This “smoking gun” killed the McDonald’s ice cream hackers’ startup

AI SaaS

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A little over three years have passed since McDonald’s sent out an email to thousands of its restaurant owners around the world that abruptly cut short the future of a three-person startup called Kytch—and with it, perhaps one of McDonald’s best chances for fixing its famously out-of-order ice cream machines.

Until then, Kytch had been selling McDonald’s restaurant owners a popular Internet-connected gadget designed to attach to their notoriously fragile and often broken soft-serve McFlurry dispensers, manufactured by McDonald’s equipment partner Taylor. The Kytch device would essentially hack into the ice cream machine’s internals, monitor its operations, and send diagnostic data over the Internet to an owner or manager to help keep it running. But despite Kytch’s efforts to solve the Golden Arches’ intractable ice cream problems, a McDonald’s email in November 2020 warned its franchisees not to use Kytch, stating that it represented a safety hazard for staff. Kytch says its sales dried up practically overnight.

Now, after years of litigation, the ice-cream-hacking entrepreneurs have unearthed evidence that they say shows that Taylor, the soft-serve machine maker, helped engineer McDonald’s Kytch-killing email—kneecapping the startup not because of any safety concern, but in a coordinated effort to undermine a potential competitor. And Taylor’s alleged order, as Kytch now describes it, came all the way from the top.

On Wednesday, Kytch filed a newly unredacted motion for summary adjudication in its lawsuit against Taylor for alleged trade libel, tortious interference, and other claims. The new motion, which replaces a redacted version from August, refers to internal emails Taylor released in the discovery phase of the lawsuit, which were quietly unsealed over the summer. The motion focuses in particular on one email from Timothy FitzGerald, the CEO of Taylor parent company Middleby, that appears to suggest that either Middleby or McDonald’s send a communication to McDonald’s franchise owners to dissuade them from using Kytch’s device.

“Not sure if there is anything we can do to slow up the franchise community on the other solution,” FitzGerald wrote on October 17, 2020. “Not sure what communication from either McD or Midd can or will go out.”

In their legal filing, the Kytch co-founders, of course, interpret “the other solution” to mean their product. In fact, FitzGerald’s message was sent in an email thread that included Middleby’s then COO, David Brewer, who had wondered earlier whether Middleby could instead acquire Kytch. Another Middleby executive responded to FitzGerald on October 17 to write that Taylor and McDonald’s had already met the previous day to discuss sending out a message to franchisees about McDonald’s lack of support for Kytch.

But Jeremy O’Sullivan, a Kytch co-founder, claims—and Kytch argues in its legal motion—that FitzGerald’s email nonetheless proves Taylor’s intent to hamstring a potential competitor. “It’s the smoking gun,” O’Sullivan says of the email. “He’s plotting our demise.”

Although FitzGerald’s email doesn’t actually order anyone to act against Kytch, the company’s motion argues that Taylor played a key role in what happened next. It’s an “ambiguous yet direct message to his underlings,” argues Melissa Nelson, Kytch’s other co-founder. “It’s just like a mafia boss giving coded instructions to his team to whack someone.”

On November 2, 2020, a little over two weeks after FitzGerald’s open-ended suggestion that perhaps a “communication” from McDonald’s or Middleby to franchisees could “slow up” adoption of “the other solution,” McDonald’s sent out its email blast cautioning restaurant owners not to use Kytch’s product.

The email stated that the Kytch gadget “allows complete access to all aspects of the equipment’s controller and confidential data”—meaning Taylor’s and McDonald’s data, not the restaurant owners’ data; that it “creates a potential very serious safety risk for the crew or technician attempting to clean or repair the machine”; and finally, that it could cause “serious human injury.” The email concluded with a warning in italics and bold: “McDonald’s strongly recommends that you remove the Kytch device from all machines and discontinue use.”

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