worth $54 million. CEO and founder Nick Grouf took the lion’s share of those proceeds, netting $26.7 million in five transactions between Feb/March, 2006 and March, 2008. Battery and Index each sold $11.7 million worth of shares (nearly doubling their initial investments of $6 million each). While co-founder David Waxman walked away with only $3.6 million and investor Bob Pittman $365,000 worth of shares. The main complaint of the lawsuit states:
Rather than working to make Spot Runner a successful and profitable venture, they perpetuated a “pump-and dump” scheme in which they aggressively promoted the Company to new investors (often by promoting that WPP was an investor in and supporter of the Company) and then sold new investors large quantities of their own secondary shares at ever-increasing valuations.
WPP alleges that they did this “surreptitiously” and without disclosing it to other investors. As one of Spot Runner’s largest investors, WPP put a total of $11.8 million into the company. But it is hard to feel sorry for WPP. Basically, it argues in the suit that it should have been able to sell its shares to greater fools as well. It is suing because it wasn’t told about the secondary share sales and wasn’t invited to participate until the very last one, and even then only after it complained (WPP was allowed to sell $900,000 worth of stock at that time, while the defendants made off with $17.8 million).
What is not clear from the suit is how much of that $54 million in proceeds, if any, came from fundraising rounds for the company itself versus private secondary sales. Spot Runner won’t comment on any of these numbers other than to say “the complaint contains many inaccuracies.” Update: In a letter sent out to employees on Friday, Spot Runner argues that its founders did nothing wrong and in fact were actually doing investors a favor by selling them shares from their own private stash (see full text of email below):
When these sales occurred, there was overwhelming demand for Spot Runner stock and the company did not want to dilute existing shareholders by issuing new shares. Therefore, the founders (in 2006) and the board members and other preferred shareholders (in 2007 and early 2008) agreed to make room for important, new investors and respond to their desire to invest in Spot Runner by selling their own shares. In 2007 and 2008, WPP and other preferred shareholders were given notice that the sales were occurring, and they had the opportunity to participate in the sales. In fact, WPP signed various documents acknowledging this opportunity
With the IPO window closed for many startups, secondary private sales of stock are becoming more popular, especially for founders. That practice is fine if the company succeeds. Nobody is going to care if the founders took some money off the table along the way if everyone gets rich in the process. It is when things don’t go so well that investors start to complain and the lawsuits start flying.
Regardless of the merits of the case, it is not a good sign when one of the largest investors of a startup decides that the best shot it has at ever getting any of its money back is in court instead of in the market. WPP is seeking $13.2 million in damages. And it is not the only one who is angry. Both former and existing employees also feel shafted (read some of the 135 comments on my post about the last round of layoffs, which somehow became an unofficial forum for employees to vent). They never got a chance to sell any of their shares.
Full complaint embedded below, via PaidContent.
Update: Below is the e-mail Spot Runner sent out to employees on Friday, after word of the lawsuit broke:
Team,
As you may have heard, WPP, a minority shareholder (less than 3%) in Spot Runner since 2006, filed a lawsuit against the company and its board members primarily related to the sale of Spot Runner stock and Spot Runner’s communications with WPP. This situation is unfortunate, as we appreciate and value the relationships we have with all of our investors and we had hoped for a long and supportive relationship with WPP. We believe these claims are without merit and will vigorously defend against them, including taking all necessary legal action to protect Spot Runner’s reputation.
We feel strongly that WPP’s complaint contains many baseless accusations and want to give you a broader perspective on the matter. This lawsuit is unrelated to our products and services – it is centered on legal agreements entered into with WPP, a sophisticated investor, regarding the way that shareholder stock sales were handled. WPP alleges that Spot Runner’s board members failed to disclose to WPP the stock sales by shareholders, allegedly in violation of the board’s obligations to stockholders, among other things.
We are confident that Spot Runner complied with all of its obligations under the various shareholder agreements. When these sales occurred, there was overwhelming demand for Spot Runner stock and the company did not want to dilute existing shareholders by issuing new shares. Therefore, the founders (in 2006) and the board members and other preferred shareholders (in 2007 and early 2008) agreed to make room for important, new investors and respond to their desire to invest in Spot Runner by selling their own shares. In 2007 and 2008, WPP and other preferred shareholders were given notice that the sales were occurring, and they had the opportunity to participate in the sales. In fact, WPP signed various documents acknowledging this opportunity.
