Salary delays, layoffs, and disclosed investors
Nimses employees and partners spoke about what is happening inside Ukraine’s much-hyped startup.
At the end of September 2019, it became known that Nimses, one of the most sensational and mysterious Ukrainian startups, is having financial troubles. Since January 2019, Nimses began to delay payment of salaries, as several employees reported to AIN.UA. The startup itself confirms that there are delays, but all financial obligations will be fulfilled after raising a new round of financing.
Despite financial troubles, the management encourages developers to do overtime and kicks off expensive advertising campaigns. “Surrealism, manipulation, and laundering of investors’ money,” this is how one of the startup’s former employees who wished to remain anonymous describes the atmosphere prevailing in Nimses. Not only employees were left without the promised money, but also startup partners, in particular, sellers on the Goods platform. However, the project is not officially closed, they continue hiring people.
AIN.UA editor explains who stands behind Nimses, where the money came from, and why the mysterious startup has not yet become a big story.
In the summer of 2017, Uanet and Runet were teeming with discussions about the unusual Nimses App. It suddenly blew up the top charts of the App Store and Play Market as either a social network, or a dating app, or maybe a crypto startup. Fancy black interface, evangelists like Ivan Dorn and Onuka, articles in popular magazines. Social networks were filled with referral links, and the SMS verification gateway was collapsing from all the verifications by phone number.
Everyone used Nimses in their own way. Some used it as an Instagram and just posted photos, some used it as a dating app, like Tinder, and others enthusiastically collected nims as a game currency.
In fact, the startup was trying to offer users a ‘multi-use superlike.’ This super like was represented by ‘nims’ – the in-app currency, which was accrued to each user every minute from the moment of registration in the application. It was planned that users would be able to buy real goods and services in exchange for nims and likes expressed in nims would become a more tangible manifestation of sympathy. In addition, thanks to the geolocation component, it would be easier for users to get acquainted with people who are physically close to them.
In August 2017, Nimses representative Yegor Okhotnikov in an interview with AIN.UA said that the service had over 3 million users in 13 countries. Also, 20,000 partners expressed their willingness to partner up with the company. The startup paraded across Ukraine and the CIS and was preparing to meet a wave of traffic from 70 countries around the globe, including the United States.
All those Nimses users needed to do is simply live their lives and accumulate nims. Over time, the startup promised that it would be possible to buy anything for nims, and at a fixed rate: 1 dollar = 1,000 nimes. The goods and services were to be provided by partners who in exchange received data on the whereabouts of users and could trap them with their advertisements directly in front of their stores.
The business came to Nimses even before they launched the Goods platform. Shops began to sell fancy clothes, accessories, coffee and muffins, and even marketing services offline in exchange for nims. Having a couple of thousand nims “in your pocket” could buy a fashionable sweatshirt from FINCH and a fanny pack from Vsi. Svoi, have a coffee in KavaBulki or order pizza in PizzaPlace. You just need to simply come to the place and transfer the required amount to the seller’s account.
Real money was excluded from this scheme. The question was how will Nimses earn money? And the company had the answer: over time, the nims were supposed to turn into a fiat currency, which could be cashed. And it looked like the team was going to deliver.
But something went wrong.
Marketing Tool and the Human Factor
Like any other popular social network, Nimses was filled with spam accounts, the only task of which was mining nims and fraud. Of course, such accounts were of no value to advertisers, moreover, nims value began to drop, jeopardizing the entire startup model. To tackle this problem the team introduced a verification system, giving permission to use nims only to those users who could confirm their existence in reality: for this, it was necessary to get the support of 10 other users who have already received verification.
But selfish miners invented more and more ways to accumulate nims. Soon, they began to sell verifications. Social networks were flooded with ads like “Verification for nims, all details in PM.” For a couple of thousand nims, any bot could be approved by a user with the status of “Human”.
The idea of making talented people rich was also unsuccessful. The “Angels” in Nimses were getting fewer super likes than ordinary hotties who were ready to share photos of their body curves and selling even more revealing photos in exchange for nims. Millions of users eventually abandoned the service.
Nimses partners were initially satisfied with the collaboration. This social network became a good marketing tool: brands received impressive coverage and targeted “barter” actions. As a spillover effect, they got media references about Nimses.
