

iStoleYourStartup: A story of an iPhone Company Con Man - alttab
http://www.connersc.com/blog/?p=58

======
alttab
I am the author and co-founder of this failed start up. And you guys say a lot
of things that were definitely true. The comments here made me realize I left
some important information out. I'll try to clear these things up here.

1\. I never really thought that what we were doing was revolutionary. We were
creating cool looking applications on a new device and that excited me. Once
we had a reputable name that had the marketing acumen, I thought that we could
push a lot of $0.99 units.

2\. The poster about saying I stayed around for the loyalty of my friend was
spot on. I probably stayed too long, and in the future I will definitely pick
my friends a little more carefully. His arrogance didn't help.

3\. My fascination with "The Secret" was true and simple naivety. Had I had
walked around the block a couple more times I would have realized that this
was complete snake oil wrapped in a snappy, marketable message.

4\. "Tanner" hasn't been that successful since. His business relationship with
Ryan rotted after the poor handling of their eventual contract and his Dojo's
attendance has been suffering as it has apparently clearly affected his
charismatic performance. I've been told he is in a mountain of personal debt
as well as over $100,000 in the hole at his Dojo. This is merely what I was
told by a source I trust but take from it what you will.

5\. I made a lot of dumb mistakes and wanted to "play business" like it was
some game and that if I sat in my room and wrote code all day the mail man
would deliver a pile of money to my doorstep. I was an ass hat and I've
learned a great deal of humility since then.

6\. It was emotional, and maybe I played that up a bit here. Its a personal
story and its taken a long time to get over it. Simply knowing I've had people
read my story is enough. It was my first true business endeavor outside the
safety of a large corporate structure and I got burned.

7\. The company is still operating, but still haven't managed to get even one
of their 12 applications onto the app store. They have since produced zero
revenue, the seed money was probably a lie from Tanner, and there's so many
cuts in the pie these days that I'd be surprised if anyone made their
investment back.

Half of me had wished I had posted for advice here earlier on, I get the
feeling I would have been served up a large slice of reality pie. I'm doing my
best not to walk around with my head so far up my own ass this time around,
seeking professional advice where needed.

Thanks for taking the interest and time to read and respond to my story.
Hopefully someone avoids making the same mistakes I did from it.

~~~
wisty
There's one point this highlights - even if you're working with friends, you
must have a contract.

You don't need a lawyer to write it (it's better, but in the early stages you
can economize), but _anything_ written on paper that divvies up the IP amongst
the founders will prevent a lot of heartache later on.

I guess that guy would have complained about creating "negative energy"
though.

------
mattmaroon
"To this day I simply can’t believe that someone out there exists who would
con and manipulate people like this"

Yeah, truly shocking that there could be someone out there able to manipulate
people who think The Secret is "just so true".

------
enjo
I'm always fascinated about how we see one of these articles every month or
two.

You don't have a business until you have an organization. Get a contract in
place. Determine ownership before even 1 second of time is dedicated to the
undertaking.

It's really not that hard.

~~~
Tangurena
I've been trying to study up on how conmen succeed, and how to innoculate
myself against them. I've been taken to the cleaners a lot in my adult life,
but one thing I've figured out is that when someone tries to manipulate me
with fear ( _buy now or be priced out of the market forever!_ or with the
typical threats from a lawyer), I _have_ learned that the most effective
technique I can do is dig my feet in and do the exact opposite of what the
fearmonger preaches.

------
michael_c
Scott, thanks for the story and I sympathize that things did not work out as
well as you would have hoped.

BUT having re-read your post a few times, and obviously not being involved at
all, I am not sure that Tanner is the malicious con man you make him out to
be.

ie being a douche != a con man && things not working out != being manipulated.

For example: 1\. Additional cut to Zen Club \- Zen Club the company is
separate to Tanner, the individual. If both are contributing to the App
Company (eg you mention the brand, the photoshoot etc), then it seems
reasonable to both to be part of the split. I agree that you should probably
have negotiated both Tanner's and Zen Club's contributions together, but it
seems irrelevant whether you split it as Tanner gets X% and Zen Club gets Y%,
or Tanner gets (X + Y)% and Zen Club gets 0%.

2\. "We started reporting to Tanner like a boss" and Ryan always agreeing with
him. \- These seem to be interpersonal dynamics that doesn't necessarily point
to Tanner being a con man. I assume there was no backroom deal where Tanner
paid Ryan $X to always agree with him etc, in which case Ryan made his own
decisions which simply happened to disagree with you. Similarly if there were
no deals that forced you to start "reporting" to Tanner, then it seems like
everybody simply fell into this dynamic.

3\. Invisible Lawyer and Boilerplate Contract \- Did you ask to meet the
lawyer? \- The lawyer is presumably busy, and you mentioned he wasn't being
paid for his services, so the fact that you got a fairly generic first draft
and the whole process took a long time doesn't mean anybody was being
malicious. Even in the best circumstances contracts take some time and always
with multiple revisions first.

