The May Report: 9/19/2011: A dark tech-noir who dunnit that you won’t find in legit pubs like Crain’s, The Chicago Sun-Times and the Chicago Tribune or TechCrunch for that matter or in wannabe pubs like Frankie Gruber’s Tech Cocktail, Eddie Domain’s Techli or Seth Kravitz’s Technori — especially not Technori — not only a morality tale but a cautionary one at that

The May Report September 19th, 2011

Editor and publisher: Ron May, ron@themayreport.com, ronaldmay@aol.com, www.themayreport.com , 773-525-3944.

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Louis Brandeis: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.”
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TABLE OF CONTENTS

The Scoop section:

Briefly noted, by Ron May
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The Scoop section:
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Briefly noted, by Ron May

* Got a good one for ya. I was lying down earlier trying to figure out how to deal with the Troy Henikoff, Michael Arrington, John R. Dallas, Jr. and others’ problems/situations. You know, some thought does actually go into this report for these problem children, as hard as that is to believe.:-) The common thread for these three fellas is that “Those the gods destroy, they first make prideful.”

Ironically, that is a theme in the morality tale we have to tell tonight along with some stark contrasts between the Valley and Chicago. Come to think of it, this would make a great one act play.

I have spent over seven hours on this story this evening checking and double checking every detail. Now you won’t find this kind of story in Crain’s, TechCrunch, the Chicago Sun-Times, The Chicago Tribune, Techli, Technori, and a dozen other pubs. I have spoken in depth to four people cross checking everything so I am pretty confident that the facts are spot on.

At TechWeek one of the hackathon companies competing in the S.P.A.R.K. (start-up weekend) competition tied to Technori was ViaTask. That firm did not come in at the top with the three finalists which were Careerli.com, DuckDuckDish.com, and Code Mountain.

So do the other firms that presented wander off into the sunset and like old soldiers never die but just fade away?

Here are the firms that presented at S.P.A.R.K.
+++++++++++++++++++++++++++++
Robogrocer
Unstookit
Icebrkr.me
iMote
medihub
Wizora
PeopleEssence
ViaTask
Foodi.es (actual URL is www.duckduckdish.com
Tabliss
Kafilter
CodeMountain
+++++++++++++++++++++++++++++

The short answer is no, they don’t. They may go to Silicon Valley where real checks are getting written!

One of the Hackathon presenters was ViaTask.com, www.viatask.com/

Now remember that there were 45 or 46 initial applicants which were narrowed down to 10 or 12 for the presentations. These firms worked for 48 to 60 hours straight to have their work ready to present to the attendees on Sunday afternoon.

Believe it or not, ViaTask was started by a very bright 16 year old kid from the Chicago suburbs (Plainfield) named Shahed Khan.

You read that right. But as unusual as Shahed is for Chicago, the firm that won TechCrunch Disrupt in the Valley which took place from Monday to Wednesday of last week was started by a 15 year old. I believe that firm is called www.shaker.com and it is a Facebook application that allows you to see avatars of your friends.
Shaker won $50,000.

www.huffingtonpost.com/2011/09/15/techcrunch-disrupt-winner-shaker_n_963748.html

Enter Peter Thiel (pronounced Theel), one of the founders of PayPal and one of the first investors in Facebook. Needless to say, he is worth a few billion dollars now. Recall that PayPal started here or at least the founders came from here and that includes the Science and Math Academy in Aurora and I believe UIUC.

Peter offers kids like Shahed Khan $100,000 to drop out of school and pursue their entrepreneurial dreams. It is called “20 under 20″ and it is really designed for college kids. Shahed is too young but they told him to apply next year.

www.thielfoundation.org/index.php?option=com_content&id=14:the-thiel-fellowship-20-under-20&catid=1&Itemid=16

www.thielfoundation.org/index.php?option=com_content&view=article&id=26

en.wikipedia.org/wiki/Peter_Thiel

OK, OK, enough of the preliminaries.

Here is what happened.

Shahed was staying for one night with a few people in a two bedroom, two story apartment in the Valley, specifically the Mission district which is similar to Wicker Park here and the Mission is heavily Hispanic. It’s a nice apartment and the tenants pay $2,200 a month.

There were four people in the apartment on the night in question, Shahed and the three roommates. There were others around but not there that night. One of them was Jeremy Smith from www.spothero.com. Spothero used space in Tech Nexus this summer and was part of a program run by the CEC, Kevin Willer told me — and for any doubters out there, that article will be on your desk in the morning. Jeremy was not in the apartment that night but his computer was there. Mark Lawrence, Jeremy’s partner in SpotHero, is back here in Chicago. I believe that Jeremy was hanging out with some of the TechWeek folks which is a good sign that they are using the connections they’ve developed here. BTW, as I understand it, some of these Chicago folks will be in the Valley for about a month or more. This is not a two day stay or a three hour tour. How many of you get that reference?

Two of the roommates were going to a private invite only party for entrepreneurs tied to YCombinator.

Two of the roommates were women (Ozoda and Beibei) and one was a guy (Richard).

