Color Labs And Bill Nguyen Sued By Ex-Employee Alleging Retaliation | Hacker News Reader

Color Labs And Bill Nguyen Sued By Ex-Employee Alleging Retaliation

techcrunch.com

136 pointsmoocow0185 comments

In or around late 2011, [then Color CFO Alyssa] Solomon began noticing discrepancies in Color’s finances. Upon information and belief, Defendant Nguyen was spending corporate funds on numerous personal items, such as charging personal items on Color’s American Express card and putting his family’s nanny, Sally Orr, and his family’s Lake Tahoe‐based ski instructor, Hillary Governer, on Color’s payroll.

If this is actually true, this is a Really Big Deal (tm). The IRS (and relevant legislation) is very serious about these things, and I can't imagine anyone running a high profile company who has a career at stake actually doing this of their own accord.

This isn't just about ethics. It's an allegation of embezzlement, which carries a penalty of imprisonment for up to twenty years(!) Doing that to save some money on a nanny seems absolutely insane to me.

Doing that to save some money on a nanny seems absolutely insane to me

-- Or just: "hubristic" [1]

________________

[1] http://en.wikipedia.org/wiki/Hubris

*Hubris (/ˈhjuːbrɪs/), also hybris, from ancient Greek ὕβρις, means extreme pride or arrogance. Hubris often indicates a loss of contact with reality and an overestimation of one's own competence or capabilities, especially when the person exhibiting it is in a position of power.

Well, he did after all spend $35M-ish on what can really only be described as a very special hobby. I guess he figured that adding a nanny to top it off wouldn't make a difference.

I'm not sure about the legality of it

But the ethical aspects, together with the crash and burn of Color are hopefully more than enough for him not to get a single penny out of VCs any more

There are lots of serious people out there looking for funding, save the investments for them instead for the loud bozos

The allegations seem to cover just about the same things Dennis Kozlowski is in prison for right now.

Bill Nguyen seems like a relatively young guy who would seem to have more punches left in him in the form of starting more companies. But given these allegations, are investors actually going to back him in the future?

Maybe this is just who I am, but if I were a VC, I'd have serious reservations about investing in a man who has demonstrated serious character issues and is known to create a dysfunctional corporate culture. In fact, I would never invest in anyone who bullies or torments their team members no matter how much of a track record he has. I wonder if thinking like this automatically disqualifies me from ever acting in such a capacity.

Not just bullying employees, but the suit outlines Nguyen going to great lengths stalking and plotting against Witherspoon's children, in ways that left a massive paper and witness trail and are quite verifiable if true.

Startups may be famous for not punishing failure, but I think this is such an exceptional case that I don't see the same rules applying here. I would not trust someone who squandered this much wealth, and certainly would not trust them if any of these allegations are even remotely true.

I think there are two failures here: (1) business failure, and (2) moral failure. Sometimes (1) is just out of our control, but (2) is fully within our control.

To me, moral failure is a bigger red flag in giving me signals about the individual.

Capital is amoral.

But leaders shouldn't be amoral.

Agreed. This applies to the CEO and the Board, where relevant. LPs and public investors can vote with their feet, but people actually with their hands on the controls need to act responsibly.

Yes, but capitalists don't like trusting amoral people with their money.

How do you know?

Besides, it's capital, not capitalists, that is amoral. Some capitalists may not participate in certain ways the same way a religion might have dietary restrictions or taboos, but capital itself doesn't care.

Maybe I've just gotten a bit cynical from being around the valley so long, but expecting VCs to have a moral conscience that would stop them from doing wrong is probably a bit deluded based on what we have seen in the past. I actually felt like Nguyen sounded like most VCs I've heard about with his talking down to others, trying to intimidate them, etc. When I think of Silicon Valley VCs I'm a lot more likely to think of stuff like http://betabeat.com/2011/11/charlie-odonnell-women-in-tech-d... than of someone passing on an investment for moral reasons.

