STARTUP

A Silicon Valley Tale of Humiliation and Revenge

He was fired from the company he helped create, YouSendIt. Then the cyberattacks started.
Forced Out YouSendIt's first president, Khalid Shaikh

Courtesy Subject; Eva blue/Flickr; Courtesy Subject

The Old Crew YouSendIt's other co-founders, Amir Shaikh and Ranjith Kumaran, and former employee Jan Mahler.


Dillon O'Kelley

The New Normal The motel outside Denver where Khalid Shaikh now resides.

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In Silicon Valley offices, the framed founder's doodle is as common as jewel-toned furniture and quirky conference-room names. But there's something peculiar about the drawing hanging in the colorful lobby at YouSendIt, an online file-sharing service based outside San Jose, California.

It started with a pen, a piece of paper, and an idea... reads bright blue type above two pages of ballpoint scribbles—sketches of the company's first homepage design, from 2003. Below the doodles is a vaguely inspirational quote: "Let's help our users start new kinds of conversations, ones they couldn't have before finding YouSendIt." —Ranjith Kumaran, Founder

Ranjith Kumaran didn't found YouSendIt on his own, though. Another man, one whom YouSendIt doesn't like to talk about, wrote the original code, built the first servers by hand, and served as the first president. His name is Khalid Shaikh, and he's 34. He was a computer-engineering student at McGill University and a former intern at Microsoft, and he once worked at Hewlett-Packard and Intel. More recently, he has been living in a Motel 6 outside Denver, awaiting sentencing for launching a cyberattack three years ago that crippled YouSendIt's servers.

The story of why—how a talented young entrepreneur turned on the company he worked so hard to help create—is at once bizarre and weirdly typical in the world of Silicon Valley tech start-ups.

"I've been involved with a hundred companies, and YouSendIt's development was very, very standard," says Nick Sturiale, a YouSendIt board member and partner at Jafco Ventures, a Palo Alto, California, venture capital firm. When he first met Shaikh, Sturiale says, "There was nothing he ever said, nothing he did that would ever indicate things to come."

Like so many entrepreneurs, Shaikh moved to Silicon Valley in 2000 with dreams of launching a tech company. Shaikh, who grew up in a blue-collar home in Montreal, the child of immigrants from Pakistan, fell in love with computers. At McGill, he had watched the dot-com boom from afar. He pictured Silicon Valley as being like The Gold Rush, a 1999 CNN documentary he loved, a place where Hotmail founder Sabeer Bhatia raced around in a Ferrari and venture capitalist Steve Jurvetson bet on start-ups as if he were working a roulette table.

Shaikh got a taste of the tech life during a Microsoft internship as a college sophomore. He took off as soon as he graduated: He married a conservative Muslim girl from Montreal (after getting permission from her father and his) and headed out to San Jose.

The boom was over when he arrived. Still, Shaikh had no trouble finding programming work. During his commutes, Shaikh marveled at how the Valley's leafy towns and office parks appeared like those of any other suburb—until a Ferrari would rip down the highway. He would excitedly follow the sports car in his Mitsubishi. When it inevitably pulled into a tech company's parking lot, his fantasies would rush back: Someday he would do that, too.

Shaikh was doing contract work for Symbol Technologies, a company that made bar-code scanners, when he befriended another dreamer, Jan Mahler. Like Shaikh, Mahler was in his 20s, grew up poor in a conservative religious family (Jehovah's Witnesses, in his case), and considered himself a proud geek. To amuse themselves at work, Shaikh and Mahler brought in chocolates for the staff every day—and secretly bet on whom they could make the fattest. After work, they would race down highway 85 in their Mitsubishis, hitting the off-ramp curves so hard, they screeched off exits.

Business would eventually complicate their friendship. In 2003, Shaikh told Mahler he planned to start a company. The business, later named YouSendIt, would let users send large files across the Web for free. Shaikh was having a conference call with his two co-founders to discuss it. Would Mahler like to join?

