Linked, Tech

Clinkle Implodes As Employees Quit In Protest Of CEO (Josh Constine/TechCrunch)

Founded at Stanford in 2011 by Duplan when he was just 19, Clinkle amassed a team of smart, driven students at the college despite refusing to show many a working prototype. Duplan’s co-founders Frank Li and Jason Riggs have both since parted ways with Clinkle.

Yet suddenly, the startup was the talk of the town when it managed to raise $25 million in seed funding in June 2013 from top investors including Peter Thiel, Andreessen Horowitz, Marc Benioff, Jim Bryer, Accel Ventures and Index Partners.

But rather than a traditional-priced seed round for equity, sources say Duplan structured the financing as convertible debt. One outcome of that was that Clinkle didn’t need to allow an investor on its board of directors, limiting oversight and keeping Duplan in firm control. The round was raised in small amounts from a large number of investors, which also kept anyone from dedicating more time to guiding Clinkle. Duplan secured another $5 million a few months later bringing Clinkle to over $30 million in funding.

A cautionary tale of woe from TechCrunch's Josh Constine. The story of Clinkle seems to be a crystal-clear example of what happens when someone takes all the wrong lessons from the tech giants of the past 40 years and then...fails miserably.

The founders of Facebook and Google all structured the ownership of their companies so that they could retain total control, even after going public. To me, that always seemed like a response to Steve Jobs's ouster at Apple (and less high-profile examples of the same behavior), which clearly worked out well for Page, Brin and Zuckerberg. On the flipside, we have Lucas Duplan, who structured his funding so that he could retain total control of the company, but didn't have a product, evidently couldn't keep a team together, and seems to have been missing some of the opportunities for advice and growth that come from bringing on more involved investors.

Now, Clinkle is circling the drain, and it seems the only question remaining for the company is how bad its outcome will be.

It's interesting to see this dovetail with Nellie Bowles's reporting on the teens of Silicon Valley. There's a group of young folk who have decided to come out to the Valley to try and strike it rich as startup employees or entrepreneurs, and they're being courted by venture capitalists and Valley luminaries out to harness the next Facebook, Google or Uber.

In the context of Clinkle, I found this quote from Kristina Varshavskaya (who left home in New Jersey when she was 17 to join her sister at Wanelo) particularly illuminating:

“I’ll either meet people who will fetishize it or will dismiss it. The fetish is kind of weird,” Varshavskaya says. “The group of young guys here. A lot of them are treated like gods and wizards and heroes, and all the venture capitalists are waiting for their next magic thing, but they’re not doing anything that special. They’re just really young. I include myself in that.”