“We presented almost all the basic goods from the store at the Central Department Store, and at that time it was the most effective advertising of our brand,” said Kateryna Byakova, founder of FINCH. According to her, the campaign in Nimses paid off better than those on Facebook or Instagram and got a long tail. The FINCH significantly increased brand awareness and customers continued to call and come to the store long after they stopped selling goods for nims.
Other companies also told AIN.UA about their fruitful cooperation with Nimses.
But there were some subtle nuances. The sellers’ nim exchange rate was different from the official one. Small items that cost a couple of bucks, like a USB cable, could cost hundreds of thousands of nims. A branded T-shirt would cost a million. Several times the company tried to adjust the rate to the originally declared 1,000 nims per dollar, but in response, sellers simply removed their goods from the Goods platform, provoking user dissatisfaction. The administration of the service was forced to give up and allow the trading platform to set its own rules.
Soon the sellers decided that the benefits in the form of advertising weren’t enough for them – they wanted real money. In response, Nimses launched the Exchange where you could exchange nims for money, but the amount had to be not less than 80 million nims (for which they promised 15,000 euros).
At first, Nimses regularly delighted users with announcements, but each time it greatly delayed its releases.
The team promised to launch the Goods platform in June 2017, but it only started working in Kyiv in September. The delay was justified by technical modifications, which were needed to be done due to the unexpectedly rapid growth of the Nimses user base. Only in December, the Goods section was launched in other big Ukrainian cities.
The team became more careful and stopped making further announcements, notifying about the changes only after the launch. All in all, in 2018, there was little information from Nimses. The members of the initial team – SMO Andrey Sirchenko, speaker Yegor Okhotnikov, and others – that AIN.UA previously communicated with were one by one leaving the company.
By that time, the hype wave settled down. However, the platform itself was constantly changing. Nimses tested more and more new mechanics that appeared and disappeared suddenly, without warning, which completely perplexed users and partners.
The triumph of the human ego
In February 2019, the company introduced a major update, and the initial goals have changed dramatically. Earlier they dreamed at Nimses of giving users the opportunity to show each other that they care, but now the service decided to switch to the good old self-absorption. “All eyes are on you. You are in the center. The world is shocked. And life really will never be the same,” said the newsletter describing the update.
Now, the status of an angel could be acquired not only by talented users who were making the world a better place with their creativity but anyone who collected 1,000+ nominations from other users (by the way, the nominations quickly turned into the same scheme as verification in its time). The “Angels” were becoming curved girls and sociable guys, rather than representatives of the creative class.
Despite the fact that this version was supposed to be final, Nimses continues to change every month. If you remove the application from your smartphone, and after some time download it again, you won’t be able to immediately find out what is happening here. One thing is obvious – it is still alive and still has users.
So Secret, Much NDA
Сompanies in Ukraine prefer to keep things private. The owners usually don’t like to go public about anything so as not to attract the attention of tax and other inspection authorities.
At Nimses, privacy is part of the corporate code. Owners and top management created an aura of mystery around the startup, which performs two functions simultaneously. The first function is purely marketing. The more they hide something from people, the stronger the intrigue: though people are not that interested in Nimses, the intrigue has not disappeared completely.
The second function of secrecy is protection. The less they know about the company, the less vulnerable the company is. Therefore, any collaboration with Nimses begins with the signing of a non-disclosure agreement. This applies to everyone: partners, employees, and even candidates (they are allowed to be interviewed only after signing an NDA). AIN.UA learned it from the company’s ex-employee Andrey (the names of respondents are changed hereinafter).
“Product Company. Secret Startup. NDA project. These are the nicknames that the company’s recruiters chose for their headhunting, ” describes the hiring process Andrey.
Employees are not allowed to specify Nimses as their place of work. You can work only through the corporate network or using a VPN. Everyone had an MDM profile installed on their working computers.
Ukrainian businesses that sold their goods on the Goods platform for nims also signed the NDA. “We have a non-disclosure agreement [with Nimses], so I can’t comment. I can say anonymously that we, as well as others, are waiting for payment,” one of the sellers told AIN.UA. According to him, they have been waiting since January 2019.
