a new lawsuit Threats are to the decades-old collaboration that brought Skype, robotic delivery startup Starship Technologies and encrypted enterprise messaging service Wire to the world.
Nerdshala has learned that one of Skype’s founding investors, Mark Diane, is suing billionaire Skype co-founder Janus Friss in the Superior Court of California for the County of Los Angeles for illegal conspiracy in their business deals.
The lawsuit is complex, with lots of twists, turns, and allegations. The crux of the controversy is whether Dion and his partner, who managed some of Friese’s investments, were working for the Skype co-founder – or simply with – when he commissioned a rescue package for The Wire in 2019. was organized.
At stake is who controls the Wire and the financial returns each party gets from Starship.
Diane and her investor partners accused Friese of illegally turning one of them into directors of the general partnership managing Wire, and conspired to curtail their interest in Starship Technologies. Diane and her colleagues also alleged (and dismissed) the allegations made by Friese that when they found the funding and restructuring for Wire, they had duties towards him.
“[Friis] The misfortune assumes that he is always entitled to get what he wants, can force others to do what he wants, and can rewrite history (and compromise) whenever he wants to. Be compliant,” reads the complaint, filed in July but not previously reported.
Dion was a major investor in the history of Skype, as one of its original investors and as its first board member. He remained on board through more than $2.6 billion in sales to eBay in 2005, and was part of the group that bought Skype from eBay in 2009. He was still on board when it was eventually sold to Microsoft in 2011.
Dion and Fris worked extensively together in Skype’s later years. Dion was an investor and board member of Frisch’s ill-fated music streaming service Rdio, which filed for bankruptcy in 2015. Like Friis, he also served as director of general partners of the iconic investment funds, which funded Wire to the tune of more. More than $64.5 million between 2013 and 2018 according to the lawsuit.
Wire, launched ex-Skype and by Microsoft engineers, provides secure end-to-end encrypted messaging, file sharing, voice and video calls. Friss hoped that Wire would become “the new Skype” according to the lawsuit, but was disappointed after failing to scale quickly, and then turning to the enterprise. Five years after its launch, Wire had only acquired about 150,000 users, all of whom were non-revenue-generating, the lawsuit notes, and was burning $8 to $10 million a year.
The lawsuit reads, “Fris has a history of leaving companies when they did not achieve their initial objectives in their sole opinion.” In addition, it said, Friis himself was highly involved in the design of robots, logos and software apps at Starship Technologies.
a turning point
At this point, the men were apparently still friends. They were working on a new venture referred to only as “Project X” in the lawsuit, and in 2017, Friss also donated $500,000 to Diane’s charitable foundation.
In late 2018, the lawsuit says that Friss cut off the flow of cash from Wire’s loan facility and sent Dion a text message that read: “Want to make sure that if all else fails we will Everything is ready to be put into a foundation.” Wire will become free open source software, with the foundation responsible for setting the terms for the open source license. Friss envisioned himself, with Wire’s CTO Alan Durick and Wikipedia founder Jimmy Wales sitting on its board.
But Diane and her colleagues had a different view. In early 2019, when Wire was only a few days away from closing, Diane and her partners quickly pulled together an $8 million Series A, according to the lawsuit, which also included Marbrook Investments and Wire’s own executive management team. Was.
Friss told others that Diane “had a miracle” in finding this financing, the lawsuit states. Although Iconical Funds will remain Wire’s largest shareholder, the transaction will apparently move the company out of Friis’ direct control.
The lawsuit states that after this round, Friese called Durik an “absolute f**king disaster” and hastened to sever all ties with the company. It alleges that he missed board meetings and did not speak to Wire’s CEO Morton Broger for nearly a year and a half.
That seems to have changed this year following Wire’s $21 million Series B round. In May, Friese insisted that Wier be reestablished in Germany, stating in the lawsuit: “After all, this was apparently part of Friese’s undisclosed plan to regain control of Wier. “
In a Zoom (not Skype or wire) call in October, Friss alleged that if the terms of the wire transaction had been made clear to him and he had been given appropriate advice, he would never have agreed to it, blaming Diane. . and his companions. He also replaced one of them as director and stopped the meetings, it says.
battle on starship
Nor are Frisch’s actions limited to Wire, according to the lawsuit. It says Friis was always upset that he had no controlling interest in the sidewalk robot delivery startup Starship, which was structured as a 50/50 deal with another Skype alumnus, Ahti Henla. The trial includes a screengrab of a text from Friese to Diane suggesting whether the structure could be treated “the way it was set in stone, one would easily pay [$]10-15 million for this. “
The lawsuit alleges that Friese conspired with one of his companies to falsely claim Starship as a “controlled portfolio company” of an iconic fund. It will pique his own interest “up to that point” at the expense of Diane and her associates. [our] Interest in secondary markets is no longer a financeable asset.” “Friss will say or do whatever he imagines it to be, regardless of the cost of others.”
Diane did not immediately respond to a request for comment.
Friis’s legal team filed a motion to have the lawsuit quashed on Friday, on the grounds that Friis – a Danish citizen living in London – is not subject to the court’s jurisdiction.
The proposal stated: “More than a decade ago, Diane [and partner] It is believed that if they connect their wagon to the fris, they can make a good profit. And in the years to come, while extorting millions of dollars in fees and profit interests, they pretended to be trustees of Friis and his entities, overseeing and overseeing Friis’ various venture capital operations. do management. But in reality … the plaintiffs had only one mind to pursue their own commercial interests at the expense of the fris.”
Friese’s attorneys also provided Nerdshala with the following statement: “Dion’s culpable lawsuit is a defensive response to questions raised about her and her team’s conduct … although we believe the allegations in the complaint to be irresponsible.” , are incomplete and without merit, they also effectively acknowledge that Witch and his team violated fiduciary duties over their decade-long relationship as fiduciary consultants. We will address these matters more fully in litigation. look forward for.”
The outcome of this lawsuit, which is still in its early days, is likely to have little immediate impact on the operations of Starship, which has made more than 1.5 million autonomous deliveries and most recently appointed ex-Google Loon chief Alistair Westgarth as its CEO. As Roca, or Wire, has completed its pivot to enterprise customers and has enjoyed some success during the pandemic.
However, it marks the end of a dream team that has built some of the most interesting and influential startups of the 21st century so far.