Early this morning, an article was published on PandoDaily: “BeachMint board ousts founders, company returns $20 million to investors.”
In it, Michael Carney reports that Beachmint, a celebrity endorsed e-commerce startup that has raised $73.5 million, has flopped. Specifically, Carney writes that the board ousted Josh Berman and Diego Berdakin, the company’s co-founders, from their positions as CEO and President, respectively.
We republished the news on Business Insider after reaching out to Beachmint for comment. Shortly after we published, we heard back from Diego Berdakin, the company’s supposedly ousted president.
Berdakin wrote that the “entire story was fabricated” then followed up with a call.
Berdakin says his company has more than $20 million left in the bank. There was no board meeting or discussion that ended in a decision to oust him. He says his company is doing “very well” with over “50% year over year growth” and not a “single quarter of down growth in 2012” (note: that does not mean Beachmint isn’t burning cash or that it’s even necessarily in good shape).
Berdakin has been known to stretch the truth about how well his company is doing in the past. Through reports of executives fleeing, money pouring out of the company, and potential roll-ups with competitors, Berdakin’s responses have remained suspiciously positive.
But one thing is certain: If there are any plans for Berdakin and Berman to be ousted, they don’t know it. And neither does their biggest investor and board member, NEA’s Pete Soshini.
Berdakin maintains that neither his company nor his board was asked for comment prior to the article’s publishing. He also says he still has a job and not a single penny is being returned to investors – certainly not $20 million.
After receiving 50 or so worried texts from friends and family this morning about his alleged job loss, Berdakin took to Facebook to set the record straight.
Dear Beachmint Employees,
Prominent analyst wrote that amazon was going out of business in 2000 so maybe this is a good omen. We’re still one of the best companies around imho, have north of the reported $20m in the bank which will last us for a very long time. Only problem is that you are stuck with me, Josh & Gregfor a long time ;)
And one that has since been deleted:
For everyone who is emailing/curious… the story about Beachmint is 100% made up. To all
the beachminter’s we still have well over 20M in the bank and everyone has a job. — feeling confused.
We spoke with Soshini who also doesn’t understand the initial PandoDaily report at all. If either executive was going to be ousted, he would would know since he’s been the longest-standing investor and board member. It’s the board’s job to hire and fire CEOs when necessary. NEA has participated in every round of funding in Beachmint.
“The article is kind of craziness,” Soshini says. “Diego and Josh are doing great with [former eHarmony President and current Beachmint COO] Greg Steiner.” He also says that while one of his other portfolio companies, Viddy, is returning money to investors, Beachming is not.
Soshini doesn’t paint quite as rosy a picture of the company as Berdakin does and admits Beachmint has had to overcome some hardships.
“Beachmint went through a time where it had to figure out its model,” Soshini says. He doesn’t deny fundraising efforts which were outlined in Carney’s article but said any meetings that have happened in the past few months were to line up strategic investors, not “dumb money” abroad.
While not all of Beachmint’s brands have done well, Soshini says it’s always been the model to launch many and see what works.
We reached out to Sarah Lacy, founder of PandoDaily, for comment about the initial report. She disputes the allegations that Carney’s report is “entirely fabricated” and did not specify whether or not her publication had reached out to Beachmint for comment prior to publishing.
She will be following up shortly with an official comment.
In the meantime, she just tweeted this:
FYI-Beachmint is disputing our story. We are continuing to report and will update it if we have evidence our reporting was not correct
— Sarah Lacy (@sarahcuda) July 3, 2013
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