Monday, November 9, 2009

Gizmo5 / SIPphone Shareholders--Beware of Michael Robertson's History

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There have been rumors reported in the press that Gizmo5 (SIPphone) could be sold soon (now confirmed here). In a previous blog, I cautioned any prospective buyers to be sure and do full due diligence. I encouraged them to not just take Robertson at his word (something no one should ever do with someone like Michael Robertson), but be sure and take a full accounting of any code, data centers, and speak personally with each and every employee.

Today, I want to caution any Gizmo5/SIPphone shareholders. They should look at how Michael Robertson dealt with the 100-some-odd Shareholders at Linspire when he sold that company's assets.

Here is what happened at Linspire:

1. Robertson sold Linspire without any input or notice from the majority of individual Shareholders. Even large shareholders, such as myself, were kept completely in the dark.

2. Millions in cash is still missing and unaccounted for to Linspire shareholders.

3. Robertson sold all the Linspire assets in a secret, backroom deal that to this day the terms of which have never been disclosed to the Linspire shareholders. Linspire's assets were sold well over a year ago and Robertson hasn't given ANY report or accounting to the Linspire shareholders. As I predicted, it would require a lawsuit to get Robertson to tell shareholders what happened, and even after that, we still have no answers.

4. The only accounting that was made, was Robertson talking to the press, where he basically said he and his father-in-law, as preferred shareholders, would be the only ones to see anything from the sale.

5. To date, every Linspire common shareholder has lost 100% of their investment, without any notice from Robertson, who remains in hiding from Linspire shareholders. (Actually, ONE common shareholder, Tina Stahlke-Donaldson, was able to sell some of her shares back to the company at a nice profit, after Robertson forced the CFO to accommodate that transaction. Why the special treatment for this one female employee? More on that in a future blog.)

Because VC's are involved at Gizmo5/SIPphone, they may force Robertson to behave more ethically there than he did at Linspire. However, my advice to any Gizmo5 shareholder would be to not sign anything without a full accounting BEFOREHAND. My instincts tell me that you, just like the Linspire common shareholders, could also walk away with nothing, even if Robertson does. Michael will want big numbers to be splashed around in the press so he can pretend to have had a success, but in the end, how much did individual shareholders make? (Thousands of shareholders lost millions at MP3.com, and Linspire shareholders lost all their investment and STILL don't even know what Linspire sold for.) If you are in fact going to get the shaft, you better have Michael explain himself BEFORE the deal is done. If Gizmo5 sells to a big company, that company may never disclose the actual purchase price, and if Robertson treats you the way he did Linspire shareholders, HE will never tell you either.

I'm not sure why anyone would pay more than a few million for Gizmo5, but even if Robertson were to sell it for a big number, I predict the common shareholders still see little to nothing. The VCs will likely have 3x or more liquidation preferences, and knowing Robertson as I do, I wouldn't be at all surprised if he will somehow get the same treatment with his shares. Even if someone was crazy enough to value Gizmo5 for tens of millions, watch how quickly Robertson can "creatively" make sure that as much as possible drops to his pockets, not the common shareholder's.

Why would Robertson suddenly get generous with employees and common shareholders?
He is the greediest person I know. Remember, this is the same person who tried to have several former employees arrested for "embezzlement" in a failed attempt to try and take back their severance payments. When those attempts were flatly rejected by the San Diego police department, he then sued these employees to get his greedy little hands on THEIR severance. All that failed energy, work, and harassment over a couple hundred thousand dollars?!? Why would any expect Robertson to suddenly grow a conscience?

Ask questions BEFORE any deal is done, otherwise, you could end up just like the Linspire shareholders, with shares of stock worth less than toilet paper and no answers.

I hope I'm wrong, and the Gizmo5/SIPphone shareholders actually see a return on their investment. I'll be sure and report if they do. At the end of the day, Robertson's real worth will not be determined by how much money he lines his own pockets with (like he did at MP3.com), but how much do ALL the investors make? THAT is the number that REALLY matters.

Kevin

Michael Robertson, the greediest man I know.

5 comments:

Kevin Carmony said...

Sure enough, it seems that Robertson is up to his same ol' tricks. As I predicted, it looks like he's planning to raid the coffers, only this time, get everyone to sign over that it's OK first.

I've learned that Robertson has sent out transaction documents for SIPphone/Gizmo5 shareholders to sign. Apparently the documents, specifically a Release they are asking all stockholders to sign, is very very broad. From what I've heard, it would basically release Robertson (and everyone else that is an executive or director of Gizmo5) from any potential claims the signers have against him.

Robertson has asked shareholders to sign these WITHOUT ANY specifics as to the deal, what their shares will be worth after any transaction, etc.

Who in their right mind would sign over the title to their home to Michael Robertson, agreeing to sell it to him, WITHOUT first knowing how much, if anything, they will get. Additionally, agreeing to hold Robertson completely harmless, leaving them no recourse should they not like the terms which will only be disclosed after they've signed away their rights.

Any SIPphone shareholder who is asked to signs these needs to get advice from an attorney, quick. (And any who DO sign it, shouldn't be surprised when they get little to nothing for their shares.)

Before signing anything, ask Robertson these three questions: 1) How much YOU will be getting for your shares? 2) How much will ROBERTSON be getting for his? 3) And how much will Robertson's special friend TINA be getting for hers?

Kevin

Kent said...

Robertson is no friend to shareholders. MP3, for starters. He's continued on his merry way since then.

T said...

None of this surprises me a bit. I worked for Robertson at MP3.com. He completely destroyed that company along with the the stock option value of most employees.

If someone approached me to sign something like that, I'd tell them to pound sand.

T

Anonymous said...

It's confirmed: http://googlevoiceblog.blogspot.com/2009/11/google-welcomes-gizmo5.html

Doesn't say how much though. I'm a shareholder, and I'll let you know if I get anything. I'm doubtful, but I'm glad to no longer have to deal with MR.

Travis said...

Everything I have read says it was done for about 30million. Of course, it is hard to tell how accurate that is. The press can be wrong.
http://www.techcrunch.com/2009/11/09/exclusive-google-has-acquired-gizmo5/