The forgotten 'third founder' of Google is fighting a fierce legal battle against his wife, who says he purposely sold his startup in a 'fire sale' amid their divorce (GOOG)


Scott Hassan and Allison Huynh

  • Scott Hassan, who helped Larry Page and Sergey Brin launch Google, has been called the “third Google founder.”
  • Hassan left Google in its early days, but embarked on his own successful career as a tech entrepreneur. He is known as a trailblazer in robotics and founded Suitable Technologies, creator of the popular Beam robot, which is used for tele-presence at events.
  • But today Hassan is in the middle of a bitter legal dispute with Allison Huynh, his estranged wife — an engineer and entrepreneur in her own right.
  • She has accused him of selling Suitable at stunningly low price in order to get a tax writeoff. In August, Hassan sold Suitable to Blue Ocean Robotics for $400,000. However, Huynh’s lawyer said the company’s assets, including its patents, are estimated to be worth more than $700 million. 
  • The legal battles are playing out in a Delaware court where Huynh sued Hasan for breach of fiduciary duties, and in a family court in California where the couple are locked in one of the longest-running divorce disputes in Silicon Valley history.
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He’s been called the “third Google founder.” But Silicon Valley entrepreneur Scott Hassan, who helped Larry Page and Sergey Brin launch the search startup that became a behemoth, has been on a rockier path than those taken by his old Google buddies.

While Page and Brin just stepped back from the tech giant in what’s been praised as a smooth transition, Hassan, who left Google in its early days, is embroiled in a nasty legal brawl over the way he’s trying to sell his own company.

It’s a deeply personal dispute. Hassan is facing off with his wife Allison Huynh, from whom he is separated, and with whom he is in the middle of one of the longest-running divorce battles in Silicon Valley.

Huynh, herself an entrepreneur who witnessed the early days of Google, is accusing Hassan of trying to sell their robotics startup called Suitable Technologies at a stunningly low price for a huge tax write-off and huge savings in his personal income taxes.

“This corrupt motive demonstrates that he has a yawning conflict of interest and is unlawfully preferring his personal financial interest over the rights of the shareholders and his family,” Huynh told Business Insider in an email.

Suitable is the maker of the telepresence robot called Beam which has been used by the likes of Google CEO Sundar Pichai and NBA star Steph Curry to remotely attend events. Hassan, the company’s CEO and sole director, signed a deal to sell the company to Denmark-based Blue Ocean Robotics for $400,000. The deal was announced in August.

However, the judge in the lawsuit says he has reason to believe that the company is worth $100 million or more. Hyunh’s lawyer, meanwhile, said the company’s assets are estimated to be worth more than $700 million. 

In the suit filed before a Delaware court in November, Huynh accused Hassan of breach of fiduciary duties, arguing that “instead of seeking to maximize stockholder value, Mr. Hassan, in bad faith and to enrich himself alone…agreed to sell a substantial amount of the company’s assets for an infinitesimal fraction of their value.”

A pioneering robotics company

Hassan’s attorney declined to comment for the story and said Hassan also will not comment. Hassan scored a partial victory last week when a Delaware judge denied Huynh’s bid for a preliminary injunction stopping the sale, which is expected to close this month. 

The judge said the decision was “based on the balancing of the hardships,” which essentially meant he took into account the harm stopping a sale could have on Blue Ocean Robotics before the merits of Huynh’s case are determined by a court. 

But the dispute is not over. 

In fact, Hassan just suffered a setback in the other legal battle, their divorce case.  On Thursday, a family court judge in San Jose refused to grant his request for approval to sell Suitable. Hassan is likely to face more scrutiny in Delaware, where the trial over Huynh’s complaint is expected to go to trial next year.

Claus Risager, CEO of Blue Ocean Robotics, declined to comment on specifics of the legal disputes citing a confidentiality agreement. “We look forward to reaching a final conclusion,” he told Business Insider. 

In a bad sign for Hassan, Judge Travis Laster, who ruled against blocking the sale, strongly hinted that he thought Huynh’s case against her husband is strong. In last week’s ruling, the judge said: “There is a reasonable likelihood that Mr. Hassan will not be able to prove at trial that the deal was entirely fair.”

They met at Stanford in the 1990s

For Hassan and Huynh, the court battles were a sad turn in what Huynh described as an engaging and vibrant relationship which began at Stanford where they met as students in the 1990s. It was the dawn of the Internet age, when young technologists and entrepreneurs were ushering in a new era of innovation in Silicon Valley.

“I think that we were attracted to each other because he could talk with me about his ideas and dreams, and I could engage in a real conversation with him,” Huynh said. 

They were married in 2001. Huynh describes Hassan as “a brilliant computer software developer, sometimes described as a genius, and a visionary.”

