What does the future hold for Guvera?
With Guvera limping on despite mounting debts, executive departures and a failed bid to float, Steve Jones looks at how it got into this position and what the future holds for the brand-funded Aussie streaming service.
Speaking to former staff members and creditors of Guvera it’s clear the company has been struggling to pay its suppliers for several months. But where did it go wrong for the company which was founded on the Gold Coast with ambitions to take on the world?
Melbourne-based media agency Media Partners has been named as one of the major creditors of Guvera, owed $235,000, while PR company Edelman and Tennis Australia are also amongst creditors.
According to one former member of staff, alarm bells started ringing as suppliers began chasing Guvera for unpaid invoices at the back end of 2015. Soon after, staff discovered their super had not been paid.
Hi Steve,
What a great summary of this absolute Mess, in my view the bottom line here is Greed
First up let me tell you I am an investor and I have been following this shambles from day 1 ……3,000 investors were sold into a dream of this will be like the next Facebook, their whole business model was based around the initial investors and the owners to make an absolute killing on an IPO . All the communication, seminars and feedback was driven around this event allowing the investors to ‘cash out’ . Over the years I have learnt if something sounds to good to be true it generally is . The management team headed by Herft should take full responsibility , he had no experience in this industry nor had he any experience or track record of building or growing 200m plus business. So the question needs to be asked Why did so many people invest over 200M on the record of someone who has little or no experience or track record…the answer is 2 fold The first reason is Salesmanship and Marketing…Herft does have a track record in Marketing and selling to accountants 1. Lies with Herfts relationship with accountants , Because of this relationship with accountants he found a way to get access to capital via the relationship the accountant has with their clients. Herft found the vein of gold via this relationship …he knew that all he had to do was sell the idea to the accountant and the accountant would then sell to their clients ( there was also Inducements to reward success).
In my view Guvera was just a means to an end for everyone involved, along the way as they left a trail of devastation and destruction and their focus was not on a Music streaming / Advertising / Branding product ( They have changed their model so many times reactively) but more on How much are we all going to make when we IPO….in one simple word GREED
Guvera is a great platform, no question,
But to much BS has been spun by people at the helm
Well said
Very well said, from experience with these guys I can safely say this was all totally utterly about greed, especially from AMMA. The quality of the product, user experience or happy staff were utterly meaningless to them, it was all about the money, inflating the fake numbers enough to get everyone a big pay day. They played the investor, with marketing bullshit and at best heavily misleading stats to back their flawed business model. Interesting that monthly active users was a taboo subject, everyone knew the 14 million was utter fantasy.
Classic example of business poorly run by people out of their depth for all the wrong reasons!
Blinkbox only cost Guvera $600k, they put no money in after purchase.
Someone needs to explain why they are so reluctant to talk about monthly ACTIVE user numbers. Registered users can be massively deceptive.
Claes & his cronies are greedy self-absorbed crooks. They’re like used-car salesmen, but with dodgy ‘tech ideas’ that have no grounding in reality whatsoever. Look at the mess that was Hyro. I can’t believe anyone ever invested in their shoddy ideas. Glad the ASX stepped in. Do your research peeps! Also, the government should make it impossible for [Edited by Mumbrella] like this to be directors of businesses. I feel sorry for the staff that will miss out on wages & superannuation.
https://www.youtube.com/watch?v=9dmhPgUJvnE
I wonder if any of the investors did their homework on the people behind Guvera. Why back a tech startup when none of the founders have any prior involvement in the music industry or indeed a successful digital / technology business?
Buyer beware,
You would think you could trust the advice from your accountant,
Wouldn’t you?
Since G. is experiencing “where-to-the-money-suddenly-disappear” problem, their (Mr. H.’s) other business is suddenly demonstrating big investments: bulk advertising, cover-em-all PR activities, hiring tons of people; and showing up the similar approach: strange market and strange marketing, strange idea, no experience within the team, zillion dollars in promises, unclear accounting, etcetera, etcetera. Co-incidence?