Richard and Beibei (pronounced bee-bee) are founders of a firm called www.attorneyfee.com. Ozoda, who is from Uzbeckistan and who has a strong legal background, having been an inspector general there, has also been a model for the www.Attorneyfee.com site. Attorneyfee allows people to compare the fees that different lawyers charge.

Ozoda (pronounced Oh-zah-da) owns a new Mac which is worth about $2K.

Two of the people from the apartment went to the party that Shahed had expressed his desire to attend. But the roommates told him that no, he could not go since it was an invite only party.

The two people who were invited to the party left the apartment.

Ozada came back to the apartment after the other two left.

Her room was closed and the light was off. She immediately noticed that her Mac was missing. It was in an unusual place. It was on the floor.

She started looking around for it and called her roommates to ask them they had seen it.

She then started searching the apartment. Shahed Khan was there when Ozoda returned and he was sitting on the couch doing nothing. He was shocked that someone had come into the apartment. According to Ozoda, his behavior was quite strange. When Ozada started looking around and asking Shahed if he had seen her Mac, he buried his head in his own computer and tried to ignore her. Ozoda told me that “Shahed’s body language indicated he was hiding something.”

Now this may also be important. Ozoda did not know before she entered the apartment that Shahed was staying there and she had never met him prior to her returning to the apartment.

Her roommates returned after about a half hour.

Ozoda “played” Shahed by asking him to hack her friend’s computer. Remember that Ozoda has extensive legal and investigative training. She knew how to engage him in conversation as a diversionary move.

Shahed remained calm and emotionless, not nervous at all, she told me.

Ozoda asked Shahed in a half dozen ways and at least a half dozen times if he had seen her Mac.

She looked everywhere. In the bathroom, the kitchen, etc. The computer was underneath the couch. She knew the computer had to be somewhere and her search was exhaustive.

When she found the computer, she held it with her gloves so as to not get prints on it and to not smudge any prints already there.

Shahed denied ten or more times that he had taken it.

When the other roommates who had gone to the party came back, they joined in confronting Shahed.

Ozoda was astonished that Shahed never offered to help her find it. He just kept on making a face like he was busy on his computer and he had his head down.

But there is more to the back story. The sequence of events demonstrates that Shahed had plotted the whole thing out beforehand, sort of like a burglar scopes a joint before burglarizing it. When Shahed landed in San Francisco, he met up with Richard and Beibei at a burrito joint. Shahed already tipped his hand at that point — but they did not realize that until much later — saying that he wanted to go to the party. They were talking about going to a bar after the burrito joint, but Shahed, being 16, could not go.

Beibei told me that in hindsight a number of things were suspicious. There was early talk of finding the phone number for the organizer of the party. There were also questions from Shahed about how long they would be gone and they told him about three hours. He was making sure he had time to do his little escapade. Beibei believes that these questions were part of a pre-meditated plot that Shahed had already hatched. She believes that he had pre-meditated finding the computer with the organizer’s number on it. “It’s unreal how smart he is,” she told me in both admiration and exasperation.

Once confronted by all the roommates, Shahed continued to deny any involvement on his part in trying to take the computer but when confronted with the possibility that they would go to the police and have the computer dusted for fingerprints, he finally fessed up that he had taken the computer.

The roommates knew how to play it. They were quite careful not to accuse him of anything. They told him they just wanted to be sure that he would not be hurt.

He came up with a couple of phoney baloney excuses that really did not hold water. One was that he had never before worked with a Mac. Highly implausible for a guy of his tremendous computer skills. Another was that he was going to the bathroom and found the Mac. That was baloney since the computer was in Ozoda’s bedroom and for Shahed to get there his route would have had to have been contorted. The restroom is by the living room and the restroom door was open so this is baloney and besides the door to the bedroom was closed with the lights out.

Shahed would have had to turn on the light in the bedroom and besides the Mac was on the floor which is not an obvious place for it.

Shahed had opened Ozoda’s Facebook page where her profile pics were.

Wait, there is more. Shahed did not have keys to the apartment. He was just staying the night. But he was shrewd enough to try to entice Ozoda into a little excursion to the ice cream shop down the street. Ozoda believes that his plan was to go outside the apartment with her, then come back in on some phoney excuse and put the Mac back. Ozoda was on to this and they never did go outside.

The best theory that I have heard for why he took the computer — and remember I have talked to four people now — is that he was looking for information related to the party he did not go to and he is desperately seeking funding — but his name is not Madonna. That comment dates me.

Let’s talk about the funding issue a bit since it is quite relevant.

Shahed says that he turned down a $750,000 offer from Lightbank, you know the cat’s pajamas venture firm here in Chicago that has all of us a buzz.

One problem with that offer. It was supposedly for 75% of the firm.

A few years ago when I first heard that Andrew Mason had ended up with about 10% of www.thepoint.com, I could not believe it. But since then, I have heard similar stories and percentages relating to Lightbank funded firms.

And what George Deeb told a group at Tech Pitch — you know the night in February when I came there in my boxers and got dressed at the meeting whilst Melanie was in the ER at Stroger Hospital — fits that narrative. He out-and-out stated that the Lightbank folks want much more control, not just financial but also operational, than the average VC firm or angel investor.