Mahler had met one of the other co-founders, Shaikh's older brother, Amir. The brothers were close; they had been apart only once, when Amir had worked in Chicago after getting his master's in computer engineering, also from McGill. Mahler had never met Ranjith Kumaran, the other co-founder, but he had heard about him from Khalid. Kumaran had been one of Khalid's programming partners at McGill. To the awkward and bearded Khalid, the trim and clean-cut Kumaran was smooth. Khalid raved about Kumaran's public-speaking skills.

Mahler declined to join the start-up. He couldn't imagine working with the brothers, who talked and bickered constantly. "They were annoying," he says. Besides, Mahler doubted their idea would work.

He was wrong. By the time YouSendIt debuted at the TiEcon tech conference in May 2004, the company had 300,000 users and was growing fast. The three co-founders split up the duties: Amir Shaikh sought advertising revenue, Kumaran focused on the user experience, and Khalid Shaikh handled the technical work. That turned out to be an increasingly mammoth task for Khalid, who was still working at his Symbol job. Traffic was increasing 30 percent a month, and the quantity of file downloads threatened to overwhelm the servers.

At night, working by hand on his living-room floor, Khalid built server after server. (He installed them in a nearby data center during his lunch breaks.) To save money, he used the smallest server cases available and drilled extra holes through the metal so he could cram in four hard drives. Sometimes, when he was drilling, the case would slip, and Khalid would cut himself, his blood mingling with the hardware.

Khalid's hard work earned him the title of president. In September 2004, when Cambrian Ventures made a $250,000 investment in YouSendIt, the co-founders' strategy was straightforward. "We didn't know what the hell we were doing when it came to funding," says Amir. "We just went ahead and bought more servers."

By the beginning of 2005, the co-founders had quit their day jobs and awarded themselves $120,000 salaries. That year, Khalid bought himself a Porsche Boxster, Kumaran bought a $650,000 house in San Jose, and Amir and his wife bought a five-bedroom house in New Jersey. (He would split his time between the two coasts.)

The company was on track to hit $1 million in revenue in 2005—enough to finance growth, but not enough to put YouSendIt on the fast track. The co-founders decided to get more funding.

Because the three of them knew little about raising capital, they hired Randy Korba, a friend of the Cambrian Ventures investors, to help lead the company. To Khalid, Korba was a real-life member of the tech elite, a Stanford M.B.A. who had worked at start-ups with people like Google board member Ram Shriram.

Korba set up meetings with investors, several of them his old B-school classmates. But when the four sat down with investors, it became clear that the Shaikh brothers, like many technical founders, lacked savoir-faire. Khalid, in particular, was a problem. "He'd just freeze up in front of authority figures," says Kumaran. When he did talk, Khalid would nervously digress into technobabble, launching into details about the server architecture.

After a while, Korba and Kumaran started going to the meetings on their own. Then, one day, Kumaran said he wanted the title of CEO. The brothers didn't object. They knew Kumaran had superior communication skills, and they all had equal shares in the company. What difference did titles make?

By the summer of 2005, Korba and Kumaran had found investors: Ammar Hanafi, a Stanford classmate of Korba's and a partner at Alloy Ventures, and Nick Sturiale, who was then a partner at Sevin Rosen Funds.

YouSendIt would get $5 million in Series A funding on an $11 million postmoney valuation. The investors would get a sizable stake as well as seats on the board with Khalid and Kumaran. (Ed Kozel, a former Cisco executive who was on the board of Yahoo, would later join the board as an independent director.) The three co-founders would each be left with less than 3 percent of the company. They could earn back more shares over the course of four years, but not a controlling stake like they had had.

At that point, the co-founders hadn't considered whether the company really needed $5 million, whether $11 million was a fair value, or what giving up ownership meant, exactly. "It was sort of arbitrary," says Amir. "There was no reason to raise that amount of money." In the business climate at the time, you had to take what was offered, says Korba. "When you're a given a term sheet, it's like the queen knighting you; you are supposed to genuflect for even gracing you with terms." Amir says Korba and Kumaran gave the brothers the signature pages of the agreement to sign. The brothers had to ask to see the rest of the documentation. (Kumaran denies this. Korba says he doubts he read the entire document himself.) To the Shaikhs, the message was clear: Just sign it.

