2014 startup fumble list.

2014’s Most Horrendous Startup Fumbles​

2014’s Most Horrendous Startup Fumbles​

Moneybox
A blog about business and economics.
Dec. 16 2014 11:45 AM

2014’s Most Horrendous Startup Fumbles​

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In a banner year for startups (and their employees, customers, and users) behaving badly, there were rats, privacy violations, and, of course, an orgy.

Photo by Lionel Bonaventure/AFP/Getty Images

This article originally appeared in Inc.

These are boom days for tech startups. But as software continues to eat big, stagnant industries, sometimes the rest of the world bites back.

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We've compiled the best of the worst behavior by startup executives, and the strangest user-behavior that ended up reflecting badly on the companies involved. (Note: In order to keep this relatively brief, we are leaving out personal misdeeds by company founders, however egregious, if said misdeeds happened outside of their professional duties.)

We are also not going so far as to catalog actual company failures. These are just the fumbles. Some are massive. Some are small-but-remarkable. Some are absurd. Here's to learning something from 2014, and making 2015 a little less slimy.

Pointing the Spotlight at the Boys Club

Back in mid-March, an engineer at Github, Julie Ann Horvath, accused the software-code startup's leadership of harassing her and creating an unbearably uncomfortable environment for women in their workplace. The online barrage of allegations gained traction online, due in part to an already intense debate about the treatment of women in the boys club of Silicon Valley. A month later, co-founder Tom Preston-Werner, the company's most prominent executive, stepped down from the company after an investigation found "evidence of mistakes and errors of judgment" by Preston-Werner and his wife, Theresa.

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Rats, Mold, and a Clone

First there was born a startup to help startup employees go without lunch. Then that startup was named after a 1973 Charlton Heston film that made plenty of people queasy. Then that startup raked in more than $2 million in outside funding. The media tried it. We tried it. Vice tried it. Vice visited the Soylent warehouse and found rats, mold, and questionable practices. Somehow, this news didn't stop the demand, and due to a backlog in orders, a Soylent clone has popped up in San Francisco. It's called Schmoylent. And if that doesn't hurt, we don't know what would. 

Even the Government Says This Startup Violated Your Privacy

Although lots of the criticism over the privacy of Snapchat heated up in 2013, it continued this year. As the New York Times reports, in May, Snapchat settled with the FTC and agreed to further improve its privacy features over time. Then, in October, an experiment by three anonymous men to prove that Snapchat's messages didn't actually disappear, called Snapsaved.com, had its servers breached. Details are hazy, but the privacy saga continues nonetheless. 

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"Orgy." Enough said.

Maybe there's nothing you can't do in New York, but Airbnb hasn't been having an easy time getting established in the Big Apple. Earlier this year, the state called most New York City rentals listed on the site illegal. That's after a report by the attorney general said listings for rentals appeared to violate building codes, safety codes, and tax regulations. More recently, a spectacular single incident seemed to show the other side of the spectrum of what terrible things can happen when one lists their apartment: A renter attempted to stage what was dubbed an "XXX Freak Fest." Airbnb, for its part, acted well and promptly responded to the matter, cutting the tenant a hefty check for damages. But that was too late to erase an image seared into the brains of Airbnb users. At least the man who was attempting to Airbnb his apartment got some traction from surviving the fumble.

Try to Be Inflammatory Enough Times, Eventually It Will Work

Genius—formerly known as RapGenius—the crowdsourced annotations site, has never been a company known for its decorous ways. Its trio of co-founders curse, brag about drug use, and, worst of all, wear sunglasses indoors. You know, like three responsible Yale graduates with nearly $60 million in venture-capital investment on their hands. In 2013, co-founder Mahbod Moghadam made headlines for outbursts, including telling Facebook founder Mark Zuckerberg and investor Warren Buffett to "suck my dick." (He subsequently blamed a benign brain tumor, which he had removed, for the outbursts.) This year, Moghadam annotated on Genius the 141-page manifesto of Elliot Rodger, the 22-year-old man who went on a rampage near the University of California–Santa Barbara in May, with comments critics deemed "creepy" and "disgusting." He promptly departed the company.

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Executive Gossips About Stalking Journalists

It was just last month when Uber senior vice president of business, Emil Michael, suggested Uber should dig up dirt on critical journalists in order to smear and discredit them. In terms of public-relations blunders, it might have seemed minor—it was no alleged passenger assault, kidnapping, or rape. But it was one that touched not just on user-safety issues, but also privacy—and generated tons of speculation on whether Uber as a company is mature enough to handle its own whopping valuation (and the responsibilities that go along with such massive scale). 

Revenge of the Freelancers

There's a common practice amongst fast-growth service startups: Use independent contractors instead of full-time employees. It's how Uber, Lyft, and TaskRabbit, to name a few, were able to scale fast. But sometimes, it can backfire. The on-demand house-cleaning and handyman startup Handy was sued in California for violating labor laws due to exerting significant controls over workers (including telling them "how to use the bathroom"), but then classifying them as contractors. How handy.

Disaster Strikes. Then Is Dragged Out

After Whitney Wolfe accused Tinder's internal management (and parent-company IAC) of sexual harassment, the company was slow to respond. Co-founder Justin Mateen was suspended, but it took until November for the company to settle with Wolfe for $1 million—and for co-founder Sean Rad to step down as CEO.