Overview:
The former Bitwise landlord says the company was simply selling a dream – one that easily came undone with time.
For more than a decade, Bitwise co-founders Jake Soberal and Irma Olguin Jr. managed to sustain a vision they had for Fresno.
“It’s not at all a mystery,” said Olguin Jr. in a Ted Talk recorded last year. “But we do have to do three very specific and deliberate things. Invite the underdog in the front door. Pay them to learn like it’s their job. And then build them castles in their hometowns.”
In Olguin Jr.’s vision, the underdog city was Fresno. The job was at Bitwise Industries. And the “castles” would eventually rise everywhere – until they started to fall.
In a reportedly 6-minute phone call over Memorial Day weekend, the founders revealed the company was financially unstable, and it was to furlough all 900 of its employees. The company soon filed for Chapter 11 bankruptcy.
Local Bitwise hubs in Fresno, Bakersfield and Merced shuttered their doors. Company expansions in Toledo, El Paso and Chicago quickly came to a halt.
In the following weeks, a slew of lawsuits were filed against the company – including a class action lawsuit from impacted employees.
Bitwise tried – but failed – to keep its positive outlook
The company was building “castles” in withered, old buildings in downtowns that don’t normally see that activity. In Olguin Jr’s words, Bitwise Industries would buy buildings for “pennies on the dollar.”
But one of the lawsuits revealed the company didn’t own the buildings it lived in. It master-leased the facilities and paid flat rates to the legal owners.
Will Dyck of Baltara Enterprises owns all three of the former Bitwise buildings in downtown Fresno – including the Bitwise South Stadium, which once served as the company’s headquarters.
Not only is Dyck the company’s former landlord, but he’s now also one of Bitwise Industries’ largest creditors in the bankruptcy.
Dyck also served on the Bitwise Board of Directors in 2018. He remembers the early days of the company well.
“They had an interesting concept,” Dyck says. “They identified the three areas of their business model, that were technology, education and a sense of place.”
Bitwise Industries sought to make tech jobs more accessible to underrepresented communities in the Central Valley. And for a number of years, it managed to maintain the image it was succeeding.
It created coding workforce bootcamps, offered apprenticeships to young professionals, and built websites for local businesses. Bitwise Industries also partnered with local governments and schools to expand their reach.
But Dyck says the company was simply selling a dream – one that easily came undone with time.
“Just blatantly, the financial backing to make all these good works happen was unbalanced right from the start,” Dyck says.
Dyck left the Bitwise Industries board in 2019 because the company couldn’t solve one key problem.
“It was always betting on the future, that someday we’ll become sustainable.” Dyck says. He said the company operated as if it was coming up with “the next Google…something that will make it all OK.”
“Unfortunately, time ran out before that happened,” Dyck says, standing in an empty building that formerly housed company operations.
‘I don’t know where it’s going to land’
Dyck is only one of a long list of investors and shareholders who are waiting to see what comes out of Bitwise Industries’ bankruptcy. Baltara Enterprises is owed more than 1.5 million worth of shares of stock from the company – but Dyck isn’t expecting to get much of that back.
“Even if they were to pay dollar for dollar of what comes out of the bankruptcy, we would get probably 5% of what we’re owed,” Dyck says.
Dyck says people tell him he should be angry about the money he lost. Instead, he says, he’s sad about the promises broken by the collapse of the company.
“People say everything from ‘[Soberal and Olguin Jr.] did it because they had to,’ ‘They committed fraud and they should be in prison.’ I don’t know where it’s going to land. I don’t know,” Dyck says.
A federal investigation accuses co-founders Soberal and Olguin Jr. of just that – fraud.
They’re accused of swindling investors for more than $100 million for several years. The pair surrendered to the authorities last week.
This story was updated to clarify Dyck is owed more than 1.5 million worth of shares in stock.
This story was originally published by KVPR.
This story is part of the Central Valley News Collaborative, which is supported by the Central Valley Community Foundation with technology and training support by Microsoft Corp.
