LA Tech Updates: Spotify Misses Revenue Mark, Snap Releases Diversity Report, TikTok Jabs Facebook
- Spotify has more listeners, but ad revenue drops
- 'We Must Do More': Snap Releases Dismal Diversity Report
- TikTok CEO Promises More Transparency, Jabs Facebook for 'Copycat Product'
TikTok CEO Promises More Transparency, Jabs Facebook for 'Copycat Product'LA Tech Updates: TikTok Says it Will Pay Creators — and Universal Music Group
TikTok is promising more transparency.
The Culver City-based social media platform will release its algorithms and content moderation policies, CEO Kevin Mayer wrote in an open letter Wednesday. Owned by China's ByteDance, the company has been facing pressure as speculation grows that its content is being shared with Beijing.
"We accept this and embrace the challenge of giving peace of mind through greater transparency and accountability," Mayer wrote. "We believe it is essential to show users, advertisers, creators, and regulators that we are responsible and committed members of the American community that follows US laws."
Earlier this month, the Trump administration said it was "looking at" banning the app over those concerns. Then last week, the House prohibited U.S. federal employees from downloading the app on government-issued devices.
It's also notable that his letter was published the same day Facebook's Mark Zuckerberg as well as the CEOs of Twitter, Google and Apple testified before Congress on antitrust law. In the letter, Mayer takes a swipe at Zuckerberg for this upcoming Reels product.
What you need to know:
- Calling it the Transparency and Accountability Center, TikTok will let experts view the company's data practices and algorithms.
- Investors of parent company ByteDance are now valuing the app at $50 billion — surpassing the projected 2020 revenue by 50 times. Some are pushing for ownership over the platform.
- Mayer took jabs at the other tech giants in the letter:
- "This puts us a step ahead of the industry, and we encourage others to follow suit."
- "At TikTok we welcome competition. We think fair competition makes all of us better. To those who wish to launch competitive products, we say bring it on."
- Then he hit Facebook's forthcoming Reels feature, calling it a "copycat product."
'We Must Do More': Snap Releases Dismal Diversity ReportSnap's Accelerator Program Expands with 'Yellow Collabs'
While much of the tech world was fixated on a blockbuster congressional hearing of four executives from top tech companies, Snap Inc. quietly released its first report on diversity since the company was founded in 2011 and the numbers were dismal.
Evan Spiegel, CEO of Snap, which has faced allegations of a racist and sexist workplace, as recently as last month told employees he wouldn't release the numbers publicly. The company has good reason to try to bury the news.
Blacks only represent 4.1% of Snap's U.S. workforce while Hispanic/Latinx makeup 6.8%, far below their numbers in the general population. At the top, 2.6% of leadership roles are held by Blacks while seven percent are held by Hispanic/Latinx. Women make up 32.9% of Snap's global workforce but only 16.1% of tech teams and just 6.7% of tech teams' leadership.
"To date, our DEI (Diversity, Equity & Inclusion) outcomes simply have not been good enough," the company said in the report. "We must do more." Snap has set a goal of doubling the number of women in tech roles by 2023 and doubling the number of underrepresented minorities at the company by 2025.
While its diversity numbers are low, Snap is not much worse than other tech giants, though most of those companies have released their numbers for years.
Last month, Snap was forced to remove a Juneteenth filter that prompted users to smile in order to break a series of chains, and that was not the first time the company was criticized for an offensive filter.
"We deeply apologize for the offensive Juneteenth Lens," the company said in a tweet.
Snap outlined a number of steps to improve its numbers, including changes to recruiting, setting representation goals for underrepresented groups, and instituting a $70,000 minimum living wage for employees working at its Santa Monica headquarters.
Spotify Has More Listeners, but Ad Revenue DropsSpotify Earnings: The Music Streaming War Is Heating Up farm5.staticflickr.com
Spotify's second quarter earnings, released today, show listening and podcast streaming up even as revenue missed the mark with the pandemic hurting ad sales.
The Swedish music streaming service acknowledged slower business in April and May across emerging regions. Still, Spotify said its strength in North America offsets the setback, noting that it turned a corner in June.
"We believe the improved momentum we saw in the back half of the quarter has continued into Q3 and we expect to hit our full year targets," the company told shareholders.
What you need to know:
- Ad revenue, which makes up less than 10% of total revenue, is down 21% from last year, a nod to dropping sales brought on by the pandemic.
