Rich Gorman, Brand.com cofounder: Here's why my company failed - Technical.ly Philly

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May 22, 2015 2:19 pm

Rich Gorman, Brand.com cofounder: Here’s why my company failed

Blackmail. Google. Philadelphia's “kind of bleak tech scene.” Gorman outlined the reasons for his reputation management company's demise at Brand.com's bankruptcy hearing Thursday afternoon.

Inside the Office of the U.S. Trustee at 8th and Chestnut, where Brand.com's bankruptcy proceeding was held.

(Photo by Juliana Reyes)

Updated with further clarification. (10/21/15, 3:31 p.m.)
Imagine this: you’ve just gotten back from a monthlong trip out of the country only to find that the company you cofounded is in shambles. All the employees have been fired, your two offices are dark, the phones are ringing.

That’s the scene Brand.com cofounder Rich Gorman said he found in January.

“The whole place was a complete, utter, 100 percent wreck,” he said.

It fell on him to pick up the pieces, he said, and he eventually filed for bankruptcy on behalf of the company.

“I literally came back and I fell on the sword,” he said, adding that it was “the most horrifying experience ever” to see the company he poured his soul into gutted.

Gorman, 33, repeated this story multiple times throughout the hour-and-a-half long bankruptcy hearing for Brand.com yesterday afternoon, often as a way to explain why he didn’t have the answers to many of the questions his examiners posed. (This is not the story he told us last March. (Editor’s note: In the course of our reporting, Gorman first said he hadn’t been involved in the company’s day-to-day operations since 2013. In a subsequent story, Gorman told us that he had misspoke, that he did make “key contributions” to the business in 2014. We hadn’t heard the story about him discovering the company in shambles in early 2015.)) The Center City online reputation management company filed for bankruptcy last month, with $1.9 million in debts and $104,000 in assets.

The filing was yet another chapter in Brand.com’s swift rise and fall. The company appeared, seemingly overnight, in a shiny new office in Philadelphia with a flashy $500,000 domain and plans to hire 100 over the next year. Mayor Nutter came to cut the ribbon. Later, former Gov. Ed Rendell joined the company’s board. Less than 18 months later, the company had all but disappeared, leaving angry customers and employees in its wake.

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During the hearing, held Thursday afternoon at the Office of the U.S. Trustee near Washington Square, just two blocks from the old Brand.com offices, Gorman, in dark jeans, a navy plaid blazer and navy espadrilles (no socks), painted a picture of a company victimized by many: There were the two men Gorman accused of blackmail, John Monarch and Karl Steinborn. (The case against Monarch was dismissed without prejudice in 2014. Gorman just won $3 million in damages in a defamation lawsuit against Steinborn.) There was the role of Google, which changed its policies around online reputation management and consequently sunk Brand.com’s main offering. There was former CEO Dave Armon, whom Gorman said acted against the company’s will by firing the whole staff and effectively shuttering the business. And there were also the venture capitalists who refused to fund the business, forcing Gorman and his cofounder to pour hundreds of thousands of their own dollars into the business in a last ditch effort to salvage it.

Gorman even invoked Philadelphia’s fledgling tech scene, which he described as “kind of bleak,” to explain the demise of his business.

“This is a Philadelphia-based company,” he told bankruptcy trustee Christine Shubert, in charge of carrying out the case. “We didn’t have the kind of venture capital that our competitors had. We bootstrapped the business.”

“We went to every venture capitalist there possibly was,” he said later. “We tried everything in our power. The CEO was shooting emails to Mark Cuban. We pitched them, we called them. We were fighting tooth and nail. This company was surviving on a week-to-week basis. That’s OK. That’s startups.”

For much of the hearing, Gorman, flanked by his lawyer, Robert Braverman, seemed to distance himself from the workings of the business.

Seated around a brown wooden table, Shubert, her attorney, Robert Seitzer, and accountant Charles Persing took turns questioning Gorman about company ownership, expenses and the whereabouts of certain records and equipment, as the main office appeared to have been cleaned out and the remaining computers wiped clean.

“What happened to the gongs?” Seitzer said with a laugh.

Gorman used language like, “I guess,” “I believe” and “to my understanding.” (For example, he estimated that Brand.com employed 100 to 150 employees last December, shortly before Armon fired everyone.)

When he didn’t know the answers to certain questions, which was often, he told his examiners that former CFO Tim Ryder would know or maybe Armon or former president Mike Zammuto.

“I’m not sure what happened to the computers,” he said. “I think maybe they sold some, maybe [Tim Ryder] would know.”

After an hour-and-a-half of this sort of back and forth, Shubert scheduled another meeting for July.

Gorman is still running a few other businesses, he said, including a company called News Innovation, Completed.com, Fulfillment.com and a design agency.

The only creditor who attended the meeting was Ilan Ben Avraham, an attorney for Taboola, a New York City startup to which Brand.com owes more than $144,000, according to court records. Avraham left halfway through the hearing.

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