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WrkRiot Collapses Amongst Allegations of Fraud (qz.com)
HockeyPuck quotes a report from New York Times: This week, WrkRiot, began unraveling in a highly public fashion (Warning: may be paywalled). Its former head of marketing revealed that the start-up had been mired in internal chaos and had sometimes paid employees in cashier's checks before delaying payment... Penny Kim, the former marketing director at WrkRiot, wrote about her experience at the company -- a story that consists of alleged deceptions, including forged wire transfer receipts, late paychecks, and lies from executives. Her entire story can be found in a Medium post titled "I Got Scammed By A Silicon Valley Startup." Quartz reports: "Here's the story Kim lays out in her Medium post: In May 2016, after three interviews, she says she accepted the role of marketing director at 1for.one, one of WrkRiot's earlier incarnations. From the beginning, things didn't seem quite right, she says. The CEO, Isaac Choi, hired one of her direct reports without consulting her. A promised $4 million marketing budget never materialized. At investor meetings, the co-founders 'talked about themselves, their connections, and their qualifications for 30 minutes' rather than the product, which they touted as the next 'Credit Karma of LinkedIn.' The software engineering team was largely made up of young Chinese employees relying on visas sponsored by the company to remain in the U.S., Kim says. After repeated inquiring about salaries, Kim alleges, Choi sent forged Wells Fargo wire transfer receipts to 17 employees, and told them that if the money wasn't in their accounts that it was their responsibility to follow up with their banks. Kim ended up filing wage claims with the state of California as the paychecks stopped coming. Kim claims Choi fired her without cause and owes her back wages, a promised $10,000 relocation bonus, and three months of severance worth $50,000, as negotiated in her contract. A series of former employees, advisors, and even the company's former CTO have since denounced WrkRiot and its leadership, in particular Choi."
The payday though is most often disappointing. Unless you've got a relatively simple product that's up and out to the public in a year and the bankers are excited and want to push you to IPO, there's generally a dilution of equity over time. So five or ten years at a startup and your payday is basically the size of a large bonus or a year's salary (which is great but it's not the quick retirement some people think they're going to have). If you take time to build a business instead of hoping for a quicky buy from Google then that time means equity dilutes. Bankers are getting smarter, they are much more likely now to want to see actual recurring revenue before the agree to help with the IPO, so it takes time and you need a real plan.
There's no easy way to make sure those options don't get taken away. Even co-founders can find themselves cut out of the picture with just one vote on the board, so what chance does someone who actually was low class enough to actually have to interview for the job expect?