If you also examine his track record, he seems to start companies, make big exits, and then those companies tank / die. I imagined that would raise some red flags.

But apparently not, at least with Color's investors.

Well "investors" probably don't care much about what happens after a part of their portfolio gets a "big exit" since that's the end goal. :(

Well, they certainly didn't get a "good exit" from Color, which was an unmitigated catastrophe.

Anyone who calls their son's teacher every day to inquire about their co-founder's child's behavior despite needing to kick their own son in the stomach to punish him needs a reality check. Reading this thing is horrific.

Provided that it is true

Absolutely. I realize that this is all speculation at this point, and a question I have relating to the legitimacy of things like this occurring is how - if it's true - it was kept under wraps. Time and time again we hear these workplace horror stories, but where are the whistleblowers? Is it not safe for them to go to the police? Do they not think their claims matter? Were there mumblings of these occurrences that went unnoticed?

It's bothersome that there doesn't seem to be a place where people can go to speak up and not feel like they're suddenly a risk to future employers, but at the same time not cause the company a burden should the claims be unwarranted.

I'm pretty sure if he does have another go at a startup, it will be using his own money without any meaningful board or oversight.

Megalomaniacs don't deal well with situations where someone else can pull the rug out from under them.

So, would that mean you wouldn't invest in a supposedly Steve Jobs' new startup if he was still alive?

> ... given these allegations, are investors actually going to back him in the future?

Given these allegations, is he going to be able to find anyone willing to work for/with him in the future?

That may be a more challenging thing. Lots of people do stupid things, sometimes even illegal things, but does not have nearly the impact on their ability to 'funded' as one might guess. For every investor who will say "No" there is another who will say "I don't care what he did or does if I get a 10x return on my investment!" Kind of sad but also true.

That said, in the Bay area at least where the valley is pretty "small" in terms of reputation there are people who have worn out their welcome and moved on. Not because they can't get funded but because they can't put together a team any more of people willing to work with them. I know a couple who have "done a geography" [1] and have started elsewhere. I feel really for the people who bought into the company and went to work there only to have this happen.

[1] A friend of mine who counseled people used the term 'do a geography' which was when a person moved to a completely new place to escape the 'bad things' that were going on where they were. Sometimes that helps, sometimes not.

Don't you think you are jumping to conclusions by making all these accusations about the man without knowing his skiing skills?

Aren't you assuming that investors and VCs are interested in ethics and morality? May be some are, but I'd guess many are more interested in ROI. Whoever gives them the max return gets their money, no?

And it turns out he has yet to do that

A fascinating read, for sure, but do take the accusations with a hefty grain of salt. As an employer who has dealt with his share of totally-irrational employees in the past, I've learned never to believe everything you read in an employee complaint/lawsuit -- especially when there is so much personal animosity/family stuff going on here.

That being said - I emphasize that I've learned never to believe _everything_ you read. Not anything :) I'd be willing to bet at least parts of this are based in truth.

Right. The mob mentality of the internet often jumps to conclusions when accusations are leveled like this. We have defense attorneys and such for a reason. If these accusations are true, let's get some evidence and a trial together.

I'm willing to bet this will be settled out of court and the details will not be publicly available.

Its probably NSFW but items 18, 31, 32, 33, 44, 45, 47, 49, 81, 98, 100 are pretty enlightening about the behavior of Bill Nguyen (I guess I should add 'if true')... very sad.

Everything except #100 seems pretty safe (for work, at least). Worst is there's some swearing.

#33 seems pretty plausible: http://techcrunch.com/2011/09/21/color-targets-new-facebook-....

EDIT: added clarification. If you read the parent post, the parent post claims that the points are "not safe for work." I was merely saying that reading the thing would probably be safe for work. Snark is really not necessary.

The gun parts in 44 and 47 are strange and don't seem to have much meaning except to enhance the perceived threat of the actual threats which are mostly legal/non-violent/career-centric in nature.

