I think everyone knows that I’m biased about this situation. I’m very close friends and a business partner of Phil Morle who has, from what I understand, been royally screwed by this, and I’m mates with Rachel and Clay Cook who have also been screwed. So it’s pretty clear who’s side I’m on.
But there are other reasons why it pisses me off.
Firstly, startups are to a large degree based on trust, especially in the early days. You get together over coffee about a hundred times, mostly with people you’ve worked with before. But sometimes you need help from someone new and you over another hundred coffees you work each other out as best you can and decide to go for it.
You don’t do police checks. You don’t do credit checks. You might ask a mutual friend if you are lucky enough to have one. Nik was mates with Marty Wells and Mike Arrington, so you’d think there is a bit of goodwill there, which shows it isn’t enough.
I’ve been lucky enough to have met good people. Dai-Kyu Kim from Zapr hired me after 50 coffees and whilst the company moved on, he always operated with integrity. He didn’t have to. He could have screwed me over, but he didn’t. Marty and Alex from Tangler (another 50 coffees) have gone through some big and challenging changes this year and are coming out stronger the other side because of how they have dealt with the situation with staff and investors.
It’s not easy, but that’s what real leadership is about. CEO isn’t something you just call yourself, you have to earn it - I think.
The second reason I’m pissed off is because Nik has been touted as being a model, young Australian entrepreneur making it big in Silicon Valley. His poor behaviour tarnishes the good name of other great Australian startups and those coming up through the ranks now. I would hate to be pitching to a Sandhill Road VC and have someone turn us down because “Australian’s can’t be trusted”.
I’m fiercely proud of my country, and I’m passionate about integrity, and when the two are threatened, I’m not going to sit back idly and just let it happen.
The fact that two of my friends have been hurt by it just makes a bad situation unbearable.
If I’m wrong, if my two friends have been lying to me and the world, if Nik is right and a good guy, I’ll be the first to apologise. Nik, let me know if you want to talk. I’ll certainly take your call.
As Phil said, ‘Sigh‘.
And now back to the great, high integrity startups that I’m proud to be a part of.
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19 responses so far ↓
1 Cris // May 5, 2008 at 6:35 am
Good post mayt.
It’s a real sorry situation and I feel real sorry for those on the bad end of the stick.
It’s close to home for me too, as I almost used omnidrive for skitch.com hosting. Luckily I felt something was odd and sought other hosting systems.
2 Hear hear // May 5, 2008 at 9:54 am
Your right I hope it doesnt tarnish Aussie’s
3 Vishal Sharma // May 5, 2008 at 10:02 am
Being in Melbourne I don’t know the whole history and details so cant comment on it, but the points you have raised are valid. I wonder why Michael Arrington and Mike Cannon Brookes ( my understanding is from Altassian is on advisory board, plz correct me if i’m wrong) 2 well respected and smart guys should help him rather than going and manging this way
4 Cris // May 5, 2008 at 4:19 pm
I should add, I still hope Nik can turn OmniDrive around. He will need to be open about the issues that occurred. Not all is lost :)
5 Mick // May 5, 2008 at 4:29 pm
I agree Cris. I think it would be hard, but if Nik came out and said what actually happened, then he could get investment, pay back his debts and then move on.
That’s one of the big shames to me. I saw how close the company was to being great, and it wasn’t even a lack of skill or integrity that really stopped it in the end. It was a lack of guts to face up to the reality.
6 Nik // May 8, 2008 at 11:57 am
Hey Mick. Its becoming harder and harder for my to defend myself - because so many conclusions have already been drawn. I decided months ago that it was time to get back to work and to make something of the 3+ years of effort we have put into Omnidrive, but with such a pounding out on blogs and on the web its just getting harder and harder.
The stories that are being told now are just completely ridiculous, even as so far as talking about substance abuse. I don’t like Clay’s comments about the partying and conferences etc. either - because it also totally isn’t true. Clay and Rachel told me a hundred times that I needed to ‘get out more’ and that I work too much. How it went from that to me seemingly spending only an hour a day actually doing any work is beyond me.. I can really only remember a handful of occasions where I even went out - perhaps the odd get-together here or there, and most if not all of that only once you guys had all arrived.