4\. If the runway ran out you would have no income while Tanner still had his
gym. \- you not having an income if the runway runs out is a standard risk for
founding a startup \- yes Tanner still has his gym. He presumably spent some
separate time and investment to set up and keep running, so this also doesn't
sound malicious.

5\. After you quit, domain / email / ftp accounts were changed \- standard
practice I would think

6\. Ryan got 5% \- I agree it does seem low, but it is possible this is a fair
deal. Think of it this way - the investor put in $250K, Ryan did not put in
any money, was working part-time, and none of the apps got approved into the
app store (is that a technical responsibility?).

7\. Other 'grievances' (eg drives BMW, not using real names, acting career,
charging you for an 'overpriced' gym membership and DVD series, alcohol,
charging for $30 pillows, 'squatting' in the spare office, etc) \- apart from
adding color to your story these details are irrelevant at best \- at worst it
makes Tanner a douche, or wasteful with money, but does not necessarily make
him a con man

Obviously I don't know the full story so take what I wrote as you will. It
just seems a shame if you take the belief that you were conned (and more
importantly, take an overly-sceptical / distrusting view into your next
project where it could become self-fulfilling) based on only 1 of several
possible _interpretations_ of what happened.

~~~
alttab
You make a lot of great points and in some cases I will agree with you.

The cut to Zen club had little to nothing to do with its brand or the
photoshoot. While it was "helping" - I will agree - he owned the gym and
blurred the lines between what was his partnership and what was the gym - and
wanted an equal share cut between him AND his gym.

2\. Absolutely true.

3\. I asked to meet the lawyer plenty of times. If he was the best partnership
lawyer in town, I would think a google search would turn his name up. It
didn't.

4\. You make a good point and I realized those risks. That said I wasn't
confident enough that I wouldn't get screwed as I had already set the
precedent for how I could be pushed around. Plus, its not like HE was quitting
his gym to go full time with us, he simply wanted it done faster and didn't
care if it put us into harms way.

5\. Yes, yes and yes. I was stupid for not getting my e-mails and records off
the servers first, but its like at this point my friend didn't even trust me.
This was an emotional response.

6\. The investor did _not_ put up $250,000, in fact, he barely even marketed
the product to his own consumer base (so far, Nov 2009), which was the only
reason I was playing along because I thought it would work (which is still a
mistake).

7.I agree here too. There were other comments as well. He was taking a
business coaching course run by the Joe Ansaldi and a couple of times said to
us "There is a science to making money. Like you hear sometimes, step 1, 2, 3,
profit. Works every time" There were similarly scammy things he said that
rubbed me the wrong way.

You have a completely unique and valid take on the situation. My emotions
blurred a lot what happened and while accurate from my perspective, wasn't
necessarily everything.

Thanks for your input, as it is posts like these that help me get the full
story and stop my inner-brooding on getting pounded in the rear by business
partners (my failure was from a long series of my own mistakes).

------
brown9-2
What rubs me the wrong way about this story is all the references to "the
iPhone millionaires" and "the millions to be made" and the "iPhone gold rush".

Gee, when you're only aim is to get rich quick, it's not too surprising that
you are vulnerable to being taken for others than want to get rich _even
quicker_.

------
tdm911
_"he paid $300 for a manual on how to make money on Twitter and gave it to
me"_

I'm assuming that's how to make money on twitter. Sell books on how to make
money on twitter for $300!

~~~
mattwdelong
I once picked up a book at someones house titled "Everything Good About George
W. Bush"; It had a nice fancy cover and everything. I opened to the first
page, blank - the second page - blank..the middle of the book? Blank!

I picture this $300 manual to be very comparable.

------
peripatetic
What a squalid petty affair.

I think you need to keep a little perspective. You aren't the first guy to
waste a bunch of time on a side project that didn't go anywhere.

1\. this was a side project!?! you can't expect great results from a side
project. if something happens, then great, if not, well .... you still have a
job.

2\. Don't you first need to _have something_ before it is conned from you. I
certainly didn't hear of any great technical achievements that would have lead
to success.

3\. Maybe you didn't like the direction the project took. But it sounds like
your partner was right about one thing, dealing w/ your dojo guy did get the
attention of the Secret guru. It seems like the involvement of the Secret guru
is the only thing the project had going for it at one point. And as I
mentioned prior, you didn't mention any great technical successes that would
have lead to a breakout.

Like i said, welcome to the club of failed side projects.

~~~
alain94040
I'm biased to defend founders, but in that story, I'm not particularly on the
author's side.

Yes, the guru was probably abusing the situation. But the author refuses to
quit his job and rejects an offer for a $250,000 seed investment. The guru
does provide a key connection.

Even a legit guru would have become frustrated with the author by then, and
tried to get rid of him.

I'm also not shocked by someone who spends $900 on flowers for their home. If
you have the money, why not? The author is just showing how young he is.
Driving a BMW is also not proof of cardinal sin :-)

~~~
alttab
The money never came - the work continued after I left, and the guy is
apparently in a lot of debt.