@ Abc-reader. I assume you are talking about AMMA and the continuous marketing of other apps like Kwicki of which Herft is a director. The problem here is ASIC need to step in and take action to protect the consumer. The accountants have a lot to answer fot here those who continuously allow AMMA to sell via their Data base should be now held accountable , ASIC or the accounting Bodies need to step in need to cut off his supply of Capital and that is via the Clueless brainwashed accountants
For all the talk by founders about ad-funded brand channels being the future of advertising, I can’t understand their decision to pour money into The House of Guvera – a live music venue they setup in LA http://houseofguvera.com http://houseofguvera.com/wp-co.....UE_DOC.pdf
How is this a viable investment for the business and advertiser return, given most of Guvera’s audience was India?
The whole thing appears to have little to purpose to the business strategy? Although it could be a rather valuable asset for the administrators to sell off!
Why are we still talking about Guvera? They are a ship of fools – a band of bloody pirates to be more precise. They continue to talk about having a plan. Seriously?! They have not had a plan since Day One. I worked with these idiots, so I KNOW the truth. It has always been about the Benjamins – seeing how much they could fleece from investors, so they could keep their sick dream alive. It was never about an ad-funded platform/business proposition, because, even after all this time, there has only been a handful of meaningful brands that were willing to invest in the charade that is Guvera. And, it has certainly not been about making sure artists and labels were paid what they deserved, because, the artists/labels were the first people Guvera stopped paying when the money ran out. Guvera is a FRAUD. Hopefully, like everything else crappy in life, if you stop thinking about it, it will eventually just go away. RIP Guvera…
Well said …and just to confirm your point they have pulled out of Australia, when was that ever in their Plan?…especially after investing millions into Voice sponsorship, Tennis Australia sponsorship and for some Unbelievable and unknown reason into Horse racing sponsorship ( what marketing Guru thought that was a good idea and target market). Herft has lost interest and is now focusing on another start up where he can fleece more off investors called Kwickie .
@ but wait , there’s more . Here may be the answer to your question The latest courier mail article published today talks of the administrators report and the content of same which I quote
Quote
The administrators also theorised the directors, who include Darren Herft and Claes Loberg – also on the main Guvera entity’s board – possibly contravened the Corporations Act by “not acting with standard of care and diligence required or in good faith by using their position and information”. Further investigations would be required, they said.
I was invited to an “investment” seminar in 2013- run by a small time franchised finance Broker in conjunction with a Gold Coast accountant…
Really aggressive sales pitch was delivered about it being the next facebook..which kind of raised questions about why they were pitching it to small time suburban investors. The broker running it touted she had a shareholding in it and soon after the seminar I started getting calls from other attendees asking for comment as they had been told(by the broker) that I was investing.A quick check online highlighted it was all suspect…and I expressed my opinion of the same.
A Guvera guy later phoned me wanting access to my network ,offering 10% commission if I suckered anyone in to it. He offered commission by way of shares and cash(albeit cash was @ a lower percentage)
I have kept track of it since and its ugly from the front to back.
Further along the track I read they had also rewarded promoters and accountants with trips to Las Vegas and Dubai where the referring agents had all expenses paid(except flights for some reason).I checked the finance lady’s facebook and she has posted from trips to both destinations….
I don’t think its ever been about the business…it looks like Herft has [Edited under Mumbrella’s comment moderation policy]…the establishment timing of AMMA was pretty much the same as Guvera-it smells like it was a cook up from the start
@CA
Very interesting Post CA , I believe that I have read somewhere that AMMA deny offering cash inducements to Accountants or referral sources as Inducements saying that it is all above Board.
Yes Herft and AMMA are at the forefront but there comes a time when the spotlight should be shined onto the Accountants and Brokers that referred this to their Data base for inducements and accepting these knowing full well. Lets face it Guvera would never have got off the ground and Clients of accountants would still have their money in the bank if it wasn’t for the Brainwashed accountants Greed , since when has it been the accountants domain to give advise on highly speculative investments to their clients under the Guise of ” sophisticated Investors” , this episode has given Accountants a bad name and the Bodies that run them should be confronting this, I am sure there will be clients that will take action.