One cannot enter Nimses office from the street. Those few people who turned out to be privileged enough to get inside were met by company employees in the courtyard and then led inside. The office itself is spacious, modern, expensively equipped and decorated with artificial plants. The employees feel comfortable there and get delicious and healthy free food. However, according to Andrey, recently there have been problems with all that.
But this wasn’t their biggest disappointment. According to Andrey, the processes at Nimses turned out to be the worst of all in his career: the developers were constantly given unrealistic deadlines without clear justification, and if they failed, the management would put pressure on them and demanded to work faster, sometimes in a boorish manner.
Deadlines were given names like “Martial Law scope” to emphasize importance and urgency. And all of this in face of constant product pivot when the application had to be rewritten almost from scratch. As a result, the team was forced to work overtime, and, according to Andrey, they weren’t paid for that.
And employees’ reward for their efforts was supposed to be the awareness of being on “top of the product development chain” and being a part of the company’s ambitious mission: victory over the banking system, cryptocurrencies, and social networks. In the end, the most persistent employees were to find themselves as a part of a “billion-dollar company that has received worldwide recognition and changed the lives of people.”
C-level and investments
Information about the owners and investors of the project is also classified. This is all we could get from the sources:
- David Mironovsky – co-founder, CEO and chief ideologist of the project;
- Victor Strelbitsky – СОО;
- Vladimir Milman – CFO.
Andrey Boborykin, who replaced Yegor Okhotnikov, is responsible for communications in the company. Six months ago, he quit and launched his own business. Okhotnikov refused to comment on the situation and climate in Nimses that prevailed during his time at the startup.
The representative of the company in matters of intellectual property – Yulia Skochilo. The startup itself is registered in the U.S., in the state of Delaware, but the rights to the trademark are also registered in Ukraine. Today, according to YouControl, in Ukraine Mironovsky owns only the company named “Big Caps”, which sells tea, coffee, and hot drinks wholesale and retail. Another beneficiary is Strelbitsky. (Update: in the first version of the article we mentioned that the rights to TM Nimses were transferred to Yulia Skochilo from MIronovsky. It is a mistake: Skochilo is the representative of the company in matters of intellectual property.
We couldn’t find out who were the investors in the company that has been working on a startup for several years. As AIN.UA came to know, one of the investors is a Ukrainian investor and entrepreneur, director of Kvazar-Micro Evgeny Utkin. He confirmed to AIN.UA the reliability of this information: Utkin has been investing in the startup since 2017.
“I’ve been a shareholder, angel investor, and strategic advisor to the company since 2017. Almost half of my time is spent developing the company, but not its operations. Nimses is a very innovative, modern company that has presented a number of completely pioneering ideas to the world in two years. “Time is money,” unconditional basic income, impeccable design, innovative blockchain, temples, showcases. All this came to the market at once, there were mistakes and failures. Such a turbulent agile that is possible only in Ukraine. The company has been developing on a scale surprising even for Silicon Valley, but still from Kyiv with very limited access to any financing,” Utkin answers the question of why he invested in the company.
AIN.UA found out that Russian investors are also involved, as well as an employee of Ukrainian ICU fund: this is his private investment (Updated: the first version of the article indicated that one of the investors was the ICU fund. In fact, this is a private investment of one of the ICU fund employees, but not the fund itself).
According to former employees, they promise to pay the unpaid salary at Nimses after attracting a new round of investment. Representatives of the social network confirmed that they are working on attracting investments, but there are no details: “Wait for the press releases,” Nimses responded shortly. Utkin assured that the startup will also pay off all employees and partners, and the startup itself is busy right now attracting new investments.
The editors of AIN.UA couldn’t find anybody in the market who heard about Nimses looking for financing right now: local business angels and investors are not aware of such a request. “There is no upcoming funding, these are empty promises (“at the final stage”, “there will be news next Tuesday”, etc.) last since January and never stopped,” commented a former employee Roman. According to one of the Ukrainian investors in an interview with AIN.UA, no one will publicly give them another round: this is a closed company without a clear monetization model. And Nimses, in turn, will not take a public round, as it has not done it before.
When the problems started
According to AIN.UA sources, salary delays began in January 2019. At first, they paid in full or partially, but by the summer payments to employees had ceased.
Vladimir hasn’t been paid for two months; Andrey says that the average debt is for 3-4 months of work. “The remaining employees have not yet been paid. Debt repayments do not occur either,” he says. Nimses confirmed the existence of debts and added that they have a plan in place to repay them.
