This is Part 1 of the series. Part 2 is here. And Part 3 is still being written.
Prepare yourself for an extraordinary journey through the realms of celebrity and deception, where fortunes hang in the balance. This story, drawn from the depths of my agency career, is an epic tale that will leave you spellbound. Brace yourself as I peel back the layers of this astonishing startup saga.
Now, let me set the stage. In the following account, I employ the term “incompetent” extensively. While I acknowledge its potential to wound, I choose it deliberately to convey the truth without sugarcoating or sparing fragile egos. Sometimes, the kindest course is to speak plainly, avoiding the sensationalism and harsh language that others close to the story have used.
It all began with an enticing brush with fame. The allure of working with a celebrity client drew me into a world where dreams were transformed into reality. But as the curtains were raised, I discovered a shocking truth: behind the glitz and glamour lay a web of incompetence that threatened to unravel everything.
Millions of dollars were at stake, and the gravity of the situation was palpable. I witnessed firsthand the sheer magnitude of mismanagement, as key players stumbled through their roles with alarming ineptitude. From strategic decision-making to execution, it seemed as though chaos reigned supreme. Yet, amidst this chaos, I held on to the hope that redemption was possible.
In the chapters that follow, you’ll journey with me through a labyrinth of deception and unexpected twists. Together, we’ll uncover the untold secrets, the unfathomable risks, and the astonishing resilience that emerged from the ashes. This is not just a story of incompetence; it’s a tale of human nature, of the capacity for both greatness and downfall. Get ready for an unprecedented adventure that will leave you questioning everything you thought you knew about startups and the people behind them.
In the beginning
The story unfolds in the first quarter of 2021, like many other projects do. Fancy, one of our agency partners, introduced us to Verse Us (V/U), a new startup aiming to become the “MasterClass of sports.” With celebrity founders and supposed ample funding, V/U appeared poised for success. However, the divide between expectations and reality would soon become painfully clear.
As time passed, approximately six months, V/U struggled to find their footing. Each passing week brought stranger developments, with V/U hyping their company and product while masking delays as signs of growth. It was an unusual dynamic since clients don’t typically feel the need to impress their vendors. They regaled us with tales of conversations with Justin Timberlake, prospective investors, and valuations soaring over $30 million before even launching. I couldn’t help but wonder why they chose Fancy, a design agency fixated on MasterClass, and that’s when it clicked—they wanted to literally replicate the MasterClass app.
To provide some context, Fancy represented the remnants of a bygone era—an agency built on impressing others through ego and exclusivity. Their full-service model had faltered, and it seemed their survival hinged on the egotistical founder, whose social media boasted extravagant possessions and snapshots with celebrities and politicians. While they occasionally demonstrated design prowess, it usually came with a price tag in the seven-figure range, paying for a handful of experienced designers and a cadre of interchangeable staff. But I digress; I’ll save the tales of Fancy for another time.
My expertise in building e-learning software for over 15 years brought me to the table. My company had poured a decade’s worth of profits into Uranium, our content management and backend system—a perfect fit for Verse Us. I proposed treating the relationship as a partnership rather than a project, an idea that would weave its way throughout this narrative. I desired a publishable case study for Uranium, so I made it clear that my company would operate at cost if we could publicly showcase our partnership. This approach resonated with the CEO of Verse Us, whom we’ll refer to as Derek from this point forward.
When Verse Us was ready to embark on the discovery phase, Fancy wanted to manage the relationship and handle billing through their agency. Although I didn’t appreciate their tendency to inflate my quotes for profit, I reluctantly went along. My enduring relationships with Fancy and the people involved mattered more to me than the billing arrangement. This marked my second project with Bryan, one of Fancy’s experience directors, despite being less than thrilled with the outcome of our previous collaboration. However, given the alignment of this project with my own interests and expertise, I decided to give it another chance.