Nevertheless, Khalid celebrated when the $5 million was wired into YouSendIt's bank account in August 2005. He took a screen capture of YouSendIt's account balance and e-mailed it to Mahler. The title of the photo was blingbling.jpg. If Mahler still had doubts about YouSendIt's prospects, they were extinguished now. Two weeks later, Mahler joined YouSendIt as the network operations manager—and Khalid's report.

Khalid may not have realized it at the time, but the writing was on the wall. Four months later, Amir would be fired, and Khalid would be fighting for his corporate survival.

Soon after YouSendIt got funding, the co-founders made decisions that crimped company performance. First, to save money, the team decided to switch the servers from expensive Windows software to open-source Linux. It was a huge undertaking. Khalid and his employees rewrote the code and switched the servers over to Linux a few at a time, but glitches caused servers to crash.

Meanwhile, Kumaran oversaw a series of changes—including capping the number of downloads per file and requiring users to register—in an attempt to attract paying subscribers. Within a year, monthly visitors would be down 60 percent.

When it came time to meet with the board, the primary topic of conversation was why the once-thriving user base had stalled out almost as soon as the check was cashed. When Korba started blaming the server crashes, Khalid froze.

"Have we identified the weak players on the engineering team?" asked Kozel. Khalid couldn't believe what he was hearing. They didn't seem to appreciate the dizzying amount of work he had put into these servers, the millions of complex operations that were taking place as the YouSendIt servers gently whirred.

On the other side of the room, Sturiale had no idea that the quiet engineer in the corner was in turmoil. To him, it was any other early-stage board meeting. "Every start-up goes through a version of this," he says.

Khalid started pulling all-nighters to get the servers working smoothly, privately seething that other people's decisions were sinking the company. He was consumed by anxiety.

Then, one day, Kumaran told Amir to come into the conference room. "The investors feel you're not fitting," he said. Amir was fired on December 16, 2005.

It's unclear exactly why he was let go. "He didn't give me much of an answer beyond that," says Amir. Kumaran says Amir was "unproductive and disruptive" and that he failed to hit ad sales numbers. It's possible that Amir was fired because he openly clashed with Korba about hiring and partnership decisions. Or perhaps it had something to do with Amir's spending one week a month in New Jersey. Korba says he doesn't remember. After being pressed for details, he wrote back in an e-mail: "The sum total of my recall was that after the funding Amir simply was not as active as others...No extraneous vibes or agenda or feelings entered into it."

In Khalid's view, it was a power grab, plain and simple. The termination sent a clear message to him: He was powerless. Khalid had no significant equity, no brother around for support, and no authority—a notion that was confirmed when he was voted off the board a few months later. "He got shaken," says Amir.

In the next few months, friends and co-workers noticed an embittered side of Khalid Shaikh's personality emerging. He sent an e-mail to Mahler bemoaning how much faster YouTube was growing, even though it had gotten funding months after YouSendIt had. "We had our chance," he wrote, calling YouSend-It a "deadbeat company." "He felt that you couldn't be good and be successful," says Amir. "He would say, 'You have to survive.' "

In May, the board hired a no-nonsense Adobe executive named Ivan Koon to be CEO. (Kumaran was bumped to vice president of marketing.) Shaikh decided he would do whatever it took to impress Koon. The first thing the staff noticed was Shaikh's makeover. He had one of the company's Web designers, Angie Chang, take him shopping for designer clothes. Shaikh also decided to take up golf. He ordered a set of Ping golf clubs on eBay and signed up for lessons at Koon's country club. Nothing went quite right, though.

The clothes he bought—a black jacket and slacks and several flashy pink and purple patterned shirts—all looked a little too big. "He went from jeans and a T-shirt to looking like a kid wearing a suit," says Mehdi Ait Oufkir, who was a YouSendIt software engineer. And the eBay clubs turned out to be fakes.