I have to agree with a lot of the comments here. Coming from heavy involvement after being with a company that sold to Fidelity Investments for a massive amount and seeing them also invest heavily in these kind of operations at losses, sadly, I expected this to happen. I also lived on the Gold Coast and saw at the time the pitch for many inexperienced people to invest in this ridiculously amazing opportunity and had many of my friends calling me for advice if they should invest after being to this awesome pitch. These were not dumb people, but they were caught up in the bubble of Facebook and others. I told them – NO – for gods sake, no – and luckily none of my friends invested. It was always at a massive risk of failing, and the only people that should have invested in this are those that can afford to lose millions and know what they are doing. I have a startup on the Gold Coast, http://www.desygner.com which I personally funded with my co-funders and only now (after 66,000 hours unpaid between the team, and a ton of cash from us as founders), am I started to look for funding, well after the product is proven and the users are coming and money, and thus profitability is around the corner. To me, $180m is unfathomable, and sure I understand that there is always risk but this was just unbelievable – the way it was structured and the commissions seem ridiculous although I have seen it happen way too many times but normally affecting only those that can afford the losses as they have made billions. No doubt, being a local, I should support local business but this seemed doomed from the start, having to take money from people that did not know what they were getting in to. I find that sad and deplorable and it taints other solid Gold Coast startups to some degree from hereon. The people I feel for in this are of course the investors that lost money. The others knew exactly what they were doing and that is fair enough as I trust that they were trying hard in their hearts to make it work but were totally out of their depths with no risk to their own money – rather, they were being generously secured financially by the investors and side commission deals it seems. Overall, it is just another failure in the world, but this one I find extremely sad, as it was such big money from families that I have since met, from people that worked hard for that money. Would be great if there was to be a happy outcome for all, but I doubt it.
I was approached by them in 2012 and they were looking for a PR agency. I met them, and sent a proposal. Never heard from them again. Cowboys.
Hi everyone.
I am a large investor with Guvera.
Guvera has been burning cash as would be expected for a start up business of its type.
I have always found the team at Guvera honest and credible.
The media have slammed this company quite inappropriately in my opinion.
In the USA, there would have been support for this business. Sad that Australia ( media ) is bagging it so much.
I’m sure there are many things the company could have done better, but they’re having a go, in a difficult market with a, now, hostile media.
I wish people could see all the positives of this company and th fact that they have had to burn cash.
I don’t want to lose my money, and I don’t believe I will.
I know tough, painful decisions have been made by Guvera, but I have backed them with further cash. Time will tell if I’ve made the right decision, but I believe in the product, the people and the business model.
Rather than bagging this fabulous Australian startup business, I wish others would support them, or at least stop bagging them.
Let’s stop being a country of knockers.
Support innovation .
Support good people.
Support good business models, and please stop kicking a person when they’re down.
@ange you wouldn’t be talking this up just to protect your investment would you? …I am a shareholder as well and you just cannot stick your head in the sand and look the other way the facts are creditors and staff that have lost their money .Ange seriously look at the facts , I can’t count the number of emails I have received over the years promoting different things like Lenovo deal rake us to the world , In partnership with JP morgan to take us to IPO and provide100m in capital , USA is the biggest market , free music so to stop pirates and reward artists or of which never came off , you can’t blame everyone else other than Herft and management . Why do you think the ASX knocked it back , why do you think there are so many legal battles going on , why do you think there are so many disgruntled stakeholders, why do you think The administrators are looking closely at the directors for non disclosure and other breaches in the corporations act as reported by the courier mail today . Herft had no track record of managing a 200 m company let alone experience in the highly competitive music industry … Did your accountant disclose their commissions they received from AMMA to you to encourage your investment , there is an old saying a fool and his money is easily parted and if you have put more money into this debacle .. Well say no more.
