It wasn’t youth that doomed Clinkle
Friday night. A voicemail message...
“Dennis… I just got a call from Lucas telling me that you are about to publish a story… I had hoped that, if you were publishing something, we’d have a chance to comment on it...um...without a gun to our heads, which sort of what it feels like is happening here.”
As far as I've been able to determine, Ken Ross is what’s known as a “CEO coach” — a sort of personal trainer for young company founders, helping them to avoid making the kind of errors that older, wiser heads are savvy to. In this case Ross was calling on behalf of his “pupil”, Clinkle founder/CEO Lucas Duplan aka the Joey Fatone of mobile wallets.
There were a couple of things remarkable about Ross’s voicemail.
The first was that, given Clinkle was experiencing one of the worst weeks of its troubled life — with multiple sources whispering that the company was finally about to collapse — it was an odd choice of priorities for Ross to be hounding reporters rather than, say, helping Duplan save his company.
The second remarkable thing is that Ross was leaving his angry voicemail for the wrong reporter. When I called Ross back to figure out what the hell he was talking about, he didn't answer. About an hour later he briefly explained his mistake in an email: “Sorry for the message. Got a call from someone I presumed to be you and was not. My apologies.”
The reporter who was about to publish a story, apparently without giving Clinkle enough time to comment, was TechCrunch’s Josh Constine. Indeed that story appeared late on Friday.
Ross and I had spoken off the record the previous day, which means I can’t tell you what was said during that conversation. Had Ross not left me a very much on the record voicemail, I perhaps wouldn’t even have been able to share the fact that someone at Clinkle thought it would be wise to bring in a professional CEO coach to help Duplan run his company, apparently with very little success.
In that regard I’m glad he called, because it’s an amazing detail and one that shows just how much of a clown show Clinkle is. Even the CEO and the CEO coach don’t know what each other are doing.
I’d been chasing the story of Clinkle’s seemingly inevitable demise for a few weeks since Pando was tipped off that the end was finally near. Frankly that was kind of a “no shit” tip, many involved in the company — from people within Stanford’s StartX to investors — had been distancing themselves from Clinkle for weeks. Emails to some of its more prominent investors returned this to Pando’s inquiries about Clinkle’s imminent demise: “Just checked internally and we're not in the loop.”
Not in the loop?
It was clear: If Clinkle was still alive, it had few members of the Valley establishment actively rooting for it. Or even engaged with it. It had been effectively written off. “Marked down to nothing” in the parlance of VCs. That means you are a ghost. You never happened. A logo scrubbed from the portfolio pages on VC web sites. Let’s change the subject.
The only problem was no one seemed to have told the company’s employees that.
If you know the name “Clinkle” it’s certainly not because of the product. It’s because it’s become synonymous with the evils of backing a young, arrogant, inexperienced, founder and giving him way too much money for an unproven idea.
Almost from the start, Clinkle seemed destined to fail. At first, it was a hot, stealthy startup built by a crew of Stanford whiz kids. But before anyone had a clue what Duplan and his team were building, they had $25 million from Valley invincibles like Andreessen Horowitz and Accel Partners — not to mention Index Ventures, Intuit, Intel Capital, Marc Benioff, Jim Breyer, and Peter Thiel, as well as Richard Branson and Stanford’s StartX in a later $5 million round. (Disclosure: Marc Andreessen is a person investor in Pando. Accel is also an investor as is Peter Thiel’s Founders Fund)
And then Clinkle turned into the dumpster fire that has made it synonymous with a Silicon Valley flameout. Duplan oversaw one disastrous management decision after another. Its investors tried to intervene by bringing in some “adult supervision” in the form of experienced executives, which led to a revolving door in the C-suite. By the time the concept behind Clinkle was revealed — a mobile wallet — the space had already seen PayPal/Braintree and Square gaining traction, while Apple Pay was on the horizon. And so, the reaction to what was supposed to be a groundbreaking technology was a collective, “That’s it?”
In the end, things just seemed to get progressively worse for Duplan and Clinkle, with the only news coming out of the company being related to firings or high-profile departures. The company became the poster child for the dangerous side of giving free reign to an inexperienced founder.
Constine’s TechCrunch piece just adds to the myth of mismanagement and childishness involved in Clinkle. According to Constine, not only did seven key employees quit the company in protest, they celebrated their departure on social media after walking out the door. Through pivots, executive departures, and rumors of sales, the team had seemingly stuck by Duplan until this point as he waved his magic “everything is going to be okay” wand to the willing to believe anything employees. Until it seems, they’d had enough.
But here’s the problem with that cozy narrative: The very same people telling us off the record that Duplan’s youth, ego, and outsized funding are to blame are the very same people who say the great thing about Silicon Valley is that it’s willing to back young, arrogant, inexperienced founders and give them way too much money for an unproven idea. If that’s the diagnosis of what went wrong with Clinkle, then VCs are damned to make the same mistake over and over again. That or miss out on a Microsoft, Apple, Facebook, Google or Snapchat. And if we know one thing about VCs — at least the top ones — it’s that they’d rather lose an entire investment in a Clinkle than risk losing the upside on a Facebook.