Spot Runner and all of its employees conduct business with the utmost integrity. Our team, technologies, and products and services are core assets of which we can all be proud. It is because of your hard work that we have come this far. To that end, we continue to drive hard toward successfully launching Project Malibu and realizing its full potential. You also should know that our board members remain majority shareholders in Spot Runner – a concrete sign of their commitment to and confidence in the business.
Our outside counsel will work with the board and management team to develop a formal reply, which ultimately will be filed with the court. These legal proceedings should not affect our day-to-day operations.
We are grateful that we can count on you to remain focused on serving our clients and partners to the best of your abilities.
Thank you again for all that you do for Spot Runner.
deadpool
Adios!!
http://www.wannadevelop.com
Can I propose an idea? Can TC please write a script to strip the word “Locator” from any comments?
Please ????????????? This would really improve the qualit of my life. I assure you.
Correction, profitable deadpool, for the founders and early investors at least
Jon
http://WoodMarvels.com – Create Unique Memories
Disgusting. Think of all the real entreprenuers that cannot get access to VC money that could have been funded instead of these idiots.
If my company had a tenth of this kind of money we could pretty much take over our niche for years to come.
I cannot blame a founder for selling shares. What is the difference if the CEO sells shares in a private company or a public company…it’s not like he sold to the shares to Grandma.
The Founder figures the venture might or might not work based on the market conditions. The buyers pay him money for shares they think will be worth a lot. These are all big boys with big lawyers and big teams and big money…
if someone got played for $25 million, they got played. Sorry. If you’re not smart enough to know what you’re doing, don’t play.
Besides, the founder’s shares are common shares generally. The buyer of these shares would know that these shares belong to founders or a non-investor because they would be getting common shares if the CEO sold them….as opposed to preferred shares if the money was a part of a normal round of financing.
No,
Nick specifically sold preferred stock to new investors, hoping to recoup his loss and pull a quick profit before his failing company went into the dirt. He also abandoned his employees who don’t own shares they could sell, or who aren’t fully vested.
As he himself has stated, he and the board are still majority shareholders in the company, which in CA requires that you not intentionally profit at the expense of your minority shareholders… This will turn out badly for Nick.
Excellent. I love stories like this.
More please.
I’ve been in this industry for a really long time and have raised money 5-6 times and have never heard anything remotely close to this. The idea that the board of directors of this company were selling shares along side Grouf et al is completely insane and cannot be true. If it is true then these guys might just be guilty as accused. Wow!
Has ANYONE ever heard of a VC selling shares during the early phase of a start-up with no revenue? I have to say that this is a new one. These guys (and their company) are toast!
I’m so glad I didn’t join this company.
Thank god I was able to realize their technical team was entirely incompetent.
obvious troll is obvious
So if you are the founder or head of a start up, don’t sell all your stocks unless you make your investors millions first? If your company looses, you better loose as well.
Or maybe I didn’t understand the article?
Not necessarily, but it is probably a good idea to enrich your shareholders before you enrich yourself.
Yeah, I find it shockingly entertaining that the founders did such a thing. If my humble little company ever had investors I would be committing “suicide by work load” to make sure they wanted to invest in my next idea.
Sell your shares after inflating the value in the first year or two when you’re loosing money hand over fist…? It’s never done – it’s a sign of weakness, lack of faith, and a red flag that leads to mistrust among all investors and employees
According to the complaint, they sold HUGE amounts of stock but never disclosed the transactions to their largest shareholder, WPP. if true, this is a big problem for the founders.
BTW, they did all of this while their company was losing tens of millions per year. This sounds like the Internet equivalent of Bernard Madoff!
Erick, great piece except for the line about “lawsuits flying”. This is a very unique case in my estimation. I’ve never heard of a case quite like this. This really sounds criminal if everything I read is true.
Let’s hope you are right, and this is a unique case. I only meant that investors sue companies only when things go wrong.
theres lots of well funded adnetworks out there who’s business models are on shaky ground.
JudgeLocator.com – mind yourself
Facebook founders are criminal too? They are no profitable but founders are allow to sell shares to make money.
At least Facebook allowed all of its employees to sell shares, not just the founders.
Huge difference between Facebook and Spotrunner founders. Spotrunner founders were selling personal shares for personal gain and not to raise money for the company as they claimed to the investors.
actually Mark Z did sell his own shares. The difference here is
1. disclosure to investors and employees
2. success
What I said was they claimed it was to raise money for the company but it was for personal gain.