- The average revenue per Spotify Premium user (ARPU) is also down 9% as a fewer percentage of users pay the standard $9.99/month rate. More are opting in for family and student plans. Users in some countries also pay a lower price for subscriptions.
- 13 million new monthly active members brings Spotify's total to an all-time high of 299 million. Plus, 8 million new subscribers brings the total of ad-free premium customers to 138 million.
- Overall listening times have returned to pre-pandemic levels in all regions except Latin America.
- More users are listening on at-home smart speakers and smart TVs.
- In an effort to diversify Spotify content and move away from music, podcast options are expanding — including exclusive deals with big names like Joe Rogan, Kim Kardashian, DC Franchise, the Obamas and TikTok star Addison Rae.
- Since the start of 2019, overall podcast listening has doubled since. One fifth of monthly active members are tuning in.
- TikTok addresses 'tough but fair questions' about opportunities for ... ›
- PledgeLA Releases Report on Diversity in Los Angeles Tech - dot.LA ›
- TikTok's $2 Billion Creator Fund Goes After Instagram - dot.LA ›
- Microsoft Reportedly Looking to Buy TikTok ›
- Microsoft Reportedly Looking to Buy TikTok - dot.LA ›
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Valence is trying to be more than just a LinkedIn for Black professionals. It's trying to narrow the wealth gap, with help from algorithms.
The social networking platform for Black professionals launched last year and has already attracted 10,000 members. It just got a $5.25 million boost from a Series A round led by GGV Capital.
It's now aiming to get to 100,000 members over the course of the year. Part of that effort will mean hiring engineers and developers who can help refine its database and allow members to make meaningful connections beyond their alma maters, locations and shared employers.
Valence is developing a "customization engine for people in their career journey," said CEO Guy Primus, who took the helm in June.
"We want to take the data a level further and be able to customize again the reason for the interactions, as opposed to just a first level connection or a geography or a school," he said.
"We want to be able to have some type of algorithm for why people connect and not just, you know, the superficial reasons that most people connect."
The former chief executive of the Virtual Reality Company said he is looking at how Valence can use its existing data set to build out a platform that connects people along their lines of interest and other factors that aren't always clear from the kind of standard resume fare found on LinkedIn.
Valence is positioning itself as a tool for corporations looking to diversify their ranks, but it's also establishing itself as a platform for founders.
Last month, the company launched a funding network that connects investors with rising Black founders, curating investment opportunities for pre-seed stage entrepreneurs.
The effort dovetails with its mission to narrow the wealth gap and open up opportunities.
Valence points out that only 3% of Silicon Valley's workforce population is Black, there are 3 Black CEOs in the Fortune 500, and just 1% of venture-funded startup founders are Black.
That helps explain why Black Americans make up nearly 13% of the population, but have only 3% of its wealth.
Sean Mendy, a founding partner at Concrete Rose Capital in the Bay Area, helped facilitate many of those funding connections for Valence. What surprised him was just how early entrepreneurs were in their company development, but he said it made perfect sense given the lack of capital access Black Americans had.
"Traditionally it's been difficult for Black professionals to take the lead in starting companies because of the lack of capital," he said.
Fuller, a general partner for Upfront Ventures, which participated in the round and helped incubate the company, co-founded Valence out of frustration with the lack of networks startups and others had to black talent.
"The goal of creating a fluid bridge between Black Talent and economic opportunity and development couldn't be more important in today's world," said co-founder Kobie Fuller in announcing the round.
- Valence Launches Funding Network to Connect Black-Owned ... ›
- With internships cancelled, Valence tries to fill the void for young ... ›
- Valence Funding Network Intends to Boost Black Startups - dot.LA ›
Hours before Dmitry Bosov, or "Dima," died alone in a Moscow suburb on May 6, allegedly of suicide or an accident, he chatted with family members over video. Even as his former cannabis company was sold to a new owner and he was overtaken by concerns about the novel coronavirus pandemic in Russia, he still seemed happy to family members, who wrote about his demeanor the night of his death in an online tribute.
The Russian coal magnate had gambled on Genius Fund, an ambitious Culver City-based cannabis startup that had plans to dominate the industry. But after investing roughly $164 million, he appeared to have walked away, at least temporarily, from the dream of a viable U.S. cannabis company.
When his former Genius Fund associates learned of Bosov's death shortly afterward, they were all "shocked," according to former employees interviewed by dot.LA.