Those that know me know that I am always the last wanting to go out or go to a conference, the same behavior that Clay describes is the sorta stuff I criticized myself! I rarely drink and I certainly don’t do any drugs, but what I say doesn’t mean anything anymore.. it seems that everybody has made up their minds and the story has gone from one of Omnidrive not closing their round when we had a chance and in-turn not being able to make payroll etc. to a story of me being a drug-crazed partying lunatic who took all this money and spent it on himself.
I don’t even know what to do to defend against that anymore - its just become insane. It seems that as soon as I don’t have time to blog, or post a photo on Flickr or twitter a message that I have ‘disappeared’, but when I get a reasonable email request (such as when Richard from RWW emailed me) I get back to him - same for other emails.
There is also this accusation that I profited from Omnidrive - which couldn’t be further from the truth. Since starting the company, I have taken out two mortgages to free up funds. The money that we have raised only covered around 60% of what we have spent since day 1. I used our PayPal card for a period of a couple of months simply because we didn’t have a US bank account at that point and every couple of days we would have things to pay for.. its a far stretch to go from that to accusing me of embezzling.
Also the situation with Clay. I emailed him last October and told him we were doing an ‘emergency round’ - which would have to be around $200-250k, and that I had emailed all investors to see who wanted to participate. On that email I attached what our financial forecast was and what we would need to spend (including catching up on payroll). I also explained that we were in talks with 4 or 5 VC firms, but the reason why we were doing a quick round was because the chances of being able to close a VC deal by the end of the year were not looking good, particularly since not much gets done in Nov/Dec. At that point we knew where we stood, as did Clay. He declined to take part in the round, but offered to come past and look over the financials of the company, I remember trying to arrange this meeting with him a few times but it just didn’t happen. We wont from being in that position to Clay asking me not to call him, being blocked on Skype and asking for his investment back (which he knew we weren’t in the capacity to do) very quickly.. I know Clay has written up all sorts of stuff on his site - but I don’t see how he and Matt make the connection from what happen to me doing something illegal. I think anybody else that steps through what Clay has said will see it for what it is. He is on some ridiculous crusade now and I really do not know what his incentive is, since it completely isn’t constructive.
As I have said before, we did make mistakes last year. First of all we could have taken at least two deals that were presented to us which we kicked back because of minor sticking points in the terms (and for the record, I wanted to do at least the first one - I really liked the firm). Second, we hired more staff on the basis of our fundraising efforts and the likelihood of closing a deal relatively quickly - which in hind-sight was a mistake, but at the time we were 100% in fundraising mode. In fact, the chances of us *not* closing a deal were slim, and that was the general opinion (even though, as it ended up we didn’t).
My final point on that note is a large part of where we went wrong was when we had too many people heading up the effort in terms of raising funds. I had two VC’s directly ask me ‘why is so and so calling/emailing to ask if your fundraising is going to happen’. That obviously doesn’t help things. If I wanted to, I could really bitch and moan about a whole host of things, from people I dealt with to people under-delivering and everything in between, but I am not going to.
No matter what Clay does or says you won’t see me write a post like he has, and you certainly wont see me hurling untrue accusations, rumor and slander. Some people forget that I am and was at the time in the exact same position as everybody else - desperately needing to close something out or simply strip the company back or shut it down. But I can’t help thinking that even if we did just shut the company down and said ‘ok we couldn’t raise a round’ that I would probably still be hearing the same things as I am now..
The other thing is, Omnidrive always was and has been a relatively lean company. We got a lot done with not a lot of money and for most of the time our burn never exceeded $25k or so. Also by October of last year we had a very clear business model and a healthy pipeline of potential customers that if executed correctly would have seen solid revenue growth. There were months were revenue did exceed what we were spending, and if implemented the dozen or so weak points that we had (mainly bugs and UI stuff) we would be in a different situation today.
So after everything caved in and everybody else faded away, I am left holding the bag (which is reasonable, as I am the founder and CEO). So many people that surrounded us for so long while the times were good are suddenly no longer around (asking you not to call them, blocked on skype, no email responses, etc.). So I am left not only having to find a way out (which I think is still very possible) but am expected to do it while nobody wants to discuss it directly with me, but they do want to post everything publicly.
