Peter Kafka

Recent Posts by Peter Kafka

Maker Studios’ Weird Story Gets Weirder, as Former CEO Sues Co-Founders, Investors

zappinMaker Studios, one of the biggest players on YouTube, is going through a messy divorce: Danny Zappin, the video network’s co-founder and CEO, is suing his co-founders, along with his former investors.

Zappin, who stepped down from his post in May but remained on the company’s board, says that co-founders Ben Donovan and Lisa Donovan, together with the company’s investors, went behind his back to dilute his ownership and reduce his ability to control the company. Zappin, who filed in Los Angeles Superior Court along with two other Maker co-founders, is asking for a temporary restraining order, a “constructive trust” over Maker, and wants the current board of directors removed.

In his complaint, which you can read below, Zappin and his attorneys allege that the Donovans and Maker investors made their moves without his knowledge. And when Zappin resigned in May, he sent out an internal email which praised his co-founders, his investors, and new CEO Ynon Kreiz.

But Zappin’s complaint also suggests that he wasn’t that happy about leaving, after all: It says the alleged manuevering was done in part to “oust Mr. Zappin as Maker’s CEO”.

Zappin’s suit comes as industry executives are trying to figure out the real value of so-called “multi channel networks” like Maker and Machinima, which are able to generate very big view counts on YouTube but are having a harder time turning that into advertising dollars. Many of the biggest YouTube players, including both Maker and Machinima, are trying to find ways to make money outside of the world’s biggest video site.

Zappin’s departure came five months after Maker closed a $36 million funding round led by Time Warner. That funding round closed shortly after Zappin engaged in a very public back-and-forth with Ray William Johnson, a YouTube star who used to work with Maker; that fight led to a public admission from Zappin that he had once been convicted on felony drug charges.

When Zappin left in May, Maker officials said his departure was unrelated to that fight. Since then people close to the company have suggested that the incident might have had something to do with it, after all. I’d love to hear what the Maker folks have to say now, but I have yet to hear back from them.

Update: Maker Studios issued the following statement: “The lawsuit is without merit and the allegations are baseless. We regret that Danny is taking this step and involving the Company he co-founded in litigation.”

stamped complaint _ Daniel Zappin v. Maker Studios_ ynon kreiz et al

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