4 ms·

If we learned anything from Cruise, it's that he should hang back, wait to see if her new business is a success, then come forward and make an equity claim. No

by dharmon 10y ago

If we learned anything from Cruise, it's that he should hang back, wait to see if her new business is a success, then come forward and make an equity claim. No sense wasting time and money just yet when 90% of businesses fail. More seriously, it could very well be an entirely different business, and she just liked the name Style Club. Re-using almost the same business name is hardly a crime. The biggest issue, in my opinion, is that she "shut down" her old business without notifying her investors. Now, to be practical, most customer-less startups (that is, most startups) don't have an official day where everyone walks away. One founder gets a day job, another starts spending a little more time on other projects, and so on. Everyone involved, including investors, knows that its dead. Startups that haven't done anything for 4 years don't suddenly take the world by storm. Nevertheless, she should have "officially" shut down her startup if she was going to go on national TV pitching her new one. While she handled this poorly, I would be wary of placing too many restrictions on allowing entrepreneurs to start new businesses. Although if they are nearly identical and you are a success, you will get into trouble (just ask Zuckerberg...)

sean_patel 10y ago
Still, how do "Mark Cuban and Shark Tank" get screwed? It's foolish to expect the producers to look at domain name registrations and LLCs and all that. I am guessing that once a pitcher gets a commitment for funding, that lawyers from the individual investors will do due diligence, and if anything Hillary (founder of style club) gets in trouble and gets told that she cannot take the investment from Mark Cuban. In which case, they don't technically get "screwed", they just lose out on 1 of the 100s of startups they invest in every year... big deal.
- hornbaker 10y ago
  Exactly. Cuban and Shark Tank will still be able to back out of this deal and stay squeaky clean, assuming Howard Marks' story holds up. The parties who will get screwed are The Style Club (more specifically the CEO), and Marks, who should have kept quiet and let her make the company a huge success with Cuban's help before coming forward with the dirt. He had the nut hole card but he flashed it too early.
  - sean_patel 10y ago
    > He had the nut hole card ROFL. What's a Nut-hole Card? Hope it's not what I think it is lol. You are right. I'd have held out and seen if it's a huge success and then enforce the agreement. Revenge is best served cold.
    - koolba 10y ago
      It's a Texas Hold'em reference. The "nuts" is the ultimate best hand for a given flop. Such as the 4th ace if three are already on the board (without a straight flush possibility).
    - sparrish 10y ago
      It's a poker term. The 'nut' is the best possible hand in a given deal. The 'hole card' is the face-down card only the player knows.
    - bwoj 10y ago
      Poker analogy: the nut is the one card that forms the best possible hand out of the shared cards on the table. Having the nut card in the hole means you have it in your hidden cards. When you're in this position, you know you're going to win the hand but the other players do not and your goal is to get them to bid as much as possible on the hand without tipping them off that you know you will win it.
    - bwoj 10y ago
      Poker analogy: the nut is the one card that forms the best possible hand out of the shared cards on the table. Having the nut card in the hole means you have it in your hidden cards. When you're in this position, you know you're going to win the hand but the other players do not and your goal is to get them to bid as much as possible on the hand without tipping them off that you know you will win it.
- digler999 10y ago
  They also waste their time airing a show with a false premise showcasing someone who is potentially doing something very dishonest. You can't just take a bunch of VCs' capital and develop business XYZ, then dump them and open up XYZ.1 that does the same thing while cutting out the VC's. So Mark's getting screwed by wasting his time with someone who doesn't own the rights to her own startup.
clavalle 10y ago
It seems fairly clear that the same web site, IP, and organization was used for both businesses. You can't just change the letterhead on the stationary and claim it's a new business and leave your investors behind.
- dharmon 10y ago
  The latter two are arguable. Is it really the same IP and organization? And how much of that IP is her personal experience? Do investors really have claim to that? I agree she handled this very poorly, but just trying to look at the other side. Is she really so stupid to literately pitch the same exact company on TV, just with the LA changed to Global in the name? It's possible she is, but starting from that assumption is an excuse to avoid thinking, in my opinion. And on his side, if it was really as bald-faced as he claims, why is he moaning about it on his blog in a resigned manner rather than taking legal action?
  - clavalle 10y ago
    Well, by IP I mean primarily brand in this case, which is obvious to a casual observer like myself. I'd be willing to bet the rest hasn't changed much if someone were to do some digging. And, honestly, I don't know what he's trying to accomplish with the blog post. The post seems like a very bad idea for several reasons at least.
  - cestith 10y ago
    John Fogerty was sued for writing songs like John Fogerty. He nearly lost. http://mentalfloss.com/article/27501/time-john-fogerty-was-sued-ripping-john-fogerty http://mentalfloss.com/article/27501/time-john-fogerty-was-s... You can't separate yourself from your partners and claim you own the brand, the merchandise, the copyrights, the trademarks, the domain name, and other assets alone.
  - btilly 10y ago
    ...why is he moaning about it on his blog in a resigned manner rather than taking legal action? The obvious answer is that it is far cheaper to talk about what will happen if lawyers get involved than to actually involve them. It is in everyone's interest to resolve this through negotiation. There is no need to openly state the obvious fact that lawyers can get involved if needed. An example of a desirable result is that all assets are transferred back to the original company, the CEO remains in charge, chastened by the experience, Mark Cuban is cut into the deal with the original company, and previous investors get a piece of some future deal with Mark Cuban. This result is much better for EVERYONE than anything achievable with lawyers. But you can't get there if you get people unnecessarily outraged.
edblarney 10y ago
"Re-using almost the same business name is hardly a crime." It's not the 'name' that is in question. It's a separate legal entity. It's a completely different company. i.e. different shareholders. This is a definitely a crime.
- wyldfire 10y ago
  Damages resulting from breach of contract are rarely considered criminal. This is covered really well by civil law.
  - edblarney 10y ago
    Yes - but transferring the assets from your company with one group of investors, over to another company, and then misrepresenting all of this entirely ... may be criminal.