Bosov's son called Genius Fund executive Ari Stiegler the next day crying. "It was super sad," Stiegler said.
A string of bad investments, power struggles and lavish spending had nearly brought Genius Fund to its knees. A lawsuit filed against Bosov and his company alleges funds were "commingled," that there was a lack of "any coherent business plan" and that the investor "concealed and misrepresented" his ownership, raising questions about what his investment intentions were.
The story is pieced together from interviews with more than 40 former employees and business associates, active and retired county officials, as well as federal and county law enforcement; state court records, arbitration, arrest and corporate records in the U.S. and Canada; other public records in six California counties; Genius Fund corporate records and emails. Some former employees and business associates spoke to dot.LA on condition that their names not be mentioned out of fear of reprisals.
This is the fifth and final story in our "Green Rush" series. Read more:
Because he died alone, of an apparent gunshot wound to the head, the oligarch's passing resulted in a great amount of speculation in Russian and other media reports that he was murdered. Russian authorities have been investigating his death as a suicide or accident.
One early report was in Kremlin-controlled news outlet Sputnik. It provided few details other than that the billionaire was "found with a gunshot wound to the head" with a gun next to his body.
But Genius Fund executive Ari Stiegler told people he believed it was murder, according to a business associate with whom Stiegler spoke.
Stiegler told him "Putin took one of Dmitry's coal mines" and "that's what happens when a $1 billion oligarch gets in a fight with a $5 billion oligarch."
A representative of the Bosov family told dot.LA they want Russian authorities to investigate whether foul play was involved in Bosov's death.
A screenshot of an online memorial to Dmitry"Dima" Bosov.
Turmoil in Russia
Bosov's last months alive were turbulent. Genius Fund was trying to restructure itself under Bosov's advisor, Gary "Igor" Shinder, and evaluate its financial losses. Bosov was also dealing with drama in Russia.
Bosov was known in Russia as a coal industrialist who more recently sought to build the largest railway infrastructure project for Russian Federation President Vladimir Putin. The eccentric billionaire was a majority owner in multiple Russia-based companies that are involved in the production of coal-linked projects.
He was the chairman of the board of directors and the owner of 86% of Moscow-based Alltech Group, a 27-year-old private investment company that manages oil and gas, coal and anthracite, as well as residential and commercial real estate, according to Genius Fund documents and Alltech's website. The investment group controls Sibanthracite Group, a coal exporter that calls itself Russia's largest producer of metallurgical coal — a crucial component for making steel, Sibanthracite's website states.
Bosov was also co-owner of other coal companies including VostokCoal MC, which manages coal extraction projects, with his longtime business partner Alexander Isaev, according to a Russian media interview on Sibanthracite's website.
Russian media reported that the state's environmental agency fined it roughly $8.4 million for illegal mining. The fine was related to a 2018 case against Bosov and Isaev's VostokCoal subsidiary, which was involved in a project to mine vast coal reserves in the Arctic's Taymyr Peninsula, Russia's largest nature reserve and a haven for wildlife like the muskox.
The Russian Federal Security Service, or FSB, also opened a criminal case against the management of Bosov's company for the illegal mining and sale of that coal, Russian media reported in April 2019. That was the same month Bosov and his wife's visas were rescinded by the U.S., said Genius Fund ex-CEO Francis Racioppi in a whistleblower retaliation lawsuit filed this past April.
A few months into 2020, Russian media reported that the Russian state's nuclear power company created by Putin sought to buy VostokCoal MC.
In early April, weeks before his death, Russian media and Forbes Russia reported that Bosov accused his longtime business partner Isaev of "egregious abuse and theft," and had him removed from his position atop coal company VostokCoal MC and also from the board at Sibanthracite. Isaev has denied the accusation.
It was later reported that less than 24 hours before Bosov's death, a former business partner was arrested in Russia on suspicion of ordering contract killings in the 1990s. Russian media outlets speculated that Bosov was about to be called as a witness.
During this period, the price of coal dropped precipitously in the face of the ongoing COVID-19 pandemic, putting the companies "in a desperate crisis," Anders Åslund, a senior fellow and Russia expert at the Atlantic Council think tank, told dot.LA.
A person familiar with Bosov's state of mind in the months prior to his death told dot.LA that he had talked about increasing turmoil, including theft, at a company.
