A story of "betrayal" and "greed"—it's a story as old as apps themselves. And now a fraternity brother is claiming he was robbed of his stake in Yik Yak, a fast-growing app where college kids post anonymously. Now, Douglas Joseph Warstler is suing his former fraternity brothers for a third of the company, which is about to raise $75 million, according to the lawsuit.
Startup backstabbing—and alleged backstabbing—is a time-honored tech tradition. And true to the increasingly common narrative, Warstler claims his old buddies from Kappa Alpha, Tyler Droll and Brooks Buffington, wrote him out of their startup success story, which began at Furman University in South Carolina more than two years ago.
Yik Yak is one of the hottest apps on college campuses. It fits nicely into the trend of anonymity that rival mobile apps like Whisper and Secret also highlight. Discrete messaging is a booming part of the industry, and there is big money at stake now that the founders are looking for a large investment.
Warstler hired the same attorneys that represented a Snapchat "co-founder" who successfully sued for a piece of the messaging app after claiming he was shut out of the company, which is valued now at an estimated $10 billion. Warstler did not say how much money he wants, but the lawsuit says he is looking to see how much Yik Yak raises and other private financial information.
Here's what the lawsuit says happened:
- In 2012, as students, Warstler and Droll built an app called Fry Cook. It went nowhere, but it led to the creation of an app development company called Locus Engineering owned by all three co-founders. They split the company three ways.
- Warstler claims they opened a shared bank account, and he was the only one to put money in it. The account was used for expenses like iTunes fees for their apps, including Yik Yak.
- From 2012 to 2013, they worked on an app called Dicho, which featured opinion questions—posed by users—that have only two answer options. (Who is better Michael Jordan or LeBron James?) Dicho allowed users to post annonymously, like Yik Yak, the lawsuits says.
- After Dicho failed, they launched Yik Yak a year ago. Warstler says it was a Locus Engineering asset.
- Last year, Droll and Buffington worked on Yik Yak from Atlanta. Warstler, a year younger and still at college, said he helped spread the word and market the app at Furman, where it first took off in popularity. The lawsuit calls Yik Yak one of the fastest growing apps in history.
- Here's where some legal footwork kicks in. When Yik Yak launched, the three made a new agreement, spinning off Yik Yak from Locus Enginnering, and redividing the shares of the company based on who contributed what. Fifteen percent of Yik Yak earnings would go to Locus Engineering, where the proceeds would split three ways, and the remaining 85 percent of Yik Yak profits would be divided accordingly.
- By December 2013, more than two months after Yik Yak's launch, Droll and Buffington approached Warstler about buying him out. He said no.
- This is where Warstler's attorneys are claiming there was a coverup. In January, Droll and Buffington created a whole new company for Yik Yak without Warstler, and said the original Locus Engineering owned no part of it. The lawsuit called it "highway robbery." And, "worse, this was committed by Plaintiff's close friends and fellow fraternity brothers and partners."