Guvera CEO dismisses India concerns despite litany of woes
Guvera chief executive, Claes Loberg, has rejected suggestions its Indian business is in turmoil, arguing he has set about transforming the operation and is getting “everything into a working fashion”.
The flamboyant head of the floundering business rejected claims that Guvera Music India was $5m in debt, owed millions to music labels or was operating without correct governance or compliance in India.
Guvera founder and interim CEO, Claes Loberg, plans to relocate to split time between India and Indonesia
“This past fortnight has been a wild personal journey inside every facet of this business and market,” said Loberg, in an email to Mumbrella. “The personal support from shareholders, team and clients is keeping me going.”
But it is unlikely to cut any ice with creditors, former members of staff or shareholders who have seen the business lurch from crisis to crisis.
One creditor said the decision to approve a Deed of Company Arrangement (DOCA) at a creditor’s meeting on Monday – which effectively allowed the company to keep trading – was made reluctantly.
Far from being a vote of confidence in Loberg, or the company as a whole, it was merely the lesser of two evils.
“Administrators said the DOCA would provide greater certainty of a return than winding the company up,” he said.
Loberg’s comments came after a leaked document sent to Mumbrella portrayed Guvera’s Indian operation – proclaimed by the music streaming firm as a ‘key market’ – as being on its knees.
An April/May board update detailed a division losing cash, generating next-to-no revenue, unable to pay its bills and struggling to make its ad-funded model work. It also outlined a number of compliance and governance problems, including issues surrounding payroll and tax.
Among the partners and suppliers owed money are mobile commerce and marketing firm Affle, digital entertainment company Hungama Music, and Reliance IMG, which brokered a deal that saw Guvera become the “official music streaming firm” for the Mumbai Indians, a cricket team playing in the Indian Premier League (IPL).
“Any compliance issues we have, have emerged as a result of funding in the last two months. I am working to re-stabalise this with new investment at present, both with AMMA and new partners,” Loberg said.
“I have also been advised from other press reports of Guvera not having a legal entity, bank accounts or board in India – this is completely incorrect. Guvera does have a legal entity in India, bank accounts and local board.”
He described reports that it is $5m in debt, owed millions owed to music labels in India, and was having issues with its business model as “incorrect”.
Loberg also rejected it had set revenue targets in India of $20m, and said any previous targets had been set by previous chief executive Darren Herft, who left the role last month, although he remains on the Guvera board.
Former Guvera CEO Darren Herft
“Those revenue targets are incorrect, any previous targets were from [the] previous CEO,” he said. “Under my direction the company has yet to release forecasts.
“We are negotiating new music contracts as we do every year, and they will include advances,” he went on. “I have been in the role of CEO for 10 days [and] I am in discussions with creditors and arranging personal meetings with partners.”
He added “many brands” have gone live on its Indian platform in the past two months, including Tata Motors, Reliance, Closeup, Udio, Harley-Davidson, Vodafone and Myntra.
“In the past 45 days, and under my first 10 days as CEO, I have been working to get on top of all matters and get everything into a working fashion as quickly as possible in all our current territories.
“I am happy to announce that our efforts in adapting our company and product to market have resulted in immediate upturn in revenue projections and I will be making announcements within the next 30 days.”
He said he was bringing in both “international and local expertise” to bolster the business.
“As part of my turn-around plan, I have executives from New York and Los Angeles that have joined me in Indonesia over the past two weeks and worked with me on adding new local hires to the team as well as structuring entire product shift and focus as a platform,” he said.
“Our head of sales from Australia is joining me next week in India, and together with our local team from UAE and India we will duplicate this past fortnight’s success in those markets.”
Loberg claimed Guvera retains a “good on-going relationship with Reliance”.
“Yes we have worked together on a media project with Reliance and Mumbai Indians. Nothing is in jeopardy. We had the media partnership and the season has finished,” he said.
“We are in further discussions and I will be meeting with them and other partners in India.”
Says previous 20-million-dollar target wasn’t his target, but his co-founder’s target, so it doesn’t count.
Then “…am happy to announce that our efforts… has resulted in an immediate upturn of revenue projections…”
Upturn when compared with WHAT, Claes?
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Poor, Claes Loberg. It is obvious he is doing the best he can with his limited skillset. In reading his comments, I almost (if I were not owed a significant amount of money) feel sorry for him…. It is obvious that he has been taking “spin” classes, because, he certainly has a polished answer for each and every (and, there are many) accusation and point from the document obtained. But, spin as he may, the facts remain – Guvera has insurmountable GLOBAL financial and regulatory issues. This is not just about running a company aground in Australia. The only thing Claes is trying to do is delay the inevitable (and pocket a bit more cash). Oh, and personally “re-locate” to India and Indinesia. Really?
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Unbelievable ridiculous comments … What the previous targets were set by the previous CEO and that CEO now sits on the Board , and Claus weren’t you part of that Board that approves budgets .Does that mean all previous plans , promises , capital raisings etc etc etc can now be cast aside because it was the decision of the previous CEO ,what a cop out and just shows our out of their depth these people are . Herft is still pulling strings behind the scenes this is all just a sharade to deflect the truth . If this wasn’t so seriosus it would be laughable and make a good Monty Python skit .