by dharmon 10y ago

sean_patel 10y ago

Still, how do "Mark Cuban and Shark Tank" get screwed? It's foolish to expect the producers to look at domain name registrations and LLCs and all that. I am guessing that once a pitcher gets a commitment for funding, that lawyers from the individual investors will do due diligence, and if anything Hillary (founder of style club) gets in trouble and gets told that she cannot take the investment from Mark Cuban. In which case, they don't technically get "screwed", they just lose out on 1 of the 100s of startups they invest in every year... big deal.

hornbaker 10y ago
Exactly. Cuban and Shark Tank will still be able to back out of this deal and stay squeaky clean, assuming Howard Marks' story holds up. The parties who will get screwed are The Style Club (more specifically the CEO), and Marks, who should have kept quiet and let her make the company a huge success with Cuban's help before coming forward with the dirt. He had the nut hole card but he flashed it too early.
- sean_patel 10y ago
  > He had the nut hole card ROFL. What's a Nut-hole Card? Hope it's not what I think it is lol. You are right. I'd have held out and seen if it's a huge success and then enforce the agreement. Revenge is best served cold.
  - koolba 10y ago
    It's a Texas Hold'em reference. The "nuts" is the ultimate best hand for a given flop. Such as the 4th ace if three are already on the board (without a straight flush possibility).
  - sparrish 10y ago
    It's a poker term. The 'nut' is the best possible hand in a given deal. The 'hole card' is the face-down card only the player knows.
  - bwoj 10y ago
    Poker analogy: the nut is the one card that forms the best possible hand out of the shared cards on the table. Having the nut card in the hole means you have it in your hidden cards. When you're in this position, you know you're going to win the hand but the other players do not and your goal is to get them to bid as much as possible on the hand without tipping them off that you know you will win it.
  - bwoj 10y ago
    Poker analogy: the nut is the one card that forms the best possible hand out of the shared cards on the table. Having the nut card in the hole means you have it in your hidden cards. When you're in this position, you know you're going to win the hand but the other players do not and your goal is to get them to bid as much as possible on the hand without tipping them off that you know you will win it.
digler999 10y ago
They also waste their time airing a show with a false premise showcasing someone who is potentially doing something very dishonest. You can't just take a bunch of VCs' capital and develop business XYZ, then dump them and open up XYZ.1 that does the same thing while cutting out the VC's. So Mark's getting screwed by wasting his time with someone who doesn't own the rights to her own startup.

clavalle 10y ago

It seems fairly clear that the same web site, IP, and organization was used for both businesses. You can't just change the letterhead on the stationary and claim it's a new business and leave your investors behind.

dharmon 10y ago
The latter two are arguable. Is it really the same IP and organization? And how much of that IP is her personal experience? Do investors really have claim to that? I agree she handled this very poorly, but just trying to look at the other side. Is she really so stupid to literately pitch the same exact company on TV, just with the LA changed to Global in the name? It's possible she is, but starting from that assumption is an excuse to avoid thinking, in my opinion. And on his side, if it was really as bald-faced as he claims, why is he moaning about it on his blog in a resigned manner rather than taking legal action?
- clavalle 10y ago
  Well, by IP I mean primarily brand in this case, which is obvious to a casual observer like myself. I'd be willing to bet the rest hasn't changed much if someone were to do some digging. And, honestly, I don't know what he's trying to accomplish with the blog post. The post seems like a very bad idea for several reasons at least.
- cestith 10y ago
  John Fogerty was sued for writing songs like John Fogerty. He nearly lost. http://mentalfloss.com/article/27501/time-john-fogerty-was-sued-ripping-john-fogerty http://mentalfloss.com/article/27501/time-john-fogerty-was-s... You can't separate yourself from your partners and claim you own the brand, the merchandise, the copyrights, the trademarks, the domain name, and other assets alone.
- btilly 10y ago
  ...why is he moaning about it on his blog in a resigned manner rather than taking legal action? The obvious answer is that it is far cheaper to talk about what will happen if lawyers get involved than to actually involve them. It is in everyone's interest to resolve this through negotiation. There is no need to openly state the obvious fact that lawyers can get involved if needed. An example of a desirable result is that all assets are transferred back to the original company, the CEO remains in charge, chastened by the experience, Mark Cuban is cut into the deal with the original company, and previous investors get a piece of some future deal with Mark Cuban. This result is much better for EVERYONE than anything achievable with lawyers. But you can't get there if you get people unnecessarily outraged.

edblarney 10y ago

"Re-using almost the same business name is hardly a crime." It's not the 'name' that is in question. It's a separate legal entity. It's a completely different company. i.e. different shareholders. This is a definitely a crime.

wyldfire 10y ago
Damages resulting from breach of contract are rarely considered criminal. This is covered really well by civil law.
- edblarney 10y ago
  Yes - but transferring the assets from your company with one group of investors, over to another company, and then misrepresenting all of this entirely ... may be criminal.