The Real TechStars of New York

How to Ruin Your Wildly Successful TechStars Demo: Fudge Facts on Stage

After accusations of lying, Karma CEO admits he "overstated" a partnership.
photo 1 How to Ruin Your Wildly Successful TechStars Demo: Fudge Facts on Stage

Mr. Gaal (Photo: Google+)

You know what they say about karma, so don’t make us repeat it. It looks like good intentions backfired with Karma, a 4G hotspot provider initially founded in Amsterdam that presented this morning at TechStars Demo Day.

In press materials for the spring class, Karma’s one-line descriptor was: “Simple, honest 4G provider,” a sentiment repeated throughout its introductory blog post. But shortly after Demo Day ended, Travis Kalanick, the CEO of request-a-ride car app Uber, tweeted that Karma’s CEO Robert Gaal had not been honest in mentioning a partnership with Uber during the company’s pitch in front of crowd of more than 700 at Webster Hall.

Mr. Gaal initially defended himself on Twitter:

But in an email to Betabeat, Mr. Gaal seemed more contrite, writing, “We overstated our relationship with Uber in our Demo Day presentation and should’ve asked for explicit permission. Miscommunication happened. As you can see in the previous email I sent you with our press summary, we are not announcing any partnerships yet.”

When asked about prior communications with Uber, including which staff members Mr. Gaal had spoken to and whether there had been discussion of a potential deal, Mr. Gaal responded, “All I can honestly say is that it was just a big miscommunication, and that we should’ve asked for up-front permission.”

We reached out to Mr. Kalanick, but have not heard back.

In an overview about Karma sent to Betabeat yesterday, Mr. Gaal did not mention Uber  or any other partnerships. But he did quote recommendations on AngelList from advisors like investor David Pakman, Union Square Ventures’ Christina Cacioppo, and Boxee cofounder Idan Cohen, who all spoke highly of the concept and team.

Karma also said it had “raised close to 1 million dollars from some of the best angels in the industry, including Werner Vogels, Kal Vepuri, Chang Ng, Jerry Neumann, David Tisch, David Cohen, BOLDstart Ventures, 500 Startups and Collaborative Fund.” We asked Mr. Gaal if he could provide a Form D filing for the round. “The round is still open actually, so we haven’t filed yet,” he responded. “It’s been raised on convertible note.”

When asked if he’d overstated anything else, Mr. Gaal sent confirmation that the list of investors was accurate. “We’re not any different from the companies on stage at TechStars here, and we never lied about anything,” he said. “There’s no need to nail us to a cross now.”

UPDATE: In a post on the company’s Tumblr this evening, Mr. Gaal indicated that he had also misstated a partnership with American Airlines during his Demo Day pitch. Under the headline, “Mea culpa,” Mr. Gaal wrote:

We apologize profusely for claiming Uber and American Airlines are working with us – a statement we never received explicit permission to use. And we apologize to TechStars and the whole TechStars community. We did not mean to overstate anything or unfairly take advantage of the network and the opportunities it has opened up for us.

In Uber’s case, Betabeat has heard from sources who indicated there was no agreement on the table with Karma. At the end of his post, Mr. Gaal added:

 The irony of our name being Karma is not lost on us – but we truly hope to live up to our name and the core value it represents, and we hope you give us the chance.

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