The first real red flag emerged when I discovered the extent of Fancy’s invoice padding—three times the actual cost. I confronted Bryan about this unethical practice, revealing that I could read the redacted proposals beneath the black squares they used to hide information. He was taken aback, but after some back-and-forth, I reluctantly decided to move forward, hoping for the best. While Bryan acknowledged my concerns about eating into the client’s budget and the discomfort it caused me, he dismissed them, claiming close ties to the founders and their supposedly ample funding. It seemed he saw it as “easy money,” ignoring the ethical implications. Pressing the morality conversation would have only complicated matters with Bryan and Fancy, so I chose to tread carefully.
Fancy's Incompetence: the king isn't wearing any clothes.
With Discovery underway, we spent three months engaging in typical agency jargon, delving into Blue Sky exercises and searching for that elusive North Star. Yet, as Fancy’s discovery process neared its end, I realized we hadn’t even scratched the surface of a critical aspect: production and content administration. V/U had ambitious plans to launch 200 videos in the first year, but I knew from experience that executing such a large-scale media production could pose significant challenges. Our software, Uranium, was well-equipped for managing video assets and content, streamlining operations. However, I hadn’t seen a capable team at V/U, and they heavily leaned toward buying solutions instead of building them. At the time, V/U consisted of just five individuals, working with a handful of agency partners, and their lofty goals raised questions about their financial burn rate, likely approaching $200,000 per month across the various agency vendors involved.
As I prepared to navigate the challenges ahead, I realized that while the budget was V/U’s problem, I had my own obstacles to overcome. I needed additional resources and budget to unpack the business logic and content operations with the client. Fancy, always eager to increase billable hours without adding value, was all too happy to support my proposal. They would assign one of their incompetent producers to our calls, who contributed little to nothing but was merely present for appearances.
The situation had taken a turn for the worse. Everyone was cheerleading the product and talking about how successful it would be, and I seemed to be the only one concerned and wanting to constructively challenge those assumptions. The prevailing positivity surrounding the company was toxic. As we concluded the Discovery phase and prepared for design and development work, Fancy had locked us in at a fixed cost of $650,000, a figure that would prove disastrous. I couldn’t pinpoint exactly when or how it happened, but back in February 2021 during the introduction phase, Fancy had asked for ballpark estimates on the project. These estimates were meant to be off-the-cuff and based on limited information. However, working with Bryan changed everything. He quoted on my company’s behalf without my involvement or consent, misinterpreting some vague comments and leaving Verse Us with the impression that the budget also covered responsive web support and a myriad of other features and enhancements.
If you make Fancy look bad, we’ll never work with you again. We may even have to sue you.– Bryan, Director at Fancy
When I challenged the budget, stating it was a gross miscalculation, Bryan responded with a threat. He warned that if I made Fancy look bad, they would sever ties with us and even consider legal action. It was a concerning situation since Fancy was a formidable player with deep pockets. However, I couldn’t compromise my core values. I immediately terminated all our agreements with Fancy, knowing it might lead to a court battle. Nonetheless, I was determined to find a way to move forward, reshape expectations, and see the project through. The silver lining was that this would be our last project with Fancy, as their quality of work and integrity had drastically deteriorated.
After spending time with the V/U team and gaining their trust, I decided to share parts of this story with them, particularly their CEO, Derek. While I couldn’t reveal the full extent due to non-disclosures in our vendor agreement with Fancy, they seemed to grasp the underlying message. There was much more to the Fancy side of the equation, but this story isn’t primarily about them; they merely played a part in setting the project up for failure.
A Glimmer of Hope
Amidst the challenges, there came a time when I found myself genuinely hopeful for Verse Us and their team. It seemed they might be on the path to success after all. They not only listened to my concerns but also made the necessary adjustments to the roadmap and budget expectations. This positive trend continued for about four months, fostering a strong synergy and collaboration. The connection was so profound that my business partner decided to join them in a full-time capacity. I wish I could dedicate more time to express my gratitude and share the uplifting experiences that transpired from August to December of 2021.
