A Silicon Valley Dream Collapses in Allegations of Fraud
SAN FRANCISCO — Like so many bright, young entrepreneurs these days, Isaac Choi arrived here last year, set up shop and promised employees that he would lead them to the Silicon Valley dream.
That dream is turning out mostly to be a mirage.
This week, Choi’s company, WrkRiot, began unraveling in a highly public fashion. Its former head of marketing revealed that the startup had been mired in chaos and had sometimes paid employees in cashier’s checks before delaying payment altogether. She also alleged that Choi had forged wire transfer documents to make it look as if compensation were on the way. By late Tuesday, WrkRiot had taken itself offline. The veracity of Choi’s credentials are also in question.
While WrkRiot is not widely known, the startup’s collapse has gripped Silicon Valley. Choi’s situation may be extreme, but the company’s implosion has a familiar ring to many who came west to be the next Mark Zuckerberg — but ended up instead at the next WrkRiot. Silicon Valley is eager to celebrate its success stories, but the reality is that numerous tiny startups that few ever hear about form the tech industry’s dysfunctional underbelly.
“With the exception of the alleged fraud, almost anyone who has worked at a startup has experienced most everything that went wrong at WrkRiot,” said Semil Shah, a startup investor based in Menlo Park, California. “People don’t realize the word startup is a broad concept that includes everything from a proven entrepreneur raising $15 million to a guy with money from friends and family.” To an outsider, he said, “they’re both the same.”
On Hacker News, an online forum for techies, WrkRiot’s tale has exploded into one of the most popular threads, attracting more than 500 comments, including one from a poster who said that the startup’s experience was “pretty much a rite of passage here.” Tech blogs have also seized upon the tale; one called it “one of the ugliest startup stories we’ve ever heard.”
Penny Kim, the former head of marketing at WrkRiot who wrote about her experience at the company, including the forgery allegations, said, “I’d heard stories about late paychecks or startups failing, but who expects fraud in Silicon Valley?”
WrkRiot terminated Kim’s employment in mid-August after she filed a wage claim. She has since filed a retaliation complaint against the company and moved to Dallas, where she previously lived.
In an interview this week, Choi, 35, said WrkRiot, which is based in Santa Clara, California, near where Intel is headquartered, was “like any company. If you want to talk startups, all startups have problems.” When asked about the forgery claims, Choi said that Kim was a disgruntled employee who was fired for cause and that the accusations were “unfair to my guys.”
Choi’s credibility is on the line. As he built WrkRiot, the entrepreneur said that he had graduated from the Stern School of Business at New York University and that he had worked at JPMorgan for nearly four years as an analyst. NYU and JPMorgan both said they had no record of Choi. At least one company listed on his LinkedIn profile could not be found.
崔的个人信誉也面临危机。这名创业者曾表示，在创立WrkRiot时，他已经从纽约大学斯特恩商学院(Stern School of Business at New York University)毕业，而且在摩根大通(JPMorgan)做了近4年的分析师。但纽约大学和摩根大通都表示，他们没有艾萨克·崔的记录。在他LinkendIn页面上的简历中列出的供职公司中，至少有一家是无法找到的。
Choi, whose LinkedIn profile has since been wiped clean, did not respond to questions about his résumé. His lawyer, Bernard Fishman, said he was not aware of the allegations against WrkRiot until contacted by The New York Times.
Choi set up his startup in June 2015 under the name 1For.One, with a mission of helping people find the perfect job online. He brought in advisers with expertise in recruiting and data science and eventually hired nearly 20 people, including Chinese nationals under work visas.
The company later changed its name to JobSonic with a tagline, “Finally, a lightning fast job platform that cares.” Eventually, the startup settled on the vowel-challenged name of WrkRiot.
Choi said that the company had not raised any money from venture capital firms but that he had “a bunch of private investors who are high-net-worth individuals who believe in the company.” He said one investor was related to him and one was not, but he would not say how much money the company had.
WrkRiot’s former chief technology officer and co-founder, Al Brown, said Choi had intended to put $2 million of his own money into the company but that only $400,000 had materialized.
“I did not find out till the beginning of August that the money for the last payroll came from one of the employees,” Brown wrote in online comments this week.
In Kim’s post about her experience at the company, which she did not initially identify but later confirmed was WrkRiot, she wrote that the startup, without consulting her, had hired someone who would report to her, did not plan ahead on its business — and had no idea what its business really was — and was repeatedly turned down by investors. The chief executive, later identified as Choi, also borrowed money from employees, she said.
“Nothing about that startup surprises me anymore and it all seems like a horrible nightmare I was lucky enough to wake up from,” she wrote.
At WrkRiot, a handful of the startup’s remaining 10 or so employees gathered Tuesday night to discuss their situation, according to a person who attended the gathering and spoke on the condition of anonymity because he was concerned about retaliation.
A few were hopeful that Choi could save the company.Some of the Chinese nationals whose work visas were tied to their employment said their visa extensions were in limbo, partly because WrkRiot had missed a payment to the paycheck-processing company ADP, making it impossible for the government to verify their employment through ADP.
By then, WrkRiot had shut down its website, its Facebook page and its Twitter account. Many of the employees are hunting for other Silicon Valley startup jobs.