NFT
Final Might, Grammy award-winning DJ Diplo grabbed headlines after a video confirmed him struggling to move safety and get right into a yacht celebration held in the course of the Cannes Movie Competition. Though meant to carry out on the personal occasion, Diplo’s identify wasn’t on the visitor checklist.
“Fortunately the proprietor was strolling by and let me in,” Diplo mentioned in an Instagram put up.
That “proprietor” was Roham Gharegozlou, CEO and co-founder of Dapper Labs. He rose to prominence together with the as soon as wildly common NFT assortment his firm created, NBA High Shot. Gharegozlou solid partnerships with a powerful checklist of stars like Michael Jordan, Will Smith, Ashton Kutcher and the Nationwide Basketball League. Dapper’s investor checklist was equally spectacular, with Andreessen Horowitz, Google Ventures and Samsung all giving the startup cash.
It solely took about three and a half years for Gharegozlou to information Dapper to a staggering $7.6 billion valuation, a lot of it realized throughout a bull run that noticed cryptocurrencies and NFT costs obtain document highs. However whereas Gharegozlou was usually celebrated within the media and enterprise communities, behind the scenes a lot of his firm’s workers lived in worry of what they referred to as the CEO’s erratic nature. A number of workers additionally discovered the first-time CEO’s spendthrift methods imprudent, particularly when the NFT market started to bitter, High Shot gross sales plummeted and layoffs at Dapper turned widespread.
So when information unfold of the Diplo celebration Gharegozlou hosted on the French Riviera aboard a 184-foot yacht — which prices greater than $200,000 per week to constitution — it landed like a intestine punch for a number of Dapper workers apprehensive about their job safety amid the turbulent market circumstances.
Inside Dapper, a lot of the corporate was in turmoil. Senior chief exits have been turning into commonplace, and people workers left behind have been drained and pissed off. Moreover, in accordance with a number of former workers, the CEO’s frequent personal jet journey, pursuit of superstar companions and spending on luxurious lodging, which at one level included a $85 million Beverly Hills mansion, had individuals questioning Gharegozlou’s priorities. The CEO’s fixed “bullying” and “public shaming” of workers solely added to the hearth, serving to to stoke a poisonous firm tradition.
The Block spoke to eleven present and former workers for this story, together with each staffers who left of their very own volition and people who didn’t. A few of those that participated nonetheless personal fairness in Dapper.
Dapper Labs acknowledged in a written assertion that working at a startup will be hectic and that it has tried to create a secure and respectful office. “We worth every worker’s contributions to our enterprise and our communities, and we take their suggestions critically,” mentioned an organization spokesperson. Gharegozlou did not reply to a request for remark.
A number of key buyers together with Andreessen Horowitz did not reply to requests for remark.
Dapper CEO Roham Gharegozlou letting DJ Diplo right into a yacht celebration on the French Riviera. SOURCE: Diplo’s public Instagram account.
With a chronic bear market that has seen NFT buying and selling volumes plummet by greater than 90%, layoffs at bigger NFT outlets like Dapper have change into more and more widespread in current months, placing strain on administration to chop prices and discover methods to navigate the downturn. Revelations of poor administration and cavalier CEO conduct have additionally just lately change into a standard chorus the world over of crypto.
Dapper’s NBA High Shot assortment has seen buying and selling collapse, tumbling from a month-to-month sales-peak of $224 million in February 2021 to a mere $2.8 million final month, in accordance with CryptoSlam.
Final week Dapper laid off 20% of its full-time workers. 4 months earlier, it parted methods with 22% of its workers.
Meteoric rise
Described by many as charismatic and personable, Gharegozlou’s entrepreneurial roots seem to run deep. His father Reza moved the Gharegozlou household to Dubai from Tehran within the early Nineteen Nineties to begin a gasoline and refrigerants firm, in accordance with a profile within the Canadian enterprise publication Monetary Submit. Later, Roham Gharegozlou received a level from Stanford College and he and his brother Sam began a small enterprise capital agency referred to as Axiom Zen in 2012.
Then in 2017, Gharegozlou’s journey to change into an NFT pioneer started when Axiom Zen helped create CryptoKitties, a well-liked blockchain sport the place individuals might purchase and promote digital cats. CryptoKitties, and its official creator Dapper Labs, spun off from Axiom Zen the subsequent yr. Shortly thereafter, Dapper secured $15 million from a protracted line of main gamers in each finance and leisure together with Andreessen Horowitz, Jeffrey Katzenberg’s WndrCo and the founder and CEO of Reddit, Steve Huffman.
Gharegozlou and the Vancouver-based Dapper’s profitable streak continued in 2020 after the corporate partnered with the NBA to create NBA High Shot, a set of NFTs which are video clips of particular basketball highlights that folks can purchase, promote and commerce. The gathering caught hearth within the first quarter of 2021, producing greater than $200 million in gross sales throughout two consecutive months. It additionally helped introduce NFTs to the mainstream.
And that’s when the large bucks began to roll in. In March 2021 Dapper raised $305 million in a funding spherical that included NBA legend Michael Jordan as nicely present all-star Kevin Durant. Together with prolific blockchain investor Andreessen Horowitz, dozens extra enterprise capitalists, NBA and Nationwide Soccer League gamers invested within the spherical. Later that yr, as NFT buying and selling volumes have been hitting all-time highs, Dapper raised one other $250 million, giving the roughly three-year-old firm a valuation of $7.6 billion, in accordance with TechCrunch.