------
melito
All parties involved seem super flakey.

Even though he was made out to be the 'villian' and is in fact probably a
douche, the guy running the zen dojo or whatever sounds like he has a good
thing goin.

This story has given me the idea of collecting stories about failed startups
from the perspective of those involved.

That way if you find yourself in a shifty situation you have something to
consult that should confirm whether or not you're in a textbook train wreck.

------
petewarden
Never trust a hippy

My two worst business experiences have been with ostentatiously 'spiritual'
people. It's not that they're insincere in their beliefs, it's just a lot
easier for them to deceive themselves that the selfish things they do have
justifications in them somewhere.

Give me a straightforward 'coin-operated machine' (as an old partner described
himself) any day, you can at least trust them to behave as advertised.

~~~
CamperBob
Congratulations. You just blew off Steve Jobs.

~~~
petewarden
I spent 5 years at Apple and Steve spends zero time blowing smoke about
spirituality. He may be a private hippy, but at work he's pure business.

~~~
CamperBob
Which Steve was that, though? The pre-NeXT Steve who was kicked out of his own
company, or Steve the White who came back from the abyss to throw the usurpers
out and save the day?

------
swombat
_"This dude even got his black belt from a man trained by Chuck Norris"_

He got his black belt from a man trained by Chuck Norris? Wow! That's like, so
impressive. Amazing. That must mean he IS Chuck Norris.

More seriously, yes, stay away from those uber-charismatic types, and trust
your gut! Never do a deal with someone if it smells fishy or doesn't seem to
add up. Your gut is your best weapon.

~~~
KevBurnsJr
_trust your gut_

------
naz
The Secret? Is this a joke?

~~~
kalendae
Ha I actually had a similar take. The story started very nicely like a good
startup story should and in my mind i thought here is possibly another good
story about the pitfalls of doing startups that one can learn from. Then got
to the secret part and it kind of just completely vaporized that notion and
the story became how a sucker got suckered. but the real downside was that he
didn't even get suckered out of that much. he did some prototyping, almost
partnered up and then decided they were not a good fit. it's not like the
couple and his friend made it so no other yoga apps can be made.

~~~
kwamenum86
I'm not sure I would call the author a sucker. He had serious reservations
from the beginning. His friend? Definitely gullible. But many of the decisions
the author made were out of loyalty to his friend, not out of gullibility.
From the start he considered the possibility that his friend was brainwashed
but gave him the benefit of the doubt. I think that even the least gullible
people on HN are susceptible to this.

~~~
kalendae
right, sucker is a bit harsh. Using it emanated more from him loving the
secret more than the story that was told. But the point I pretty much failed
to make was that if he felt the enterprise to be worthy, but the people not to
be, it is something within his control to find new partners or continue,
nothing that happened prevented that. But the story dramatizes events to the
level of someone having stolen his business dream or some such. Basically, yes
it is a crushing experience to lose your innocence and find out someone you
highly respect is just out to exploit you, but there's no reason to get it so
mixed up with everything.

~~~
kwamenum86
Yeah when I read that "just so true" part I thought he was either being
sarcastic or would come to his senses later in the story. Neither seems to be
the case. It is a shame because positive thinking in the form of good old-
fashioned optimism is a great thing so long as it is balanced with a healthy
dose of realism. Applying positive thought naively and waiting for good stuff
to happen to you is sad and embarrassing.

------
flipper
This article reads like a case story out of 'Winning Through Intimidation' by
Robert J. Ringer (a book anyone who is thinking about starting a startup
should read). "Tanner" sounds like a Type Number 2 Master Intimidator.

The author escaped with only getting the tips chopped off a couple of fingers
rather than losing his whole hand (read the book and you'll understand what I
mean).

------
gridspy
How horrible for you.

It just shows that you have to choose your partners extremely carefully, and
you must write up legal contracts that will back up your agreement.

More importantly, don't partner with anyone you don't know and trust already.

------
KevBurnsJr
You can't please everyone. If you try, you will eventually leave yourself open
to manipulation.

A lesson best learned as early as possible.

I call it a win.

------
schammy
A lot of you are being pretty hard on this guy. It's a good story, and if you
don't have business experience you can learn a lesson from it.

Just because he liked "The Secret" doesn't mean he's some asshat who deserved
what he got. Hindsight is 20/20 and it's obvious he had a lot of reservations
throughout the ordeal. But when you're dealing with a good con artist (I
have), they can make you believe anything. Reading this story brought back a
lot of memories of what I went through. But I could see all the sings from a
mile away while I was reading it.

Once you've been conned, it will never happen to you again. Unless you're an
idiot.