Partners are also waiting for the repayment. In one of the intermediate versions of the product (if you can call them that), merchants were promised 15,000 euros for the “infinim” (about 80 million nims as of October 2018). Then Boborykin told AIN.UA that some merchants had successfully converted their infinims. In order to do that it was necessary to go through the verification procedure – in other words, to verify that the nims were earned in accordance with the rules of the platform.
One of the merchants at Goods, who wished to remain anonymous, said that, like many others, he was still expecting payment from Nimses.
“We went through all the “honesty verifications” of the earned nims in February and March. The last time we talked about payments with support was in May when we were asked to be patient. Recently we wrote to support again. There hasn’t been an answer yet,” he said. His page managed to collect two infinims, that is, about 160 million nims. He still didn’t get the promised 15,000 euros for the first infinim from Nimses. The merchant was no longer applying for the conversion of the second since he didn’t see the point in doing so. Since May 2019, his page has suspended work at Goods. During the time of cooperation with the service, he sold for nims about UAH 100,000 worth of goods. Nimses said that all payments are in line and the startup will pay off all debts in the future.
The editor of AIN.UA also contacted the company Zvuk, provider of streaming music for Nimses (the parties haven’t disclosed the terms of their cooperation) and asked to confirm or deny the existence of Nimses debts to Zvuk. “We have no problem with Nimses. We don’t comment on other issues/questions,” answered the Head of Partnerships at Zvuk Edward Davydov.
Despite financial problems, in June 2019, Nimses paid for expensive advertising integration with the most popular blogger on YouTube: a video with Nimses advertising was released on the PewDiePie channel. Felix Chelberg devoted more than a minute at the beginning of his video to the Ukrainian service. Also, a link to the application can be found in the description under the video. The video collected 6 million views.
Nobody knows the exact rates for Chelberg’s ad placements, but earlier he confirmed in one of the podcasts that he makes about $ 3,400 per hour off his videos. A post in PewDiePie’s Instagram costs $70,000. According to Nimses ex-employees, they paid for the marketing campaign involving the famous streamer with a loan from a private person. By that time, Nimses was already experiencing problems with paying salaries and affiliate conversions through the Nimses Exchange.
Nimses refutes the fact of massive layoffs, “The employee turnover within the company is no different from the average on the market both in terms of quantitative indicators and in terms of reasons,” Nimses noted.
However, according to one of the interlocutors, the layoffs did take place. “A few people were fired from the development and product management teams (one of the first people on the project), because they were considered “ineffective” according to the freshly hired “vice president of engineering,” the source said.
“David, CEO of the company, has a very strange idea of how to do business. It feels like he’s just trying to melt human resources into a product’s popularity without thinking about anything that might be common sense,” says Vladimir.
The exact number of employees in the company is not disclosed, so it is difficult to conclude how massive this case is. Nevertheless, according to Andrey, the company’s staff has shrunk by more than half. Those who demand their salary are offered to leave and sign a non-disclosure agreement and a completion deed, promising to pay money in the near future. And the rest are told to embrace for the next tremendous amount of work that needs to be done “yesterday.”
“At the same time, people were still hired even with a hole in the budget, and they continue to hire people,” emphasizes Andrey.
While employees suffer from overtime and lack of money, top management of Nimses, according to Roman, “does not suffer from any lack of finances. But maybe it’s just a coincidence, and they have income on the side,” he says.
According to employee observations, Nimses lacks a product strategy and monetization model: supposedly no one understood the company’s product from the very beginning. Four years passed, but nobody can still understand. It is not surprising, given the number of pivots (since the last major update, the interface has changed dramatically again). But if in 2016 the misunderstanding caused mystical delight among users, whereas in 2019 it caused more of a confusion. The promises laid out in the description of the application, “recognition, glory, success, influence, and power” sound unconvincing.
Nimses still has a “tail” of user activity following the end of the hype wave: according to SimilarWeb, the average DAU for Android in the second half of 2018 in Ukraine is 8,500, and in Russia – 10,500, and MAU, according to a former employee, for the same period amounted to about 200,000. But if the company’s past successes in PR are unconditional, then the future of the “multi-use superlike ” is now in question.