
This guest post was written by Josh Dickson the founder of Syrah, which makes a web content editing tool, and syndicated with permission. The original version is here.
MOUNTAIN VIEW, California — Every year, thousands of employees begin new jobs at technology startups in Silicon Valley.
The transition, even for veteran tech workers, can be stressful and demanding. For employees at mobile messaging startup Tango, or Tango Me as the company is sometimes styled, there were often unexpected surprises.
As a young iOS engineer opened lunch at his desk inside the company's Mountain View headquarters, a middle-aged man with dark, unkempt hair, who had been mulling about the engineering floor, approached. His eyes narrowed sharply.
“Who are you?” the man barked. “Who do you work for?”
The young engineer, only several weeks into his job at Tango, struggled to answer. He paused, then answered slowly, trying to figure out what he'd done to deserve the public lashing. It was his first time speaking to the older man.
“There is no eating at desks,” quipped the older man, loud enough for those around to hear clearly. The unscheduled feedback session continued.
The engineer, dumbfounded, eventually closed up his lunch and went to eat alone in the cafeteria.
“Some first impression,” said a source with knowledge of the incident, speaking for this article on condition of anonymity.
The older man, Uri Raz, is Tango's co-founder and CEO. Along with co-founder and CTO Eric Setton, Mr. Raz founded Tango in 2009 as a voice and video calling mobile application. The duo designed the product, a cross-platform alternative to Apple's Facetime technology, to keep in touch with friends and family around the world. Prior to founding Tango, Mr. Raz was already a successful serial entrepreneur, having founded and sold a number of companies in both the United States and Israel. His largest success came in 2006, with the sale of Appstream to Symantec for $53 million.

At Tango, user growth was meteoric. Tango recorded its millionth user just ten days after launch. The company raised significant amounts of venture capital to expand its product offerings and hire employees. Along with further development of its core messaging product, it experimented with content channels, games, and most recently, e-commerce.
Now well into its seventh year, Tango has raised a staggering $365 million in venture capital in at least five publicly disclosed rounds of financing. The largest portion of that financing came in March of 2014, when Chinese e-commerce giant Alibaba Group invested $215 million as part of a $280 million round.
In a statement announcing the fundraising, Mr. Raz termed it “just the beginning” for Tango. Tango was often included in lists of mobile apps that could be the “next WhatsApp,” a reference to mobile messaging app WhatsApp's $19 billion purchase by Facebook in early 2014.
Not long after the $280 million investment closed, things changed. New business initiatives failed to live up to expectations. A number of executives, many of which had only been with Tango for a short time, left the company.
In late November, just as most in the US were preparing for the Thanksgiving holiday, Techcrunch reported that Tango had laid off 9% of its workforce following a failed move into e-commerce. The story featured comments from Mr. Setton, who addressed challenges in Tango's business. “The initiative didn’t really pan out. We didn’t see the conversations we wanted. [There was a] good amount of traffic but the volume didn’t materialize. [We recently] updated the app to take the e-commerce flow out, but unfortunately couldn’t keep the team working on that initiative.”
Mr. Setton, speaking about the company's revenue growth, told Techcrunch, “this year, [revenue] is an order of magnitude above what we’ve ever seen before.”
Techcrunch described the layoffs as a “reshuffle.”

Yet in dozens of interviews and conversations with both current and former Tango employees, dating from early October up to the publication of this article, a picture emerges of a company in the middle of far more than a reshuffle. One former engineer described the environment as “the most toxic I've ever seen, and I've seen everything.” Another former employee described morale as “ridiculously low.” Random quiet firings have been common since August.
One employee described the information given to Techcrunch, particularly the 9% figure, as “a load of [expletive.]”
“Nobody will say anything because they are deathly afraid of Uri,” said a former employee, speaking on condition of anonymity for this story. “That company is beyond [expletive]ed up.”
Numerous former employees, all of whom had experience at other technology companies in Silicon Valley prior to joining Tango, said they could write a book on how poorly Mr. Raz and his management team ran the company.
On Glassdoor, a platform that allows employees to anonymously review their employers, Tango's reviews are an outlier. 80% of Snapchat reviewers approve of its frat boy turned chief executive Evan Spiegel. At Twitter, new CEO Jack Dorsey nabs 94%. 100% approve of WhatsApp CEO Jan Koum, and 97% approve of Facebook's Mark Zuckerberg.
At Tango, Mr. Raz holds an approval rating under 50%, an unheard of number for a technology CEO.