The allegation is apparently that Nguyen invited someone into the office environment, with a visible weapon, and called attention to that. That would certainly seem to constitute a "threat" to most people. I don't really see why you wouldn't think so.

I'm going to guess that you feel this is an infringement on "Dunphy's" right to carry that gun. It's not. The right to bear arms doesn't extend to the unrestricted ability to use them as a means of intimidation.

>The allegation is apparently that Nguyen invited someone into the office environment, with a visible weapon, and called attention to that.

This is the part I would have qualms with. The problem is that the presentation of context in the filing isn't great. I saw a one-liner that mention Nguyen telling somebody else about Dunphy having a Glock or something.

>I'm going to guess that you feel this is an infringement on "Dunphy's" right to carry that gun.

Please no. Not what I was getting at. I'm mostly concerned with the dissonance in what the filing is trying to convey versus how it might be perceived.

Mentioning that somebody carries a firearm in itself isn't a threat, it's heavily contextual. I have little trouble imagining that Nguyen was mentioning it in a threatening manner from what's provided in the filing though.

The 'presentation of context in the filing' is only to establish some circumstance, the very definition of "context." the details will come out in court if it gets that far.

There are different laws for concealed carry vs open carry, and "brandishing" a weapon is a crime.

It is very much a relevant issue to determine the context in which a gun is mentioned. Connecting a firearm mention to an otherwise unrelated statement is quite reasonable interpreted as an implied threat to use the firearm.

After reading #44 through #50 it's completely unclear what problem you could have with the way the information was presented.

Well the allegation that Corey Dunphy, working for the US Department of Justice and a friend of Nguyen, was armed, and made threats against employees who crossed Nguyen to use his resources at the OIG to ruin their lives by destroying their credit and getting them declared as terrorists (this is my interpretation of a threat by a government official to put someone on the no fly list) is pretty amazing. You'll also never be able to get this guy to admit to it because it is an extreme abuse under color of authority that could get him charged with civil rights violations: http://www.fbi.gov/about-us/investigate/civilrights/color_of...

>Well the allegation that Corey Dunphy, working for the US Department of Justice and a friend of Nguyen, was armed, and made threats against employees who crossed Nguyen to use his resources at the OIG to ruin their lives by destroying their credit and getting them declared as terrorists

This is my point, it's a non-sequitur. Being armed is irrelevant. Millions of American citizens carry firearms everyday. Everything you mentioned has nothing to do with the firearm. Mentioning it is just a way of scaring people with irrationality.

That aside, that Nguyen mentioned (from what I can tell) that Dunphy owned a weapon in a context where it seemed like he was making a threat is the real problem. Mentioning that a buddy/colleague owns a weapon as if they're going to go shoot somebody for you is...immature to the point of being psychotic...

That's the more relevant part here, I just found the placement, phrasing, and framing of it in the filing to be pretty poor.

So if Dunphy works for the OIG...seems like someone should FOIA his emails and see if anything comes up related to this matter

http://www.linkedin.com/pub/corey-dunphy/33/404/9b1 right?

I see a postal dispute: https://docs.google.com/viewer?a=v&q=cache:TRTRSY2PM0kJ:...

He's a US Postal Service Office of the Inspector General Special Agent.

Which is interesting because 1) the USPS Postal Inspectors are no joke when it comes to the mails, but have exceedingly limited jurisdiction otherwise -- I assume this extends to their OIG as well, if not more so and 2) they are one of the least internally corrupt USG agencies (DEA is probably the worst; FBI and USSS are also pretty bad; various OIGs vary wildly down to HHS OIG; US Army CID and USAF OSI are probably the best).

So maybe this claim is totally baseless, but I'd probably not brag about my post office friend's ability to put people on no fly lists or brandish his Glock.

Regarding #18, how come nobody's called CPS?

Maybe they were torn between losing their job/submarining their startup job?

There are also direct allegations on the Board ( except Doug Leone) that they were complacent, and did nothing in spite of being privy to all the alleged shenanigans of Bill Nguyen. This is serious stuff.

