By Andrea Chang
6:13 PM EDT, July 16, 2013
The bitter feud between local start-up BeachMint and tech blog PandoDaily rages on, with both sides still fighting over a PandoDaily report two weeks ago that said the Santa Monica e-commerce company was going under.
BeachMint continues to reel from the July 2 story, which was written by PandoDaily reporter Michael Carney and based on half a dozen anonymous sources. In the post, Carney wrote that BeachMint co-founders Josh Berman and Diego Berdakin had been ousted, and that $20 million was being returned to investors.
After BeachMint's board and founders quickly disputed the story, the tech blog published a lengthy update on its website saying, "it seems that Berdakin and Berman are still employed at Beachmint and that no capital has been returned, yet."
PandoDaily stopped short of issuing a correction or a retraction, a point that outraged BeachMint executives and left techies confused over what, exactly, was the current state of the company.
BeachMint has six "Mint" brands -- JewelMint, ShoeMint, StyleMint, intiMint, BeautyMint and HomeMint -- that sell retail products to consumers online. The brands are generally designed with a major celebrity: StyleMint, for instance, was launched with Mary-Kate and Ashley Olsen, and Rachel Bilson backs ShoeMint.
Since the story was published, BeachMint and its board have launched a multi-pronged approach to clear the company's name.
On Tuesday, the company's board of directors and investors sent BeachMint employees a letter to "bring a definitive end to this ridiculous story."
"The BeachMint board of directors and I would like to share how incredibly positive we are about the health and trajectory of the BeachMint business," said the letter, which was written by Anthem Venture Partners general partner Bill Woodward and forwarded by a BeachMint employee to The Times. "The company has delivered strong year-over-year revenue and subscriber growth, has a solid balance sheet, and with a phenomenal team in place, is poised for continued success. It is for these reasons that we fully support its executive leadership team."
Woodward also wrote: "At no time did anyone from PandoDaily contact any one of us -- informally, or formally -- to ask for corroboration or comment on this article. Nor did they contact anyone on BeachMint’s leadership team. Apparently being factually accurate was less important than printing a salacious headline that could generate traffic."
Meanwhile, BeachMint also hired attorney Lanny Davis, who served as special counsel to former President Bill Clinton, as a media advisor.
In an interview Tuesday with The Times, Davis said he'd had two phone conversations with PandoDaily Editor in Chief Sarah Lacy on Monday and had also exchanged a string of emails with her in which he requested that the blog correct or retract its story. Those efforts, he said, were rebuffed.
"I was shocked by her response," Davis said. "Having gone back and forth with her yesterday, it wasn't confrontational.... I thought I could reason with her and didn't want to humiliate her or embarrass her."
When reached by The Times, Lacy said PandoDaily stood by its reporting on BeachMint and noted that the blog had already apologized for and corrected the two points of contention raised by BeachMint -- that its founders had not yet been fired and that $20 million hadn't yet been returned to investors.
"The company's founders have refused to talk to us during this whole process," Lacy added. "I've never had anyone request a retraction and refuse to talk to us and [then] hire a third person to talk to us on their behalf. I'm still trying to figure out on my end what exactly is going on."
"We've apologized for errors on those two facts and other than that we've been very straight with our readers on the bind we're in. We stand by our reporting," she continued. "We're working very hard to get to the bottom of this situation to figure out exactly what did occur. Our sources felt very convinced that this was happening."
Carney echoed Lacy's comments when contacted by The Times. PandoDaily also posted its own take, including the email string between Lacy and Davis, on its site here.
BeachMint's executives are still weighing their next moves and declined to comment on whether they would file a defamation lawsuit against PandoDaily.
"There's harm to the business and there's obviously damage. We definitely have a shaky employee base and it's affected a lot of people and our partners," BeachMint Chief Operating Officer Greg Steiner said. "This hasn't been without consequences and that's what we have to be thoughtful of moving forward."
What's clear, said co-founder and CEO Josh Berman, is that the firings and reports of money being returned "never happened and were never contemplated."
As is often the case in he-said-she-said situations, the truth probably lies somewhere in between, venture capitalists and tech watchers around town said.
Many VCs not connected with the company said although they'd heard rumors of internal strife and growing pains over at BeachMint, the problems seemed typical for a young company and didn't appear to be cause for alarm.
"I was surprised to hear Michael say he'd heard people say BeachMint was going to shut down," said TX Zhuo, managing partner at Karlin Ventures. "I hadn't heard that story, honestly. I don't think the company is doing badly at all. I think they're doing somewhere in between OK and well.
"I know the people pretty well in the community, so if something was happening I would be one of the first to know, even before Michael Carney," Zhuo said.
BeachMint executives themselves contend that the company grew too quickly and was forced to lay off staff last year when its employee ranks became bloated. They also note that although the company has rolled out several "-mint" brands, some -- namely its four fashion-focused brands -- are more successful than others. That could mean consolidation or changes to some brands down the line.
Things seemed to be running smoothly over at BeachMint's Santa Monica headquarters when I visited a few days ago, with both Berdakin and Berman in the office chatting with employees and holding meetings. About 100 employees were working as Berdakin showed off the company's newly designed shoes and jewelry slated to become available in the fall.
On Tuesday, BeachMint plans to release a statement in which it says PandoDaily committed a "fundamental violation of the rules of journalism and fairness."
"BeachMint trusts that its customers, employees, and others who have followed the company will take into account Ms. Lacy's and PandoDaily's refusal to correct and retract indisputable falsehoods about BeachMint and its senior officials in the future when judging the credibility of anything else appearing in PandoDaily about BeachMint," the company said.
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