Success? What success? Facebook doesn’t make a profit. It’s burning cash. It’s about to run out. And it’s raising money at nearly 1/8th the previous valuation. Doesn’t really sound like success to me.
That’s a shame if they are making money and slighting investors. People need to make a real product and respect the investors trust in them.
Pump and Dump… isn’t that the same as a one night stand?
the complaint filed by WPP says that, as the largest single shareholder early on they had a right to know about stock sales but weren’t told. Then they claim they asked questions and heard back that no stock sales were happening. Then they found out that it did happen and in a huge amount.
The Facebook situation is very different. Facebook was forced to allow stock sales because there were dozens of ex-employees in the market trying to sell. They had to appear like they were getting in front of the situation. It’s called spin.
haha, looking at that I’d have said that the entire thing was a little bit rapey on the VC’s
If there are some VC’s out there that want some true hard hitting bona fide advice drop me a line. It might not be palatable, but I wont be be giving you one either , LOL
Interesting case…. but seems a bit farfetched. It sounds like Sir Martin is grasping at straws considering how WPP has been tanking compared to the other holding companies. $13 million is a puny amount for WPP — he must be desperate. Besides, hard to imagine a conspiracy theory involving the whole board.
The board is five guys in jeans, two of whom are the founders, and all looking to turn a buck. This isn’t some 50 story conference room with 30 men around a table like in the movies.
Jasper, i get your skepticism but have you EVER seen a board of an early stage company with huge losses and almost no revenue sell stock during their Series A, B & C?
I’ve raised money many times and have never seen anything like this.
If Spot Runner goes down in flames (as it appears it will), the market is then only served by the remaining players: Google TV which is in Beta, template ad-maker Spotzer (which seems to have moved away from local TV ads to online media), and CheapTVSpots which remains the most award-winning discount TV ad agency in the world. Google TV may have more trouble in this space than it’s worth, given to the low traditional profit margins of the industry and the tight-budget that clients for this type of service usually are beset with. Clients do not like to bid up against each other for TV air time. That’s one of the problems that Spot Runner may have had…high media costs, and that’s going to be the problem for TV ads from Google. Clients are not stupid. They eventually figure out where they’re getting shorted, and flee for greener pastures.
stop spaming please with your geocities-grade website
Ahhh… time-honoured corporate theft and greed.
“Money-Men” are all the same though, as it’s a quest for power and selfish greed that drives them to become who they are. The hypocrisy that they so regularly exhibit also brings them to pass judgement on others, as though they were so very different.
It’s just that some know how to cleverly “bend” the rules, others know how to influence change in their favour by greasing other greedy palms, and some are simply so arrogant and ignorant that they fail to see an approaching Nemesis.
Spot Runner directors would clearly fall into the last category.
“It’s just that some know how to cleverly “bend” the rules…”
Yes, this is exactly what they teach you at Harvard Business School.
Well put, but I think Spotty falls more in the 2nd group (greasing other greedy palms). I went to high school with Nick, and he was a greasy dick even back then… ick.
He always swung with the right crowd – should have been a politician. At least he attempted to go straight.
it’s dog eats dog among the vcs. until next round.
If true, how does this reflect on what I thought was a very reputable firm in Index Ventures?
Assuming WPP’s facts are correct this is really an awful way for aboard and investor group to act. Selling stock like they all did before the company has accomplished a single thing and without conferring with other major shareholders is unprecedented (at their stage) in my experience.
You laugh about “pump and dump” but tens of thousands of people are swindled of billions of dollars that way every day. Pump and dump sucks and unfortunately, it’s usually anonymous or through 3rd parties. It takes years to build an immunity to the pumpers. I especially hate google groups on the NYSE because that’s ALL IT IS.
BTW, we just got an awesome new 12 bay HP SAN for our 1TB SATA drives.
http://picasawe...e.com/soeet.com
I am so psyched about getting this off the ground. No pumping implied. This is what it is.
As for the topic at hand, I knew spotrunner wasn’t making a profit. Private shares and equity is a very very dangerous investment. You can only do so with friends or people you have known a long, long, long time.
My friends and clients always made my private equity investments. Not the bank or what most of you know as VC.
Look at the 250M investment in Facebook by Microsoft. The company was just valued at 2B. You know what I mean?
When you make a private investment, you are out there with no anchors. You really have to be friends with the people. Even on the exchanges, sometimes you are without anchors as well, and pumpers are everywhere. Beware.
