A Forbes investigation found that Chris Kirchner, of the $240 million Goldman Sachs-backed startup Slync.io, fired executives after they asked questions about the company’s funds. Now, he’s facing a lawsuit for wrongful termination and claims of “fraudulent behavior.”
Over the July 4 weekend, a little-known executive named Chris Kirchner hobnobbed with golf royalty at the JP McManus Pro-Am, an exclusive event that gives wealthy people the chance to play alongside legends like Tiger Woods and Rory McIlroy. Kirchner, who had been selling TVs at Best Buy only a few years before starting his logistics software company, Slync.io, had seen what appeared to be a dramatic reversal in his fortunes.
But as Kirchner flew around the world on his private jet to play exclusive golf tournaments, meet celebrities and discuss buying an English football team, his 100 or so employees back in the States were going on almost two months without pay.
“I can’t even articulate it,” a current employee tells Forbes. “He’s jetting around, playing on team Slync with our name, on the company’s dime.” (Forbes has granted anonymity to current and former employees due to their fear of retribution.)
Slync’s payroll problems are just the beginning of its woes. A review of court filings, documents and video files obtained by Forbes, and interviews with 13 current and former employees, show that some investors and board members overlooked Slync’s lack of transparency around financial figures. Investors like Goldman Sachs and Blumberg Capital—which had board seats and led funding rounds into Slync totaling $80 million, valuing the company at $240 million—appear to have taken no action when, on three occasions, executives were fired after approaching the board with concerns.
Slync replaced Swiss luxury watch brand Omega as the title sponsor of the Dubai Desert Classic. Kirchner, pictured left, with tournament winner and Norwegian golf star Viktor Hovland, center, said he agreed to a five-year agreement.
David Cannon / Getty Images
Central to these concerns was that the CFO and CRO of the company did not have access to all of the company’s bank accounts, according to six former employees. Instead, Kirchner himself provided quarterly financial reports to the board.
In addition, according to multiple people familiar with the matter, Kirchner reported to the board that Slync generated close to $30 million in revenue in 2021, from about 20 customers. In fact, the real figure was close to $1 million in annual revenue and fewer than five customers, these people say. In response to these claims, board member Jim Atwell said that Slync “has many more than five customers and the company’s annual revenue is significantly higher than your information,” but declined to say how many or how much.
One of the fired executives, former vice president of engineering Jason Selvidge, filed a lawsuit Tuesday alleging wrongful termination. In a draft complaint seen by Forbes, Selvidge claims he was fired after he sent a letter to the board alleging the company had “routinely” failed to pay employees, and that Kirchner had engaged in “unlawful and fraudulent behavior.” Slync disputed that Selvidge was fired, but declined to comment further on employee matters. It added that it does not comment on pending litigation.
“I don’t know that [Slync] was a business so much as it was a kleptocracy.”
In his lawsuit, Selvidge alleged that the former CFO, Samar Kamdar, had been fired after informing the board in May that “his review of the financial statements indicates that some figures do not add up, as he did not recognize some of the accounts which reported revenue.” Selvidge’s attorney, Ilya Filmus, said, “We believe that a number of laws were violated and we intend to establish that.”
Kirchner declined requests for an interview and did not answer a detailed list of questions. Through crisis public relations firm FGS Global, Slync’s board declined to comment on a list of questions about Kirchner’s personal ventures and finances, stating they “are unrelated to the business.” Company spokesperson Jamie Reints, vice president of marketing, also disputed some of the characterizations of its financial dealings in this story. Goldman Sachs said the board responded on its behalf. Blumberg did not respond to a request for comment.
Many startups are struggling in a deteriorating economic market, venture capital firms have pulled back on funding, and mass layoffs have hit the tech industry. But the troubles at Slync contrast sharply with Kirchner’s personal excesses and highlight the risks of investors’ refusal to curb such conduct, employees say.
Over the past 18 months, while his company was running out of money and struggling to raise funding or attract new customers, Kirchner had bought a private jet valued at $15 million, joined an exclusive Texas country club, purchased luxury cars, invested in a European tech startup and attempted to buy the English football team Derby County.
Seeing this, some employees concluded that they were duped by a CEO more interested in living a life of excess than building a successful company. “I don’t know that [Slync] was a business so much as it was a kleptocracy,” a former employee tells Forbes. “Chris Kirchner was ultimately using sports to buy access to things he wouldn’t have had as a regular guy.”
