JALTCALL 2008 Conference Workshop Nagoya University of Commerce and Business May 31 st 3-4:30 p.m. Room 621 Computer Lab by Steve McCarty Professor, Osaka Jogakuin College

Several friends of mine were affected by questionable business practices of Blognation’s founder. Please see Oliver Starr’s “Open Letter to Sam Sethi” (Reposted in full below with permission of the author.) Then head over to Debi Jones who continues the story with “Blognation: The Blogger’s Prelude and Tale.”

…a conversation has started at TechCrunch on their post Blognation Meltdown: Writers Never Paid, Promises Not Kept.

AN OPEN LETTER TO SAM SETHI

Please Note: This is an open letter to Sam Sethi, Founder and CEO of Blognation. I have elected to write this letter after having been one of the principal Blognation authors since August of this year. In all that time I have not received the pay promised in my contract nor the reimbursement promised for expenses incurred on behalf of Blognation during this period. I am not alone. Every other Blognation author is in the same unsavory situation.

This open letter details in very broad strokes the reasons why I have lost faith in Sam. It makes specific statements as to the veracity of things Sam has said or written as well as things he has failed to do. I do not say these things lightly. Every statement made in this letter can be backed up with verifiable written material from email correspondence, Skype chats, or SMS messages.

The final paragraphs are obviously my opinion and do not necessarily reflect that of the other bloggers that are still members of the Blognation team. For a more detailed history of this sordid story, one includes a considerable amount of the actual Skype chat dialog as well as many paragraphs from dozens of email messages, please visit my new home on the blogosphere, owstarr.com (http://owstarr.com), my new email will be oliver@remove-this-first-owstarr.com

Lastly, this post is likely to be removed very shortly after I post it so please, make a screen capture, download it to an off-line reader, copy and paste it into a document or repost it on your own blog(really). At the end, this is a cautionary tale and the victims are the people that have worked for months on the content many of you have enjoyed but for which Sam Sethi has yet to (and may never) pay.

Oliver Starr

Sam,

In case you are wondering why my sentiments towards you have so dramatically changed over the past few weeks I will be as clear as I know how to be.

I don’t appreciate it when people lie to me and I detest it when people lie to me repeatedly, especially when it is obvious that they are lying and have been given an opportunity to come clean. It insults my intelligence when someone lies to me over and over when it is obvious that this is what they are doing and I don’t enjoy having my intelligence insulted.

What you should know about me, Sam, is that I am a truly loyal friend. Ask Marc. I’m the sort of friend that will stand in front of you and take the force of the blow, go to jail, give up my last dollar…there are few limits to what I would do for a real friend. The counterpoint to that is that my friendship and loyalty come with a price. That price is honesty. That price is respect. That price is integrity. I don’t expect my friends to be perfect – God knows, I am far from perfect myself. I don’t even expect my friends to be willing to go to the same lengths for me that I would for them. But I expect…no I DEMAND integrity in the relationship.

When I extend friendship and exhibit loyalty towards someone and they trod all over the respect I have given them it psychically injures me and when I extend the courtesy of a second chance, a pass, and someone that I have treated with friendship and respect ignores me and continues to treat me as if I am a moron it angers me a great deal. It also kills any respect I might have for that individual, destroys any feelings of loyalty, and crushes any sentiments of warmth, sympathy or understanding.

When Nicole was attacking you who had your back Sam? When people first started squawking about the extended delays in payment, who got in touch with you privately to see what he could do to help? Who volunteered their network of connections to aid in raising funds? Or offered to have their good name included in your business plan to help you present a stronger team to prospective investors? Who was the person introducing you to his contacts at companies like SpinVox to help you get more sponsors for Blognation?

I didn’t ask you for anything more than for the truth. The simple, unedited, unembellished, unvarnished truth. I wanted to know the real situation with the funding. I wanted to know the real situation with the funds on hand and I wanted to know the real situation with regards to the payments you said were on the way. That’s it Sam. That’s all I asked you for. Politely.

Te begin with, you told me lies.

When I was in the UK you actually said – to my face no less – that you had already “banked” the funds from the first investment and that you had capital on hand sufficient to cover the operation’s expenses for the first full year.

Then, after I returned home and payments that had been promised failed to arrive and you started hedging about when those funds would actually be coming. I grew concerned so I called you up and got you on the phone.

Do you remember what you said?

You told me that the deal had been “signed” but that the VC was taking some time to complete their process to fund the account. You told me that according to your attorney this process was possible to complete in “four days time” but that because the VC was in the midst of some other deals and that since we were not their sole priority it could take as long as a couple of weeks.

Personally, I thought this sounded a bit peculiar since I have pretty substantial experience from both sides of a VC deal and I’d never heard anything like this before; but then, I considered you a friend and I trust my friends so I told myself that this must be some kind of UK custom that was simply different than how things are done in the US.

