Shad Khan, Jaguars owner, ends association with One Spark, calls financial ties

[thelakelander]

Interesting response.

It's changed three times as I've been typing this post but this is all I meant:

With our limited outside knowledge of what actually went down, I believe things aren't as black and white as assumptions being made on the internet.

Just perhaps neither guy is an asshole. If they truly shared a bank account, Khan's guy (the guy Khan let go) knew of how the money was being spent. Perhaps, upon further internal oversight, Khan didn't approve and decided to part ways with him and what he deemed as unsustainable investments.

All speculation and assumptions of course...(just like everybody else's opinion in this discussion) but shit happens sometimes. In such a scenario, neither party is the bad guy. You just part ways and move on.

[strider]

The office furnishings and equipment and all of the other things of value will be distributed amongst the principals of KYN, and the will probably have already paid for their leased spaces in advance, and will keep the option to occupy the space or to rent it out to a subleasor.

FYI, assets and cash leftover when a non-profit closes it's doors can be sold to pay debts and can be given to another non-profit but not distributed to the directors nor to a for profit.  I believe you will find there are severe tax penalties otherwise. They can be and most likely will be donated to another non-profit with a similar mission.

Though just my opinion, it does appear that the principals of KYN took advantage of the situation and were not good stewards of the funds they were charged with distributing.  From personal experience with a non-profit that had tens of thousands taken from it, it is very difficult to get it determined as a prosecutable crime and so Khan has pulled his backing and KYN is gone.  That seems to be the end of the story.  While looking at KYN's 990's may be interesting, what happened internally between KYN and Stache/ Khan is Khan's business more then anything else and has no bearing on what happens next except when it comes to how he spends or donates his funds in the future.

One Spark or rather what happens with One Spark next is not dependent upon KYN's demise nor the reasons for it. Of course, people will make it part of the equation but it should not be.  One Spark, whether it is well run or not, needs to be looked at independently.

[edjax]

btw, keep in mind, this is what most of the 40-60 year olds are hearing about this issue:  The Times Union version:

Shad Khan blasts One Spark-related group, saying officials enriched themselves with his money while startups got only 12%
Posted: October 9, 2014 - 8:56am  |  Updated: October 9, 2014 - 5:31pm

By Drew Dixon
Jacksonville Jaguars owner Shad Khan says he was short-changed when it came to his investment in a business group associated with One Spark, Jacksonville's crowdfunding festival.

Two days after Khan announced he was breaking financial ties with the group known as KYN, spokesman Jim Woodcock said Khan was not happy his $1.1 million in capital investment was not being allocated to the startup businesses as he intended....

Its interesting to keep in mind that this view has also been aired on NPR Jacksonville, by Drew Dixon's wife, Melissa Ross, during her morning call in show.

Its certainly not akin to the much fairer picture of things that we are fleshing out here.

The owner of the football team in Jville probably has a lot of cachet compared to a successful artsy festival group with the larger share of the voters, I think.

In all fairness, the T-U did indicate the relationship between Melissa Ross and Drew Dixon.

[thelakelander]

I just am not comfortable making a judgement about Elton, because he hasn't taken the opportunity to adequately explain himself, and I would like to reserve judgement until that happens, so Im a little sensitive about being put into a position where I'm 'blaming' him for anything.

Well good thing I didn't put you in that position.  I just asked an innocent question in order for you to provide better clarification because some of the previous post read a different way. Thanks for providing that clarification.

[ProjectMaximus]

The office furnishings and equipment and all of the other things of value will be distributed amongst the principals of KYN, and the will probably have already paid for their leased spaces in advance, and will keep the option to occupy the space or to rent it out to a subleasor.

FYI, assets and cash leftover when a non-profit closes it's doors can be sold to pay debts and can be given to another non-profit but not distributed to the directors nor to a for profit.  I believe you will find there are severe tax penalties otherwise. They can be and most likely will be donated to another non-profit with a similar mission.

Though just my opinion, it does appear that the principals of KYN took advantage of the situation and were not good stewards of the funds they were charged with distributing.  From personal experience with a non-profit that had tens of thousands taken from it, it is very difficult to get it determined as a prosecutable crime and so Khan has pulled his backing and KYN is gone.  That seems to be the end of the story.  While looking at KYN's 990's may be interesting, what happened internally between KYN and Stache/ Khan is Khan's business more then anything else and has no bearing on what happens next except when it comes to how he spends or donates his funds in the future.