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Where are the regulators? Even the administrators have suggested that serious questions need to be asked. Herft may have successfully removed himself from the press headline photos, but he still has questions to answer.
A 1℅ active user ratio! No wonder they don’t talk about MAU!
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@Deus . I would say Herft is frantically chasing up capital from wherever he can get it behind the scenes , Herft’s reputation is shot to pieces ( if he ever had one) and will never recover although I guess he has set himself up nicely of the back of investors funds, I just really don’t understand how Accountant’s would continually introduce clients monies into any other project this guy thinks is the next windfall or Facebook , is he a cult figure or something, beyond me or are they just Dumb!!
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Why would brands spend their marketing budget to advertise to consumers who are not prepared to pay for music. Surely you would want to go after consumers who are willing and able to spend money.
Strange business model!
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Your question is the same as asking: why do brands spend millions on free-to-air TV advertising? Surely they would want to go after consumers who are willing and able to spend money on pay TV.
Not wanting to pay for TV or music streaming doesn’t mean you have no disposable income whatsoever.
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If you really want to know how delusional management of this group are you just have to read Claes lobergs recent twitter post
Claes Loberg @claesloberg
Current press is incorrect. Do you not realise the impact reckless reporting has on a company, its staff and shareholders.
Excuse me me Loberg
Obviously you Do not realise the impact reckless management has on a company it’s staff creditors and shareholders
Can you believe that??? Reckless reporting or reporting the truth
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If you really want to know how delusional management of this group are you just have to read Claes lobergs recent twitter post
Claes Loberg @claesloberg
Current press is incorrect. Do you not realise the impact reckless reporting has on a company, its staff and shareholders.
Excuse me Mr Loberg
Obviously you Do not realise the impact reckless management has on a company it’s staff creditors and shareholders
Can you believe that??? How naive or stupid us this bloke , a statement like this with millions of dollars blown and people suffering including staff and creditors businesses because of poor management and that’s being kind , who know s what domino effect their non payment has on other businesses and their staff . Reckless reporting or reporting the truth
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Where is Peter Foster when you need him.
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@Jim. It’s like free to air TV or Radio or Google or Facebook. People watch TV or listen to the radio or use google or Facebook for free but buy things from the Brands who advertise there.
This is not new. Just new for the music industry. The music industry is dying due to piracy and has lost 30% revenue each year for last 5 years. They are on a death spiral and until now no one had a solution.
If Artists don’t get paid we won’t get songs written and performed and that would be a tragedy.
Problem is only 5% of consumers are prepared to pay for their music which is where streaming companies such as Spotify, Pandora, Apple Music are fighting over.
It’s too small a market which is why none of them have been able to turn a profit despite being in business for many years.
95% of people are not prepared to pay and pirate it illegally and Guvera’s model legally give’s customers free music funded by the advertising from Brands.
Guvera hold’s the world wide patents for this method in music.
Guvera is in 95% of market whereas Spotify, Pandora etc are fighting over a shrinking 5% of the market.
However like any solution that disrupts the market globally there are many challenges to overcome before it finally becomes accepted.
At least Guvera is trying to do something to help the music industry survive long term in creating a win/win for everyone.
Artists gets paid, consumers get free music legally, Brands advertise cost effectively, Guvera makes money for its shareholders and provides employment for employees.
The idea is a positive honorable initiative.
Success is always in the implementation and any start up in a global business needs capital to invest in its foundation before it can generate revenue.
In this start up phase they will have their critics like Facebook, Uber etc.
I wish them luck because their success is critical to so many people.
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This is such a joke. This is OBVIOUSLY written by Claes himself, and the fact that he thinks writing it under a pseudonym thinking he’s going to fool everyone is embarrassing. If people didn’t think Claes and the entire Guvera executive team weren’t completely idiotic before, they definitely do now.
Claes – just give up, you’re making it worse for yourself, if thats even possible.
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Disaster- Guvera’s entire Board of Directors. On more money than anyone and the most inadequate of them all.
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Agree. Disaster = Guvera’s entire Board of Directors. On more money than anyone, and the most inadequate of them all.
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Or written by an accountant who is sh$t scared of being sued by his clients , and also that is going to lose his ‘paper’ investment of bonus shares issued to him as inducements
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Claes is an absolute joke! He does not have the credibility or the intelligence to run any company, never mind pull Guvera out of this unsalvageable position. One look at his instagram feed proves that all he is interested in is boozing around the world using investor money.
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Whether you are targeting a user who is prepared to pay for the Guvera service, or not, the real question should be: why would brands be interested in aligning themselves with a product that lacks a defined user/audience? From Day One, Guvera has never been able (or willing) to accurately report its active user data – which any brand manager worth his/her salt will need to evaluate the investment. So, whether it is a free, paid, ad-funded or subscription-based business model, brands are never going to engage without transparency. Sadly, not a core value at Guvera.