As the pandemic spread, Bosov reportedly armed himself, believing rampant crime would break out, and yelled at people to "stay home or die."
"It's clear that since the beginning of the year, there had been something going on," said Brian Whitmore, director of the Russia Program for the Washington, D.C.-based Center for European Policy Analysis. "Russian media was reporting that his financial affairs appeared to be in turmoil since the beginning of the year, when he began transferring assets and dismissing employees."
Whitmore said despite much speculation in the Russia media it's hard to know exactly what may have led to Bosov's death. Whitemore said the billionaire was known for "adventurous," high-risk investments.
"We had a saying in Russia: was it suicide or were they suicided?" Whitmore told dot.LA.
In April, as the turmoil at his Russian companies' was unfolding, Genius Fund ex-CEO Francis Racioppi filed a more than $3.5 million whistleblower retaliation lawsuit in Los Angeles federal court against Bosov and Genius Fund. And in June Genius Fund, itself, filed a second arbitration claim alleging their former business associates embezzled and unjustly enriched themselves.
Bosov's manner of financing and lack of strict accounting controls prompted speculation among Genius Fund staff. In particular, as to why he was "repeatedly dumping millions of dollars into the company without requiring any accountability from company management or executives as to how the money was being spent," according to allegations in Racioppi's lawsuit.
"I'm surprised the company didn't get raided by federal authorities only because there's one investor," a former Genius Fund employee told dot.LA. "He's a billionaire oligarch and it looks like a classic play of moving assets to the West."
Just how much Bosov was involved in day-to-day decision-making at Genius Fund remains unclear.
In his whistleblower retaliation lawsuit, Racioppi contends that Bosov was not a passive investor but exerted "complete control" over the business. A Bosov family member told dot.LA this was not true. That person declined to provide details beyond that the family hoped Genius Fund would be "grown as father wished and be a great company."
Racioppi's lawsuit alleges that Bosov ran Genius Fund's day-to-day operations while living in the U.S. from fall of 2018 to the around May 2019, just as the company was getting off the ground.
During that time, Bosov lived in a garish Beverly Hills mansion described as a modern-day tribute to Versailles that he eventually purchased through an entity created a few weeks prior, paying $30 million in cash, according to property and court records.
In his lawsuit, Racioppi alleges Bosov mixed his personal funds with Genius Fund's, blurring the lines between corporate and personal investments.
Attorneys representing the defendants denied the allegations and characterized Racioppi as a disgruntled CEO who was unwilling to take direction from the new owner, and was never terminated.
Amit Sharma, a former U.S. Treasury Department official and a startup owner himself, said it's crucial that there be a firewall between business funds and personal funds. "Commingling is a notable red flag in the money laundering world," he said.
Genius Fund operated more than 50 entities, but had only one main account through which the investor's money came in and from which money was spent, according to corporate documents and former employees.
The Beginnings of the Power Struggle
By fall of 2019, back at Genius Fund's Culver City office, Racioppi said he was communicating with Bosov daily regarding the company's growing debt, according to his lawsuit.
As the year went on, funds wired from Bosov's company, Alltech Group, to Genius Fund became less frequent. Genius Fund's sole investor began requiring more details on profits and losses before sending additional funds, multiple employees said.
"In the past, these two kids, whenever they wanted money, he just sent it," Evan Kagan, an executive in one of Genius Fund's ventures, said of Stiegler and Borden.
Internal company records and former employees show the plan had been that Genius Fund expected to be financially self-sufficient by the fall of 2019. But by that December the company was still not cash flow positive, and it looked unlikely it would be anytime soon, according to company records.
Bosov summoned the team to the Mexican resort town of Cabo San Lucas for a meeting, according to multiple employees and company records. He made Stiegler and Racioppi co-CEOs and made it clear that they should not meddle in the staff's future financial projections, according to multiple former employees. The billionaire introduced his friend, Shinder, who lives in the U.S., as his new consultant on matters related to Genius Fund.
When the executives returned in early December, former staff members realized that many of them had received the same calendar invitation.
They told dot.LA that one by one, they were brought over to talk to a representative of HR and legal and told they were being let go. The casualties included the C-suite of products, the THC team and anyone redundant, three former employees said. Stiegler and Borden stayed away and waited it all out, the three remembered.
The next day, Stiegler went over to the product team and said, "If you're around, congratulations, get ready to work really fucking hard," according to the three former employees.