No one was laughing when Shaikh began showing Koon how demanding he could be as a manager. Not even Mahler was safe. When the servers crashed, Shaikh let him have it. "He would tear me apart in these e-mails with Ivan on them," says Mahler. "Instead of saying, 'How can we address this?' he's saying, 'You're an idiot; I can't believe you'd do this!' "

Mahler says Shaikh would come by later and tell him not to take it personally. " 'I'm just showing Ivan I'm more worried about success than anything—and I'm willing to sacrifice my friends,' " Mahler recalls him saying. Mahler says he feared for his job.

In June, Shaikh got another chance to impress Koon by going to a conference called Webmonsters in Las Vegas. Shaikh was proud he had been invited to join the exclusive group, which included Netscape veteran Omar Ahmad, Sequoia Capital adviser Jonathan Heiliger, and the operations heads at several big tech companies. Koon had approved Shaikh to travel on YouSendIt's dime.

In Vegas, Shaikh found himself among people he had long admired—in social situations his upbringing had long taught him to shun: They drank. They gambled. At one point, Shaikh says, a few people broke off from the group and went to a strip club. Shaikh says he was too intimidated to go with them that night, but later he wouldn't shy away from such activities.

Eager to fit in, Shaikh went to two more tech conferences that fall. Between the attendance fees, luxury hotels, and expensive meals, he racked up $5,000 to $8,000 in expenses on his personal credit card at each event. And not all the things he had spent money on came with receipts he could put on an expense report.

Shaikh eyed the racks of servers, many of which he had built. He took a couple of unused network switches, worth about $2,400, and put them up for auction on eBay.

Later, Shaikh told Mahler what he had done, just to be sure the missing switches wouldn't mess up the tech department. Mahler was furious. As infrastructure manager, he felt he would be responsible if someone caught on.

Mahler called Kumaran. "I need to tell you something that Khalid's doing," he said.

On the weekend of November 11, 2006, Koon confronted Shaikh about the missing switches and told him not to return to work on Monday. Shaikh said he had planned to give the money to the company. Koon didn't buy it. Then, Shaikh accused Kumaran of stealing: Kumaran's side project, Dealblurb.com, was operating on YouSendIt's servers, Shaikh shot back—that cost the company money. (Kumaran denies using YouSendIt resources for that project.)

Eventually, after months of negotiation, Shaikh says, he got a $50,000 severance payment. He agreed to sell his 317,000 shares in the company for $73,000, less than a fourth of what they had been worth in the Series A round.

Shaikh felt angry, ashamed, hopeless. He looked for someone to call, but all his friends—practically every contact stored in his phone, he realized—worked for YouSendIt. He says his termination agreement prohibited him from contacting them. He had become estranged from his wife, and they divorced within the year. "I remember going to bed wishing that God would kill me," he wrote later on a personal blog.

After a few dark months, Shaikh slowly began reassembling his life. In March 2007, Intel hired him as a consultant, the first of several short-term jobs. Shaikh and Mahler made amends—they jokingly referred to YouSendIt as "Vietnam"—and began launching side businesses, both individually and together. Shaikh launched a YouSendIt competitor called FlyUpload. (Mahler lost his YouSendIt job, too. The company won't comment, but Mahler thinks it was because of his relationship with Shaikh.) The friends also collaborated on a music site, 2muchmuzik.com, and Mahler worked on an iPhone app called Hottie Spotters—the idea was to let users snap photos of attractive strangers and post them to an online map. Then Shaikh met a young hacker online, a high school student from Cupertino, California, who flipped websites the way some people buy, fix up, and sell houses. Shaikh, Mahler, and the teenager pooled $25,000 and bought a company called Ucash.in to overhaul and resell.

Meanwhile, Shaikh found love again. He had been surfing Shaadi.com, a website catering to marriage-minded Indians and Pakistanis, and spotted a profile he liked: Saroash Syed, from Staten Island, New York. She was pretty and came from a Pakistani Muslim family. Unlike most of the women on the site, who were traditionally dressed, Syed was pictured wearing the outfit she had gone clubbing in the night before. The two started messaging each other. She was a manager at Forever 21 in the Staten Island Mall, and she could be brash and assertive. And like Shaikh, she was divorced and had an interest in business.