‘Roped in by the highlife’
Positioned as a trailblazer, Gharegozlou’s accomplishments have been featured in premier enterprise publications like The Wall Road Journal, Forbes, Fortune and Quick Firm. The chief’s fame had ascended together with Dapper’s hovering valuation.
Round this time is when Gharegozlou’s conduct is claimed to have began to alter, in accordance with two former workers that labored carefully with the CEO for years.
With NBA High Shot producing buzz, Gharegozlou began receiving calls from well-known entrepreneur celebrities and prime CEOs, mentioned one particular person accustomed to the matter. Two individuals mentioned he might land a gathering with virtually anybody he needed.
Gharegozlou’s life-style additionally developed dramatically. The CEO started to fly regularly on personal jets, in accordance with 5 individuals accustomed to the matter. The mode of journey turned one in all his priciest expenditures because the journeys would usually value between $60,000 and $100,000 per flight, one particular person mentioned.
Whereas on the bottom, Gharegozlou routinely rented mansions at any time when he traveled, together with as soon as renting a 12-bedroom, $85 million mansion in Beverly Hills that may value $300,000 a month, in accordance with three individuals. When not renting a mansion, the CEO usually booked five-star resort suites that will typically value as a lot as $30,000 an evening, in accordance with one particular person accustomed to the matter.
The $85 million Beverly Hills mansion Gharegozlou is claimed to have rented. Personal jet journey and luxurious lodging have been usually marked down as “advertising” bills. PHOTO SOURCE: Zillow
As Gharegozlou thought of the big-ticket bills integral to his technique of cozying as much as celebrities, they have been usually listed as “advertising” bills, one particular person mentioned.
“He completely received roped in by the excessive life,” mentioned a former worker that labored carefully with Gharegozlou for years.
4 former workers who labored carefully with the CEO mentioned even because the bear market set in, Gharegozlou gave the impression to be extra involved with producing hype through superstar partnerships than he did constructing new merchandise or discovering builders to make the most of Dapper’s blockchain, Circulation. Additionally, the superstar partnerships, whereas making for flashy press releases, usually didn’t create tangible worth for the corporate, three of these individuals mentioned.
Dapper additionally regularly sponsored extravagant occasions, in accordance with three individuals with data of the technique. The corporate’s Circulation blockchain formally sponsored a February 2022 New York Style Week bash held in Los Angeles. Musical superstars Justin Bieber and Drake carried out, and the celebration boasted a visitor checklist that included Kendall Jenner and Leonardo DiCaprio, in accordance with a report in Vogue on the time.
Dapper mentioned in an announcement that “the notion that there was extreme spending” not tied to the corporate’s technique is “inaccurate and deceptive.” The corporate additionally mentioned the CEO personally funded some occasions. “Our enterprise is rooted in leisure and sports activities,” the assertion additionally mentioned. “We now have and can proceed to spend cash on high-impact occasions.”
Regardless, oversight of the CEO’s spending could have been missing as throughout a lot of the corporate’s existence three-fifths of the corporate’s board has included Gharegozlou, his brother Sam and a university pal, mentioned one particular person accustomed to the matter.
Revolving door
As Dapper rapidly turned a multi-billion greenback darling, a minimum of on paper, the corporate expanded its headcount exponentially. Its workers swelled to about 600 from 100 in lower than two years. However Gharegozlou struggled to delegate or relinquish management of even minor particulars, in accordance with most of the former workers who mentioned the CEO was keen to participate in each potential resolution, to the purpose of micromanaging, they mentioned.
As the present crypto winter emerged, Gharegozlou’s mercurial nature worsened, in accordance with every of the individuals The Block spoke to. It turned more and more frequent for Dapper’s workers to both stop or be fired because the poisonous work tradition spiraled uncontrolled, the individuals additionally mentioned.
NBA High Shot month-to-month buying and selling volumes declining in 2022 as bear market units in. SOURCE: CryptoSlam!
All through a lot of 2022, it was widespread for newly employed senior workers to final only some months as they might both stop after struggling beneath Gharegozlou’s management or have been fired, mentioned 5 individuals accustomed to the matter. The excessive turnover fostered a hectic work atmosphere the place individuals have been fearful of crossing the CEO, in accordance with everybody The Block spoke to.
Staff’ anxieties have been additionally exacerbated by a tradition of “bullying” spurred on by Gharegozlou’s propensity for publicly shaming workers on Slack or screaming at workers throughout video calls, most of the individuals mentioned. Staff opting to take mental-health breaks turned commonplace, the individuals mentioned.
‘Tremendously excited’
In a doc obtained by The Block, which introduced Dapper was laying 20% of its workers, Gharegozlou advised buyers he aimed to enhance effectivity and that the corporate is in a “robust money place with no excellent debt.”
Dapper additionally now finds itself within the midst of a court docket battle to find out whether or not the corporate violated securities legal guidelines by promoting NBA High Shot Moments NFTs with out the usual registration and disclosures which is utilized to different funding contracts.
In final week’s memo to buyers, Gharegozlou waxed optimistic, saying Dapper is “tremendously enthusiastic about a number of main launches developing this yr, and extra assured than ever that web3 will remake digital life for the higher, for billions of individuals over time.”