In a video clip of a Genius Fund meeting reviewed by dot.LA, Stiegler announced at a staff meeting that he and Racioppi are now co-CEOs and said he's in charge of "investment decisions." Stiegler told his employees, "I'm deciding where our money is going."
The mid-January 2020 forecast prepared for Bosov found if Genius Fund wanted to continue operating in the same fashion, he would need to invest tens of millions — on top of the more than $150 million he'd already spent without profit, two former employees said.
"In the past, these two kids, whenever they wanted money, he just sent it," Evan Kagan, an executive who joined in on Genius Fund's manufacturing venture, said of Stiegler and Borden.
"Until it became a problem, they probably never thought they had a financial problem."
Things were unraveling.
The Incident in Mexico
Stiegler occasionally set aside samples of the company's branded product with the words "this one's for Dima," according to former employees who saw and heard him do this.
Racioppi's lawsuit alleges that "Bosov insisted that a Genius Group employee transport a sample of its commercial cannabis product to him in Italy" despite Racioppi's objections. The suit describes an executive organizing the transport behind Racioppi's back.
In December, on another visit to Mexico, Stiegler stashed some of Genius Fund's marijuana in his backpack for another visit to meet Bosov. But before Stiegler could exit the airport, he was randomly selected for a search, three former employees said.
He was arrested.
"The one thing I can tell you about the Mexico trip," Stiegler told dot.LA. "There was, like it was kind of like some dirty Mexican cops, who obviously saw me as a rich American and they wanted to exploit that. They were, like, trying to extort me and scare me and stuff like what you see in the movies."
Stiegler added he had a "couple joints, literally like three, four joints in a bag" in a side pocket. "They saw it, then they just really scared me."
He said he was in jail for a "pretty short" amount of time.
As Genius Fund underwent a crisis at its top ranks in February of this year, the company continued to spend on what some within the company said were unrealistic ventures. An employee flew to Rotterdam in order to research automated greenhouses and hold meetings about potentially buying a $92 million project, a former employee said.
Stiegler also tried to develop a new real estate investment trust to operate as a Genius affiliate, spending investor money on research and travel to meet people in those last months, former employees and business associates said.
Racioppi alleges he told Bosov of the "the gravity of the company's dire financial situation" during meetings in Mexico, presenting him with a plan to turn the company profitable with a minimal additional cash infusion. In court filings he said Bosov then directed him to "implement a reorganization plan" with Shinder overseeing that effort.
By the end of February, Racioppi called a staff meeting where he stood up and told everyone, "I don't know if I have money to pay you or not. So you guys can go home. Don't come back. I'm so sorry. You'll get a letter from us," said several former employees.
For the many off-site employees, the conference call piping them into the meeting didn't work -- callers heard a bunch of people talking in the background before the line went dead, two former employees, who were on the phone call, said. They said they learned they had lost their jobs when they could no longer log into their work Gmail accounts. A week or so later, employees said they received a letter telling them they were laid off.
In the final months, ex-employees described efforts by the company to sell whatever it could, including farm equipment, to make payroll. In March, the company's coffee table and couch disappeared from the office, they said.
The layoff letter was dated the same day Racioppi accepted a new position as sole CEO. His contract was to run through 2021 with an annual base salary of $700,000 plus a $300,000 signing bonus, along with $30,000 in moving expenses and a guaranteed bonus of no less than $350,000 a year, according to Racioppi's lawsuit, which alleges he is owed the remainder of his contract.
But according to the lawsuit, shortly after he was promoted, Bosov pulled the funding and sold the company, its entities and assets to Shinder.
In his final written executive order as Genius Fund's board chair, Bosov detailed the murky corporate structure that made him the company's ultimate beneficiary. He said he indirectly owned the company through a majority stake in Cyprus-based Goldhawk Investments Limited, according to the order. But that name had never appeared on monetary wires to Genius Fund, said four former employees. Bosov's other company, Alltech Group, was cited on internal paperwork as the source of funds. The relationship between the private companies is unclear.
After Bosov washed his hands of Genius Fund in March, Shinder made himself the company's president and chairman of the board of directors, according to Racioppi's whistleblower retaliation lawsuit.
By the end of March, Shinder established a new Genius Fund board of directors that included three active members: Shinder as president, as well as his two attorneys, lawyers at the Washington, D.C.-based law firm Freeh Sporkin & Sullivan.