In January 2008, Shaikh flew to New York to meet her. About a month later, they married in a religious ceremony, and she moved to California. By November, they had started a business, Perfect Acumen, and hired developers in Pakistan to churn out iPhone apps.

But even as Shaikh filled his life with new businesses and new relationships, the specter of YouSendIt continued to haunt him. Earlier, an angel investor had approached Shaikh about FlyUpload. After the investor asked Shaikh for references, the deal fell through. Shaikh says YouSendIt was to blame. (Kumaran recalls telling the investor he couldn't speak because of confidentiality and antidisparagement agreements.)

When YouSendIt's website began listing only Ranjith Kumaran as the company's founder, Shaikh was livid. Sometimes a simple mention of the name YouSendIt could derail him. His wife eventually made a rule: No talking about YouSendIt in the house.

But Shaikh had other ways of venting his frustration. He started a short-lived blog called YouSendItDeathwatch.com. He asked a lawyer about suing YouSendIt for wrongful termination and also considered taking YouSendIt to small-claims court, but he didn't pursue the cases. From time to time, mysterious changes would appear on YouSendIt's Wikipedia page. Sometimes Shaikh would be the only co-founder mentioned.

By the fall of 2008, Shaikh's projects were barely breaking even. FlyUpload had not panned out as he had hoped. Shaikh had ended up selling it for $50,000. Ucash.in had also failed to take off. "We are really dead," Shaikh wrote to Mahler in an e-mail. "Like dead dead dead...I'm not putting in more." Mahler wanted to keep going—and try to get back the $7,500 he had invested—but they ended up selling Ucash.in for a loss. By the end of 2008, the future of Perfect Acumen, the iPhone app company Shaikh had started with his wife, was still uncertain. Shaikh had sold his Porsche and was now driving a Mazda A3.

In Shaikh's absence, YouSendIt had continued to grow. It had raised an additional $14 million in VC funding and had 100,000 paying subscribers. Still, Shaikh marveled at how often YouSendIt's site went down. He had even sent a tip about one of the outages to Valleywag, an industry gossip blog, which ignored his e-mail. If YouSendIt's servers were still running the way he had left them, he believed, the site wouldn't be crashing. At YouSendIt, Shaikh had been the subject of what he calls "senseless, mindless pressure" to keep the servers running. Now, no one seemed to care.

So, on a chilly Tuesday morning in December, Shaikh ran a piece of testing software, called ApacheBench, that flooded YouSendIt's servers with traffic. The servers keeled over immediately. Later that day, a sentence appeared on YouSendIt's Wikipedia page: "Looks like the company may be out of business, their site is down." (Shaikh says he didn't write it.)

According to YouSendIt, the attack lasted for about 12 hours. Every time YouSendIt's engineering team found the source of the attack and blocked the IP address, Shaikh launched an attack from a new one. He managed to bring down the site for a total of four and a half hours. A week later, Kumaran reported the attacks to the FBI. He told them he suspected Shaikh.

Shaikh never imagined that authorities would be interested in his activities. To him, they amounted to nothing more than a prank, a way to blow off steam. Shaikh returned to work at his latest contract gig, at nVidia. He was unaware that federal agents were subpoenaing his Internet records—and quietly reaching out to his friends and associates.

As 2009 progressed, Shaikh began to find meaning apart from YouSendIt. His wife found out she was going to have a baby, due in September. And Perfect Acumen, the couple's iPhone app company, was finally getting off the ground. The developers in Pakistan were cranking out as many as five apps a day. Those apps may have generated upward of thousands of dollars a day in revenue before Apple eventually banned Perfect Acumen from its App Store for "persistent" infringement claims, according to a TechCrunch article in 2009. The tech blog argued that Apple's acceptance and subsequent rejection of more than 900 of Shaikh's hastily designed apps—including Top Sexy Ladies: Audrina Patridge, which sold for $4.99—revealed that "Apple doesn't know what the hell it's doing."