On Monday, July 18, three days after receiving questions from Forbes about its failure to pay employees, Slync’s board member Atwell said that “all employees are being wired funds they were owed.” He added that “the process to ensure employees received all payroll to which they are entitled was very dynamic.”
As of Tuesday, four current and former employees told Forbes they still had not been paid.
At this year’s Dubai Desert Classic, the famed European Tournament stop at Emirates Golf Course held in January, there was the usual pizzazz. Official sponsors like CNN, Rolex and BMW enforced the image of prestige amid the skyline and bright rolling greens. The Swiss luxury watch brand Omega had been the title sponsor of the event for the past decade, but this year, Slync.io—a small and unknown company—had paid millions for the privilege. “It is funny when I talk about Slync and the dreams I had—this is not one that I saw,” Kirchner told a local reporter. “This week is exciting, new and somewhat surreal.”
The event highlighted how far Kirchner had come in such a short time. The 34-year-old, who often sports a baseball cap and bears a vague resemblance to the character Turtle from the TV series Entourage, attended the University of Kentucky for a degree in marketing and communications but left in 2009 before graduating. According to his LinkedIn, he then launched Kirchner Entertainment, which was involved in “various ventures in advertising and entertainment.” When it didn’t achieve much success, Kirchner went to work for Best Buy, where he stayed until 2015.
After Slync paid millions of dollars to sponsor the Dubai Desert Classic, Kirchner, right, rubbed shoulders with golfing royalty, including Erik Van Rooyen of South Africa, pictured left.
David Cannon /Getty Images
He caught a lucky break in his next role, leading marketing at Lexington-based label making company, Turner Labels, when he met Raj Patel, his point person at Salesforce, which was a vendor. Patel was working on Salesforce’s Einstein AI team, which makes a predictive analytics tool, and the two men realized that such analytics could be applied to the logistics sector.
They left their jobs to build an all-in-one operating system that could connect data from multiple logistics software to streamline tasks like tracking shipments to managing deliveries. With three other cofounders who worked with Patel at Salesforce, they founded Slync.io in late 2017. Despite his lack of technical know-how, management experience or knowledge of the logistics sector, Kirchner was made CEO, because, an employee later recalled Patel saying, “he can sell to anyone.” Patel did not respond to a request for comment.
The team bootstrapped Slync for three years before moving the headquarters from Kentucky to San Francisco. After signing on major freighters, including Kuehne + Nagel, DHL and Expeditors, Slync secured an $11 million Series A funding round in April 2020, just after the Covid-19 pandemic arrived. “We see Slync.io as part of the solution, not just in the short term, but for a more robust global supply chain,” said David J. Blumberg, Blumberg Capital’s founder and managing partner who joined Slync’s board, in a press statement at the time.
Despite the votes of confidence, early warning signs had already started to emerge. In January 2019, Kirchner convinced Tom Wrobleski, a veteran consultant who had been making more than $500,000 a year at management firm Korn Ferry, to become Slync’s chief strategy officer. Kirchner promised Wrobleski a $360,000 salary, of which his mom and her husband would put up $150,000 of the funds. But after joining the company, Wrobleski’s pay was nearly halved, according to a lawsuit Wrobleski filed in 2020. Slync and Kirchner responded to the lawsuit, which was ultimately dismissed, with a blanket denial of all Wrobleski’s claims. Wrobleski did not respond to a comment request.
“The lifestyle that he was living just didn’t seem real.”
But Wrobleski wasn’t the only one who claimed he was stiffed: Payments were delayed to employees in August and September 2019, and Slync did not pay employees in the three months leading up to the Series A funding round, according to Selvidge’s lawsuit. In addition, Slync was sued by the industry publication Freightwaves, which claimed it was owed almost $400,000 for an event sponsorship that went unpaid. While the parties settled, Slync told Forbes that FreightWaves was paid in full after the company closed the Series A. FreightWaves declined to comment.
Then, five days after announcing its series A funding round, Slync secured a Payment Protection Program loan, the federal government initiative meant for hard-done businesses struggling to meet payroll as a result of the Covid-19 pandemic. It said it would use the $391,667 to cover the costs of 20 employees.
