There's something really weird happening at $500 million adtech startup RadiumOne, and the way we found out about it is even stranger
Late last week Business Insider reporters began receiving emails from anonymous sources claiming the company was in a dire financial state, having struggled to raise financing, and that it had just three months of cash left.
On Friday, RadiumOne chief executive Bill Lonergan sent out a memo to staff, flatly denying allegations that the company is in financial distress and reassuring staff that "jobs are not at risk."
On Monday, RadiumOne's former, CEO Gurbaksh "G" Chahal, tweeted that two board members - Vishal Gurbuxani and Krishna Subramanian - had resigned from the board effective immediately. (Chahal is still RadiumOne's largest shareholder even though he was ousted from the company last year after domestic violence charges against him were made public. The prosecution dropped felony charges but he pled guilty to two misdemeanors - domestic assault and domestic violence - following a plea bargain. He was sentenced to three years probation, a 52-week domestic violence training course, and 25 hours of community service.)
So what's going on? Is the company in trouble, or is it fine?
Our investigation into those questions took a somewhat surreal turn in the last few days, and it's still not entirely clear what to believe.
Anonymous@anonymous.com: "URGENT RADIUM ONE SAN FRANCISCO CA."
That was the subject line of an email Business Insider received from "anonymous@anonymous.com" last Wednesday.
The email, in full, read:
On Thursday, we received another email from anonymous@anonymous.com, making similar allegations.
Business Insider immediately set to work contacting sources close to the company, in an attempt to ascertain the claims. Then things got weird.
The "anonymous source" calls Business Insider from Chahal's number
After sending emails to Chahal and a few board members, Business Insider's Alyson Shontell promptly received three missed calls from a number that showed up on her cell as "G Chahal" (Shontell had contact with Chahal last year when he was ousted from his former company and his number was saved to her phone.)
When Shontell picked up, a woman's voice said she was the anonymous emailer, offering to connect Business Insider with board members who could confirm what the emails had said.
Shontell asked if the woman realized that the caller ID was identifying her as Chahal. The woman became quite awkward and the line went silent for a long while. When the woman eventually came back she said she was just finding a private place to talk.
Shontell again asked why it had said "G Chahal" on her caller ID, to which our "anonymous emailer" replied she didn't know, and that she didn't know Chahal.
Alyson then asked how the woman got her cell phone number. The woman replied that Alyson's number is "everywhere" and that she knows the right people who gave it to her.
Chahal tells Business Insider he isn't the anonymous source
Why might he want to spread rumors about his former company? So he could crush its value so he could buy what remained for cheap, and return, perhaps?
Business Insider called Chahal on Friday to put that theory to him.
We first asked why a woman had called using his number.
Chahal didn't sound surprised this had occurred, and responded that if you Google it, his number is "all over" the internet, and that he used to receive "hundreds" of phone calls.
"I don't know, I guess there's spoof apps or whatever the hell else out there. I haven't phoned, this (a different number, Chahal says, to the one that called Alyson) is my only number. I spoke to Alyson back in July I believe and I started my company back around that time and since then I have obviously [wanted] a clean slate. I don't have that number, I don't know who's playing a game, or who's trying to spoof my number, or my former number, I don't have that number," Chahal said.
We said that it was a bit of a coincidence that someone called using a number connected to him, offering to leak us details with what was happening at his former company, but then claimed not to know him.
He responded: "I don't know what you're talking about there. I know there's a lot of crazy people out there and there's a lot of disgruntled employees out there. I know that my number was publically available through Google, so you know, months ago, I changed it for the very reason that I want to keep my life more private and it not being so easily accessible. It's very easy to go ahead and spoof someone's number and hopefully that was the case and [Shontell] gets to the bottom of it."
We then put our theory to him, that Chahal might want to devalue the company so he can buy it back at a knockdown price. He answered: "I have no desire to acquire RadiumOne or be part of it, the situation as it is [Chahal's findings about the current financial situation at RadiumOne tallies with the story sent to us via email.] I've tried to help them out, that's a separate [issue.] I acquired Triggit last week ... so I have no desire or capital to go ahead and be involved in something. I actually was hoping there would be a material outcome because I'm the largest shareholder. Don't you think that it would be more my benefit than having a demise then trying to pick up for it? I mean, why would I want to go back to an organization like that? It doesn't make any sense."
We agree - it doesn't make any sense.
On Monday Business Insider tried ringing back the old "G Chahal" number that had called Shontell, but it went to a Verizon voicemail that stated, "the number has been changed, disconnected, or is no longer in service." That serves to support Chahal's claim that he didn't ring Shontell last week on that number.
RadiumOne CEO Bill Lonergan squashes the accusations
On Friday, RadiumOne's chief executive Bill Lonergan sent out this memo to staff, denying that the company was in a dire financial state.
The memo confirms the claims we had received, that, yes, RadiumOne is on a fundraising mission. But no, it is not in financial trouble, and jobs will not be affected. That's a pretty strong statement, and written words that would surely come back to haunt Lonergan if the company was indeed struggling to raise investment and had just a couple of month's cash runway left.
RadiumOne board members resign
On Monday, Chahal tweeted what appeared to be emails from board members Vishal Gurbuxani and Krishna Subramanian to RadiumOne's Lornegan and the board, announcing their resignations.
If you click to zoom-in on the image, you can see Subramanian and Gurbuxani apparently announcing they were leaving the board effective immediately. We have contacted RadiumOne to confirm and are awaiting a response.
Gurbuxani is an adtech industry veteran who now serves as an investor and adviser to several startups. He co-founded Mobclix, a mobile advertising exchange, which was acquired by Velti in October 2010. He went on to become Velti's chief technology officer, before leaving to co-found his own company, Team In Residence, a group of entrepreneurs and venture capitalists.
Subramanian co-founded Mobclix with Gurbuxani and also followed him to Velti, becoming its SVP of advertising and marketing, and later its chief marketing officer. Subramanian is also a co-founder at Team In Residence. Prior to that he co-founded the BlueLithium advertising with Chahal in 2004, which was sold to Yahoo for $300 million in 2007.
Who to believe?
It's difficult to know precisely what is going on until those people open up and talk on the record.
Of the sources we spoke to outside of the company, the idea that RadiumOne was struggling to raise financing and might be in trouble didn't surprise them - but none could confirm that was the case. It last raised investment - $21 million in Series B financing, according to CrunchBase - way back in 2011. (It has previously been valued at $500 million.) And one only needs to look at the recent poor financial performances of rival ad networks like Rocket Fuel or Millennial Media to see that this a challenging sector to be in, particularly as companies like Google and Facebook steadily build out their adtech stacks.
A person close to the company told us that while adtech fundraising is difficult right now, RadiumOne is actually "doing well" revenue-wise, and that it could be cashflow positive depending on what it decides to invest in next. Meanwhile, two sources close to the company told us people within RadiumOne believe Chahal was behind the rumors leaked to the press.
Chahal told us he thinks the leaks probably came from someone within the finance team at RadiumOne.
One thing is clear: This whole Chahal-RadiumOne situation is still one hot mess.