Here’s what you need to know about advisory boards: They’re mostly bullshit.
Here’s what you need to know about Nextblock Global: They’re stupid.
Nextblock CEO Alex Tapscott, who is stupid, admitted his company has ‘stumbled’ today after being caught stacking his investor deck with supposed advisors who weren’t actually advisors.
I wouldn’t normally call a CEO stupid (publicly), but I think Tapscott – whose $100m financing that was going to take them into an RTO of Nobelium Tech Corp, and would have likely zoomed to a nine-figure valuation because everyone loves blockchain right now, but now won’t because they were busted in a dumb lie – would agree with my assessment.
Tapscott said the young company had “stumbled” in falsely listing some crypto and blockchain experts as members of the firm’s advisory board. He is currently talking to NextBlock investors to work out how to return their original investments and to “rebuild the trust of those [they] have disappointed.”
The curtain was pulled when Forbes started calling people named and profiled in the Nextblock deck and asked them if it was true they were advisors.
An investor deck sent out by a broker via email Thursday, October 19, which touted its “access” and “unparalleled relationships” as its top selling point, listed eight advisors, including former U.S. Department of Justice prosecutor and current Coinbase Board of Directors member Kathryn Haun; serial blockchain entrepreneur Vinny Lingham, CEO of blockchain identity startup Civic and a shark on South Africa’s Shark Tank; Dmitry Buterin, father of Ethereum co-founder Vitalik Buterin; and Karen Gifford, a special advisor for global regulatory affairs at Ripple who was previously counsel and officer at the Federal Reserve Bank of New York.
“I’m not an advisor and I never have been,” Haun told Forbes.
“I’m not an advisor to his fund,” said Lingham by phone.
Buterin confirmed he had been approached to be an advisor but had declined.
Through a press representative, Gifford stated that she is not an advisor and that she never spoke with Tapscott about becoming one.
Dmitry Buterin, co-founder of Blockgeeks and father of Ethereum co-founder Vitalik Buterin, was included in at least one draft of the investor deck. He told Bitcoin Magazine in a recent interview what had happened. He recounted:
“It’s pretty simple. Alex asked me to be an advisor, I declined. Then I got a deck forwarded to me which listed me as an advisor. It was forwarded to me by investors who received it from Alex.”
Buterin said he had met with Tapscott to let him know he wouldn’t be on the advisory board:
“We had a meeting and I was not convinced that they have the right resources to pull this off.”
When CIBC learned Tapscott was stacking his advisory board with people who hadn’t agreed to be advisors, they yanked their side of the deal.
Canaccord, which was also in the arrangement, didn’t, which doesn’t reflect well on them.
But Tapscott is at least doing the honourable thing and returning money.
The whole issue of advisory boards is more smoke and mirrors than reality for many companies. I’ve been asked to sit on a half dozen or so, but always end up declining when it’s clear that no advice is actually being sought, and that I’d essentially be tying my name to the performance of a company that may or may not value my reputation enough to stay out of dumb business practices.
But on a deal like this one, where the actual business model is reliant on the ‘network’ of ‘blockchain stars’ that are agreeing to work with the company, stacking the deck with fakes is JUST THE DUMBEST thing.
I mean, all you really need to do in the market right now to raise $100m is have the word ‘blockchain’ in your name, say you’re going to invest in that sector, and find a random homeless guy to be your CEO, on the condition he doesn’t get in the way.
For a guy like Tapscott, who knows the markets (he’s worked at Canaccord before), and knowns blockchain (he literally wrote a book on the topic), getting from concept to a hundy mill required little more than turning up sober.
And yet he screwed it up.
Of course, maybe it wasn’t him. Maybe someone else stacked the investor deck. Maybe they ‘thought’ they’d get a nod from all those people and it didn’t happen. Or maybe nobody checked to confirm. Or maybe an earlier deck went out without anyone noticing.
Either way – that sort of screw up before you even do business is exactly what a good CEO is supposed to step on before it gets out.
I’ve seen shitty decks aplenty before. The deck for Imagination Park (IP.C) showed a screenshot of Mortal Kombat and tried to pass it off as a screenshot from one of their upcoming video game productions, as an example. I prefer to think of that as ‘a really dumb screw up’ rather than ‘straight up fraud’, but where you sit on that is down to you.
Either way – it shouldn’t happen.
Being a public company – especially a $100m public company – requires extensive due diligence and compliance. Tapscott has shown his team isn’t capable of that. It’s good the deal is dead, but it should stay that way until a new CEO can be found.