So it is no surprise that Shahed Khan, a talented 16 year old, would turn down an offer for $750K on a $250K pre-money valuation! — if I have that right. Post money valuation would have been $1MM.

Now a few words about Shahed. My information is that before the Mac was missing, his roommates noticed some strange things about his views of business and business ethics.

By the time all the confrontation had taken place regarding the taking of the computer from Ozoda’s room, it was after midnight but Shahed did not spend night there. He did leave. He never apologized or showed any remorse, Beibei told me.

No one is making any accusations but ViaTask is a knock off of a San Francisco based firm that is hot right now: www.taskrabbit.com.

Taskrabbit is up and running as a business and has gotten $5MM in venture funds thus far.

summify.com/mirceapasoi/2011/05/05/1/

They got the money in May 2011 lead by Shasta Ventures and that was on top of $1.8MM in seed and angel funding they had already received.

The concept of the business is simple. You need a task done and don’t have the time or inclination to do it yourself. You put out a requisition and say “I will pay someone $10 to pick up my clothes at the cleaners.”

Then various errand runners look at the order and decide if they want to do it.

The $10 fee typically gets split up $7 for the errand runner and $3 for TaskRabbit.

Here are some of the tasks that TaskRabbit handles.

www.taskrabbit.com/

+++++++++++++++++++
Browse Task Types
Accounting

Administrative

Assembly & Repair

Automotive

Carpentry

Catering

Child Care

Cleaning

Computer Engineering

Computer Help

Construction

Cooking/Baking

Courier
Craigslist Help

Creative

Data Entry

Dog Walking

Donation Pickup

eBay Help

Electrical Work

Event Help

Gardening

Graphic Design

Groceries

Handyman

Health & Medical
Heavy Lifting

House Chores

HTML Coding

IKEA Assembly

IKEA Pickup

iPad Pickup

Junk Removal

Laundry/Dry Cleaning

Marketing

Mechanic

Misc. Delivery

Moving Help

Notary
Office Help

Organization

Painting

Personal Care

Pet Care

Photography

Plumbing

Recycling

Research

Restaurant Pickup

Selling

Sewing

Shipping
Shopping

Snow Removal

Spring Cleaning

Target Pickup

Transport

Tutor

Videography

Virtual Assistance

Website Design

Whole Foods Pickup

Writing

Yard Work

Yoga
+++++++++++++++++++++++++++++

The kinds of folks who use this type of service strike me as what David Brooks calls BoBos for Bourgeoisie Bohemians or the children of what they called Yuppies in the 1980s. en.wikipedia.org/wiki/Bobos_in_Paradise

No one is making any accusations but there may be some chance that Shahed Khan had inside info. on the business model and plan for TaskRabbit, but as we all know, execution is key regardless of the plethora of ideas on how to run a business.

Shahed Khan is meeting with Ron Conway tomorrow, actually today, Monday I believe. Ron Conway is a famous Silicon Valley Angel principal investor. According to Beibei, he is known for doing a “deal a day.” It is micro-financing and he’s funded firms like Dropbox.

www.crunchbase.com/person/ron-conway

en.wikipedia.org/wiki/Ron_Conway

Shahed was able to get into Tech Crunch Disrupt for $200 since he is a high school student. Had he been in college or older, he’d have had to pay $2,000. This guy is very clever and sneaky. He got a volunteer’s t-shirt and snuck back stage. Back stage is where luminaries such as Ashton Kutcher hang out.

Here’s how Shahed got the meeting with Ron Conway. He snuck back stage and intercepted star investors like Peter Thiel and Ron Conway.

So why did I get the call Sunday evening? That is very important to know. The parties involved gave it a great deal of thought, Beibei told me. The one thing that stood out for them was that Shahed Khan showed no remorse, no sense of guilt, no regrets for what he did whatsoever. Ozoda told me that she would never bother her roommates’ things without their permission. Shahed must not have gotten that memo!

But there is more. Shahed is getting a lot of publicity, Beibei told me. It is clearly going to his head. His ego is massively overblown and he routinely takes advantage of the fact that he is just sixteen years old.

He is “sort of abusive,” Beibei told me.

Nonetheless, they did struggle quite a bit before coming to me. They don’t want this to ruin Shahed’s life, but maybe it will be the catalyst to set him straight before he starts believing his own press.

There is also the issue of whether Shahed should be able to capitalize on his youth and obvious smarts without moral standards to accompany it

And the people involved here are not twenty or twenty one years old. They are a bit older and more mature and I believe that several of them have law degrees.

Tomorrow, after a good night’s sleep, maybe we can do some lessons learned. One lesson is that the activity level in the Valley makes one’s head spin here. Did you read that Brad and Eric?

I’ve been working on this for about seven hours now and I am hungry!

BTW, I heard today that Mayor Bloomberg of New York City is considering a tech center which will cost over $100MM. And the SEC is now reconsidering its hard line on what is called “crowdfunding” used by Pabst Blue Ribbon Beer I believe, and I think shares were going for $5 each. .

We’ll have to see what happens but it is entirely possible that Shahed Khan will get a check in the Valley just as many other entrepreneurs are.
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END OF REPORT

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