One Spark or rather what happens with One Spark next is not dependent upon KYN's demise nor the reasons for it. Of course, people will make it part of the equation but it should not be.  One Spark, whether it is well run or not, needs to be looked at independently.

I could easily be mistaken...but I didn't know KYN was a nonprofit. How exactly do they own equity in the businesses they invest in as a nonprofit then? Or is it Shad Khan who owns the equity stake and KYN was just a vehicle for his investment...which imo makes his outrage over the percentage going to fund startups a bit of a crock.

[Glenn OSteen]

One of the most remarkable facts coming out so far it that 2 very astute business men, Khan and Rummell, did not insist on audited financial statements;  that's Business 101.

[tyrsblade]

I know someone who went through the KYN "process" or should I say wringer. For 30k in investment , next to zero true business development advice, and disparaging treatment, he/she/it surrendered more than a quarter of their corporations shares. It's one of many reasons why I did not take my game development company through them and decided to close up shop.

Incubators in the south east have very few real successes to point out. Off the top of my head I can think of only Atlanta's ATDC (and their SAvannah Office, great folks there)  which has a fairly targeted audience. Whereas joystick labs shuttered , Kyn and several other digital media incubators didn't even make it the 5 year mark.  A lot of that is in part is an unfair almost predatory amount of stake that these things require in a startup.  30k barely buys toilet paper, pizza , beer and a single cowork spot  to be shared across five developers for a year, let alone carry a group of developers through prototype development.

In a technology driven economy like Jacksonville where if you can spell ".net" or "SQL" you can land an entry level developer position making 45-60k, you're better off taking the entry-level job and building on nights and weekends. The ones taking advantage of these 30k incubators or typically school kids, that just don't know better.

I think thats why I have such a love affair with the idea of coworkjax and desperately hope they open a beaches office. They provide a wonderful environment, lots of amenities and excellent social networking and advice for a fair price. Places like these provide a better chance for a startup to get somewhere then a KYN type incubator.

and to pull this all together, OneSpark is great for the inner city  and for the greater jacksonville environ. However it's not too swell for the Creators, most the folks that do well are already doing well going into the festival. I know of at least three project that went in and came out negative for the experience. I believe the processes can be fixed and eagerly look forward to see how 2015 is going to be done.

[TheCat]

@tyrsblade, do you know if any of the businesses that worked with KYN would be willing to speak about their experience?

[Non-RedNeck Westsider]

One of the most remarkable facts coming out so far it that 2 very astute business men, Khan and Rummell, did not insist on audited financial statements;  that's Business 101.

Not that remarkable....  The amount of the investment wouldn't seem to be an issue here and definitely not an amount large enough to even warrant a full-blown audit.  As this has been fleshing itself out over social media, metro-jax and other news sites, it appears more about a lack of production. 

If there had been 40 of the 448 applicants in some stage of assistance, a number 1/2 of the size than the 20% success rate KYN is touting, then we probably wouldn't be having this discussion.

[simms3]

One of the most remarkable facts coming out so far it that 2 very astute business men, Khan and Rummell, did not insist on audited financial statements;  that's Business 101.

Not that remarkable....  The amount of the investment wouldn't seem to be an issue here and definitely not an amount large enough to even warrant a full-blown audit.  As this has been fleshing itself out over social media, metro-jax and other news sites, it appears more about a lack of production. 

If there had been 40 of the 448 applicants in some stage of assistance, a number 1/2 of the size than the 20% success rate KYN is touting, then we probably wouldn't be having this discussion.

Agreed.

[ProjectMaximus]

One of the most remarkable facts coming out so far it that 2 very astute business men, Khan and Rummell, did not insist on audited financial statements;  that's Business 101.

Not that remarkable....  The amount of the investment wouldn't seem to be an issue here and definitely not an amount large enough to even warrant a full-blown audit.  As this has been fleshing itself out over social media, metro-jax and other news sites, it appears more about a lack of production. 

If there had been 40 of the 448 applicants in some stage of assistance, a number 1/2 of the size than the 20% success rate KYN is touting, then we probably wouldn't be having this discussion.

You're not the first person to say this, so I'm confused as to why they accepting more applicants would make them more successful? That would have just be more investment dollars spread out over weaker business startups. Khan would probably have gotten even less return on his investment.

[simms3]

One of the most remarkable facts coming out so far it that 2 very astute business men, Khan and Rummell, did not insist on audited financial statements;  that's Business 101.