Even though the company was now flush with cash, Kirchner allegedly learned that Slync could keep the government-issued loan if it retained its employees, according to Selvidge’s lawsuit. The same month, Kirchner purchased a black Ferrari Superfast 812, which retails for between $300,000 and $500,000. (Slync spokesperson Jamie Reints said the company repaid the loan at the end of 2020).
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f employees had concerns, they could be allayed by blue-chip investor interest. In February 2021, Slync announced that Goldman Sachs was leading a $60 million Series B funding round, valuing the company at $240 million. “Slync has demonstrated tremendous progress,” John Giannuzzi of Goldman Sachs Growth said in a press statement announcing that he was joining the board.
With the Goldman-led cash infusion, Kirchner sought to parlay his love of golf—and sport more broadly—into a business focus of Slync. Even though there seemed to be little correlation between a logistics tech company and the PGA, Slync began sponsoring professional players like Justin Rose and Albane Valenzuela. The company signed a multimillion-dollar sponsorship agreement with the NHL ice hockey team Dallas Stars. Kirchner told employees the sponsorships were part of the company’s new go-to-market strategy. “Execs don’t buy software from websites,” one employee recalled Kirchner telling him. “They buy it based on relationships and experiences.” (Rose, Valanzuela and the Dallas Stars did not respond to a request for comment.)
But Slync’s new direction also served to build Kirchner’s own image as a flashy globe-trotting CEO. He bought a Gulfstream G550 private jet, was seen driving around in luxury cars—including his Ferrari, which had since been painted red—and joined the Vaquero, an exclusive country club in Dallas, where an annual golf membership costs over $150,000. During the summer of 2021, he hosted a group of employees at the Vaquero, where he bragged about playing golf with Saudi princes and flying to exotic places on his private jet, according to an employee who was there. “The lifestyle that he was living just didn’t seem real,” says one former employee.
Despite the lavish spending, and infusion of cash from investors, some things didn’t add up. The company’s marketing budget, for one, made little sense, especially after Slync announced in September 2021 that it had signed a five-year deal to be the title sponsor for the Dubai Desert Classic—an approximately $8 million annual endeavor that included TV commercials, an executive retreat and contribution to the prize pool, according to three sources. Meanwhile, the budget for marketing the company’s product was only about $500,000 in 2021, two employees say. Slync’s Reints said this figure is “inaccurate.” Dubai Desert Classic could not be reached for comment.
It was particularly alarming because Slync was barely growing: The company had less than five continually paying customers—including DHL and Kuehne + Nagel—and was no longer working with Expeditors. Other companies were brought on through trials of the product but didn’t become fully fledged customers, according to three former employees. Reints said this customer figure was “inaccurate,” but declined to comment further. DHL declined to comment. Kuehne + Nagel and Expeditors did not respond to a comment request.
When employees questioned how the company was performing financially, they were stonewalled by Patel, Slync’s cofounder and chief product officer. Then, the day after the Dubai Desert Classic finished in January, chief revenue officer Paul Pesutti was fired. Pesutti had previously raised concerns to the board about a lack of transparency of the company’s financial figures, according to multiple employees. Reints said in a statement that Pesutti “did not complain to the board of a lack of financial transparency.” Pesutti declined to comment.
“I was alarmed,” says Daniel Chan, a former employee. “A lot of the let-gos tended to be really silent.”
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ut Kirchner countered with rosy financial projections to Slync’s employees. On April 11 he sent an email claiming the company had a “strong balance sheet” and that “we have been frugal in our spending,” according to a copy seen by Forbes. He added that he was “in the final steps of closing our Series C.”
Less than two weeks later though, Kirchner sent a very different message. Kirchner told employees on April 21 that he had missed the deadline to make a wire transfer to pay them. “I’ve let everyone down,” he wrote, before adding that the money would be sent in four days.
Employees continued to receive delayed payments over the next month, until the money stopped flowing entirely in mid-May. As employees demanded answers, Kirchner appeared on an all-hands Zoom meeting and insisted again that the company was about to close a Series C funding round, and that some long-term investments should be liquidated. “At that point we’ll be caught up and have enough cash to get us to the close of the Series C and into the future,” he said, according to a recording of the meeting obtained by Forbes. “That means no more hiccups on payroll.” In separate conversations, Kirchner told employees that he had been talking to investors in the Middle East about a $100 million funding round or a potential acquisition of the company.
“That means no more hiccups on payroll.”