Several former employees believe that Tango had offered compensation to employees, particularly engineers, to not post negative reviews upon quitting, and had compensated current employees for leaving positive reviews.
One former employee cited Glassdoor as an ongoing issue with recruitment.
Tango, which boasts a valuation of $1 billion, is an example of what is often referred to as a “unicorn” — a privately-held startup with a valuation of at least $1 billion. In the past several years, unicorns have become more common as startups raise vast amounts of capital to fuel their growth. Aileen Lee, founder of Cowboy Ventures, first coined the term in a 2013 article for Techcrunch. In an expanded and revised summary of unicorn valuations for Techcrunch earlier this year, Tango is listed near Tumblr, Eventbrite, and Next Door.
Among companies that have messaging apps as their core product, just three are valued more highly than Tango: consumer focused Snapchat and WhatsApp, and enterprise focused Slack.
A burgeoning global interest over control of mobile messaging apps, a strong engineering team, significant user growth, and founders with a history of successful exits gave Tango all it needed to raise tens of millions of dollars in venture capital. In early 2013, Tango announced that it had reached 100 million users.
Messaging apps, in both user numbers and valuations, boomed.
In late 2013, both Facebook and Google are believed to have shown interest in acquiring ephemeral messaging app Snapchat for as much as $3 to $4 billion. Tencent Holdings, the parent company of WeChat, the dominant mobile messaging app in China, offered to invest in Snapchat at a $4 billion valuation. Japanese messaging app LINE was thought to be considering an overseas IPO at a valuation near $10 billion. In early February of 2014, Japanese internet giant Rakuten bought messaging app Viber for $900 million.
In late February, Facebook bought WhatsApp and its 400 million active users for $19 billion in stock, which would become $22 billion in stock by the time the deal closed.
In China, WeChat's dominance had helped double the public valuation of owner Tencent Holdings. Chinese e-commerce giant Alibaba, which had its own messaging app called Liawang, had struggled to compete with Tencent and WeChat. Marketing efforts to boost its popularity, which included Alibaba founder and chief executive Jack Ma publicly quitting WeChat in favor of Liawang, were unsuccessful. Alibaba considered pivoting Liawang away from messaging, or closing it down altogether.
By early 2014, though Tango was closing in on 60 million active users, it too felt as though it had missed the opportunity in China. Despite launching in China well before WeChat, Tango had never found a real level of success there. Tango's user numbers lagged behind other messaging app giants, and it was not a clear number one winner in any of its key markets.
Alibaba, flush with cash from its e-commerce operations, began to look at sizable investments in US-based technology companies. With its own chat app a failure, it wanted back into the mobile messaging space. Through Yahoo co-founder Jerry Yang, who had been instrumental in Yahoo's investment in Alibaba, Tango found an audience in Alibaba chief Jack Ma and its US-focused investment team. In March 2014, just one month after the deals for Viber and WhatsApp, Alibaba led a massive $280 million round of financing for Tango, valuing the messaging app at $1 billion. Alibaba pumped $215 million into the company for a twenty to twenty-five percent stake.
Well before the $280 million round of financing, Tango's management had grown restless with its core messaging product.
While Tango could monetize its messaging app with ads, management lusted for messaging to become just one feature at the heart of something larger. Nearly a year before the Alibaba deal, the company had already pivoted from a messaging app to a “mobile social” network, following similar moves by other messaging apps like LINE. Tango added a number of in-app games, e-cards, and animations, and later added photo filters and in-call activities.

Tango's first major foray outside messaging came with the addition of what it called “content channels.” Channels would serve as a way for brands, like Spotify or 500px, to better interact with users and distribute content to followers that could be shared within Tango's messaging product. A video from June 2014, posted to the company's official YouTube page, outlined the channel functionality, similar to that of a Twitter account or Facebook page.
Channels was later reworked into a concept called “rooms.” According to sources familiar with the company's thinking, Tango believed that people wanted to have “meaningful conversations” around content from a number of high profile brands that it had inked deals with, including Vimeo, WhoSay, Buzzfeed, Spotify, Rhapsody, Soundcloud, AOL, Vevo, Funny or Die, and Hulu. “It's a perfect example of [Tango management] not understanding the users. They only wanted meaningful conversations about smoking weed or sharing naked pics,” said a former employee.
In a November 2015 review of the app, it was not clear whether any of the high-profile channels remained. Rooms remains a core feature of the app.