It’s hard to support a business that don’t pay their employees.
I didn’t get my salary for June and you call them “good people”?
@ ange. As a shareholder you would have received todays update from Guvera and especially the fact that they are quitting the Australian Market , now please Ange when was this ever in their Business plan , They have spent Million and Millions on trying to establish this Market …Sponsorships of the VOICE , Sponsorships of Tennis Australia , Sponsorships of race Meetings in Melbourne ( for what reason God only knows) , Salaries and wages , Seminars the list goes on…all to just walk away … all thrown away in two sentences to Shareholders …and you are backing them with further Money ….I would be seeking a refund and in a hurry
@ Ange: How can you even suggest that the people at Guvera are honest and credible? They have literally stolen your money (if you are, in fact, an investor), mis-managed an organisation and technology platform that had potential, walked away from debts all over the world (driving companies out of business along the way) and terminated over SIXTY employees in Australia without paying them their salaries and entitlements, or contributing to their superannuation accounts (for as long as two years). Does that sound like a group of people that care about anything other than lining their pockets with other people’s money?
I applaud the ASX and the media for doing their jobs. Guvera would have been more than happy to continue to mis-lead and deceive investors, as well as the general public, had it not been for the due diligence and courage of the ASX.
Given you brought it up, it would have been really interesting to see what happened if Guvera tried to pull their brand of hyperbole and nonsense in the U.S. They would have had their ass handed to them. Guaranteed. And, speaking of the U.S., Guvera just shut down there, too – with literally NO revenue to speak of after a year in that market. I guess the Americans know a scam when they see one…
I support innovation. And, while I was there, I did my best to support the organisation. But, I quickly saw that the leadership at Guvera are not good people – they are not ethical or honest – or the least bit compassionate, given what they did to all of us. I also learned that leadership had no formalised business plan, absolutely no understanding of the brand, no vision for the future. And, now that Claes is in control, no hope whatsoever. So, can we all just say ENOUGH?
Agreed!
Australia needs to own a successful platform like Guvera, with them and JB HiFi gone it’s almost impossible for indie Aussie labels to negotiate licensing deals when there’s really only 2 major US owned platforms in the country doing business (iTunes & Google Play).
Guvera made some really bad decisions, they launched way too early with a sub-standard platform back in 2009, it was just terrible….if they gave it a few more years things could be way different and I wish that was the case.
Avoiding staff and the tax office?…..amazes me that they were doing that after raising a ridiculous amount of capital….someone in the business needs a real kick in the arse for that! But possibly some overpaid execs were part of the problem, not unusual when there’s so much cash being chucked around.
Really hope they rise from the ashes, it’d be a triumph for Australian business and a healthy delivery point for labels and content owners worldwide.
Streaming is a very busy space at the moment and we have a whole new generation of people who think music (And video) should be free…..watch the industry die unless royalties are increased, streaming is convenient for the consumer….problem is it’s cheap…which funnels down to no only the labels but the artists…..no incentive, no artists, no new music.
Peace.
@ange,after recent breaking news RE India operations , I hope your seeking a refund of your latest investment.. None of that info in detail was disclosured to shareholders .. Get your money back before it’s to late
@Ange – how the f*** can a company unable to pay its liabilities as they fall due even think about listing on the ASX?
“good people” wouldn’t do that surely?
“here’s to feeling good all the time”
I think it’s a great time for Herft/AMMA to return some of the millions siphoned off for ‘services rendered’ from the investors’ capital back in to save this ‘great business’.
And if they don’t, I guess we’ll all know why…….
Just like the Confidential loans that the IPO was going to pay back, AKA directors payment in kind. Wouldn’t be surprised if the new “Confidential funds” are a loan by AMMA, hence why so confidential.
http://www.theaustralian.com.a.....4d26faa9e6
Accountants should stick to tax advice.They are not stockbrokers or investment advisers.