Worse than nothing, they compromised the integrity of their investigation by leaking allegations and identifying the source of the claims. (Allegedly, per items ~48-54, and 67-68)

Brilliant purchase there, Apple. The concept of meritocracy is well and alive.

I can't imagine why they would break-even the VCs that had so clearly failed in fulfilling their role as board members. They could probably have easily snagged all the engineers, given the dysfunctional work environment and well ... failure.

I suspect it is way cheaper to buy an engineering team (and IP/patents in this case?) as a unit rather than chase every engineering hire separately and try and construct a team afterwards.

In ¶ 64 it says that “there was no space in Patrice Gaultier’s [sic] group at Apple for Witherspoon.”

According to https://www.linkedin.com/pub/patrice-gautier/0/14/139, Patrice Gautier is VP of Engineering, iTunes Store and iCloud.

So maybe that is where those engineers will turn up…

Did Apple actually buy Color Labs?

From the TC article:

"One key thing to note is that the suit says that Color’s assets have indeed been sold to Apple, something that has not been confirmed on the record by either company to date. Witherspoon claims in his suit that he was the only technical employee at Color who was blocked from joining Apple in October. Today, Color’s website notes that its app will no longer be available after December 31st, 2012."

I wonder if this suit will be enough to derail the acquisition...

You incorrectly assume that Apple did "break-even the VCs". What basis do you have for this? The rumors are that they paid a low 7 figure sum for the team and assets. Your sarcastic commentary seems to be based on a misunderstanding of the facts.

Apple paid approx. 5m. It's hardly about making anyone whole.

I'm pretty sure there was something like a $30+ mil loss.

And having worked with one of the VCs involved your right about their level of 'clue' in the companies they invest in being minimal

And here I've been trying to get my Schadenfreude under control ...

Reminds me of this clip: http://www.youtube.com/watch?v=7WAwuSK36Gw

  "Looks like I picked the wrong week to quit sniffin' glue."

I wonder if that dates me, or if "Airplane!" is a movie that is still relatively well-known with a younger crowd.

</off-topic>

It dates you. 24 year old here :-)

I'm 27 and consider the movie well-known.

Counterpoint: I'm 27, know the movie, but definitely consider it an older movie that most people don't know. I know it through older cousins who insisted on showing it to me.

Obviously we can't be certain all or any of this is true, but if it is the board members should be ashamed of themselves. Failing to act for so long on the reports against Nguyen as employees were fired for standing up to him, and giving the guy a free pass because of his past successes is despicable.

I think it also shows some failings in employment legislation. His ability to apparently fire people at will wouldn't be possible in many other countries.

Only difference between "firing" and "getting to quit" is in the severance package.

That said, this guy seems like he may have preferred firing over getting employee to quit.

Outsiders perspective - SV culture is becoming more and more just like Wall Street. Sad.

This is ONE startup out of 100s in Silicon Valley.

People were falling over themselves to sing the praises of Color when it came out.

Praises? Color was vilified in the Valley because of their excessive funding.

Care to show proof of people praising Color?

The vilification was a response to the fountains of praise before it launched. I didn't think to keep links handy.

Praise before it launched? Can you mention what they praised about Color?

I live in Silicon Valley and plugged in to the startup community.

I don't know anybody who praised Color.

Their app on both Android and iOS was horrible.

Depends perhaps on whether you count the Valley press and venture capitalists as part of the Valley community. Obviously the VCs were praising it: Sequoia and others put a huge pile of cash into Color. And the Valley press was breathless over them too, with TechCrunch publishing this prelaunch article: http://techcrunch.com/2011/03/23/color-looks-to-reinvent-soc...

I do not remember this. People were shocked at how useless it was and how much money was sunk into it.

I meant when the news of Color came out.

Sarcasm doesn't translate well on the internet, so I'd make that more obvious. And I do hope you're being sarcastic.

Although my thoughts are rooted in the immediacy of this article, it's a trend I've noticed over the last couple of years. As another has pointed out, it's not quite as meritocratic as I thought it was.