Games, a mainstay of mobile social apps that Tango was modeling itself after, became another area of focus not long after the channels launch. In July 2014, Tango hired renowned gaming executive Jim Ying, who had previous posts at RealNetworks, GREE, and Xbox, to lead a new in-house gaming development team. Tango, which had previously released a software development kit to help companies build games for its platform, announced forty gaming partners and launched a $25 million gaming fund to invest directly in developers.
Tango struck gold early on with a racing app called Road Riot, a product of its growing in-house game development team. The app was downloaded over 10 million times during its first year in Android's Play Store. For a time, it was the number one racing game by download ranking. It continues to rank well on both iOS and Android.
Other attempts to build similar games were less successful. “It's gaming, it's hit or miss even with a good product. It's expensive,” said a former employee. Some games, like Marine Adventure, were well-reviewed but failed to live up to expectations. Most games, including Jewel Raiders, Pharaoh's War, Super Cake Boss, Toon Squad, and War Inc, were flops.
Less than a year after hiring Mr. Ying, Tango management, led by Mr. Raz, changed course. “The focus was suddenly off gaming and onto e-commerce,” said a former employee. For Tango, the high costs of developing and marketing games that were not commercial successes proved unsustainable. Mr. Ying left the company, and Tango laid off roughly half the gaming division in previously unreported layoffs.
The results of the $25 million gaming fund were not promising.
“They didn't receive any worthwhile submissions,” said a former employee who had knowledge of the company's gaming initiatives. Several employees doubted whether the company had ever planned to invest the $25 million and dismissed the fund announcement as a publicity stunt. No public award was ever announced from the fund. At press time, an advertisement for the fund was still present on Tango's website.

In a November 2015 review of the app, it was not clear if any third party gaming content remained.
A US-based angel investor, who had invested in a company that later became one of Tango's original gaming partners, said that Tango's gaming initiatives never made sense in relation to its scale. The investor declined to be named for this story.
The partnership with Alibaba had opened major new doors for Tango, particularly in China and e-commerce. The company hired Chi-Chao Chang, a well respected technology executive who had spent time at Yahoo, as Vice President of Strategy. Mr. Chang had famously spent just twenty-four hours at stealth mobile payments startup Clinkle in December of 2013, resigning just hours after seeing the state of the company's core technology. Mr. Chang was lauded as a skilled operator and strategist by former Tango employees.
Mr. Chang, along with some other members of Tango management, wanted to refocus the company on messaging.
In a presentation for Alibaba group in July 2014, copies of which were provided for this story, Tango pitched an alliance with Alibaba. The cornerstone of the strategy would be to “neutralize” WeChat in China and the rest of Asia by building a new, simplified messaging app that carried Alibaba branding. Former employees called it “Tango lite.” Tango would bring its years of experience in messaging app design and engineering to the new initiative, while Alibaba would provide marketing and product integration support. Tango sought additional help with Alipay, Alibaba's online mobile payments platform.
According to former employees with knowledge of the Alibaba partnership, Tango lite, Alibaba's Liawang successor, never materialized. Tango management, led by Mr. Raz, were not supporters of refocusing on messaging, and had changed direction once again to refocus on e-commerce.
According to sources familiar with the incident, just three months into the e-commerce initiative, Mr. Raz told the new e-commerce team that messaging was “over” and Tango needed to become a Wish competitor. Wish, which the Wall Street Journal has called a “direct from China shopping app,” was thought to be raising $100 million at a valuation near $1 billion. Mr. Raz demanded a new product strategy that could be differentiated from Wish by the following day, when he would present it at a meeting of the Tango board of directors.
Wish later raised $500 million at a valuation near $3 billion.
Sources familiar with the company's thinking pointed to Tango's management team, led by Mr. Raz, as a core reason for why the company failed to develop a coherant product strategy around data. Many felt as though Mr. Raz, who was notoriously hard-headed and difficult to work with, gave more credence to product suggestions from investors over keys employees with first-hand knowledge. Mr. Raz was not afraid of yelling at employees, sometimes in public, calling one an idiot “who did not know what the [expletive] he was doing” at a meeting. That employee later left the company.
Alibaba, meanwhile, had grown impatient with Tango. Still looking for success in mobile messaging, Alibaba pumped $200 million into Snapchat in March of this year. Former employees called the investment a “major blow” to morale at Tango. Many felt as though it was the beginning of Alibaba giving up on them.