There were three more cyberattacks on YouSendIt in 2009. The last attack occurred just after midnight on June 14. About five hours later, changes to YouSendIt's Wikipedia page began appearing.

"Early 2005 [sic] Ranjith Kumaran hired Randy Korba, a Stanford GSB graduate in an attempt to take over the company while cutting communications with two founders Khalid Shaikh and Amir Shaikh," read the amended history. Another new addition capped things off: "Since then YouSendIt's traffic has dropped 10x..." (Shaikh won't confirm or deny responsibility for the attacks. He says he had nothing to do with the Wikipedia changes.)

On September 9, 2009, Shaikh got an alarming text from the teenage hacker he had partnered with: "Two guys at the door." The two guys turned out to be FBI agents who questioned the teen and seized his computer files—everything but his homework.

Shaikh didn't know what to make of it. The kid sometimes had mysterious ways of getting his hands on websites. Was it about that?

The following week, Shaikh got a call on his cell phone. It was Jan Mahler.

"A private investigator left me a voice mail," Mahler said. "What's going on? Why are they coming at me?" He said the investigator was asking about Perfect Acumen and YouSendIt—something about the servers being down.

Shaikh's wife, Saroash, who was due to give birth in two weeks and was at home watching TV, could hear the concern and confusion in her husband's voice. She suggested they all meet in person. Mahler offered to meet them at a Thai place in San Jose.

When the couple arrived, Mahler was already there, seated at a small table next to the wall. He spent the meal rehashing the previous events, looking for reasons someone might investigate. He mentioned he thought the FBI might be involved.

If Shaikh's and his wife's backs hadn't been to the window, they might have noticed a Chrysler in the parking lot with three men inside, watching them.

The next morning, after Shaikh went to work, his hugely pregnant and suspicious wife drove to the regional offices of the FBI and demanded to know what was going on. Agent Albert Fontana came out to meet her.

"Are you Khalid Shaikh's attorney?" he asked.

"No, I'm his wife!" she replied.

Fontana told her they wanted to speak with Shaikh and couldn't tell her anything unless he was there.

That night, the couple returned to the FBI office. Saroash was told to wait in the lobby while her husband was interviewed in an adjoining room. Because it was late on a Friday, and almost everyone at the FBI office had gone home, no one noticed when she got up and listened at the door. Inside, the agents asked Shaikh about his background. He told them about going to McGill, moving to the Valley, founding YouSendIt.

On the other side of the door, Shaikh's wife could hear him stuttering, the way he did when he got emotional or nervous.

The agents began asking Shaikh about buying and selling websites with the teenager. They asked him about a site called e.tv. It had been stolen, they said. They asked Shaikh if he knew anything about the sale of that site. Shaikh wouldn't say. Then they showed him documentation that the money for the sale, about $18,000, had been transferred online using Shaikh's IP address.

"That puts me in a very negative light," Shaikh said, according to the FBI report. "Where do we go from here?" He asked the agents if they knew of any "FBI-friendly attorneys."

Suddenly, Shaikh's wife burst into the room, speaking to him in Urdu. She had thought they were cooperating with the FBI—and this was turning into a full-blown interrogation. "Khalid, let's go," she said. When he argued with her, she lost her patience.

"Why can't I pull you out of the room?" she said. "Is he gonna arrest us? What's going to happen?" Shaikh agreed to leave, and the agents let them go.

The couple hired a criminal defense attorney and prepared for the worst. About a week after Shaikh's wife gave birth to a girl, their lawyer received discovery documents that included FBI reports. Shaikh had said enough during that meeting to give the FBI plenty of evidence to work with. And there was another chunk of evidence on a CD, clipped to the discovery pack. When Shaikh's wife opened the audio files, she could hear herself and her husband, chatting with Mahler over green curry and basil chicken. Mahler had worn a wire.