With the transfer of power complete, Shinder worked for weeks with lawyers to get a handle on the company's financial picture.
The new board's first executive order, submitted as part of Racioppi's lawsuit, was to audit Genius Fund and all of its entities, ban distribution of any assets or funds without written approval from Shinder, and to order an independent investigation regarding "possible fraud and negligence" because of apparently "severe deviations" in the fund's financials, structure and management, the document said.
By the end of March, Shinder laid off all existing staff, including management, citing the "substantial business interruption caused by the ongoing COVID-19 outbreak," even though the state and city said cannabis shops were allowed to remain open. Just a month earlier, the company had set records for daily and weekly revenue, Racioppi alleges in his whistleblower retaliation lawsuit.
But Genius Fund's time and financial backing had run out.
Former employees told dot.LA that the sudden dissolution of Genius Fund left them and their colleagues with thousands of dollars in expenses unreimbursed thus far. In a letter dated April 22 reviewed by dot.LA, employees received a "notice of unavailability of COBRA (healthcare) continuation coverage."
Some upset employees sold heavy machinery in the field to a competitor and then split and pocketed the cash, two people familiar with the sale said. Meanwhile, the company notified vendors it was terminating their relationships even though many of them were still owed money, according to recorded liens, Racioppi's lawsuit, and interviews with former employees and vendors.
Today Genius Fund's website is just a landing page with an email address. Slowly assets have been sold or appeared for sale, according to property records and documents submitted as part of Racioppi's lawsuit.
The company grew more than one million pounds of industrial hemp, but none of it ended up in any of Genius Fund's branded products during the company's less than two years of operation, multiple ex-employees said.
In April, property records show that Genius Fund sold its Santa Barbara County land for $5.4 million. The Adelanto site, used to manufacture CBD and THC oils and extract, is for sale, according to an arbitration claim Genius Fund filed in June against its former partners at the site, which alleges they stole, embezzled funds and were grossly negligent.
The arbitration has since been settled, according to Kagan, one of the parties to the claim.
Genius Fund's new owner, Gary Shinder, did not reply to repeated requests for an interview, but said in a letter to dot.LA that after significant examination, "I did not find anything that could support any allegations of embezzlement, theft, or mismanagement by Heli Holdings or its principals." He wrote that he instead found what was likely "the only successful project in the Genius Fund portfolio."
"Everybody's just trying to get what they can out of it," said former Genius employee Jeff Davis in May. Davis lives with Stiegler and is one of the people Racioppi's lawsuit said is helping on a commission basis to distribute remaining assets for what Davis called the now "defunct" company.
In the meantime, the FBI has shown some interest in talking to Stiegler. Federal agents showed up at Stiegler's house, but he wasn't home, Stiegler told dot.LA.
Stiegler said an FBI agent called him afterward and asked if he was OK in light of Bosov's death saying, "we want to make sure you're safe." The agent then proceeded to ask him questions about Bosov, but Stiegler said he didn't want to speak about him.
A spokeswoman for the FBI declined to comment.
'A Case Study in Excess'
Former VP of Cultivation Jason Taylor told dot.LA that the company could have been the largest player in the cannabis industry today, but "they just couldn't get out of their own way. They were too busy on drug fueled binges and parties."
"He gave them everything. The ability to have a private chef at the offices…they bought vehicles, all kinds of stuff," Taylor said of Bosov. "This was a billionaire who stood up and stopped meetings to shake my hand. He was not a monster, he just wanted results."
Borden and Stiegler were also let go in the final round of layoffs, but Shinder subsequently hired them back on a commission basis — along with a skeleton crew of at least six others — to "liquidate" the multi-millions in assets, including 1.7 million pounds of hemp, real estate assets, business entities, vehicles and other equipment, as quickly as possible, Racioppi said in his sworn declaration filed in his whistleblower retaliation lawsuit.
Stiegler said "that's not accurate," and that there were "two or three remaining employees and I'm pretty sure they've all been fired or quit now."
In his letter to dotLA, Shinder wrote: "While the public relishes in the success stories of young brash entrepreneurs in Silicon Valley, they usually don't hear about the colossal failures... To everyone's embarrassment, the prior Genius management can serve as a case study in immaturity, ego, financial irresponsibility, and excess."
He declined to comment further.
One former employee called it a "tragedy" that hundreds of people lost their jobs. So far, no one has accepted responsibility for the company's failings.
