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.
