Sellout Crowd

[gopokes88]

They should have started small and refined the business model.
As PhiAlpha said, didn't have enough runway.

Hiring 15 people right out of the gate didn't allow them to trial and error everything over 4-5 years. Once they had a path to profitability, then you get the loan to go hire 15 people. You at least understand and know the model at that point.

The Athletic came screaming out of the gate, they had $139.5MM in funding (5 rounds), almost went bankrupt, eventually sold off to the NY Times, then re-org'ed with layoffs.

Media might be the hardest business there is.

[okatty]

Berry T headed to the Tulsa World.

[Pete]

It looks like they actually hired several of the creators as employees and more or less guaranteed them a 3-year salary.

I suppose that's why many of them are so mad. They thought they had a guaranteed income then it all imploded pretty quickly.

[bamarsha]

Sam Mayes has always been one of my favorite sports talk personalities (the favorite locally).

[Pete]

The Frontier has a good write-up on this mess.

https://www.readfrontier.org/stories...media-company/Sold out:

The rise and fall of America’s most ambitious sports media company
June 24, 2024
Sellout Crowd’s founders lured writers with promises of lucrative pay, and, thanks to some big name investors, enough funding to stay in business for three years. None of it was true.

This is the crux of any litigation, although I don't know if the main people accused have any money:

But Tramel said he later learned Sellout Crowd hadn’t raised the millions of dollars in cash to get the site off the ground that Koehler had claimed. What the startup had gotten instead was a $1.5 million loan from Toby Keith, Keith’s business partner Hunter Miller, and former University of Oklahoma Coach Bob Stoops that carried a 12% interest rate. And now, unaware, he was on the hook for it.

[okatty]

^What an absolute disaster. Berry must have signed a personal guaranty to be on the hook - just being an owner does make you personally liable on the company debt. Huge oversight by a very smart guy it appears.

[traxx]

Good article from The Frontier.

If this Koehler dude has his own marketing company, how is it still in business? It doesn't sound like he could successfully run a vacuum let alone a company. Did he just think that you could launch a site and the advertisers would come and find you? How did he not have that lined up ahead of time? It sounds like people from a 20th century industry trying to copy and paste it onto a 21st century model.

[Pete]

Good article from The Frontier.

If this Koehler dude has his own marketing company, how is it still in business? It doesn't sound like he could successfully run a vacuum let alone a company. Did he just think that you could launch a site and the advertisers would come and find you? How did he not have that lined up ahead of time? It sounds like people from a 20th century industry trying to copy and paste it onto a 21st century model.

Koehler was day-to-day but there was a self-described investment manager (Michael Carnuccio) who was raising the capital and interfacing with the big money guys.

I've seen the proformas that were sent out to investors and the numbers are insane. Like projecting someone like Jeni Carlson could bring in a sponsor for $35,000/month for her podcast and videocast. Plus, tens of thousands more a month for web ads driven by her content. Similarly, completely outrageous numbers were given for all the content providers.

They were also paying most the writers a guaranteed salary which was more than any had been making previously, which is why some quit their jobs. And they were promised that pay for 3 years.

This is complete craziness. The market price for digital advertising is very easy to determine just by getting rate sheets from some of the more success businesses in the area. I've done it myself. And I can tell you those ad rates are 50x market and then they projected that for all 20 or so creators.

Also, how do you expect to pay salaries from the jump?? You have no revenue.


They took this big chunk of money (turned out to be a loan, not an investment) and then burned through most of it in only a couple of months. And if they generated more than a few thousand dollars in revenue I'd be very surprised vs. the $1.5MM+ they spent in this short time.

My impression that Koehler was going on the projections of others and was way out of his depth.


I have to say absolutely everyone involved looks pretty bad in this situation. Nobody did even a cursory due diligence and if they had they would have quickly realized none of this was remotely realistic. Somebody put ridiculous numbers into a Powerpoint, went out and got a high-interest loan, and then everyone just followed him over the cliff.

[LordGerald]

Koehler was day-to-day but there was a self-described investment manager (Michael Carnuccio) who was raising the capital and interfacing with the big money guys.

