> Advice to potential investors and partners - check all numbers from CEO - it’s easy and you will be surprised.
> Facts about Youplus:
> - 4+years old
- has no users and never had traction in both USA and India
- change of direction every 2-4 weeks
- no one cares about results
> CEO has a lot of energy and love to pitch whatever in his head to everyone in the office for hours in endless meetings. What he completely lacks is a solid vision, execution and just a common sense. His ego is tremendous — he despises other people’s opinions and if he asks for your opinion the only expected answer is “Awesome!”.
> Youplus is a toxic place to be for everyone with a self-respect.
(from October 2018)
> First of all they do not pay on time
> You can get fired in a second because they don't need you anymore
> According to the complaint, Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. When one investor pressed Shamim for information substantiating those claims, Shamim allegedly provided the investor with falsified bank statements in an effort to conceal the fraud. The scheme allegedly unraveled in late 2019 when Shamim confessed to certain investors that YouPlus had in fact earned less than $500,000 and obtained only four paying customers from the company’s inception in 2013.
Seems to be just regular run-of-the-mill fraud.
Fake it till you make it is something to direct at your customers, or at your product's implementation, not at people who are giving you their money, who are protected by the SEC.
I assume that the firm will never be able to make a positive return for its investors, which is why they invoked the nuclear option.
Sadly in most cases like these, the money's largely gone and very little is left to make any 'round' of investors whole (usually the latest round comes first).
A number of comments are asking why the investors do due diligence in checking the numbers.
Before Series A (i.e. seed, seed+, bridge), asking for audited financials is quite uncommon. The startup investment space largely works on trust, honesty, and speed. It also works on 'stamps of approval', previous ventures, accelerators (500, YC), investor networks (gain one, you gain a few others by association).
It's easy to say, they should always ask for diligence/auditing, but that slows things down in a space where speed to delivery means something. Less time you can spend on fundraising the better and even w/o diligence you can spend way too much time fundraising.
Not saying it's perfect, but it's the side of the double edge sword that's in play. If defrauding happens too much then enough bad eggs will have ruined the pot and audited financials will be required as a general practice.
Honestly the investors are morons. Who doesn't do due diligence before investing?
This communication says that the CEO only produced the false bank statements when he was pressed about it. Seems like somebody snapped out of it, did the due diligence that should have done in the first place before signing a check, and realized that this was all smoke and mirrors.
Theranos managed to suck in billionaires like Rupert Murdoch, Tim Draper and Larry Ellison, executives at Safeway, the Walton Family and others. All without working technology or a single peer-reviewed paper regarding their work.
It happens all the time, and is happening as we type this. How?
I think it's wrong to rationalize what YouPlus CEO did to investors by saying he was like so many other people in startup culture; his actions don't represent silicon valley. I wish more people would call out startups like YouPlus when they take money from investors for the business they don't have and for the technology that only exists inside their heads.
[+] [-] necubi|5 years ago|reply
> Advice to potential investors and partners - check all numbers from CEO - it’s easy and you will be surprised.
> Facts about Youplus:
> - 4+years old - has no users and never had traction in both USA and India - change of direction every 2-4 weeks - no one cares about results
> CEO has a lot of energy and love to pitch whatever in his head to everyone in the office for hours in endless meetings. What he completely lacks is a solid vision, execution and just a common sense. His ego is tremendous — he despises other people’s opinions and if he asks for your opinion the only expected answer is “Awesome!”.
> Youplus is a toxic place to be for everyone with a self-respect.
(from October 2018)
> First of all they do not pay on time
> You can get fired in a second because they don't need you anymore
> Promises are not kept most of the time
(from Jun 2017)
[+] [-] darkhorse13|5 years ago|reply
[+] [-] vkou|5 years ago|reply
Seems to be just regular run-of-the-mill fraud.
Fake it till you make it is something to direct at your customers, or at your product's implementation, not at people who are giving you their money, who are protected by the SEC.
I assume that the firm will never be able to make a positive return for its investors, which is why they invoked the nuclear option.
[+] [-] elliekelly|5 years ago|reply
I’m surprised the DOJ hasn’t charged them with a crime yet. The money the SEC is seeking has to be long gone right?
[+] [-] irjustin|5 years ago|reply
A number of comments are asking why the investors do due diligence in checking the numbers.
Before Series A (i.e. seed, seed+, bridge), asking for audited financials is quite uncommon. The startup investment space largely works on trust, honesty, and speed. It also works on 'stamps of approval', previous ventures, accelerators (500, YC), investor networks (gain one, you gain a few others by association).
It's easy to say, they should always ask for diligence/auditing, but that slows things down in a space where speed to delivery means something. Less time you can spend on fundraising the better and even w/o diligence you can spend way too much time fundraising.
Not saying it's perfect, but it's the side of the double edge sword that's in play. If defrauding happens too much then enough bad eggs will have ruined the pot and audited financials will be required as a general practice.
[+] [-] whoisjuan|5 years ago|reply
This communication says that the CEO only produced the false bank statements when he was pressed about it. Seems like somebody snapped out of it, did the due diligence that should have done in the first place before signing a check, and realized that this was all smoke and mirrors.
[+] [-] itsoktocry|5 years ago|reply
Theranos managed to suck in billionaires like Rupert Murdoch, Tim Draper and Larry Ellison, executives at Safeway, the Walton Family and others. All without working technology or a single peer-reviewed paper regarding their work.
It happens all the time, and is happening as we type this. How?
[+] [-] raverbashing|5 years ago|reply
Did they see the product in action? A concept? Or all they saw was powerpoint and empty words
I agree, it's fraud, but I sincerely believe there's a point where "don't blame the victim" stops making sense.
> to have developed a machine-learning tool to analyze videos on the internet
Ah yes of course.
[+] [-] adrr|5 years ago|reply
[+] [-] JumpCrisscross|5 years ago|reply
This is an unusual ask. Founders forging bank statements simply isn’t common enough to merit it.
[+] [-] unknown|5 years ago|reply
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[+] [-] tossmeout|5 years ago|reply
[+] [-] tw1912112|5 years ago|reply
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[+] [-] davidbrennerjr|5 years ago|reply
[+] [-] tw1912112|5 years ago|reply
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