Not that remarkable....  The amount of the investment wouldn't seem to be an issue here and definitely not an amount large enough to even warrant a full-blown audit.  As this has been fleshing itself out over social media, metro-jax and other news sites, it appears more about a lack of production. 

If there had been 40 of the 448 applicants in some stage of assistance, a number 1/2 of the size than the 20% success rate KYN is touting, then we probably wouldn't be having this discussion.

You're not the first person to say this, so I'm confused as to why they accepting more applicants would make them more successful? That would have just be more investment dollars spread out over weaker business startups. Khan would probably have gotten even less return on his investment.

This is probably a large part of it, as well.  Not only were there only 4 startups being groomed, were they 4 truly strong startups?  Someone in this thread or another called Jacksonville's startup scene internationally notable.  That could not possibly be further from the truth.  If you have a truly good idea and are really working it, finding a team, and really really trying to make it go somewhere, you're not doing so in Jacksonville.

In terms of "ROI", the question here is not on the ROI driven by the startups themselves, but the amount of overhead.  There really was no economy of scale with only 4 startups, so as a percentage of dollars coming from Khan, likely a much smaller % would have gone to "overhead" had there been more startups, but then if those startups were all a waste of time, perhaps there would have been an even larger "loss" on his investment.

[Non-RedNeck Westsider]

One of the most remarkable facts coming out so far it that 2 very astute business men, Khan and Rummell, did not insist on audited financial statements;  that's Business 101.

Not that remarkable....  The amount of the investment wouldn't seem to be an issue here and definitely not an amount large enough to even warrant a full-blown audit.  As this has been fleshing itself out over social media, metro-jax and other news sites, it appears more about a lack of production. 

If there had been 40 of the 448 applicants in some stage of assistance, a number 1/2 of the size than the 20% success rate KYN is touting, then we probably wouldn't be having this discussion.

You're not the first person to say this, so I'm confused as to why they accepting more applicants would make them more successful? That would have just be more investment dollars spread out over weaker business startups. Khan would probably have gotten even less return on his investment.

It wouldn't necessarily make them more successful, but their 'success rate opportunity' increases with every potential startup they represent. 

Simply, I would be able to justify a 6 figure salary and high-expenditure if I spread my resources and experience across a multitude of potential companies - the success of these companies is ultimately up to them, I'm just there as a pre-paid consultant, so-to-speak.

How can I justify anything when I pour all of my resources into only 5 of 450 applicants and only 1 of those appears to be poised for any real success?   

Speaking in generalities, you can only make a sale if you make a call/knock on a door.  KYN decided not to accept the majority of applicants, cherry pick so to speak, and after a cursory review, they weren't performing up to the expectations of their main financier.  Without any proof of real success, their funding was cut. 

To me, it's a fairly simple matter.

tl;dr - Here's some money to do something. [1 year passes]  Ok, show me what you guys do?  Not good enough, no more money, thanks for playing.

Edit:
And in the grand scheme of things, in this case, I don't believe the salaries of the primaries are even the issue, it was their lack of production.  I personally don't believe it would have mattered if the balance sheets showed 100k/yr or 25k/yr - if the performance isn't there, then it's still a waste of money.

[whyisjohngalt]

Trust.  Credibility.  Authenticity.  These a traits that tend to trickle from the top of an organization based on the leadership traits of the ones at top.  Jacksonville deserves these traits.

I've had serious concerns about One Spark since the results from 2013 and would like to share them here since this is the first public forum I've found willing to raise questions about the situational reality versus the polished mainstream press releases.  I enjoy One Spark for what it is and hope it continues but I don't feel like misleading the public when the available facts seem to be different.  Alas, we're in a culture of sound bites so I'll try to keep these facts brief.

The beginning
Fact
Jacksonville planning department begins notices a "spark" shape between downtown art institutions for planning what would later become the spark district grant.  The name stuck and BeOneSpark releases a promotional video (perhaps commissioned for district release) but doesn't mention a festival at all.  The leadership has a way with words that have little tangible meaning: http://vimeo.com/24464667  This was the beonespark website for almost a year until the Epoch Festival outlined what would later become the One*Festival. http://members.jacksonville.com/entertainment/arts/2012-03-13/story/project-aims-draw-big-crowds-downtown-jacksonville

"Spin"
"This really started on a napkin at Panera one day with myself and a few friends," said One Spark founder Elton Rivas.  http://downtownjax.firstcoastnews.com/news/news/97573-one-spark-lights-jacksonville

Questions
Did that napkin happen to have the newspaper article about the Epoch festival?  What's wrong with telling the truth about the beginning - especially if sharing ideas is the point of the festival.  Why not share honest ideas?

