How a Web Design Company Crowdfunded Millions and Completely Disappeared
Credit to Author: Edward Ongweso Jr| Date: Tue, 25 Feb 2020 17:12:17 +0000
In 2014, California-based startup The Grid launched a crowdfunding campaign for a web design service it promised would automate the process with artificial intelligence. It raised millions through a mix of crowdfunding and VC investors, but The Grid quickly ran into problems with product delays and promised features missing.
Still, some of its customers did use its technology to design their own websites. But then things got even weirder. The Grid’s Twitter account made its last tweet in January of 2018, and has been silent ever since. In March 2019, The Grid locked customers out of their websites built with its “Version 2” product, then updated its website with a one-page statement, ending on this note:
To keep expectations clear, we will not be uber-regular with life-is-swell emails. We will not be shipping *minimally* viable shells of a product to satisfy suits. We won't talk talk talk about how close we are (though we are) and how game-changing yada yada. You won't be hearing from us in full dose till the new engine hums.
Before the shutdown, The Grid was selling a $144 annual “Pro Membership” that seemingly promised users the ability to build up to 10 sites, a demo of the Version 3 product, a spot on the V3 waitlist, and web hosting. The purchase page for these memberships is still online, although the company’s website says it has suspended new registrations. There have still been no updates on Version 3 or the “tool” customers were promised they’d be sent to retrieve content from their archived websites.
Meanwhile, disgruntlement among The Grid's customer base has fomented over the past year. On Twitter, there is a list named GridVictims, made to track people "who've been fooled into taking a Grid lifetime membership just like myself"—206 people, including the list’s creator, are on it. Visiting The Grid’s dedicated subreddit or simply searching it on Twitter is an easy way to drown yourself in waves of criticism and skepticism about the project. One frustrated user captured the general mood about The Grid’s “MVP” (minimally viable product) in a Tweet in July 2019, where they tweeted:
“Oh yea for sure, definitely not a scam initially. They had a vision, sold us the idea, delivered a subpar MVP and then scammed us on a better vision (v3) and like you said we fell hard for that beautiful lifetime guaranteed // yup it was 90$”
There have been scandals surrounding refusing refunds, accusations of using sock puppets, and the extent to which The Grid uses artificial intelligence as well as its effectiveness.
Motherboard reached out to The Grid’s CEO and co-founder Dan Toucchi IV to comment. Surprisingly, he answered and had a conversation with us.
"The problem space we tackled, we had the kind of hopeful naivety that would actually give us the balls to do it, but it's much more difficult than any of us realized," Toucchi told Motherboard. "I can imagine there's a few people who are pissed off."
Toucchi went on to portray those his company has "pissed off" as being a vocal minority, and disputed that it has run off with everyone's cash for the very simple reason that his company is bad at making money and good at spending it. It is not clear how much money The Grid raised in total; news articles suggest it raised at least $7 million from VC funders and another $5.2 million from users via crowdfunding and the sale of memberships.
"It's funny 'cause there's this narrative from a small group of angry people on Twitter about 'oh millions of dollars, blah blah blah,’” said Toucchi. “We made less than $6 million on a crowdfunding campaign and a lot of that was ad-driven. We had to spend to get there, we made a 20 percent profit on that, so it's not like we're awash in cash and pulling a Fyre Festival and partying like crazy."
It’s worth noting, though, that The Grid’s own marketing material hyped it, and also suggested that, during its early phases, the entire team took a trip to Hawaii to work on the product there.
In 2015, current Grid board member and former Google AdSense cofounder Brian Axe wrote a Medium post titled “The Grid — an unconventional startup” where he described the team taking “team-cations” to “exotic locations” and justified it by favorably comparing The Grid to Google. In that post, Axe also hailed his company’s “diverse set of tech founders” (“like Google”) because one lives in Berlin and one lives in San Francisco. A photo of The Grid’s team included in the post depicts six white people. One is vaping, and one has dreads.
The Grid at one point boasted a staff of 35, but Toucchi told Motherboard that after running out of cash and being unable to pay most of its workers, the company’s staff is down to just three. Multiple former employees, investors, and board members did not respond to Motherboard’s request for comment.
When pressed about his company’s lack of transparency or communication since March 2019, Toucchi was vaguely apologetic: “I would say we're truly sorry that we're not professional—everything's perfect, VC-funded, everything golden and grand, but we're bootstrapping and doing what it takes. We’re still very active."
Toucchi went on to explain how his and The Grid’s GitHub would prove that the project was not a scam but a sincere, if misguided effort, to power web design with artificial intelligence. "Our GitHub and our code is there for everyone to see. In the developer community, we're extremely respected," the CEO said.
The last code updates to The Grid’s GitHub came just under three years ago, and a GSS engine repository linked to the AI web design project was last updated five years ago if you don't include a line edit made in the Read Me file on December 16, 2019.
Toucchi said that the initial product was put aside in favor of developing a peer-to-peer version because of how expensive cloud services for AI had proved to be:
"We had to shut down the product and work on getting [V3] out. One of the hidden costs that's coming to light with the cloud infrastructure with AI is that it's a lot more expensive than people realize. [The Grid will be] just a more decentralized peer-to-peer version of what we're doing."
Toucchi compared The Grid to the Hello Games team behind No Man's Sky, a video game that was widely criticized for not living up to the promises of its developers at the time of its 2016 release, but has since turned a corner after some serious updates.
"I saw a great talk from [Hello Games founder Sean Murray] and he was like: 'We made a rule and that rule was we're not gonna communicate at all with press or anyone at all; the only way we communicate is through shipping something.' I'm gonna take that methodology right now," Toucchi said to me, a member of the press.
Until The Grid’s V3 product launches—Toucchi did not offer any timeline for its release—that comparison may be as close as people get to concrete answers about what happened to the once-promising startup and what happened to all the money it raised.
This article originally appeared on VICE US.