At the end of his post, Clay says:
“I honestly wish Nik all the best and will, if I can, help him on the journey. ”
Ironically, this is just a couple of pixels above a comment left by Matt (his biz partner) talking about how I took investors for a ride (well, at least the single investor who thinks so) and ‘the clear fraudulent activities ‘. Saying that I commited fraud is a really serious accusation - but I can’t see anywhere in Clays post where there is anything backing that.
That is exactly how situations like this snowball. First a person says that I didn’t reply to their email (no transparency), within 5 minutes that becomes ‘fraud’, and a further 10 minutes later it turns into a drug-crazed do nothing who stole my money and shot my dog.
The *only* motivation that I can think of that Clay has is to discredit me. To do what he can to try to undermine me (regardless of what his last line says (which was added in later) - I think that is plainly obvious). I really do think that it was a very poor judgment call on his behalf. I can understand that he may have been frustrated, but he should have just called me or emailed me and dropped the legalese crap and talk to me like the friend that he once was. It seems he formed a view by talking to everybody else _except_ me. The only person who has emailed me in the past couple of days has been Richard.. I also know for certain that each time these stories come up, there are people who are behind the scenes emailing who they can asking them to leave comments, or adding to the story and forwarding to bloggers etc. etc.
You must think to yourself that with everything being said and so many accusations being hurled at me - what is my motivation to continue? Even the way in which this argument is framed makes it hard for me. What I do know is that there is a lot of potential in Omnidrive, and at the moment I have at hand a similar capacity of resources as those we had at the time we initially developed the app, the same level of resources that was resposible for around 95% of what is there today. There is also a very deep stack of knowledge, IP and lessons learnt which is a bigger advantage than having a bigger team of developers. For eg. we learnt the hard way that retailing hard disk space (be it in the sky or in a computer) is essentially a race to zero in terms of price and margin. You can add all the bells and whistles to the app but that fundamental rule remains the same. With that in mind, around 10 months ago we modelled an updated version of Omnidrive that would take a shift in terms of how it operates - shifting away from the dollars per GB race and providing an application that makes web computing more efficient and easier for users. So my point basically is that while we went through a lot last year, we are not in a hopeless situation (certainly not 99% hopeless like what Clay insists). The margin for sucess and my ability to redeem what were a very tough 2-3 months at the end of last year do get a lot harder though each time I read some re-printed and/or exadurated rumor.
Would be more than happy to talk on the phone, same applies to anyone
7 Mick // May 8, 2008 at 5:07 pm
Nik, thanks for a very long post. I do believe there is some honest in there. But you know that I was with in Atherton for some of this stuff and you know very well that you have only answered 20% of the issues, avoided the others and not represented some of it correctly.
I will email you and take this offline, but one point I have to make is that you said you were very lean, at 25k a month and that ‘So after everything caved in and everybody else faded away, I am left holding the bag’. From what I experienced first hand, people like Phil and Jon hung with you for months not being paid even though you said you had money, and told them they’d be paid. You didn’t say ‘come on board, we’re trying to raise money, we might not be able to pay.’ And Phil saw you raise some money from Clay. Phil and Jon left because you didn’t come through on your promises after a number of months. They gave you a lot of chances and they just had to let it go. That was really unfair of you to do that and it was the root cause of all your problems to date.
You still haven’t commented on this at all and until you do, I don’t have any sympathy for you.
I’d find it much easier to give you a chance and come back and help you, which we all would, if you really faced up to all of it. Not online. This is a shit forum for that. You have all of our email addresses. Just email us and we’ll talk.
8 Rex // May 8, 2008 at 7:46 pm
Well said Mick.
Where are Nik’s friends? I have only met people that were burnt by him, including myself.
9 The truth comes out about Omnidrive. - Rex Chung - Beyond 2.0 // May 8, 2008 at 7:48 pm
[...] and valleywag. Arrington is still out there defending Nik. Nik also has a come back with another story, typical. I hope other people has learnt the lessons and Nik would learn to cut his crap. No [...]
