BeachMint is slamming a report that said its two founders were ousted and that the e-commerce company was flailing and returning $20 million to investors.
"It was a made-up story," Diego Berdakin, BeachMint's co-founder and president, said in an interview with The Times on Wednesday.
The controversy stems from a PandoDaily story posted late Tuesday in which tech writer Michael Carney, citing unnamed sources, said Berdakin and co-founder and CEO Josh Berman had been fired by the company's board of directors.
"The long, slow unraveling of Los Angeles e-commerce startup BeachMint appears to have come to an end," he wrote. (Actually, the company is based in Santa Monica.)
Not so fast, Berdakin said.
Besides not being fired, he said the company had not been asked to return money to investors. He said no one from BeachMint had been approached about the PandoDaily story before it ran and that it was "100% untrue."
"I've been spending my entire morning reaching out to all my vendors, partners and celebrities and explaining what happened. It's not been the best use of my time," said Berdakin, who added that he had received "north of 100" panicked texts, emails and messages after the story broke.
As part of BeachMint's damage control, Peter Sonsini, the company's largest shareholder and a member of the board, also offered a statement:
"The board of directors is incredibly positive about the future of BeachMint and we fully support both Josh and Diego in their efforts to build a phenomenally successful business,” said Sonsini, a general partner at venture capital firm NEA.
On Wednesday afternoon, PandoDaily stopped short of a correction or retraction and instead offered a lengthy explanation on its website titled, "An update on our BeachMint story."
"At this point, I can say with certainty that our reporting was not '100% false,' but -- as with most breaking news -- it’s [sic] appears not to be 100% accurate," said the post, which was written by PandoDaily founder and Editor-in-Chief Sarah Lacy. "We apologize for any facts we got wrong. Specifically, it seems that Berdakin and Berman are still employed at BeachMint and that no capital has been returned, yet."
Lacy also wrote that although she couldn't disclose details on who Carney's sources were, "I can tell you that Michael and I independently heard the details that the founders had been asked to leave and that $20 million was being returned from six well-placed sources in the L.A. and Valley ecosystems last night."
Carney and BeachMint's founders have a testy relationship that goes back several months, with Carney repeatedly writing that the e-commerce company is on the brink of collapsing. He has reported that the company has had trouble raising new financing, hasn't gained traction with customers and has laid off several employees.
Berdakin, meanwhile, has been unabashedly positive about the company's position and its prospects. He said Wednesday that the company "has tons of cash in the bank" and that the business was "very healthy." BeachMint, he said, was spending less cash every month and had enough to last through 2014, by which time the company is planning on reaching profitability. "We're very much on that trajectory," he said.
BeachMint currently has six "Mint" brands -- JewelMint, ShoeMint, StyleMint, intiMint, BeautyMint and HomeMint -- that sell retail products to consumers online. The brands are generally designed with and backed by a major celebrity: StyleMint, for instance, was launched with Mary-Kate and Ashley Olsen, and Jessica Simpson is the face behind BeautyMint.
Carney offered his own statement Wednesday afternoon, saying rumors that his story was the result of a personal dislike of Berdakin or a desire to see BeachMint fail "couldn't be further from the truth."
"Like Sarah, I have questions about Berdakin’s credibility, stemming from past dealings, but I wish neither him nor his company any ill will," Carney said. "In fact, as an avid believer in the L.A. start-up ecosystem, I’d prefer to see the company succeed and deliver on its early promise. But in the end, none of this is about what we want to be true. It is about the facts. Ultimately, I expect the facts to speak for themselves."
As for the truth about its story, PandoDaily said it was talking with sources and "still trying to conclusively figure that out."
BeachMint, meanwhile, said it expects to write a lengthy blog post next week in which it will share the company's financials and other numbers.