While the overall story carries tragic, disappointing, and even repulsive elements, I want to acknowledge this brief chapter that shone brightly. Verse Us had assembled a remarkable team, and some of them have become long-term friends and trusted colleagues. We have continued to collaborate on numerous projects, building upon the foundation of that memorable period.
Back to Reality
As someone experienced in working with startups, encountering founders who display naivety is nothing out of the ordinary. In fact, I often view it as an opportunity rather than a red flag. Naivety, when coupled with a strong work ethic, a hunger for knowledge, and a willingness to learn, can even serve as a strength for a fledgling company.
Rather than delving into a detailed timeline, I’ll provide a retrospective summary that highlights the talent gap within Verse Us as it grew:
- 1 exceptional founder emerged—a green but teachable individual who possessed kindness, a strong work ethic, and a desire to be liked. However, his tendency to idolize the wrong leaders and engage in gossip occasionally added a dramatic flair to the mix, albeit not excessively so.
- 4 individuals, masters of their respective crafts, formed the marketing team. These professionals brought their A-game to the table, with backgrounds in agencies or freelancing. They were a group of highly competent individuals who knew their craft well.
- 2 well-intentioned founders, although lacking in commitment, primarily contributed to the company’s reputation through name-dropping and endorsements. While they bear less responsibility for the narrative that unfolded, it is plausible to speculate that a greater level of dedication and authority on their part could have resulted in a more successful venture.
- 2 entirely incompetent and morally bankrupt leaders held the positions of CEO and COO. They were the decision-makers of the company and ultimately steered their startup, along with all those involved, toward financial ruin.
- Half a dozen interns and junior staff members, although well-meaning, lacked relevant experience. Unfortunately, their contributions often incurred costs that outweighed any value they could provide.
- Another half a dozen individuals simply freeloading. These were the types who preferred to fly under the radar, evade responsibility, and collect a paycheck for doing nothing. This state of affairs persisted for months.
I assure you, there is no exaggeration here. If this weren’t akin to penning a book, I would delve even further into this bewildering mix of personalities. It was utterly mind-boggling to witness and collaborate with such a disparate crew. On one hand, I had never encountered a more inept team, while on the other, I interacted with some of the most talented individuals I had ever come across in their respective fields. Despite being less than a year old, this startup already necessitated compartmentalization due to the glaring divide in skills. Collaboration or integration between teams became a point of contention, and the leadership’s attempt to address this issue was laughable at best. Their strategy involved haphazardly mixing and matching teams in an effort to coerce better communication and collaboration. The team dynamic at Verse Us was a reflection of the stark realities faced by startups, where talent and incompetence could coexist within the same organization, leading to a volatile and challenging environment.
Amidst the tumultuous landscape at Verse Us, it is important to acknowledge the presence of some of the most exceptional experts I have had the privilege of collaborating with. These individuals, whether they were internal team members, freelancers, or agencies engaged to propel the company forward, deserve recognition. For a moment, let us set aside the intricacies surrounding Fancy and focus on the broader picture.
Verse Us, whether consciously or unconsciously, made the wise decision to recruit top-tier talent to bolster their business. The caliber of digital agencies, freelancers, and producers involved in shaping Verse Us was truly impressive. However, this aspect should serve as an extension of my previous chapter on Agency Greed. The issue with pouring money into renowned agencies is that they often gladly accept the funds without providing any guarantee of success. In truth, they have no vested interest in the outcome. This was a stark contrast to the dedication displayed by my company and a select group of vendors who genuinely operated on a break-even basis. Our motivation stemmed from the desire to establish a valuable case study and foster a meaningful partnership. We had skin in the game.
Meanwhile, Verse Us seemed to be frivolously spending money like an impulsive gambler who hits the jackpot, indulges in excess, and squanders it all at a strip club. Without clear deliverables, strong leadership, focus, and direction, success becomes an elusive prospect when collaborating with any service provider, regardless of their caliber or reputation.
Join the Circle Jerk!
Before delving into this section, I want to emphasize that, despite the tone of this story, I consider myself an ardent optimist and idealist. However, I have come to learn that my unwavering belief in the best in people can sometimes lead to unfortunate outcomes. To counterbalance this trait, I strive to employ logic and reason, although it often takes time to do so.