Meet & Greet your investment partners, or do a lot of diligence if you invest in a public company.
I of course mean that MS invested at a 15B valuation where the company was just valued at 2B. That’s pump n dump as far as I am concerned.
But even that is eclipsed by what some pumpers do for publicly traded stocks. People are so insecure and scared they’ll take any advice or believe anything.
The MS investment wasn’t that odd. I’m amazed that people keep pointing to that valuation, especially regarding Facebook’s upcoming investment rounds. At the time of the MS investment, NO ONE believed that Facebook was worth that much, including MS and Facebook. The investment was made to build a relationship between the two companies (and as I recall get Facebook on Live search?). The wildest number for Facebook’s valuation at the time was 8B, and that was higher than most estimations.
Facebook has certainly taken a hit recently, but it’s not quite as bad as 15B to 2B.
MS invested at taht valuation to BLOCK GOOGLE!!
I don’t know why no one sees this. Rather than buy a company, give it a few bucks to live independently at an insane valuation to fuck with any buyout offers.
and, it shows a complete and utter lack of confidence in their investment.
It does not show a lack of confidence at all. 9 out of 10 venture investments produce negative-to-moderate returns. If a VC is able to double their money and still have a good enough stake in the venture, why would anyone in their right mind not do this. A VC fund owes a fiduciary responsibility to its LPs first and foremost. And selling a piece of something at a profit and still keeping a piece is a freeroll in poker terms.
the problem is if you read the entire suit (it’s a quick read and in plain English), you will see that the problem was not the selling, but the fact that the VCs conspired to keep the info away from WPP as mandated by the Right of First Refusal provisions signed between all of the parties for the series C.
and also breach of trust for acting in their own interest instead of the interest of the company
In a company meeting Friday, the founders acknowledged the stock sales, and several of my old colleagues all state that they detected not an iota of remorse or shame in their voices.
As someone who slaved away on an idea I deeply believed in from 06 to 08, the same span in which Nick and David made their millions, had I known that their vote of confidence was to jettison millions of their shares while we toiled away, I never would have invested so much–emotionally and fiscally, paid in time, dollars, stress, and lots and lots and lots of hard work.
Fuck em all. I once looked up to some of my execs, but at this point, they can go die in a fire.
you have more eloquently than anyone captured the essence of what this is about. These guys should go to jail in my opinion.
Just remember, this is the same Nick Grouf that took advantage of thousands of sub-prime consumers that needed a PC…he founded PeoplePC and then charge people ridiculous monthly dial up internet access for $50/month for 200 years…trust me, this guy is a thief…just this time, he fleeced prime investors
And, to give you a sense of how much a snake-oil salesman Nick is, he burned through 200-250 million on People PC and barely sold it off for 23 million. But here comes another 100 million for his next failure. When will these investors start doing their due diligence?
check this out: http://en.wikip...alk:Spot_Runner
This is someone from Spotrunner trying to manipulate their wikipedia entry.
Sounds like another Madoff scam
This is so amazing! Spotrunner is run by shady and questionble characters trying to “pump and dump”? SEC should definitely look into this since there is registration of shares involved. Send those criminal bozos to jail.
I owned a couple of TV CHANNELS and when I saw what spotrunner does I was a little confused- you can get a very nice 30 second spot produced for $250-$500. And this is a spot that is CUSTOM VIDEO and not just a tag or lower third or whatever SpotRunner does…. not that I am faulting them for pricing– just that I’m not surprised they are not making any money….
Nick Grouf lost touch with reality long ago and cannot tell the difference between honest salesmanship and being a complete baldfaced Con Artist.
Society would be very well served if he spent a long time in jail considering his actions.
Anyone who has spent any time watching SpotRunner over the years has seen multiple instances of outright corporate lying repeatedly about their capabilities, partnerships and accomplishments.
WPP got fed up with the BS and has finally called Nick and team on their crap. We can only hope that they SEC takes notice of this civil suit and puts these jokers in jail.
Not clear yet whether the VC’s behind SpotRunner deserve the same treatment, but there is plenty of stink surrounding thier actions. Same is true of Allen & Company who were the primary promoters of SpotRunner.
You know these legal problems started by the f-ers The Circle of Five:
http://www.tech...comment-2681945
Circle Jerks AKA exec meetings in Rex
Ya, it’s definitely the whistleblower’s fault, not the guys who stole $54m from the company.