On October 28, 2009, Shaikh was indicted on four counts of computer fraud for attacking YouSendIt's servers. He was released on a $100,000 unsecured bond. In June 2011, he pleaded guilty to the first count, a felony, for the cyberattack that took place in December 2008. (No one was ever charged with stealing e.tv.) Shaikh agreed to pay $48,194 in restitution to YouSendIt. His sentencing hearing is scheduled for April 30, 2012. The sentencing guidelines recommend six to 12 months of imprisonment, but under the terms of the plea agreement, that may be reduced to house arrest. Whether or not he serves jail time, it's unclear how much longer Shaikh will be allowed to stay in this country. Though his wife is a U.S. citizen, Shaikh is here on a temporary work visa. He applied for permanent residency in 2009 but was denied. "This kind of conduct comes under great scrutiny with the government," says Michael Wildes, a partner at Wildes & Weinberg, which specializes in immigration law.

Since Shaikh's arraignment, contract work has been harder to get, especially at companies that do background checks. His recent resumé states that he is willing to relocate without expenses. Since June, Shaikh has been living in Colorado—a company there hired him to write code for a set of home monitoring gadgets. His wife and daughter remain in California. Shaikh is clean-shaven now, and he has gained some weight. He has given up the flashy suits and the T-shirts in favor of unassuming slacks, a blazer, and a polo shirt.

Every weekday, Shaikh drives his muddy Honda Insight hybrid from the desolate Motel 6 to a low-slung office building 9 miles away. Shaikh says he distrusts his one-year employment contract, so he refuses to lease an apartment. The Motel 6 may be wedged between a six-lane thoroughfare and a Walmart, but it carries no contractual obligations. Shaikh controls whether he stays or leaves.

Other sorts of contracts—a mortgage, credit card agreements, car loans and leases—have stacked up against Shaikh over the past few years. An October 2011 presentencing report estimated he and his wife have more than $263,000 in combined debts, contributing to expenses of about $9,000 a month. That's before legal fees related to his court case—and the money he must pay YouSendIt. In Shaikh's mind, the Series A contract, which caused him to lose control of YouSendIt, was the one that led to his downfall. That's what started the battle he ultimately lost.

Shaikh still doesn't understand why knocking YouSendIt offline for a few hours overshadows everything he did for the company. "Why don't they talk about when it was a top 600 website in the world, when I was doing everything to run it?" he asks. "Millions of dollars later, I do something so small, and it's a big deal?" In Shaikh's view, he just chose an improper method of expressing himself. "I vented through technology," he says. "Obviously, this was the wrong way to vent."

Alone in Colorado with his thoughts, Shaikh often spends his off-hours wandering through a local mall. "People are very kind here," he says. Sometimes his thoughts drift back to when he and some friends hacked together YouSendIt, when it was a simple site that made enough money to pay the bills, when there were no investors, no lawyers. "Once you break even, to me, that's the best point," he says, "because at that point, you have complete control over your own life." Still, Shaikh's not sure he will ever launch another business.

Shaikh remains close with his brother, Amir, who now runs InRCom, a small marketing company in New Jersey. But their old colleagues seem worlds away. YouSendIt, still under the management of Ivan Koon, exceeded $24 million in sales in 2010, up some 2,500 percent since Shaikh left the company. YouSendIt made the Inc. 500 in 2010.

In early 2011, Kumaran left YouSendIt to launch PunchTab, a company that designs software for customer loyalty programs. (Kumaran remains on YouSendIt's board.) In November, PunchTab received $4.4 million in funding from some of YouSendIt's early investors.

"Outsiders get sold this vision that you start a company, get funding, and you're set for life," says Kumaran during an interview in Palo Alto, near the PunchTab offices. "I'm Exhibit A, a very old 36-year-old"—he points to his gray hairs—"that it's a lot tougher than that."

These days, Kumaran speaks in the press about "lessons learned." He even penned a Forbes.com article in January. First bullet point: "Early stage investors back you, not your company." He never mentions either of the Shaikh brothers.

IMAGE: Vivienne Fleasher
Last updated: Feb 28, 2012

BURT HELM | Staff Writer | Senior Writer

Burt Helm is a senior writer for Inc. Magazine.




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