I've seen the proformas that were sent out to investors and the numbers are insane. Like projecting someone like Jeni Carlson could bring in a sponsor for $35,000/month for her podcast and videocast. Plus, tens of thousands more a month for web ads driven by her content. Similarly, completely outrageous numbers were given for all the content providers.

They were also paying most the writers a guaranteed salary which was more than any had been making previously, which is why some quit their jobs. And they were promised that pay for 3 years.

This is complete craziness. The market price for digital advertising is very easy to determine just by getting rate sheets from some of the more success businesses in the area. I've done it myself. And I can tell you those ad rates are 50x market and then they projected that for all 20 or so creators.

Also, how do you expect to pay salaries from the jump?? You have no revenue.


They took this big chunk of money (turned out to be a loan, not an investment) and then burned through most of it in only a couple of months. And if they generated more than a few thousand dollars in revenue I'd be very surprised vs. the $1.5MM+ they spent in this short time.

My impression that Koehler was going on the projections of others and was way out of his depth.


I have to say absolutely everyone involved looks pretty bad in this situation. Nobody did even a cursory due diligence and if they had they would have quickly realized none of this was remotely realistic. Somebody put ridiculous numbers into a Powerpoint, went out and got a high-interest loan, and then everyone just followed him over the cliff.

TK and Stoops giving out private loans with 12 percent vigorish is like the Okie version of the Sopranos. Drake Stoops is going to make collections Moltisanti style.

[Isaac C. Parker]

just being an owner does make you personally liable on the company debt

I think this is supposed to read "Just being an owner does not make you personally liable on the company debt."

[OKCRealtor]

12%, woof. Could have gotten a better deal from Lenny the Loan Shark.

[BoulderSooner]

12%, woof. Could have gotten a better deal from Lenny the Loan Shark.

in the normal range

SBA 7(a) loans Variable: 11.5% to 15%

Fixed: 13.50% to 16.50%

Rates vary depending on loan amounts and terms

https://www.lendingtree.com/business/rates/

[Pete]

At 12%, $1.5MM borrowed would require $15,000 a month just in interest payment. That's on top of guaranteed salaries, content production (podcasts and webcasts), website development, and marketing.

I bet they never took in more than $5,000 a month in total, and that's being generous.

[Timshel]

Another reminder that just because you are very good at your chosen profession does not mean you are automatically good at the business aspects of your chosen profession. A tale as old as time.

[okatty]

I think this is supposed to read "Just being an owner does not make you personally liable on the company debt."

Yes…..thanks Isaac.

[DoctorTaco]

Hucksters, self promoters and wishful thinking.

After reading that Frontier story I am left with the feeling that this is the most OKC thing of all time (until the next one).

[gopokes88]

Koehler was day-to-day but there was a self-described investment manager (Michael Carnuccio) who was raising the capital and interfacing with the big money guys.

I've seen the proformas that were sent out to investors and the numbers are insane. Like projecting someone like Jeni Carlson could bring in a sponsor for $35,000/month for her podcast and videocast. Plus, tens of thousands more a month for web ads driven by her content. Similarly, completely outrageous numbers were given for all the content providers.

They were also paying most the writers a guaranteed salary which was more than any had been making previously, which is why some quit their jobs. And they were promised that pay for 3 years.

This is complete craziness. The market price for digital advertising is very easy to determine just by getting rate sheets from some of the more success businesses in the area. I've done it myself. And I can tell you those ad rates are 50x market and then they projected that for all 20 or so creators.

Also, how do you expect to pay salaries from the jump?? You have no revenue.


They took this big chunk of money (turned out to be a loan, not an investment) and then burned through most of it in only a couple of months. And if they generated more than a few thousand dollars in revenue I'd be very surprised vs. the $1.5MM+ they spent in this short time.

My impression that Koehler was going on the projections of others and was way out of his depth.


I have to say absolutely everyone involved looks pretty bad in this situation. Nobody did even a cursory due diligence and if they had they would have quickly realized none of this was remotely realistic. Somebody put ridiculous numbers into a Powerpoint, went out and got a high-interest loan, and then everyone just followed him over the cliff.

