Yik Yak may not be a household name like Snapchat, but it's almost as popular. The anonymous college bulletin board app was founded by three frat brothers at Furman University last fall and has already pulled in around $85 million in venture capital. Like other apps born out of frats, two of the founders allegedly screwed the third out of the company—only this time it was under parental supervision.
"This is a case of betrayal by greedy co-founders of a tech start-up," begins a lawsuit filed by Douglas Warstler. The suit says Yik Yak was originally developed under a business called "Locus Engineering." Ownership was the divided equally among Warstler, his fraternity "big brother" Brooks Buffington, and fellow Kappa Alpha member Tyler Droll. Warstler described Buffington as "one of his best friends."
But according to the complaint, when Yik Yak began going viral, Buffington and Droll cut Warstler out of the action:
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.
Warstler provides ample evidence that Yik Yak was created by Locus Engineering—and that he was a partner in the business. Early app store records show Yik Yak as being owned by Locus, business records filed in the state of Georgia list Warstler as a partner, and Warstler is listed on Locus's bank statements. The suit also includes several emails and text messages between the former partners.
The trio released Yik Yak to the public in November 2013. It quickly gained traction around Furman University. The next month, on December 21st, Buffington sent Warstler a series of texts offering to buy him out of the company:
Hey so Tyler [Droll] and I have been thinking about yik yak and we want to know if you'd be open to being bought out? [...]
Tyler and I would like to at least have yik yak for ourselves to go with. For sure, we'll buy you out completely of if you don't want to do that then we'll buy most of your percentage out for a lesser amount
Warstler refused. Droll later delivered the bad news that his parents forced him to dump Warstler out of the company:
This isn't ideal but it is what needs to happen. We need to start fresh with your name off of this [Yik Yak]. I know we spoke about this before Christmas, but I spoke with my parents over the holidays. They are making me get this settled before continuing to fund it. My parents know how much Brooks and I have riding on making this succeed, so they want everyone to be fully committed. We are also going to have a lot of expenses going forward. We don't want to be coming to you for money and signatures when we are trying to get stuff done [...]
The lawsuit alleges that Yik Yak then "hired lawyers to engage in corporate machinations to basically erase Locus Engineering from the map."
Since pushing Warstler out of the company, Yik Yak has raised $11.5 million from investors and is closing in on "roughly $75 million" more. The frat-born startup is growing so fast that one Facebook executive recently tweeted (then deleted) that he feels "The real tech story is that Yik Yak is blowing up, not Secret or Ello, specifically at college campuses."
Photos: Yik Yak, Lawsuit