After nearly two years, Yik Yak’s cofounders Stephen Brooks Buffington and Tyler Steven Droll have settled a lawsuit with their former Furman University fraternity brother, Douglas Warstler.
Warstler claimed to be the forgotten founder of the anonymous gossip app and said he was cheated out of one-third of the company by Droll and Buffington.
The terms of the settlement have not been disclosed but Yik Yak’s founders gave the following statement in a press release:
“We are pleased we were able to come to this resolution, and we acknowledge the contributions Doug made to the early ideas behind Yik Yak.”
Founder lawsuits seem to be the new normal in the startup world. It’s hard to think of a hot consumer startup that’s been successful and hasn’t been sued by someone claiming to own a chunk of the company. Similar battles have ensued at Facebook, Snapchat and most recently Cruise, a car company that recently got acquired by GM for a reported price north of $1 billion.
Yik Yak has raised $73.5 million in financing and was, for a while, one of the top social networking apps in the App Store. When the lawsuit first came out, Yik Yak was red-hot in the startup circuit. Since then, buzz around the company has dwindled.
How it all got started
Here’s some background on the lawsuit:
In late 2014, Warstler filed a lawsuit against Yik Yak and its founders. Warster was a Kappa Alpha fraternity brother of Buffington’s and Droll’s, and said he was initially given one-third of the company. (Buffington was Warstler’s “big brother” in the fraternity.)
Buffington and Droll allegedly offered to buy out Warstler’s one-third stake. Warstler says he refused, and then Droll and Buffington created a new company without him.
From the complaint:
Plaintiff, Buffington, and Droll partnered up to work and pool money together to develop and market various mobile applications including Yik Yak, a social media mobile application that allows people to post anonymously to other users within a 1.5 mile radius. The three of them agreed, in writing and orally, to split ownership of the Yik Yak partnership into 1/3 each. After acknowledging in writing Plaintiff’s ownership interest in the Yik Yak partnership and unsuccessfully attempting to buy Plaintiff out, Buffington and Droll did the unthinkable: they brazenly kicked Plaintiff out of the partnership and claimed that Plaintiff owned nothing in Yik Yak. To cover things up and erase any evidence of Plaintiff’s ownership, Buffington and Droll dissolved the company under which they and Plaintiff co-developed and co-owned Yik Yak, and transferred the company’s only asset — the Yik Yak application — into a newly-created company.
It all sounded very similar to the tale of Reggie Brown and Snapchat. In fact, Warstler hired Brown’s lawyer, Luan Tran, to represent him in the Yik Yak case.
The complaint, which was filed in November 2014 by Tran’s team, included paperwork that showed the initial company Warstler, Buffington, and Droll allegedly created together, Locus Engineering.
At the time, Yik Yak gave Business Insider the following statement:
“We are aware of the lawsuit, we believe the accusations to be entirely devoid of merit, and we will vigorously defend this litigation. Yik Yak continues to be one of the fastest growing social media platforms, and we look forward to continuing to grow and connecting our users with each other and their communities.”
The language was almost the exact same language Snapchat CEO Evan Spiegel used when ousted co-founder Reggie Brown sued him. Then, Spiegel called the lawsuit “utterly devoid of merit.”
“We are aware of the allegations, believe them to be utterly devoid of merit, and will vigorously defend ourselves against this frivolous suit,” Spiegel told TechCrunch. Later, the two reached a settlement.
Here’s the initial Yik Yak complaint, below.