This is the most insane part of all of this.
https://awfulannouncing.com/ringer/t...nvestment.html
"The Ringer charges between $25 and $50 for every 1,000 people who hear an ad on their podcasts."

Simmons is one of if not the largest sports podcaster.

Even if Sellout Crowd was valued as highly as The Ringer (they never would be), Jenni's show would need......1.4 MILLION people listening EACH episode for it to make sense on the ad buying side. Just spend the $35,000 on one of the largest podcasts in the world. And that's assuming Sellout could get the $25 per 1,000.

It's not an exact apples to apples comparison, but there weren't even in the same galaxy. Just insane.

[OKCRealtor]

in the normal range



https://www.lendingtree.com/business/rates/

I am in the wrong business lol

If anyone would like a nice 15% loan feel free to shoot me a pm

[BoulderSooner]

I am in the wrong business lol

If anyone would like a nice 15% loan feel free to shoot me a pm

it is why banks grow

[Pete]

These were the figures on the slide presentation.

Whereas they were projecting over $400,000 in MONTHLY revenue, an ambitious number based on reality would have been about $5K/month.

[ManAboutTown]

it is why banks grow

Being a banker, I can say that 15% is not normal for a $1+ million commercial loan. Depending on what security was used for the loan, 7.5 - 10% or so is more likely, especially with Toby Keith's name anywhere near the entity borrowing the money.

EDIT: Shame on me for not reading the article first. 12% is fairly high for a commercial BANK loan, but not necessarily for a private money loan.

[soonerguru]

The Frontier has a good write-up on this mess.

https://www.readfrontier.org/stories...media-company/Sold out:

This is the crux of any litigation, although I don't know if the main people accused have any money:

I feel bad for Berry. He really should have known better, though. I personally have lost a lot of money by making a poor investment decision, but not to the point that it put my family's finances in jeopardy. The article did a nice job of giving the journalists' perspective (makes sense; written by a journalist). They were burned out, worried about layoffs, probably not paid very well for a high-pressure job, and the lure of something fun and new -- with the possibility to make more money -- is a pretty simple lure.

Without naming names, the guy behind that must be a super shady person to mislead people who thought he was their friend in such a cold and calculating manner.

Berry and Jenny and the others should have seen the red flags, but it still sucks for them. Berry seems like a great guy although I don't know him well and sometimes get put off with his writing and pontificating.

[Pete]

Most those writers had already been laid off and I'm sure Tramel and Carlson were not getting increases and I know all the writers there had been forced into periodic unpaid furloughs.

Even if Tramel is on the line for the debt, he can file bankruptcy and move on.

Nobody else involved left a steady job, except... Jenni Carlson. Good luck finding another full-time writing gig when you already have 95% layoffs and all those people are taking peanuts just to have some income. Tramel hustled up and took the job at the World but you can bet that was at a significant salary reduction.

Most would be shocked to know how little freelance writers are paid these days. Most earn around $20-$50 per article.

[soonerguru]

Yeah I don't really understand all the scam comments. They had what seemed like a decent idea if done properly. They just probably didn't execute it all that well and didn't have enough of a runway from a financing standpoint for it gain the necessary traction to take off. It sounds like that combined with their limited funding drying up when Toby passed just put the the nail in the coffin.

Overall it's just disappointing that it failed. Similar to Prairie Surf (which is obviously starting to struggle as well), it's somewhat rare in Oklahoma for people to take big, outside the box (or outside of traditional OK industry) ideas and attempt to execute them. Really disappointing when they don't work out.

Read the Frontier piece. it's a total scam. The victims should have known better but they gotten taken for a ride by a guy issuing false promises, based on fraudulent information.

[Pete]

It was a scam to the extent that whoever put together their projections wasn't just a little off, they weren't in the same solar system as anything approaching reality.

If you use completely falsified projections to lure investors and employees, that is straight-up fraud.

And it's easy to prove because you have all these proformas that were sent to everyone who signed on, and then you have several months of actual revenue to compare. Also, it sounds like most were told they had $3 million in "investment capital" when in fact it was just a loan. That's also fraud.

These are similar issues to those that landed Elizabeth Holmes of Theranos in jail for over a decade.