You know what? Fuck all you guys! Go cry to your mommies, not here.
Ya, less whining and more yelling and cursing pls.
OK Nick, we will stop whining when you are in jail and you have returned the money that you stole.
Nah, I’m pretty sure that was Rosabel’s alter ego lashing out again.
These guys spent more time thinking of dog names for their conference rooms than they did coming up with a viable business model.
Seriously, dog names for conference rooms were approved at the highest level of the organization.
In fact, at what time we used to have trademarked dog names as our conference rooms…e.g. Scooby (and Snoopy? Don’t quite remember).
In a fit of paranoia or PC, the two cartoon named conference rooms were renamed to generic names. If memory serves me correctly, Rex, Fido, and Dollar were all renamed–their former selves having far cooler names.
In fact, at one time we used to have trademarked dog names as our conference rooms…e.g. Scooby (and Snoopy? Don’t quite remember).
In a fit of paranoia or PC, the two cartoon named conference rooms were renamed to generic names. If memory serves me correctly, Rex, Fido, and Dollar were all renamed–their former selves having far cooler names.
to be fair that person has not been at the company for over 2 years
Which person?
QM
Nick, David,
The only thing for you guys to do is to step down from your roles and from the Board and allow the company to regroup and rebuild from scratch. With you at the helm we are going to loose the few employees we have left in the office.
This can still work but you cannot be involved with Spot Runner.
I urge all CURRENT employees to add a small anonymous comment if you believe Nick and David have to step down by replying to the message.
My name is Durga and I support this message.
While I agree with change of leadership, a no confidence vote should be kept internally. As much I like to publicly flog the execs, I think it’ll hurt your chances to close any deals for Malibu if potential partners don’t think there will be any employees left to support it.
True. Nick and David have to put their egos aside, hand the keys over to Mark and let him drive this ship now. He is the only hope we have left.
There is no way that Nick is going to walk away from SpotRunner…… unless he is in handcuffs..
Mark Rosenthal? Hand over the keys to him? He doesn’t do shit – you have to be kidding me….this guy didn’t do shit at MTV, he doesn’t do shit at Spot Runner and he will not do shit when he gets to the next defunct company he joins. His ego towers over his skill sets (which are nothing more than snowing over stupid ceo’s like Nick.)
No Name – come on….do you really know this guy? Do some research!
Ad Guru sorry for the late reply.
Yes Mark Rosenthal. He is a very solid leader and I have worked close with him and to say he does not do much at Spot Runner is a gross understatement. He is a leader who can rally the company around an idea and march towards a goal.
If not Mark who is left?
Kurt is an overpaid useless leader who should have been fired months ago. He hardley comes to LA. Lives up in Sausalito and does basically nothing.
Gus is a great guy but not CEO material yet
JG is part of the clan and cannot be trusted
Sam is not a CEO and no one believes the guy when he speaks and he can inspire anyone.
Ken is a jackass.
Who else is left?
No VP level candidate at Spot Runner is CEO material. No leader from outside will touch this thing.
Who’s left, who cares…..Rosenthal can’t even speak in complete sentences. His thoughts get hung up on mental hick-ups, his speech patterns pause for them to pass. Leadership, why because he threw parties for MTV? This guy doesn’t even lead the two or three guys in his office, let alone a company!
As for the others mentioned, they proven they’re no and never have been leaders…..their justice is coming. Can’t wait to see where nick gets his next VC money from….Friends from Pelican Bay!
This whole group of management is pathetic!
Is the board of this company too busy to do their jobs? You folks must get rid of these founders if you have ANY hope of saving this company. This is not going away and is not getting resolved quietly. The damage has been done.
Putting Malibu aside, who would sign up for Spot Runner’s creative or media agency services now?
I worked my ass off for these guys while they are sittin around making money selling shares?? fuck that. fuck nick and david.
I hope they are guilty and go to jail.
Iw ill provide any information needed to bring them down.
Nick and David were so sue happy they sent cease-and-desist letters to the AT&T/Yellowpages.com guys guaranteeing lawsuits if they hired anymore Spot Runner people. What goes around comes around. I can assure you this will not be the only lawsuit in the next two weeks.
besides pissing their pants those little girls better be hiring them some bodyguards! lol!