In the case of Verse Us, an overwhelming atmosphere of toxic positivity permeated the company. While optimism can be a valuable asset, it became a hindrance when it was coupled with a lack of accountability and an absence of space for constructive criticism. Those who sought a seat at the table were not welcome to express concerns; they were only allowed to cheerlead and hype. Several factors contributed to this dynamic, primarily stemming from the leadership. Derek, the CEO, would commence meetings with prayer and frequently emphasized faith and trust and any critique was a personal violation of his belief system. So most of the agencies involved in the project showered praise and flattery because they were driven by financial motives. Personally, I was only excited about the opportunity to bring Uranium to the market and there were even discussions of a potential joint venture.
This is my family’s future. If we do this right, I’m going to retire a millionaire.– Cray Cray, Director at Verse Us
One of the co-founders, leveraging his celebrity status as the general manager of a Major League Baseball team, instilled a sense of confidence in the company’s success. These factors, combined with the presence of religious themes across the team, fostered a blind faith and an unquestioning following. Many team members placed their entire lives and futures on the line, hoping for financial security in their retirement. They were sold the dream that this startup would create a “whole new generation of millionaires,” as one founder enthusiastically described it to me. In response, I jokingly cautioned him, saying, “Don’t hold your breath. It will take years of hard work and sound decision-making to achieve success.”
The toxic positivity that permeated Verse Us was a double-edged sword. While it instilled unwavering confidence and fervent hope, it also stifled critical thinking, accountability, and the willingness to address the challenges and obstacles that lay ahead.
WTF is Going On?!
As the story unfolded, a series of peculiar behaviors emerged from both Verse Us and the investment company, Key9, from December 2021 onwards. Although I have yet to delve into this part of the narrative, it holds significant importance. It turned out that Derek, the CEO of Verse Us, was also a partner in the investment company that had contributed to the initial round of funding for Verse Us. While it was not unheard of for a partner of an investment firm to assume the role of CEO, it did raise some eyebrows. Things were smelling weird, but we couldn’t quite figure out what was off. My business partner ended up joining Verse Us to assist them in rapid and reliable growth and also to see if we could shed some light on the oddities we had been observing. However, it took many months before we started gaining insights into the financial and operational aspects and things began to come to light.
Having unparalleled access to information across the organization, thanks to my dual role as a vendor and someone operating as a trusted advisor, I had a clear vantage point from both perspectives. Additionally, I had served as their IT personnel, setting up various systems such as HR, payroll, email, and other communication platforms. Consequently, I had visibility into billing, emails, documents, and other assets that were typically siloed. It’s important to note that despite this access, I was still primarily treated as a vendor, albeit one granted extensive access and occasional consultation.
The first true red flag materialized when I stumbled upon an investor presentation in January. It was then that I discovered the extent of the deception—a web of fabricated claims concerning user numbers, revenue, and partnerships. This was not a case of innocent embellishment or “fake it ’til you make it”; these were outright fraudulent assertions. To my astonishment, my name, biography, and photo were even featured on the executive team slide in the investor deck! They had used my likeness as CTO, one of five profiles and name drops, in an attempt to convince investors of the legitimacy and potential success of the company. If I were someone with ego, I might have felt flattered. However, utilizing my image for clout, especially without my consent, was completely unethical. What’s more, they were fully aware of the distasteful nature of their actions, as this investor deck was held in the utmost secrecy, accessible only to a select few. I have witnessed founders operate with a lack of transparency before, but never to the extent and depth that Verse Us did with their team. Information became a privilege reserved for Derek and Clay, and if you weren’t one of them, chances were slim that you had access. Although my access was primarily a technicality due to my involvement in setting up infrastructure and access controls, I had also earned trust by maintaining the confidentiality of the information, even from my own business partner.
This was the beginning of my suspicions that I might be working with frauds, but had no idea what would unfold next…
Continue to Part Two: The Conspiracy
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