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@ (Curious) George: A lot of what you have written is true: people do not want to pay for music; piracy is a scourge (for the entire digital space); the music industry are a bunch of myopic navel gazers, and clearly out of touch with digital consumers; artists are not being paid appropriately; margins are microscopic in the streaming business and the competition are a bunch of cutthroats (and everyone is struggling).
Not the best environment to launch a business, but Guvera gave it a go, which was admirable. But, somewhere along the way Darren lost sight of the fact that a lot of people had invested a SIGNIFICANT amount of money to keep the dream alive. In addition, management lacked the discipline to work within the confines of a budget. A lot of people have been adversely affected by Guvera’s mis-management.
I think if Guvera had shown some business acumen and ethics, there would have been a crowd of people supporting the brand – instead of a long line of people with their hands out waiting to be paid what they are owed. What a true waste of potential!
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That’s an entirely different and unrelated question, but I’ll respond anyway.
First of, how do you know that brands do not have active user data from Guvera, or at the very least are not getting advertising performance reports from them?
As you say, no brand would ever advertise without that data, yet big brands like American Express, Goodlife, Priceline, and Virgin Mobile were happy spend advertising money with Guvera.
No brand manager in any of those companies would risk their career on a non-traditional spend, if they can’t back up their spending to their bosses without some solid data…as you said basically.
Not making active user data publicly available does not equal no data being known or shared with clients. It could simply mean confidential or privileged data.
You are making big assumptions, without any data to back it up I might add. Or if you do have evidence of your claim, please do share it. I’d love to see it for myself actually.
p.s. from what I’ve read, brands *did* engage with Guvera Australia, as well as in overseas markets where Guvera was/is active. No defined user audience…where are you getting this stuff from? I mean, how could you possibly know that?
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I don’t disagree that Guvera has been mismanaged. But I think what Claes is implying is that media coverage being so negative puts further pressure on the business, which essentially jeopardises investors’ money already spent.
While Claes and Guvera seem to be doing their best to rescue the business and find a way to grow revenue and become profitable, everyone else, including (paradoxically) some investors it seems, are dead set on destroying the business. And that is reckless, as Claes suggests, because that would guarantee that investors see a return of exactly zero dollars.
I understand that as an investor one would be upset about mismanagement, but from where I stand, trying to destroy my own investment defeats common sense.
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If consumers don’t pay for music like the very successful Spotify model promotes, how is a business model like Guvera sustainable when it relies 100% on investor funds? Short answer is it’s NOT sustainable and never was. Loburg and Herft knew this in 2008 when they created Guvera’s ‘revolutionary’ dated “free to air” streaming music model, they are therefore 100% responsible for the collapse of a dodgy investment ‘opportunity’.
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My response to this comment is that if guvera is chasing 95% of market and others chasing 5% why don’t they have more success? If those percentages are correct their market is 19 times the size of the other market yet they still can’t get users. I’d like to know the basis of those “facts ” as they just don’t add up!
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If you paid attention you would have picked up that the entire idea about Guvera is that it would be ad funded.
In the same way that free-to-air TV is free, Google is free, Facebook is free, Gmail is free, even Spotify is free if you don’t mind the ads (and apparently 80 million people do not mind them). There are numerous successful businesses that generate enormous amounts of money through advertising revenue. That is how the Guvera was/is planning to generate revenue. And that is how a business can be sustainable without selling anything to consumers.
It is also not a dated model, it is in fact a very proven and sustainable model, when executed well. I recommend a 10 minute research on ad-funded models, and the growth in revenue YoY these companies have had only last year.
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@ Ryan .. Your first sentence summed it up , nothing excuses mismanagement of this size and scale especially when you are dealing with someone else’s money ( I have written mine off as a bad investment ) ,the directors Herft and loberg and others should be held accountable . How couldn’t they see the writing on the wall with in house , non arms length , conflict of interest relationships and transactions .Herft the CEO of Guvera and also owner of AMMA, property leased between entities , monies changing hands … Basically Guvera and AMMA morphed . Just ask ASX why they knocked it back , call it what you like mismanagement , stupidity lack of experience whatever the bottom line is they have blown 200m of investors money and they should be strung up by the balls not encouraged
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We are in the process ( we can sense it) of getting cheated for about 30,000+ AUD – which in any case has been delayed for months.
We are not employees of Guvera India but a vendor who worked for them on one of their high profile campaigns.
We have SO much proof against these guys and are working out a strong legal case. While we know the legal process might take years and we might never see our money we feel it’s imperative the world – especially the Indian market knows how untrustworthy Guvera on the whole is.
Steve Jones if we could get an email address for you? Reading up on the coverage you have done for Guvera we really feel we can share our experience with you including all the proof we have if things go south for us. Which they will.
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Steve can be reached via Steve@mumbrella.com.au
I don’t know how the Indian legal system works but I assume it is based upon UK law. Why don’t you issue a formal demand for payment? And if it not paid within 14 days, start proceedings to wind up the company.
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