After a fake-out last month, Color, the over-valued photo-sharing app that has come to symbolize all the failings of the social-media tech bubble, is closing down, per an alert on their website (pictured above). And, turns out, things were even worse at the startup than anyone inside the bubble thought. The news of the shut-down itself doesn't exactly come as a surprise, since the app has gone through many failed iterations, leading to its CEO checking out in September and whisperings of a sale and/or shut-down that surfaced about a month ago. But a lawsuit filed by a former employee, Adam Witherspoon, against the CEO, Bill Nguyen, reveals some nasty things about Nguyen and the company culture. In the suit, Witherspoon alleges "intentional infliction of emotional distress" and is seeking lost wages and benefits and for "humiliation, mental anguish, and emotional distress," reports TechCrunch's Colleen Taylor. The lawsuit also gives pretty damning insight into the company culture. An excerpt:
In or around late 2011, [then Color CFO Alyssa] Solomon began noticing discrepancies in Color’s finances. Upon information and belief, Defendant Nguyen was spending corporate funds on numerous personal items, such as charging personal items on Color’s American Express card and putting his family’s nanny, Sally Orr, and his family’s Lake Tahoe‐based ski instructor, Hillary Governer, on Color’s payroll.
In retaliation for Solomon’s investigation into his misuse of Color’s corporate funds and other fiduciary misconduct, Defendant Nguyen expressed his intent to fire Solomon in front of Color employees on numerous occasions. Color employees, including Plaintiff Witherspoon, had no doubt that Solomon was on her way out as a direct result of Nguyen’s vindictive threats.
Color employee Andre Charo inadvertently had some information leaked to the press prior to the launch of a new Color product. Defendent Nguyen oredered other color employees to gather and listen in on a phone call with Charoo who was crying and unaware other color employees were listening in. In this phone call, Nguyen screamed at, humiliated, and fired Charoo over the phone. After the call, Nguyen announced this incident to the entire Color team as an example of what would happen to them if they made a mistake.
The full court document below has tons of anecdotes like these. If true, it looks like Color's failings had as much to do with toxic (and wasteful) leadership than it did with its inability to make an app that doesn't already exist.
One bit of good-ish news for the app: Apple has acquired Color's 20-person technology team and some of its key intellectual-property assets last month, these court documents reveal. Apple paid $7 million for the talent and these asserts sources tell Taylor. At one point the app had been valued at somewhere around $100 million, so $7 million is kind of chump change. But, at least not everyone lost their jobs.
This article is from the archive of our partner The Wire.