@Yellow Panties They already have. There are two strange fellow lurking around SR.
really? really? Wow. You don’t trust your own employees Nick? The same group that would have followed you off a cliff six months ago? Are you guys such pussies that you had to go get body guards for you and David? Why dont you walk into Rosabel’s office and admire a woman who is stronger than you will ever be. You are such a PUSSY.
The little bit of respect you scumbags had, you have lost with this move.
Mark my words this is what will happen in the next month or two with Spot Runner.
The board will fire Nick and David. Index and Battery will also be removed. Gentry may end up getting the booth as well. New Board and CEO will be chosen.
In order to raise more money and lessen the voice of Nick and David and the other “founders” there will be a 100 to 1 reverse stock split so Nick will end up with only 220k shares and David with 25k shares. Next the current employees that are still at Spot Runner will be given new shares in order to try to keep them. Those that left and purchased their shares will be given new certs at 100 times less quantity and 100 times the price.(BIG FU)
At this time Spot Runner will start the PR campaign for Malibu. They will be able to raise some more money because there are ALWAYS desperate VCs who dont want to be left off the bandwagon.
Wouldn’t there have to be a vote of no confidence by the employees first? I mean, the five people indicted -are- the board.
Bye Bye Spot Runner, Bye Bye Google TV, and Bye Bye to all the other wanna-be tech based ad monopolies that charge extra for TV air time. You got found out. The high profits you need to report to your VC partners can only be gained immorally or unlawfully. Now, spin that into an IPO.
God forbid that any of you judgmental people should make a mistake. Perhaps not all of the pertinent information is available to the public and it is causing people (such as yourselves) to jump to quick and incorrect conclusions. These are not the first people to make money off of a company that failed and they will certainly not be the last.
It is part of the capitalist system that some people get rich while some do not. If you are unhappy with the system, change it. Do not sit and judge people who work for themselves within the confines of the system.
Oh wait, this is Sean Locke as well. You can tell because he’s always the “company man” while consistently saying “if you are unhappy with the system, change it” or something similar which is completely missing the point. We cannot change the fact that 50% or $50 million was secretly stolen from the Spot Runner coffers which is the direct reason for people being laid off and not the economy, and having to admit it publicly regardless of the lawsuit is going to make the employees leave and the company to ultimately fail.
You keep suggesting changes, so what is your recommendation?
fuck off Rosabel
The following should be considered to prevent Spot runner being sued off the map.
Nick Grouf should resign as CEO and Chairman of Spot Runner effective immediately. Nick’s position should be held on an interim/transitional basis by Co-Chairman Mark Rosenthal while a suitable replacement CEO is recruited. Nick’s remaining stock options should be returned to the company.
The current board of Spot Runner directors should resign their positions effective immediately and return any remaining stock option grants to the company. The interim CEO will work with investors to designate new BOD.
David Waxman should resign effective immediately. Waxman’s remaining stock options should be returned to the company. A new head of product from the TV advertising/media world should replace Waxman.
Gentry (who secretly cashed out early) should resign effective immediately. He should make way for a COO with expertise in the TV media/ advertising business with incentives aligned with the company.
Any new deals relating to Spot Runner’s assets should NOT take place by the current executive team and should be overseen by a new BOD and the interim CEO.
August, unfortunately you cannot take their stock away. As Kurt mentioned the only way to make their shares “insignificant” is to do a reverse stock split and then issue new shares to everyone else.
what’s my embarrasing story? i believed the hype. on top of getting rid of the greedy senior executives, the alpha phaila uppa sorority sisters need to be sent packing back to their multiple OC mcmansions. after successfully snow-jobbing sr exec team with outsourcing fantasies and promises of rainbows leading to pots of revenue, 3-day-work-week-CS leader promptly laid waste to everything that stood in her way of running everything at SR except engineering. SR sr. execs were too vacant and too busy finding ways to push the stock value ever higher (and are still too busy huddled behind bodyguards up there in rex with legal counsel) to see that the head of client svcs is building her own org on SR’s dime. spot runner’s unspoken company line: if you’re not drinking the SR “we’re the next google” koolaid, doing forced volunteer work for the ceo’s brother’s charity or being a team-player on Team Smoke & Mirrors, then you weren’t “adding value to the organization.” thanks for the 3 years and especially these last fun-filled WARN 60 days. here’s a story some person told me (at least 15 f’ing times!!). it’s called THE HONOR CART. … it turns out that when a company reached certain size, SOME people stopped leaving correct change in the jar. some people actually started stealing money from jar. -WPP HAS JOINED THE CALL
I am not knowledgeable about such matters, but would like to understand.
