Art by Mike Sullivan
March 4, 2021 6:00 AM PST

Not much was going right early last year at SoftBank-backed construction startup Katerra. Money was drying up, and board meetings sometimes erupted into shouting matches. Anxious about missing financial forecasts while the company was trying to raise more money from investors, at least one Katerra employee told others in its relatively small but profitable apartment renovations division to find a way to boost revenue.

Heeding the suggestion, the division prepared exaggerated updates on how much renovations work had been completed so far on certain building projects. Katerra employees then used the misleading project updates to front-load revenue by millions of dollars in financial reports submitted to investors, the company found in an investigation last summer, said four people familiar with the matter, including two with direct knowledge of the probe. Last August, a law firm hired by Katerra sent a letter to then-CEO Michael Marks saying that an investigation into the matter found that the company’s financial statements likely had been “intentionally misstated” during Marks’ tenure, according to a copy of the letter viewed by The Information.

A month before launching the accounting probe, Katerra’s board fired Marks on the grounds that under his watch Katerra had perennially missed financial goals and burned through the more than $2 billion the company had raised. There is no indication that Marks knew of the misleading financial reports. But according to interviews with 30 former employees and investors, Marks presided over a company that repeatedly stumbled on construction projects and failed to address warning signs that the business was failing.

Get access to exclusive coverage
Read deeply reported stories from the largest newsroom in tech.
Latest Articles
 
The Briefing Apple Entertainment
Apple’s Mac Renaissance
Apple's new Mac laptop. Photo by Bloomberg.
For a company as routinely successful as Apple, continued success can get repetitive. Tonight’s earnings call, for instance, was so full of the usual hyperbole about record revenues that Chief Financial Officer Luca Maestri repeated a segment of his commentary without missing a beat. But within the eye-glazing recitations of Apple’s various records—and, for the TV service, its award nominations...
Latest Briefs
 
SoftBank COO Marcelo Claure To Leave Firm
Robinhood Stock Sinks as it Forecasts Steep Drop in Revenue
Credo Technology Climbs 17% In Public Debut
Stay in the know
Receive a summary of the day's top tech news—distilled into one email.
Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Photo by AP.
Exclusive
Tiger Global, Alkeon Slash Startup Valuations Amid Public Stock Selloff
For more than a year, startup founders have watched in awe and some trepidation as hedge funds and other large investors flooded private startups with big checks, pushing up valuations and making it easier than ever to raise money.
Snowflake CEO Frank Slootman (left) and Databricks CEO Ali Ghodsi. Photos by Snowflake, Bloomberg. Collage by Mike Sullivan
Exclusive Cloud
Snowflake vs. Databricks: How Onetime Friends Became Fierce Cloud Rivals
A few years ago, Snowflake and Databricks were up-and-coming cloud software startups that were so friendly, their sales teams regularly passed customer leads to each other.
Art by Haejin Park. Photo courtesy Caroline Spiegel.
The Big Read Startups Culture
Caroline Spiegel’s Porn Revolution
Birds chirp and wind rustles through leaves—the sounds of early fall. “Man, it’s beautiful out here,” remarks a deep, crackly male voice.
Pinterest headquarters office in San Francisco. Photo by Bloomberg
Exclusive Entertainment E-commerce
Pinterest Has Lost at Least 7 Senior Execs in Recent Weeks
Pinterest has lost at least seven senior executives in roles ranging from creator marketing to corporate development in recent weeks as the online scrapbooking app grapples with a drop in U.S.
Susanne Daniels. Photo by Bloomberg. Art by Mike Sullivan
Opinion Media/Telecom Entertainment
Why YouTube Sees Hollywood’s Future in the Creator Economy
Tuesday’s letter from YouTube Chief Business Officer Robert Kyncl to its 2 million–strong creator community—announcing that original content chief Susanne Daniels had resigned—read like the final salvo in YouTube’s recent PR campaign touting its creator economy successes .
Art by Mike Sullivan
Exclusive Venture Capital Startups
Tech’s Great Headhunter Shortage: Employers Shower Recruiters With Better Pay, Benefits
In the middle of 2020, not long after the Covid-19 pandemic began sparking layoffs across the country, Joe Price watched as eight members of the recruiting department at an automotive software company he worked for lost their jobs.