By the end of May, Samar Kamdar, the CFO, had raised concerns to the board about the ongoing payroll issues. According to multiple employees, Kamdar also allegedly learned that Kirchner had provided 2021 revenue and customer figures that he couldn’t reconcile with what he knew of the company’s finances. Kamdar declined to comment.
On May 27, Kamdar told Selvidge that the Slync operating account had only $15,000 in it, and that he couldn’t confirm how much money was in Slync’s investment account because only Kirchner could access it, according to Selvidge’s lawsuit. In response, Slync spokesperson Reints said the account had “multiple signers” but declined to say who. (Such arrangements, where financial executives do not have access to necessary accounts, have previously led to disaster at other startups when overlooked by investors).
A few days later, Kamdar was fired. On June 5, Selvidge sent a letter to the board asking why Kirchner was the only person at Slync with access and knowledge of its funds and called on the board to investigate and remove the CEO. On June 14, Selvidge was locked out of his company accounts, a move he claims amounted to being terminated as retaliation, according to a draft complaint seen by Forbes. Selvidge’s attorney Filmus says the lawsuit was filed Tuesday in California Superior Court, San Francisco County. In response, Reints said Selvidge “was not fired.”
Weeks had turned into a month of missed paychecks, despite multiple assurances from Kirchner that the money was coming. Then, the company learned employees had been talking to journalists. Kirchner issued a threat on Slack: “The issues with sharing information publicly are jeopardizing the future of Slync … and I’ve been instructed to pursue legal remedies for any infractions,” he wrote on June 9. “Please don’t make a bad situation worse.”
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n the months when Slync’s employees were getting delayed or missed paychecks, Kirchner had bragged about his wealth online and made pronouncements about buying the bankrupt English football team Derby County. He had been pursuing the acquisition since late 2021, but had withdrawn his offer, reportedly worth $60 million, in December. Then after failing to buy another club, Preston North End—because it reportedly didn’t believe Kirchner had the funds—he returned to Derby with another offer and was selected as the preferred bidder on April 11.
In response to skeptical Derby fans who had seen news reports questioning Kirchner’s means to fund the acquisition, Kirchner tweeted that he had access to funding from private investments and other early crypto investments. When a fan asked him on Twitter if it was true whether he was worth more than $6 million, Kirchner replied: “Well, I paid cash for my plane . . . so yes.”
But when the deadline to make the payment came and went at the end of May, Kirchner blamed three English Bank Holidays for interfering with the transfer of funds from the US, and tweeted an assurance: “Nothing to be alarmed about.” When a new deadline was missed on June 10, Kirchner withdrew his bid. Fans were outraged, and took to social media with complaints. “A ‘shambles’ and a ‘farce’!” read a headline in the Daily Mail about the ordeal.
Kirchner, pictured right at Pride Park Stadium, told Derby County fans he could fund the acquisition of the club with money from crypto investments, before withdrawing his bid in June when he failed to produce the funds.
Goodwin/PA Images/ Getty Images
Kirchner’s glitzy facade has continued to crumble. He is selling his private jet. The Dallas Stars NHL team is reportedly owed about $800,000 for an unpaid sponsorship contract (the team did not respond to a comment request). And in recent weeks, Kirchner was sued by a company called Triple S Sports and Entertainment Group, which claims he has not paid almost $2 million loaned to him to pay staff at Derby County, as part of his acquisition negotiations. Triple S lawyer Don Hill said the company is pursuing “a legitimate contractual claim” against Kirchner in “his individual capacity,” and declined to comment on Slync’s management.
On the surface, there remains one bright spot for Kirchner: the 2023 Dubai Desert Classic, which still appears to be scheduled for January. At the top of the event’s website, Slync.io remains the title sponsor. “This sponsorship was part of the company’s broader go-to-market strategy and has helped to support Slync’s overall brand,” Slync’s Reints said in a statement. However, when Forbes sent an email to the event’s contact email asking if Slync remains the title sponsor, it bounced back.
Kirchner has talked often about how his approach to golf applies to his style of leadership. In an interview during the Dubai event at the start of the year, Kirchner said it was a dream come true. “As I typically say of my golf game,” he said, “it is better to be lucky than good.”
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Source: https://www.forbes.com/sites/davidjeans/2022/07/20/slync-ceo-chris-kirchner-goldman-sachs/