10 Nik // May 9, 2008 at 2:35 am
Mick I probably should have been clearer, but when I was referring to ‘holding the bag’ I wasn’t referring to Phil and John - far from it. I told both of them at the time that I really appreciated their efforts considering what was happening at the time. There were at least 3 or 4 occasions where we thought that we had the fundraising wrapped up, and the only way you can gauge what is happening and how soon it might happen is to take the feedback you get at face value. The big mistake is counting fundraising before it actually closes, and I was certainly guilty of that - so there is a lesson there. There was even a point where we not only had a ‘yes’ from 2 firms and term sheets, but also amongst a group of either existing or potentially new investors as well. It is easy to say this now, but there is no doubt that I would have done things different at the time knowing what I do now
But it is a big stretch to go from that to some of the things that are being said now, which are vicious personal attacks on me. I never once denied that I had made mistakes, nor did I tell anybody to go screw themselves. Some people are trying to re-cast the story into something it isn’t (eg. fraud, drug use, partying)
I am fully aware of what my responsibilities are at this moment and am working hard. If some people want to write that effort off and continue the personal attacks on me, then thats their prerogative.
Ill shoot you an email, I appreciate being able to talk without having crazy accusations thrown at me
11 Sami // May 9, 2008 at 7:12 am
Sorry guys to bother you with this. But I believe that what is, as far as i’m concerned, a major element of the story, that’ s to say customers, has been voluntary or not neglected in this story. What they would wait from Nik would be one email (or one blog post on http://www.omnidrive.com) explaining clearly and briefly what happened the last months, revealing only the details that should be publically known. The rest of the story has to stay in the respective mailboxes of each involved person.
Furthermore, apart from that, I think that this type of discussions shoud be private as it mainly involves some investors, some ex-employees and their small circle of friends, and of course the CEO. Put it on a blog and it will end with misunderstandings, lies, and in many cases useless accusations, because of a lack of discernment, thus not solving in any way the initial problem…
Disclaimer : I am personally not involved in this story, however I did use Omnidrive as a product, and so I felt that I had the right to put my two cents in this “yet-it-should-be-private” public discussion. Sorry again, provided that my comment may offend somebody’s sensibility.
12 Dave S // May 20, 2008 at 10:47 am
Nik, the simple fact is you took customers money and have field to deliver.
You can gloss over it as much as you like, but that’s the truth.
I have been throught this all before with Streamload - Mediamax - Nirvanix - The Link Up and whatever they will be calling themselves next week.
I have now made it a goal of mine to hammer these people and their company into oblivion and will slate them to anyone who will listen.
They have done nothing but lie and cheat and steal money off customers for three years now.
I bought into Omnidrive as a customer and you let us down.
Instead of coming clean you have just issued excuse after excuse.
I have not had a response to any of the emails I have written asking for a refund, and I don’t expect one now.
Once again I have tried to log on to Omnidrive today to find it’s not working.
You let a product go to market without it been fully tested under market conditions, you got what you deserved.
13 Mick // May 20, 2008 at 4:27 pm
Dave, that’s well said I think.
14 Omnidrive Officially Placed In The DeadPool…We Think // Jun 10, 2008 at 11:08 pm
[...] late as May 5 Cubrilovic would appear to have continued to blame everybody but himself, suggesting that various [...]
15 Omnidrive: Not dead yet, thanks » mathewingram.com/work | // Jun 11, 2008 at 3:24 pm
[...] company again — but there are still some pretty big skeletons wandering around, to judge by posts like this one. For some extra insight into Nik’s viewpoint on the whole mess, and that of some of his [...]
16 Kevin // Aug 3, 2008 at 6:33 pm
Business is tough; and if you guys behave like that, close your business now. There is no chance you can compete with other companies.
17 Mick // Aug 3, 2008 at 6:53 pm
Kevin, if you run your business by not paying your key people, not telling the truth, not paying suppliers and by not getting the work done, then you should close your business. I certainly wouldn’t work with you or pay money for http://www.drivehq.com/ I would assume I’m going to get ripped off.
Businesses are tough, but without integrity, it’s only ever short term.
18 Charlie // Aug 3, 2008 at 7:37 pm
It’d be great if Nik could send round an email to the users. I’ve still got lots of files on Omnidrive. At the very least I’d like to delete the account. I don’t like having having personal documents in a failing company; a bit like the West worrying about plutonium in the crumbling Soviet Union.
19 jemma // Sep 1, 2008 at 3:02 am
Nik wants us to just forget:
http://twitter.com/cubrilovic/statuses/904586757
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