So 1/1 is correct. Are you implying that all of the rest of them have no issues? I bet Zynga employees are pretty thrilled with their stock packages that were taken away right now, just as Facebook employees are presumably thrilled that the "$60-80/share" stock package their recruiter had promised them is now in the sub 20/share range. But hey, thats just 3 examples, and there are hundreds of companies right?

Okay, how about last startup I worked for? Director of Operations hooks up with a subordinate, tries to promote them, someone else points out this is messed up, Director of Operations vows revenge, starts witch hunt, spends over 100k on consulting and salary for the employee they hooked up with, who should have been fired. In the end, when everyone realized what the person, he had already moved on to swanky new job. Karma is not a thing.

What? Not having your company's stock perform as well as you wish (or what the recruiter told you, which everyone takes with a grain of salt anyways) is nowhere near examples see in that court filing. Not remotely close. Putting what looks to be serious abuse in the workplace alongside stock underperformance as "issues" is absurdly disingenuous.

I know plenty of folks who work at a wide variety of companies in the Bay Area and have heard of nothing remotely as crazy as what is being reported at Color, so yes, I do believe this sort of thing is relatively isolated.

I mean, if "this type of thing"=someone bringing a gun to work and your children getting threatened, I obviously agree. My point was more that there is a pretty discernable pattern of people acting like terrible human beings when they run a startup and see dollar signs in the future.

ps. I think the whole "which you can take with a grain of salt" statement says it all. These companies employ these people and ask them to sell the company by saying thing x, y or z. If those things they made up to get you to leave a job are complete bullshit, its not just like "oh well, silly me trusting a recruiter" it should be "wow those guys at Facebook are kind of scumbags for misleading me and promising me x while giving me y while our CEO is now one of the richest people on earth." Cool.

I did not imply that the rest don't have any issues. But for one or a few incidents do not make Silicon Valley.

I've been in Silicon Valley for 4 years. I've met and known people who I would not want to be friends with let alone be associated with.

But overwhelmingly, Silicon Valley is full of good people who tried to do the right thing which is why it still continues to thrive.

There seem to be plenty of awful CEOs here, particularly among the generation who first sold companies during the .com boom.

For all the talk about how it's important to have a strong, engineering-centric founding team, there is a lot of money going into dubious startups here run by non-technical founders who seem to be just doing the CEO / "startup" thing more for the image, delegating as much as possible so they can leave early to cart their kids around and go to concerts with their buddies.

Obviously Nguyen sounds like a particularly atrocious example, but it doesn't surprise me at all that someone like him thrives in this environment.

I'm curious what department this guy was Dunphy guy was in the OIG office of -- OIG isn't an agency, it's a role within larger agencies (like the internal police for each department of government, the equivalent of internal affairs in a PD).

I have zero problems with firearms, but if the guy was breaking the law, using official status, etc. to help his friend, that I have a problem with, and I imagine any agency would as well.

Based on the document located at http://www.nalcbayarea.com/PDF%20Files/Rong%20Arbitration.pd..., it looks like as of 2007 Corey Dunphy was a Special Agent of the United States Postal Service’s Office of Inspector General.

More proof that charismatic CEOs with Narcissistic Personality Disorder are bad for business. Don't be blinded by charisma.

http://www.forbes.com/sites/ericjackson/2012/01/11/why-narci...

Cue DHH tweetbombs.

According to the legal papers, Bill Nguyen had a friend who is an OIG Agent (apparently with the US Postal Service) involved. That sounds kind of fishy, as generally those agents investigate internal matters, not external law enforcement. The US Postal Inspection Service deals with most outside matters like postal fraud. http://en.wikipedia.org/wiki/United_States_Postal_Inspection...

Why is it fishy?

I am sure this agent will testify that he is a personal friend of Nguyen, that he stopped by the Color office to meet with his friend about a personal matter, and that he knows nothing about the company's bizarre office politics.

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