2013 Results
The final results from One Spark 2013 can be seen here: http://beonespark.tumblr.com/post/48543645500/one-spark-2013-closing-ceremony-key-stats

They are separated by categories that a) didn't match the categories that the creator initially signed up for - and are currently listed under on the website and  b) are different from the categories that One Spark reported them under in the first day biggest movers:http://beonespark.tumblr.com/post/48308447411/one-sparks-first-day-largest-percentage-movers

For instance, the Technology category has final results that include 3 projects from 3 different categories (1x art, 1x science, 1x tech).  The music category has a winner that doesn't even make noise!

The Issue
While I initially thought this was petty, I believe it epitomizes the larger issues of facts being "rearranged" for the benefit of One* et. al but at the expense of the truth.  So REAL Top 3 winners in tech don't bring in that much $ relative to the other categories - at least it sets reasonable expectations for people entering in 2014 (and worldwide).

"Crowd"funding the "crowd"funding festival
Just 2 things about this that I noticed whatching their Rocket Hub campaign:http://www.rockethub.com/projects/42249-one-spark-berlin-2014
1) They were $5,000 away from their Berlin goal when I noticed at the time KYN as a backer and it go over.  I was pointing it out to someone in the office when I told him to pull it up and KYN was off as a backer.  Just an fyi.
2)  One Spark's own kickstarter may have had a similar infusion when it was announced on the 18th that they were going to get a big backer and then their total more than doubled the next day:http://www.kicktraq.com/projects/onespark/one-spark-2013/

Why delete KYN from the list?  Was this so Khan wouldn't see his money going directly to One* - as Rummell denied? okay, and realistic, if you have to put your "own" money behind your idea.  Frankly, that's how real startups work. 

Speaking of Crowdfund
Last year up to $3.25 million was available to creators.  These were from VC firms - including stache fund - and that number leveraged extensively to help hype the event and draw creators.  Now, if I'm reading this correctly, of that $3.25 million, Elton started his own incubator after the event that cost $1.1 million and of that $1.1 million only like $135,000 cash went to these projects?  Not only did more than a 1/3 of the VC money go to Elton's interests but less than 15% of that got to actual creators?  I don't believe this is criminal but I do believe this is a serious conflict of interest.

Elton
Since the beginning Elton has had a smooth grasp of marketing/pr speak.  But what are the facts?  I heard he was selling pipes and faucets before starting Zero Confines, but I don't see any actual clients or testimonials for this "startup" accelerator.  I know that he and Rummell started CoWork Jax together, but isn't that a way to leverage the community for your own profit?  What did Elton actually do besides hype up an office into a timeshare business model?  Is that worthy of calling yourself a serial entrepreneur?  Has he started any successful companies?  Is it safe to say that the same community exploitation is the basis of One Spark?  More importantly, why was One * trusted with so many city resources when more established and credible organizations aren't supported?  Is Jacksonville leadership really that susceptible so snake oil salesmen?

The Ugly Truth will Set you Free

One * calls itself the World's Crowdfunding festival.  Why?  With less than 5,000 visitors (which is small enough to be counted exactly - especially at only 1 venue) and 639 unique voters in Germany, why should this festival be considered bigger than Jacksonville?  The reality is it isn't, but the delusions of grandeur coming from the top say otherwise.  As an event it was awesome - and that's because of Jacksonville.  We made it awesome.  It may have taken hype to get us off the couch - along with several favors from public officials - but it happened.  And it will happen again.  It would just being doing everyone a favor if they could be more honest and transparent about what the facts are.  It's actual better if it's Jacksonville's festival instead of another organization pretending that Jacksonville isn't good enough and trying to move away.  (WATCH the One Spark Berlin promo - said $4 million distributed - instead of up to - and it never mentioned Jacksonville - only USA One Spark 2014)

TL:DR/Soundbite

Serial Entrepreneur could turn the festival formerly known as One Spark - The World's Crowdfunding Festival - into One Spark - Jacksonville's Crowd Exploitation Festival if Khan blindly continues his support.

[tyrsblade]

@tyrsblade, do you know if any of the businesses that worked with KYN would be willing to speak about their experience?

I've emailed both my contacts. will Keep you updated.