Part of the willingness to blame Duplan’s age, ego, and lack of experience is psychological. There is a pent up frustration that many in the press and the rank and file Valley workers — not to mention Silicon Valley outsiders — feel against the iconic 20-something wunderkind. The existence of a Mark Zuckerberg just feels unfair to anyone who has worked hard, followed the rules, stayed in school and paid their dues only to still be barely scraping by. So when a “wunderkind” flames out so spectacularly they become a sort of scapegoat for all that pent up cultural frustration.
But entrepreneurship isn’t fair. It’s about massive home-runs. The less predictable — the bigger the possible upside. VCs arbitrage in unfair all day long.
To some degree, an entrepreneur’s age is as much of a red herring as saying “That’s why you shouldn’t back people with brown eyes!” What made Mark Zuckerberg succeed wasn’t his age — it was a million little factors that spoke more to his own quirky weird worldview. Anyone who is either backing someone because they are just out of Stanford and obnoxiously tell you they can change the world — or — not backing someone because they are just out of Stanford and obnoxiously tell you they can change the world is probably not going to be too successful of an investor.
“In Silicon Valley, we have a myth that the hero-entrepreneur is this young 20-something year old guy who is extraordinarily charismatic and talented and is capable of upending huge industries if we can only capitalize him enough,” says Ann Miura-Ko, of Floodgate who has backed young founders in Lyft, Twitter, Twitch, and Refinery29, among others. “There are some examples that prove this to be true. That said, of the exits that are greater than $1 billion, there are more founders who don't fit that mold. Instead, what these founders seem to have in common is that they are high velocity learners who attract and retain talent.”
Still, there is some truth to the double-edged sword of youth in Silicon Valley. Duplan clearly didn’t understand what he was getting into and one has to believe if he’d been through a few startups, things would have played out differently. Either he would have learned that things like misleading VCs and breaking verbal agreements with them or not heeding the sound advice offered by those trying to help will win you more enemies than friends in the Valley and every founder is gonna need a friend at some point. That or he was the type of person who’d never learn and would have developed such a toxic reputation that he wouldn’t have gotten backed in the first place. Either way, it’s safe to assume age could have de-risked a bet on Duplan one way or another.
That said, Duplan’s age and immaturity is clearly not what tanked Clinkle, cozy and comforting as that narrative is. There are similar stories bandied about about Snapchat’s Evan Spiegel, regularly.
So what makes the difference between 20-year-olds? It’s a frustrating answer, but it’s ultimately the quality of the founder. Do their intrinsic views of the world and desire to learn and be coached outweigh the inexperience and arrogance that can come with youth?
“The primary advantage of young founders is they often view the world in very unconventional ways,” said Mike Maples Jr., also of Floodgate. “They also have a tendency to want to do things ‘their way,’ which can be very powerful when they have the right insight. They are often the first people to have a breakthrough insight about a new technology or trend because they may have ‘grown up’ steeped in it.”
That is definitely a big differentiator in Spiegel. Management bedside manner and gross college emails aside, he has one of the most innate mobile-first product senses of any entrepreneur in tech today. Snapchat — for instance — only communicates with you through the app. Not a single email spam or alert in sight. He had no desktop baggage.
Young CEOs can be coached, but they have to be willing. That’s why they continually do well in the Valley, because the coaching is what the Valley does well. As Maples — and others we spoke with — noted Mark Zuckerberg and Bill Gates in particular were “like sponges, absorbing every bit of wisdom possible at super high speed.” These sponges don’t view other high level managers with experience as threats — they view them as learning opportunities. And they risk their own financial future on their outsized rhetoric: Zuckerberg refused to sell Facebook for $1 billion, because he actually did think his company could change the world. Ditto Spiegel.
Others let it all go to their heads, Maples says. “They become more enamored with the short-term adulation of being a "famous" tech CEO, before the business has delivered,” he says. “They get caught up in PR, parties, and celebrating funding rounds like they are an accomplishment.”
The latter sounds a lot like what happened at Clinkle.
No gut is ever infallible. Bad 20-somethings will continue to get funded and the world will continue to pile on the “I TOLD YOU THEY WERE TOO YOUNG” when they do. After the money is in, it’s too late for investors. But would be employees of these companies should watch closely what happens after they get funded: Do they hire people smarter than them and parasitically learn from them, or do they strut around cocktail parties bragging about their valuation?
If you really delve into Constine’s piece, it’s not just Duplan who comes off as immature — it’s anyone on the team who didn’t quickly see this coming. Yes, he most likely lied to them about what was happening with the company sale. But, there isn’t a single executive I know who gives the details of an impending acquisition to his charges. Good or bad.
If this was the last straw, the core staff just wasn’t facing reality. This is a company with no real sellable assets at least some of whose investors had long since washed their hands of Clinkle. It had no product anyone would want, outdated technology, and a core group of employees who stuck around far too long than made sense in one of the hottest hiring markets in Valley history.
One of the investors we reached out to about the macro questions about when youth works and when it doesn’t was Naval Ravikant of AngelList. He had this to say: “It's always product/market fit. If you have product/market fit, the founder is a ‘genius’ or a ‘visionary.’ If you don't have product/market fit, then people latch onto whatever narrative is easiest to focus on - in this case, youth. I don't know this kid - too bad he failed. Hopefully everyone learned, and imagine what he'll do at 30!”
That’s a very good point — if there’s one thing we know about the Valley it’s that Lucas Duplan will very likely get a second chance. Assuming, of course, he’s sufficiently humbled by what happened this time around.