Three Questions:
I noticed that CNet.com and the San Jose and Los Angeles Business Journal did not have any coverage on this case even a week after the story went public. Does anyone know if either publication takes ad dollars from either of the accused VC’s portfolio companies?
Another question. Do the other large investors have a fiduciary responsibility to audit the companies involved to protect their individual investors or stockholders? Will the individual investors have the right to sue their investment fund managers for a breach of fiduciary responsibility if they do not at least audit the suspect company?
Last Question: Would UTA (United Talent Agency) and 60 Frames take a prestige hit being associated with an alleged scam? What would such a hit cost in dollars?
Nick’s wife is still at UTA, no? Boy, I bet she’s taking some “prestige hits” right now.
Someone should find out who her clients are and warn them to check their accounts to make sure she too is not like Nick cheating on them
Sean Locke,
AKA “mr lobo” AKA “Jason” AKA “ken grouf is a midget douchebag”,
First, Read the comment from 20,000 Feet “April 18th, 2009 at 4:03 pm PDT”. the poster makes a good point.
Second, You have repeatedly written posts trying to pursuade people to “fix the problem” and continualy bitch about the Circle of Five. honestly, who fucking cares? why are you still yelling and poking fun at the whistleblowers? i am embarrassed for you because you don’t see the real problem. who fucking cares what the circle said or did if they actually did anything. who cares if WPP is so greedy they want to sue Spot Runner because they couldn’t get in on the selling spree because spot runner needed to keep them on the roster to continue to sell shares. nobody has actually started helping the remaining employee’s futures which means nothing at Spot Runner has changed.
let’s not lose sight of the single most important issue,
***Spot Runner executives sold shares and fleeced you all***
you all were hired with promises and you all came on board because you thought the founders believed in the company. they did not sell their shares because they didn’t want to dilute the pool, they knew the business plan was a failure and the Microsoft deal fell through because Microsoft saw the numbers. that means, in breach of employement contract, Spot Runner hired you, gave you options that they said were in “good faith” and secretly cashed out, if you had known, you very likely would not have accepted the position. that is the real problem here. who cares about the legal case or the outcome, what they did was unethical and they should be tared and feathered and ridiculed.
so stop acting like you are trying to buddy up with the readers by throwing out childish rude comments about the execs and acting like you hate them and blaming some rogue vigilante group who brought this to everyones attention. you have been seen meeting with david waxman and nick about how to respond to these posts. enough treating people like children and manipulating them, for fucks sake!
there was no “fixing the problem,” there was only sheading light on the truth. what is done is done. stop beating a dead horse and you help fix the problem by aligning with the rest of the organization and ousting the people who have given Spot Runner a black eye.
you, sir, are being laughed at.
Nick, If you really care about Spot Runner and the employees you would reverse this greedy move by issuing new Spot Runner stock and then buy (along with Waxman, Gentry, Huie etc) those shares sold back (stock equal to the latest valuation) with the $40 million you stole from us. $40 million should buy you a nice chunk. Sure it will dilute the company by 5% (a fraction) but who cares, we can eat 5% if the company can get an infusion of $40MM and another year of runway which it badly needs to launch Malibu.
This is what a moral CEO and executive management team would have done in the first place you greedy immoral fuck!
Just because you lacked the vision to make this company work doesn’t mean you should have sold out the people who could. That funding would have saved a lot talented peoples jobs and would have allowed enthusiastic (who were before you fucked them) employees to launch Spot Runner the right way and give them the fair chance they deserve to realize their hard earned reward from a legitimate stock sale later on.
You’ve now jeopardized and stolen from the very investors that just made you temporarily rich. They are coming back for their money and when they do they bury you. the clock is ticking. Your ponzi scheme is going to put you where you belong, in jail.
I can’t believe the employee reviews of Spot Runner on GlassDoor.com. They seem to be taking it easy on them….
http://www.glas...ews-E100558.htm
So as Nick was stealing 10s of millions in he was saying:
“We want to use the investment to make a real penetration in the market,” said Nick Grouf, chairman and CEO of Spot Runner. “We want to expand both organically and through acquisitions, as well as expand our staff, and these strategic investors will help us do that.”
Jail time.
Ha. I remember the meeting where he announced the latest round of capital infusion.