Stiegler said since Genius Fund's dissolution he's been working on new investments and new projects, "just kind of on to the next."
He's also hired a public relations and crisis management firm to improve his online image, a former business associate with direct knowledge told dot.LA.
Former employees who spoke to dot.LA say they are still dealing with the sudden job loss.
"It'd be great for some kind of justice to come out of (everything that happened)," said a former employee." There were a lot of good people who were trying to do right."
This is the fifth and final story in dot.LA's "Green Rush" series looking at the rise and fall of cannabis-related startup Genius Fund. Read part 1, part two, part three, and part four and sign up for dot.LA's newsletter to be notified about new stories.
Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me at tami(at)dot.la, or ask for my contact on Signal, for more secure and private communications.
Lead art and illustrations by Candice Navi.
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With investments in some of tech's best-known companies, China-based Tencent is one of the world's wealthiest funders. It's also, along with TikTok, a target of the Trump administration.
Last week, Trump signed an executive order that will bar U.S. transactions related to WeChat, one of many companies owned by Tencent, raising concerns about what other businesses might soon be impacted.
L.A.-based Riot Games is just one of many companies Tencent owns. It also holds shares in Activision Blizzard, Snap and Spotify, among others.
A White House official told the L.A. Times that Trump's executive order "only blocks transactions related to WeChat," but that hasn't stemmed concerns that Trump's actions could ripple through California, as companies and investors take another look at their relationships with China.
The executive order's language is vague – it does not, for example, specify what kind of transactions are banned. What it makes clear, however, is the Trump administration's concerns about Chinese tech companies.
"When people have to start defining where does WeChat end and Spotify begin, that's when people start to get more nervous," said Cynthia Cole, special counsel at Palo Alto-based Baker Botts, which specializes in data privacy and technology. With the executive orders, Trump's threats and their potential consequences have become "more real," she said.
Cole said CEOs are likely to be concerned with two things. For one, they may need to turn off the spigot of investment capital that has come from China.
"The reason these companies sold shares to Tencent is because they need capital to grow," Cole said. Now, however, they and others may need to look elsewhere.
The second concern is about perception. Being associated with a company whose integrity is under attack may turn customers and shareholders away, Cole said.
L.A.-based attorney Aaron Swerdlow added that "a lot of companies are taking a wait-and-see approach." Many companies are in a "holding pattern" as they seek to gauge the extent to which Trump's actions are political posturing before the November election, rather than harbingers of longer-term policy shifts.
Swerdlow, who does transactional work with tech companies at Weinberg Gonser LLP, added that investors are beginning to factor geopolitical uncertainty into their analyses of where to place their bets. Given that the U.S. government's China concerns relate to national security, Swerdlow says investment into tech and internet companies may slow, as clarity about what constitutes a national security risk remains unclear.
What's to come? Cole offered two predictions.
The first is that companies, especially those with ties to Tencent or ByteDance, will start to publicize that they respect data privacy and user security.
"I think we may see companies become more open about how they're using data," Cole said, "to try to differentiate themselves from bad actors." She added this could come in the form of more disclosure, including not only what data companies collect but also how they use it, and via marketing campaigns.
Cole's second prediction is a "chilling effect" among companies spooked by the prospects of what else Trump might do to his perceived corporate enemies, regardless of whether they have a tie to China.
That could mean companies become less inclined to take a defiant stance against the Trump administration, particularly as the election nears and politics become an ever bigger piece of the equation.
"Companies may be more concerned about the perception and wider ramifications of their actions," she said.
Swerdlow sees the potential for a chilling effect beyond the Chinese mainland. Pointing to Hong Kong, another arena where the U.S.-China tension is unfolding, he said some Chinese-backed companies may find money slower to arrive.
"Hong Kong is really an entrepot for money coming in and out of China to the world," he said. Now, however, with the Chinese government tightening its grip on the former British colony, its role as financial intermediary between East and West may shrink.
"Especially given the proximity between California and China, if money is frozen or coming more slowly out of China via Hong Kong to L.A.-based companies," even those that aren't directly implicated in Trump's executive orders may suffer.
The U.S. election may help to resolve some of the uncertainties businesses are facing amid the U.S.-China tensions. But Swerdlow said the Hong Kong question will likely remain unanswered until well after November.
Sam Blake primarily covers media and entertainment for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA
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