A brand new lawsuit threatens a decades-long collaboration that introduced Skype, robotic supply startup Starship Technologies and encrypted enterprise messaging service Wire into the world.
TechCrunch has discovered that Mark Dyne, certainly one of Skype’s founding buyers, is suing billionaire Skype co-founder Janus Friis in California’s Superior Court for the County of Los Angeles for illegal conspiracy in his enterprise dealings.
The lawsuit is advanced, with loads of twists, turns and allegations. The coronary heart of the dispute is whether or not Dyne and his companions, who had managed a few of Friis’s investments, had been working for — or just with — the Skype co-founder after they organized a rescue package deal for Wire in 2019.
At stake is who will get to management Wire and the monetary return either side will get from Starship.
Dyne and his investor companions accuse Friis of illegally changing certainly one of them as a director of a common partnership that manages Wire, and conspiring to scale back their curiosity in Starship Technologies. Dyne and his companions additionally allege (and dismiss) accusations by Friis that that they had fiduciary duties to him after they discovered funding for and restructured Wire.
“[Friis] unfortunately believes he is always entitled to have what he wants, can force others to do what he wants, and can re-write history (and agreements) whenever it suits his present purpose,” reads the grievance, filed in July, however not beforehand reported.
Dyne was a key participant in the historical past of Skype, as certainly one of its unique buyers and its first board member. He remained on the board by way of its sale to eBay for greater than $2.6 billion in 2005, and was a part of the group that purchased Skype from eBay in 2009. He was nonetheless on the board when it was ultimately bought to Microsoft in 2011.
Dyne and Friis labored collectively extensively in the years after Skype. Dyne was an investor and board member of Friis’s ill-fated music streaming service Rdio, which filed for chapter in 2015. Like Friis, he additionally served as a director of the final companions of the Iconical funding funds that funded Wire to the tune of greater than $64.5 million between 2013 and 2018, in accordance to the lawsuit.
Wire, launched by ex-Skype and Microsoft engineers, affords safe end-to-end encrypted messaging, file sharing, voice and video calls. Friis hoped Wire would change into “the new Skype,” in accordance to the lawsuit, however grew to become disenchanted after it failed to scale shortly, and then pivoted to enterprise. Five years after its launch, Wire had acquired solely about 150,000 customers, all of whom had been non-revenue producing, the lawsuit notes, and was burning by way of $8 to $10 million a yr.
“Friis has a history of abandoning companies when they did not achieve their early objectives in his sole opinion,” the lawsuit reads. In addition, it states, Friis himself was extremely concerned with the design of the robots, the emblem and the software program app at Starship Technologies.
A turning level
At this level, the boys had been apparently nonetheless buddies. They had been engaged on a new enterprise referred to in the lawsuit solely as “Project X,” and in 2017, Friis even donated $500,000 to Dyne’s charitable basis.
In late 2018, the lawsuit says that Friis reduce off the stream of money from Wire’s mortgage facility and despatched a textual content message to Dyne, studying: “Want to make sure we are ready to put everything into a Foundation if all else fails.” Wire would change into free open supply software program, with the inspiration answerable for setting phrases for open supply licenses. Friis envisioned himself, Wire’s CTO Alan Duric and Wikipedia founder Jimmy Wales sitting on its board.
But Dyne and his companions had a completely different thought. In early 2019, when Wire was solely days away from shutting down, in accordance to the lawsuit, Dyne and his companions shortly pulled collectively an $8 million Series A together with them, Marbruck Investments and Wire’s personal government administration workforce.
Friis advised others that Dyne had “pulled off a miracle” in discovering this financing, states the lawsuit. Although the Iconical funds would stay Wire’s single-largest shareholder, the transaction would, apparently, take away the corporate from Friis’s direct management.
The lawsuit says that following the spherical, Friis known as Duric “a completely f**king disaster” and hastened to sever all ties with the corporate. It alleges he missed board conferences and didn’t communicate to Morten Brøgger, Wire’s CEO, for practically a yr and a half.
That appears to have modified this yr, following Wire’s $21 million Series B spherical. In May, Friis insisted that Wire be redomiciled in Germany, the lawsuit states: “In hindsight, this was clearly part of Friis’s undisclosed plan to reacquire control of Wire.”
In a Zoom (not Skype or Wire) name in October, says the lawsuit, Friis alleged that if the phrases of the Wire transaction had been made clear to him and he had been correctly suggested, he would have by no means agreed to it, blaming Dyne and his companions. He additionally changed certainly one of them as a director and stalled conferences, it says.
The battle over Starship
Nor are Friis’s actions restricted to Wire, in accordance to the lawsuit. It says that Friis was at all times vexed that he didn’t have a controlling curiosity in the sidewalk robotic supply startup Starship, which was structured as a 50/50 cope with one other Skype alumnus, Ahti Heinla. The lawsuit contains a screengrab of a textual content from Friis to Dyne suggesting if that construction might be remedied “in a way that was set in stone, one would easily pay [$]10-15 million for it.”
The lawsuit alleges that Friis conspired with certainly one of his corporations to inaccurately declare Starship as a “controlled portfolio company” of one of many Iconical funds. This would inflate his personal curiosity in it on the expense of Dyne and his companions “to the point where [our] interest is no longer a financeable asset in the secondary markets,” it says. “Friis will say or do anything in order to suit his present fiction, no matter the cost to others.”
Dyne didn’t instantly reply to a request for remark.
Friis’ authorized workforce filed a movement to quash the lawsuit on Friday, on the grounds that Friis — a Danish citizen residing in London — just isn’t topic to the court’s jurisdiction.
The movement acknowledged: “More than a decade ago, Dyne [and partner] recognized they could profit handsomely if they hitched their wagon to Friis. And over the ensuing years, while extracting millions of dollars’ worth of fees and profit interests, they pretended they were acting as Friis’s and his entities’ trusted fiduciaries overseeing and managing Friis’s various venture capital pursuits. But in reality… Plaintiffs had a single-minded focus of advancing their own commercial interests at the expense of Friis.”
Friis’s attorneys additionally supplied TechCrunch with the next assertion: “Dyne’s defective lawsuit is a defensive reaction to questions raised regarding his and his team’s conduct… Although we believe that the allegations in the complaint are irresponsible, incomplete, and without merit, they also effectively concede that Dyne and his team breached fiduciary duties over their decade-plus relationship as trusted advisers. We look forward to fully addressing these matters in litigation.”
The consequence of this lawsuit, which remains to be in its early days, is probably going to have little quick affect on the operations of both Starship, which has made over 1.5 million autonomous deliveries and lately snagged ex-Google Loon chief Alastair Westgarth as its CEO, or Wire, which accomplished its pivot to enterprise prospects and loved some success throughout the pandemic.
However, it does spell the tip of a dream workforce that has created among the most attention-grabbing and influential startups of the twenty first century thus far.