“We didn’t raise this money because we need it” (LIE)
“We would like to have some extra money in the bank in case we see a worthwhile aquisition” (LIE, the money went into HIS account, not the company’s)
“We are still on target for profitability in the near future” (HUGE LIE! We weren’t even close)
I understand executives not always showing their entire hand but to outright lie to, and mislead your employees is unforgivable.
And to top it off, those of us who purchased our stock options were basically conned out of the money we worked our asses off for.
So not only did he swindle his investors, he swindled his employees as well. This guy is nothing but a two bit crook.
I don’t wish harm upon anybody, but the thought of the many sleepless nights and mountains of stress that Nick Grouf has in his future, certainly makes me smile.
People like Nick don’t have sleepless nights.
Do former employees of spot runner have a case for a class action suit against them?
From: SR Employee
TO: Board of Directors
Pilot Groups’ Bob Pittman
Index Ventures’ Danny Rimer
Battery Ventures’ Roger Lee
Gentlemen who are you waiting for? When are you going to do your job? It is your responsibility to the company, to the current and past employees and to all the investors to force Nick and David to step down immediately. We all know that John Gentry has cashed out as well and has to step down within few days and not weeks. What all you have done may be legal, never the less it is immoral. I have been in start-ups for years and have never seen company founders take money out at such vast amounts so early in the game.
I know each of you cashed out as well, but if you act now your remaining shares may be worth something in the future, if you don’t they will be worthless in a matter of few weeks to months as Spot Runner is on its death bed waiting for you to take action. It’s your move and every single one of us is waiting for you to make it or else we will leave and you get to keep a nice shell of a company with no assets and no employees.
Good luck gentleman. Act fast.
It has been a week but Nick and David have not resigned from Spot Runner yet. To put more pressure on them and to show that we are all united I ask everyone to call in sick on Tuesday the 28th of April to send a clear message to both
Why just on Tuesday the 28th? Let’s just stop showing up altogether starting on Monday.
Uh, that’d probably be a brilliant idea. In this economy you’d just make it easy for them to cut costs without paying you severance. Mass quitting would probably be their dream scenario.
Nobody said quit. They said stop showing up. “Work from home.” With SR’s legal team working overtime they don’t have the energy to actually make cases for firing employees right now. Imagine if they got slapped with a wrongful termination suit in the middle of their current predicament.
It may be time for Barbara Barry to outsource a job for herself!
indeed! barbara’s perfectly qualified for a high level position in a C-level agency, where she can demonstrate her keen lack of interest in anything non-political, delegate every bit of work to her underlings, engage in ill-conceived power grabs involving outsourcing/firing entire departments (only to re-form those same departments and staff them entirely with “yes” people), show up totally unprepared for most meetings, apply her vast creative talents (she was the force behind the Jenny Craig ads afterall!), and redefine the meaning of ‘office casual’. and all this she’ll accomplish in 3-day work weeks! who wouldn’t want her?
Even Jenny Craig wised up and fired her
Barbara Barry…. It’s tempting to spend many words on her breathless lack of talent and security… …and brains. But she doesn’t deserve the airtime; there are trailers in every California county full of phonies like Barbara and her clones.
The real story is that Gentry hired her, likes her, and took her advice designing the brilliant new Spot Runner org chart… while everyone else knew she’s a scheming clown. Just another example of how the Three Stooges of Spot Runner are absent and clueless. I wonder if the Board will ever know that Grouf, Waxman and Gentry barely involve themselves in the operation of the company.
And they still got rich.
But surely they never purposely did anything wrong.
Right?
Are those 3 crooks still at Spot Runner? Any news from inside?
Notes from the just-published AdAge article:
“Mr. Grouf brought in investment from companies that could also be make-or-break partners for the company, such as WPP. Now that strategy has backfired, an entire advertising holding company, along with the biggest media-buying unit in the world, effectively swears off doing business with the company.”
“Even Mr. Grouf’s critics concede there is a great need, and potentially a big business, for whomever figures out how to automate and streamline TV advertising. The question is whether anyone in the industry wants Mr. Grouf to be the guy to do it.”
“The relationship took a turn for the worse last January when [WPP] claims it began to hear “rumors” of insider stock sales.”
“Then there’s the issue of timing. “At the time they took the money out did they know there were going to change their business model, lay off 60% of their work force?” Mr. Dagres asked. “If they did know that and [WPP] can prove they knew all that, then that could be ticklish for them.”
http://adage.co...ticle_id=136269