NFT
Final Might, Grammy award-winning DJ Diplo grabbed headlines after a video confirmed him struggling to go safety and get right into a yacht get together held in the course of the Cannes Movie Pageant. Though meant to carry out on the personal occasion, Diplo’s identify wasn’t on the visitor record.
“Fortunately the proprietor was strolling by and let me in,” Diplo mentioned in an Instagram publish.
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 cast partnerships with a formidable record of stars like Michael Jordan, Will Smith, Ashton Kutcher and the Nationwide Basketball League. Dapper’s investor record 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 concern 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 frequent.
So when information unfold of the Diplo get together 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 anxious about their job safety amid the turbulent market circumstances.
Inside Dapper, a lot of the corporate was in turmoil. Senior chief exits have been changing into commonplace, and people workers left behind have been drained and annoyed. Moreover, based on a number of former workers, the CEO’s frequent personal jet journey, pursuit of celeb companions and spending on luxurious lodging, which at one level included a $85 million Beverly Hills mansion, had folks questioning Gharegozlou’s priorities. The CEO’s fixed “bullying” and “public shaming” of workers solely added to the fireplace, 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 might 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 traders together with Andreessen Horowitz did not reply to requests for remark.
Dapper CEO Roham Gharegozlou letting DJ Diplo right into a yacht get together on the French Riviera. SOURCE: Diplo’s public Instagram account.
With a protracted bear market that has seen NFT buying and selling volumes plummet by greater than 90%, layoffs at bigger NFT outlets like Dapper have develop into more and more frequent in latest months, placing stress on administration to chop prices and discover methods to navigate the downturn. Revelations of poor administration and cavalier CEO habits have additionally lately develop into a typical 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, based on CryptoSlam.
Final week Dapper laid off 20% of its full-time employees. 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 Nineties to begin a gasoline and refrigerants firm, based on a profile within the Canadian enterprise publication Monetary Put up. Later, Roham Gharegozlou obtained 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 develop into an NFT pioneer started when Axiom Zen helped create CryptoKitties, a well-liked blockchain recreation the place folks might purchase and promote digital cats. CryptoKitties, and its official creator Dapper Labs, spun off from Axiom Zen the subsequent 12 months. 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 can be 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 massive bucks began to roll in. In March 2021 Dapper raised $305 million in a funding spherical that included NBA legend Michael Jordan as properly 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 12 months, 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, based on TechCrunch.
‘Roped in by the highlife’
Positioned as a trailblazer, Gharegozlou’s accomplishments have been featured in premier enterprise publications like The Wall Avenue Journal, Forbes, Fortune and Quick Firm. The manager’s fame had ascended together with Dapper’s hovering valuation.
Round this time is when Gharegozlou’s habits is claimed to have began to vary, based on two former workers that labored intently with the CEO for years.
With NBA High Shot producing buzz, Gharegozlou began receiving calls from well-known entrepreneur celebrities and high CEOs, mentioned one individual accustomed to the matter. Two folks mentioned he might land a gathering with virtually anybody he wished.
Gharegozlou’s way of life additionally developed dramatically. The CEO started to fly continuously on personal jets, based on 5 folks accustomed to the matter. The mode of journey turned considered one of his priciest expenditures because the journeys would typically price between $60,000 and $100,000 per flight, one individual mentioned.
Whereas on the bottom, Gharegozlou routinely rented mansions every time he traveled, together with as soon as renting a 12-bedroom, $85 million mansion in Beverly Hills that may price $300,000 a month, based on three folks. When not renting a mansion, the CEO usually booked five-star lodge suites that will generally price as a lot as $30,000 an evening, based on one individual 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-about the big-ticket bills integral to his technique of cozying as much as celebrities, they have been usually listed as “advertising” bills, one individual mentioned.
“He completely obtained roped in by the excessive life,” mentioned a former worker that labored intently with Gharegozlou for years.
4 former workers who labored intently with the CEO mentioned even because the bear market set in, Gharegozlou seemed to be extra involved with producing hype through celeb partnerships than he did constructing new merchandise or discovering builders to make the most of Dapper’s blockchain, Stream. Additionally, the celeb partnerships, whereas making for flashy press releases, typically didn’t create tangible worth for the corporate, three of these folks mentioned.
Dapper additionally continuously sponsored extravagant occasions, based on three folks with information of the technique. The corporate’s Stream 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 get together boasted a visitor record that included Kendall Jenner and Leonardo DiCaprio, based on a report in Vogue on the time.
Dapper mentioned in a press release 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. “Now we have and can proceed to spend cash on high-impact occasions.”
Regardless, oversight of the CEO’s spending might 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 school good friend, mentioned one individual accustomed to the matter.
Revolving door
As Dapper shortly turned a multi-billion greenback darling, a minimum of on paper, the corporate expanded its headcount exponentially. Its employees swelled to about 600 from 100 in lower than two years. However Gharegozlou struggled to delegate or relinquish management of even minor particulars, based on most of the former workers who mentioned the CEO was keen to participate in each attainable choice, to the purpose of micromanaging, they mentioned.
As the present crypto winter emerged, Gharegozlou’s mercurial nature worsened, based on every of the folks The Block spoke to. It turned more and more frequent for Dapper’s employees to both give up or be fired because the poisonous work tradition spiraled uncontrolled, the folks 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 frequent for newly employed senior employees to final just a few months as they’d both give up after struggling underneath Gharegozlou’s management or have been fired, mentioned 5 folks accustomed to the matter. The excessive turnover fostered a aggravating work surroundings the place folks have been frightened of crossing the CEO, based on 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 employees on Slack or screaming at workers throughout video calls, most of the folks mentioned. Staff opting to take mental-health breaks turned commonplace, the folks mentioned.
‘Tremendously excited’
In a doc obtained by The Block, which introduced Dapper was laying 20% of its workers, Gharegozlou instructed traders 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 courtroom 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 traders, Gharegozlou waxed optimistic, saying Dapper is “tremendously enthusiastic about a number of main launches arising this 12 months, and extra assured than ever that web3 will remake digital life for the higher, for billions of individuals over time.”