Of course this wasn’t anything remotely resembling the reality of the situation and that became clear when the letter you wrote to Wilkins or whatever his name is surfaced. Had the deal been signed and funding eminent, the VC might have found the letter upsetting and been upset with you for failing to divulge something of possible consequence to them but it would have been very difficult for them to have washed their hands of the deal.

Not having signed a deal however this was a very good reason to cool considerably. After all, at a minimum the VCs must have felt that this letter exhibited some very poor judgment on the part of a CEO in whom they were considering an investment. More significantly it demonstrated that the individual appeared to lack a certain amount of self control and this could have the potential to manifest in other surprising and problematic ways. Third, the threat of legal action, action which could at a minimum impede the progress of a company into which the VC was considering an investment was very evident from this communication and might even have been deemed likely.

Even with all these facts before us, you still maintained that things were moving along smoothly. At about this time, since it was clear to everyone that major funding was not happening any time in the next few weeks (and by now had been delayed from the end of September to the Middle of October to October 30th to November 15th to the end of November (maybe)) you told everyone that you were going to take a loan out against your personal assets and make interim payments to everyone.

At this time you told me that you’d be sending me 2000 pounds and I waited for several days, checking the bank each day and even calling the bank a few times to see if any incoming wires could be seen. As you know nothing came in because nothing had been sent.

Others were starting to make noise about this and several of them, Marc included, spoke with me. It seems you had essentially made the same promise to everyone based upon the claim that you were taking a note out against your home to provide cash for interim payments. You made both public statements that funds had been sent and you made private statements to me, too. Here’s an example from our Skype chat:

Oliver Starr “stitch” 5:03 AM
sam are the wires going out today?
Sam Sethi 5:16 AM
yes

That is pretty much as unequivocal as you can possibly get and yet…days go by and still no wire, still no check…still no funds forthcoming in spite of your words above. That is NOT OPTIMISM Sam, that is LYING.

At what point, I began to wonder, does Sam not understand the difference between wanting something to happen and actually making it happen? I asked myself this because you routinely tell people you will call or even that you are actually calling and yet the phone fails to ring. Similarly, you sent a “tweet” that you were “at the bank” implying to all recipients that you were there for the purpose of wiring us some of the money that is owed yet no one received anything.

You made commitments to provide a certain amount of money in the promised “interim payment”. The sole recipient of any funds to date has been Ewan and he’s received half…HALF of what you promised most people and even less than half of what you had promised me. Saying you’re sending 1500 quid and sending only 750 is not telling the truth Sam. I hate to break it to you but you need to get a much more solid grip on reality because the one that you have appears to be tenuous at best.

At any rate, as I think I’ve probably provided enough detail above to illustrate my point, the simple deal is that you squandered my friendship by lying to me over and over again. You disrespected me and my intelligence in the same way. Your inability to own up to your false claims, your broken promises and your refusal to accept responsibility for putting myself, my friends and many other people in a bad situation is another reason why my feelings for you have gone from friendship and respect to distrust, disrespect and zero confidence.

I won’t lie, Sam. I was impressed by your speaking engagement in the UK. You seemed to have it together and I really did believe that this was a project on track to succeed. The only difference between then and now is the mountain of bullshit that you’ve managed to shovel in between us with your inability to tell the simple honest truth.

Frankly, I don’t understand this kind of lying behavior at all because I am clearly not like you. If anything – and Marc can doubtless attest to this – I tend to be a bit too available with the truth. One thing I am not is a particularly good self-censor. Since Marc isn’t here to suggest otherwise or to inject a modicum of additional restraint you’re getting the real nitty gritty accounting of why I went from your ally to someone that holds you in esteem about equal to that in which I hold another blogger with whom I have had an association…

I want you to consider that for a moment as we’ve talked at length about my prior experience and how I was treated and what I am being forced to do about it. I never thought that you would treat me in a manner even remotely resembling the way XXXX treated me but by failing to be honest with me and failing to come clean given multiple opportunities to do so that is exactly what you’ve done.

Incidentally, I’ll have you know that I turned down a VP of Biz Dev position at a top Silicon Valley startup because they felt that blogging for Blognation would put me in a conflicted situation and I told them I didn’t want to leave Blognation as I had made a prior commitment there. It wasn’t the highest salary I’ve ever had or been offered but it was a lot better than what I’m making at the moment and would have done a good deal to defray the losses of the last four months where I received no pay since all I was doing was working on Blognation and of course you know how much that’s made me…

Of course it is important to mention that you’ve also promised multiple times to reimburse me for my out of pocket expenses but as you well know that hasn’t proven to be true to date either.

So… that’s a pretty ugly litany of yours up there; lies, more lies, still more lies, exaggerations, evasiveness, manipulation, usury, fraud even – honestly Sam I think there’s a good chance that what you’ve done is actually criminal not just pathological and antisocial – perhaps even psychotic behavior. Sorry to have to recount it – I never would have expected that I would have had to write anything like this to you. It goes to show that you just never know people until you’ve been down the road with them a few miles, huh?

