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Implosion of David Dobrik's Dispo shows dangers of influencer branding

"It's extremely uncommon for a venture capitalist to cut all ties with a founder or a company in which it has invested. The reaction is a testament to the severity of the accusations," said one VC expert.
David Dobrik in a video posted to Youtube on March 23, 2021.
David Dobrik, co-founder of photo sharing app Dispo, in a video posted to YouTube on Tuesday.Youtube

In a rare move, venture capital firm Spark Capital has severed "all ties" with Dispo, the popular photo-sharing social platform co-founded by YouTuber David Dobrik, after rape allegations against a member of his team emerged. Dobrik has since stepped down, according to a statement released Sunday.

Experts say a venture capital culture that tolerates sexual harassment and male-dominated teams is partly to blame.

"The number of sexual harassers and allegations in the VC industry is a joke," said Lakshmi Balachandra, an associate professor of entrepreneurship at Babson College in Wellesley, Massachusetts.

"Money and power and all men leads to bad behavior — and women getting less than 2 percent of all funding," Balachandra said.

After the allegations were first published in an investigation by Business Insider last week, Spark Capital, a Boston-based venture capital firm, which just a month ago led a large $20 million Series A investment round in the startup, announced that it was distancing itself from the company.

"In light of recent news about the Vlog Squad and David Dobrik, the co-founder of Dispo, we have made the decision to sever all ties with the company," Spark Capital's company Twitter account posted early Monday morning shortly after midnight.

"We have stepped down from our position on the board and we are in the process of making arrangements to ensure we do not profit from our recent investment in Dispo," the tweet read.

But the company has a term sheet and a binding contract with Dispo, and the statement does not specify how the investment itself would be affected. Spark Capital did not respond to a request for comment.

"Dispo unequivocally condemns any form of assault or violence and believes survivors must always be heard and supported. In order to remain true to our mission, we support David's decision to part ways with the company," the company tweeted Monday. Dobrik's co-founder and childhood friend, Natalie Mariduena, has not made an announcement about her future with the company.

Mariduena said in a statement Tuesday on Twitter: "I've spent a lot of time thinking about the recent allegations and because of the severity, it's taken me time to process. Like many of you, I'm upset and angry and do not condone the behavior detailed in the article or any sexual misconduct/abuse for that matter."

Other firms that participated in the funding round, including Reddit co-founder Alexis Ohanian's Seven Seven Six, said they were distancing themselves from the startup and would donate any profit from the investment to organizations helping women who are victims of sexual assault.

Even without a material sign of a break, the statement by the lead venture firm itself is unusual among startup investors.

"It's extremely uncommon for a VC to cut all ties with a founder or a company in which it has invested," David Robinson, a professor of finance at Duke University, said in an email.

"The reaction that you're seeing is a testament to the severity of the accusations the founder is facing," he wrote.

For years, brands have paid influencers to show their products in their posts, a practice that came under fire from the Federal Trade Commission when some influencers did not disclose the sponsorship. Others, such as fashion blogger Arielle Charnas, makeup blogger Huda Kattan and personal trainer Kayla Itsines, have started their own fashion, beauty and workout lines, respectively. Starting a company with venture capital investors is the next iteration. VCs were as quick to cash in then as they are now to backpedal.

The risks associated with a brand's partnering with a celebrity are nothing new. Several brands cut ties with Tiger Woods after a car crash in 2009 shattered his image as a squeaky-clean family man and exposed his serial infidelity.

But the reputation crisis for all of the brands involved underscores the need to conduct proper background checks of involved parties and not to let a hot "rule-breaking" property be an excuse to ignore basic rules.

According to its website, Spark Capital's early venture team consists of six men and one woman. The gender imbalance is likely to have contributed to the firm's overlooking or giving a pass to offensive material and behavior in Dobrik's online video empire, Balachandra said.

The founder of Women Who Tech, Allyson Kapin, general partner at the W Fund, which invests in women and diverse-led tech startups, said in an email: "Due diligence on founders is one of the most critical parts of the process when you are investing in a startup. If the founder(s) have a known history of 'frat boy' culture where they film and profit off toxicity, that should have immediately raised red flags for any investor."

Kapin said Dispo as a company can still survive and thrive without its co-founder.

"The team at Dispo has a major opportunity at this early stage in the company to create a non-toxic culture that's welcoming, inclusive, and respectful, with zero tolerance for sexual harassment — and this should be in the new leadership's DNA," Kapin said. "If new leadership invests in this and its community of users, they can do well."

According to the Business Insider report, Dobrik's high school friend Dominykas Zeglaitis, who goes by "Durte Dom," is alleged to be a perpetrator in the rape claims.

Zeglaitis invited several college women via Instagram to make a video shot by Dobrik. One of the women, who says she was 20 at the time, said she blacked out from alcohol provided by the Vlog Squad and did not consent to intercourse. According to Business Insider, Dobrik uploaded a video of the incident, titled "SHE SHOULD NOT HAVE PLAYED WITH FIRE!!" It has been removed at the woman's request.

Zeglaitis has not commented publicly about the allegations.

In the second of two apology videos, Dobrik, who is based in Los Angeles, announced that he would be taking a break from social media, that he believed the woman's allegations and that he should never have posted the video, "even though I had consent."

"I want to apologize to her and her friends for ever putting them in an environment that I enabled that made them feel like their safety and values were compromised," he said.

Dobrik got his start on the short-form video service Vine before moving over to YouTube with his posse of friends, who appeared in his videos as "characters." The videos consisted of self-described pranks and improvised dialogue, tightly edited with an insouciant and raw flair. Some of the video were "really offensive" and were played off as "bad jokes," Dobrik said.

The "shock" tactics paid off. His and his friend's channels racked up millions of views and subscribers, fueled by YouTube's algorithm, which rewards audience viewing time, regardless of whether watchers even like the videos they are nevertheless glued to.

Brands, desperate for audience and authenticity in an increasingly splintered viewing world, showered him with endorsements and prizes. Chipotle named a burrito after him. EA Sports gave him a $290,000 Lamborghini.

In 2019, Dobrik started a photo app called Dispo, a digital version of an analogue disposable camera. Photos were shot without filters and appeared on timelines 24 hours later, an antidote to the perfection-seeking aesthetic that pervades Instagram. Seeded among fellow influencers, the app took off among their followers and attracted venture interest.

The videos initially read as some kind of comedy. There are setups, characters and everyone keeps laughing. In a sampling of scenes from one video, "Durte Dom's Best Moments in David's Vlogs," two men dress up in wigs and dresses and try to enter fraternity parties. Women are recruited off Craigslist to jump up and down outside an apartment. A woman who is said to be drunk sits on a couch next to Dom while trivia questions are shouted at him. There is an extended discussion of whether a woman is a "slut." Through editing, a live rabbit is made to appear as if it was stomped to death.

In a video posted March 9, before the rape allegations emerged, Zeglaitis apologized for other videos he appeared in that involved "slut shaming" remarks and were "blatantly racist." He said another former member described the group of video makers as "toxic cultish."

"At that point in time we were making these videos, and it was funny, and it was jokes, and it was comedic," Zeglaitis said in the video apology. "You don't realize that these certain jokes and these certain pranks and these video bits, they have repercussions on people."

Dobrik said that when he returns to making content, he hopes to do it with "infrastructure" and "checks and balances."

For now, the moment could be somewhat of a reckoning in the rush to capitalize on influencers.

"Expect to see new guidelines come down the pipeline," Ronn Torossian, CEO of the PR and crisis communications agency 5WPR, said in an email. "Smart brands won't let this happen twice."