The Seven Dreamers fiasco

I wrote this up awhile back, but never got around to hitting the publish button. This is what transpired between Seven Dreamers and myself in the months leading up to their bankruptcy.

In November (2018), I was contacted by a guy recruiting for 7D. They wanted someone to take over factory operations, factory security, and so forth … they wanted to bring the laundroid to the Japanese market by Christmas 2019.

I wasn’t too enthusiastic about going back to China, but the laundroid was a project that I really wanted to see succeed. So I had a bunch of meetings with Shin, Makoto, and their former head of engineering. As the talks continued, the feeling grew that there was something not quite right with 7D. So I asked to have a frank discussion about the state of 7D/laundroid, with special emphasis on intellectual property and manufacturing rights, signed an NDA, and had that meeting.

They’d just received their third (or possibly fourth) round of funding (which seemed really odd for a “startup” that had been around since 2011), they were ready to do a production verification test run at the Chinese factory (Haier), and they just needed someone to shepherd to production ramp.

Little tidbits kept slipping out during the discussions, however. They’d done DVT and EVT (development/engineering verification test) runs at a factory in Japan (Panasonic, not Haier), and wanted to air-drop everything over to Haier and ramp there. This was tried without success at Apple, when they tried to move production of a random iPhone from Foxconn to Pegatron. Most of the gear arrived at Pegatron damaged. Foxconn denied responsibility, but anyone who spent any time at a Chinese contract manufacturer knows what happened.

It turned out that they hadn’t yet signed a contract with Haier. This bit will become rather important in this story a few paragraphs down.

At this point, I was starting to suspect that they were in a bit of trouble. Nobody sane jumps from one contract manufacturer to another after a PVT or two, and especially not without restarting the *VT process. The whole point of the progression is to make sure the factory is actually capable of making the product.

You don’t just throw the schematics and production documents over the fence to the CM and call it good. However, that was exactly what they were planning to do.

Panasonic was apparently very upset that 7D pulled out of the production deal in favor of Haier. They didn’t come right out and say that, but the asks of the role I was being brought in for made it pretty clear that they were not going to bring any production tooling from Panasonic to Haier.

At this point I told them that I’d need full disclosure in order to decide if I was going to take the gig. That’s when the NDA bit happened.

They were going to use an NVidia ARM platform. Their intention was to release the laundroid as an API; 7D would control the hardware and the OS, third-parties would write apps that ran on the laundroid. Ambitious, I thought …

… except for that pesky GPL. Which they had never heard of. Which essentially ensured that they’d have to provide source code for their OS value-add to any customer who asked. They asked why they couldn’t simply ignore that, as “nobody does that”. I urged them to check the license requirements and run it past their lawyers.

They had frozen the hardware design around December 2018. The firmware was in what we’d call a “slushy freeze”. The OS side was admittedly a heap of spaghetti, and was to be refactored sanely. Shin said that they’d run out of time, and were going to ship what they had as v1 come hell or high water, with dev resources being focused on v2. I’m personally unsure that the v1 firmware was anywhere near shippable; they were still asking how they should go about basic things like performance metric transmission … but that’s what they said.

Another highlight of the meeting was that they’d given Haier the rights to market the laundroid in mainland China; 7D intended to market it elsewhere. I further recommended that they go over that contract with a fine-toothed comb. “That’s not necessary,” they said, “they’re our trusted partner”.

I thought about it for a week or so, made a couple of adjustments to the proposed employment contract, they agreed, I signed, and was set to start on 18 March.

Then things started getting really weird. The Friday before my start date, 7D said that they had run into some contractual issues. Shin needed to go to China to meet with Haier, and the timetable was suddenly out the window. They asked me to hold off on starting until 01 June — it probably wouldn’t be that long, but they wanted to worst-case it.

I said that was fine, and I’d stand by awaiting instructions. No worries on my end; the contract said I was employed effective 18 March, they didn’t amend it, so I was taken care of … I thought. I was going to negotiate back-pay after I actually started deploying to China.

Not long after, they sent a one-page to me via the recruiter saying that they couldn’t hire me. You can read it at https://www.disavowed.jp/7D/7D_cancellation.pdf.

That was, of course, extremely unacceptable. I demanded a meeting.

We met on 10 April. Only the executive secretary (Makoto Sato) attending. The first half of the meeting was me determining what in fact had happened (and getting gibberish in return), the second half me explaining that they couldn’t just do that, and giving them until 26 April to work out a deal.

“Sure, 26th April, that’s fair!”

They’d already filed for bankruptcy at that point, although Makoto denies it in the recording I made of the meeting. I thought I was safe because Japanese bankruptcy simply can’t happen that fast.

So I waited. I’d given up on them, tried to reconnect with recruiters, and abided by my NDA.

Yahoo Japan reported they’d declared bankruptcy on 23 April. I sent them an email demanding a response upon pain of legal action, they said “nope, talk to the bankruptcy trustee, and by the way, you weren’t an employee”.

I talked to my lawyer, who said a) they’re wrong and b) you’ll get nothing out of a bankrupt company. So I posted the situation on LinkedIn, and the trustee reached out to me at 0200 the following day (a Saturday!), inviting me to join the mass of creditors.

I’ve got email to back most of this (the recruiter helpfully cc’ed me on his discussions with 7D).

About Chris Kobayashi

I'm a security systems engineer, specializing in UNIX, network, and physical security. I'm in Tokyo, and I'm mostly retired now. I'm well-versed in both electrical and software engineering, with a particular interest in old computers and game consoles.
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