I know you probably think that I’m the king-hell rat bastard mother-fucker of all time about now, but the truth, Sam, is that I’m no different from anyone else on the BN team…no different that is except that I actually have the sack to say what I’m thinking. Bottom line Sam, you fucked up. Not because the money didn’t come when you expected, but because of the lies you told when you said that it had come…

You made promises that people took to the bank and then you defaulted on them leaving everyone that trusted you to face the consequences. I am not kidding when I say that there are people on Blognation that probably won’t have a Christmas thanks to believing in you. There are people that are going to be late on car payments and there are people that are going to have to think twice before they go to the dentist because they are out some $10, $20 or even $30,000 dollars of income that they were expecting, for which they HAVE A CONTRACT and for which you have an obligation because you told us that you had the money when in fact you never really did!

Is this getting through to you loud and clear? I know I’ve repeated myself enough times here that I’m starting to sound like I’m brain damaged but then I thought my other emails were pretty clear and they never even elicited a response from you in spite of them being far, far more cordial; understanding, even.

But I’m through being understanding. You need to understand what it is you’ve done and what you ought to be doing to make it right.

As I see it, your chances of raising funds from a VC as the CEO of Blognation are in the very slim to none category. Not only are VCs highly unlikely to invest in a company such that a large part of their investment must be used to satisfy debt, but the fact that every single blogger is in a position to sue the company (or you personally) for breach of contract would send even the bravest VCs running for the hills. Add to this the fact that you aren’t presenting a management team, have never shown me the presentation or business plan or executive summary (in spite of telling me you’d send them straight over), and cap it all off with the Wilkins correspondence and the fact that you’re going to have to explain why key people are leaving and you would have to be named Merlin to make a deal go through.

Nevertheless (and in spite of apparently starting with a new VC which as you well know would take months in the best of situations) you still haven’t suggested to anyone that it is likely or even possible that they might need to find another source of income because things might not go as planned. That’s pretty freaking selfish if you ask me. You’re basically going to fuck up others quite badly but you don’t care and that’s not only evident, it is what at the end of this diatribe, is the thing that more than anything else has cost you my support and friendship.

Even today, you continue to make false promises and to lie about the potential deal that you claim to be negotiating. Why, for instance did you say that the deal was done and that they were investing $600,000 for 18% of the company only to come back later and post a note from one of the deal brokers that described a deal of $250,000 for 25% of the company. And what happened to the original $500,000 that you said to my face you had “banked” that was for 25% of the company at an impossible $2.2 Million valuation?

Don’t you realize that you’ve completely screwed with people’s live here? People who have families and real bills to pay. People who don’t have a spouse that works at Microsoft or wherever, people that are going to be seriously, seriously hurt by your actions.

My god, Sam; you have some nerve. In spite of all the demonstrated lying – lying I’ll add that is conclusively demonstrated by virtue of the numerous archived Skype chats and the many dozens of emails you’ve sent to me and the other bloggers. Demonstrated even in your updates to your entire team. How do you think you’ll build trust and loyalty among your people when you’ve proven yourself to be absolutely untrustworthy and disloyal?

Or do you even care? I myself suspect you don’t. I think this whole Blognation scam is all about one thing; Sam Sethi’s ego. You got tweaked by Michael Arrington last year and now you’re hell bent on showing up at Le Web with a dozen bloggers to back you up; your triumphant return to the scene of your demise – that’s right, you’ll show Mike and Loic and the world that no one fucks with Sam Sethi. You’ll show them that you’ve built – in less than a year – a blogging empire with bloggers from all over the world reporting 24 hours a day on all the topics the tech world wants to read about. You’ll talk about your advertising play and your new media properties, you’ll boast about your wine cellar and the possibility of hiring some huge name bloggers to round out your team.

I’m sure this will be punctuated by haughty tweets with what you think are big-brained ideas – your obvious effort – to be one of those smart cool kids who launch companies like twitter or Wua.la. You’ll probably stay at a very nice hotel in Paris and encourage all your bloggers to do so too.

And to get them to do so you’ll have convinced each and every one of them to pull the funds from their own dwindling bank accounts because the funding is in… and only has to be held by the bank for just a few more days…

Yes, I’m sure that Paris will be triumphant for you except for one teeny, tiny, itsy, bitsy little detail. Trivial in your mind but oh so important in the real world. Your big return, your blogging network, the content in every post, and nearly everything you’ve said or written about Blognation; it’s all based upon lies…

And when that dirty truth leaks out – there won’t be anywhere on earth you can run where the truth won’t find you. (not to mention the lawsuits that are sure to follow close behind)

Sincerely,

Oliver Starr