Rather than work to improve morale, former employees say Mr. Raz was often at the heart of the company's problems. After a particularly challenging week in 2014, which saw already overworked employees staying later than normal, Mr. Raz sent an email to the company to say that employees were not working hard enough. The email contributed to what many described as a toxic culture at the company.
One employee, who had been away on vacation, was fired upon his return to the office.
Former employees suspected Tango of stalling on visas to make it more difficult for employees to leave the company. Those incidents could not be independently verified, though reports of the problems are available on the company's Glassdoor profile.
In May, Tango launched its now shuttered e-commerce play, Tango Shop, with participation from Alibaba and Walmart. The launch, which was US-only, was the start of another strategic plan for Tango. Tango would first build a shop where people could buy value-oriented products, getting buyers into the system. Former employees said the company wanted to eventually introduce tools for peer-to-peer selling, to allow buyers and sellers to transact within the Tango application.
Mr. Chang, whose strategic plan for Tango had focused on messaging and a possible relaunch in China, left the company.
Another Vice President, Jonathan Flesher, who had also pushed for a messaging focus along with Mr. Chang, left after only a short time with the company.
Sources with knowledge of the failed e-commerce initiative felt the move was “doomed from the start.” Tango, which skewed nearly 3:1 in favor of Android users over iOS, was more popular with those of lower socioeconomic status. “It was not a customer group that you were going to rapidly build a $1 billion [e-commerce] business on top of,” said a former employee.
The e-commerce flow has been removed from current releases of the app.
Since announcing 60 million active users at the time of the Alibaba investment in early 2014, Tango has repeatedly declined to provide an update on its user numbers. According to sources familiar with Tango's internal metrics, in early 2015 the app still had around 60 million active users.
Earlier this year, Facebook's WhatsApp introduced voice calling. By April, the feature had made its way to the company's iOS application.
According to sources, Tango's MAUs, or monthly active users, have declined from 60 million to near 30 million since April, in parallel with WhatsApp's release of voice calling.
WhatsApp (900 million active), Facebook Messenger (700 million active), WeChat (650 million active), Snapchat (200 million active), LINE (211 million active), and Viber (249 million active) have grown.
According to sources, the board has asked Tango management to cut 20 to 30 percent of its workforce during the current quarter. The company employs around 270 people.
Earlier this year, led by a new Vice President of Product, Tango launched a feature called Discover. Sources familiar with the company's thinking said that the VP wanted to turn Tango into a dating app.
Discover's design shares obvious similarities with hookup app Tinder, including card-based profiles that can be swiped left or right across the screen. “[The new VP] loved cards,” said a former employee with knowledge of the company's product plans.
Tinder's parent company, Match Group, went public in November. A source familiar with product decisions said the product strategy had been to simply “copy Tinder.”
Former employees said that the Discover feature, along with a rework of Tango's chat rooms, led to average users often receiving random hookup requests from strangers. Employees called the chat rooms a “cesspool” full of requests to hook up and trade explicit photos.
In a November 2015 review of the app, the first chat room suggested by the app was inundated with hookup requests, requests for sexually explicit pictures, and requests to chat about masturbation.
Tango, which is not believed to be profitable, earns revenue from both games and ads that it places throughout its apps. A source pegged the split at roughly 50/50.
In conversations with former employees, it was not clear whether a new strategy for the company to either raise additional capital or sell itself had been devised by management.
Data from analytics firm App Annie, which tracks app performance in both Apple's App Store and Google's Play Store, illustrates the downward trend in downloads.

In China, where some Tango executives had once sought a new path forward, download numbers continue to shrink. WeChat continues to dominate mobile messaging in China.
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Former employees believe that Tango will likely be able to find an acquirer should it choose to pursue a sale, though at a price far below its last valuation.
Path, another social networking app, was bought by KakaoTalk parent Daum Kakao for what is thought to be under $50 million earlier this year. The company, which had raised more than $75 million in funding, had around 30 million active users, the majority of them in Indonesia. Like Tango, Path was also founded by a successful technology executive in Dave Morin, who had been an early employee at Facebook.
Former employees dismissed the idea of a sale focused on the company's gaming assets in light of Activision's $5.9 billion deal for Candy Crush maker King Digital. Tango has just one game hovering around the 200th spot in the App Store, while King owns two of the top five games on iOS.
Other employees were more hopeful, and wished the company would again refocus on messaging. “Uri is brilliant, but he's never had to do anything like this before,” said a former employee. “Maybe a change of scenery would help...”
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