They became friends with fellow Stanford students Page and Brin, and Hassan eventually played a key role in the creation of the Google search engine. “Larry and Sergey asked Scott to create an internet search engine,” Huynh said. “He did it in about two weeks.  This invention launched Google.”

Hassan recalled the birth of Google in “Valley of Genius,” an oral history of Silicon Valley which came out last year: “I sat everyone down and said, ‘Hey, let’s build a full search engine!’ Right? And both Larry and Sergey thought it was going to be a lot of work. I was like, ‘No, no, no, actually it’s not that much work. I know exactly how to do it.’ … Very quickly, in six to eight weeks, we were able to build the whole structure of Google.”

Hassan could have played a bigger role at Google. “The guys asked him to stay and be the third cofounder of Google,” Huynh said. But Hassan declined, she said, telling Page and Brin: “I don’t think that you are serious about starting a real business.”

Page and Brin let Hassan purchase 160,000 Google shares for $800, which subsequently were worth more than $200 million by the time the company went public in 2004.

‘A very good marriage’

Huynh said she and Hassan had a “very good marriage,” and looks back with fondness to their life together with their three children. “Scott and I had a wonderful lifestyle and eventually a nice home in Palo Alto,” she said. “I stayed home raising our beautiful children. We traveled and spent a lot of time with Sergey and Larry.”

Huynh is the founder of MyDream Interactive, a digital marketing company. But she said she opted to put her career goals on hold to support Hassan.

“In support of Scott and our family, I abandoned the workplace, did not finish my Stanford classes to get my degree, and deferred starting my own social media company.” she said.

Meanwhile, Hassan continued inventing new tools, including what became Yahoo Groups and the Beam robotics operating system. Amid their legal battles, Huynh said, “Scott has helped change the world for the good of humankind.”

In 2006, he launched launched Willow Garage, a research lab focused on developing non-military robotics and open-source robotics software. Suitable was spun off from this initiative.

‘He was not an effective CEO’

Suitable is known as a trailblazing company, but it’s been losing money — the judge noted in the hearing that Suitable posted a $10 million annual loss between 2014 and 2018.

Huynh said Hassan himself admitted that “he was not an effective CEO.” In his ruling, Laster said “one of the issues with the company has been that Mr. Hassan has focused on other ventures.”  

Meanwhile, Hassan and Huynh’s marriage had started to fail. They broke up in 2015 when their divorce proceedings began. Huynh declined to say what led to the separation: “I am going to preserve our privacy on this issue. What I can say is that Scott and I together are raising our three terrific children.”

But their divorce battle started to morph into a broader business dispute around December when, she said, Hassan told her she was shutting down Suitable. 

Six months later, he told her he was selling the company assets to Blue Ocean for $500,000. The price was later reduced to $400,000 following a fire at a Suitable facility that damaged some inventory.

Huynh said her lawyers pressed Hassan for more information on the deal but they were “stonewalled.” “I instinctively thought that his Blue Ocean deal was fishy,” she said. 

Judge Laster said that based on the evidence he heard, “there’s good reason to believe that Suitable’s asset value approximates or even exceeds $100 million.” Huynh’s lawyer Pierce O’Donnell said the company’s assets, including its patents, are estimated to be worth more than $700 million. 

A ‘fire sale’

Huynh said Hassan was essentially disposing of the company in a “fire sale,” hoping it would result in a huge loss that would help ease his tax burden. Huynh said Hassan has admitted several times that “his professed rationale for the deal — for a price that is an infinitesimal fraction of the assets’ value — is so that he can tank Suitable and take a $94 million tax write-off and save $30 million in personal income taxes.”

Judge Laster also noted that, based on the evidence presented in court, it appeared that Hassan was looking to “harvest a tax loss” from the sale of Suitable. He did cite Hassan’s desire to maintain Suitable’s technology as an open-source platform, noting how he “seems to have been motivated to allow many different people to use it so that people could build the best possible robots that they could.”

“But the difficulty in this situation arises because when he was selling the company’s assets, Mr. Hassan had a duty as a fiduciary to attempt to maximize their value for the benefit of the company,” he said. “This sale process is not one that inspires confidence. It’s one that inspires concern.”

For Huynh, Hassan’s actions and decisions have been mind-boggling. “I am at a loss why Scott thinks it is in anyone’s best interests—our children, his wife, or some 30 Suitable shareholders” to sell the company for $400,000 “when those assets are worth hundreds of millions of dollars if managed by people who know what they are doing,” she said.

“We have exposed how unfair and unreasonable this fire sale is,” she said. “There was no serious sales process. We want fairness and transparency for all shareholders.”

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