Speaker 1: Welcome to Tech Stuff, a production from iHeartRadio. Hey there,
Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland.
Speaker 1: I'm an executive producer with iHeart Podcasts and How the
Speaker 1: Tech are You. So we're continuing our episodes about tech
Speaker 1: startups that met their end in twenty twenty three. Last
Speaker 1: episode we covered a cloud services company, a cybersecurity firm,
Speaker 1: an organization that provided telemedicine services to pet owners, as
Speaker 1: well as a music streaming service, all of which had
Speaker 1: to close up shop in twenty twenty four for various reasons.
Speaker 1: Though I should add that cybersecurity firm did later emerge
Speaker 1: out of bankruptcy earlier this year and has a new
Speaker 1: lease on life. So it was only, in the words
Speaker 1: of Miracle Max, mostly dead. But what other startups had
Speaker 1: their end downs in twenty twenty three? See what I
Speaker 1: did their startups and downs? Well, how about a real
Speaker 1: estate company that went on to embrace technology. You can
Speaker 1: think of it as kind of like a cyborg real
Speaker 1: estate company if you will. It didn't start off as
Speaker 1: a tech company, but it would embrace tech as part
Speaker 1: of its DNA. I think of a lot of tech
Speaker 1: companies when you boil it down, or at least a
Speaker 1: lot of tech startups end up not really being that
Speaker 1: much about tech. Tech tends to get tacked on or
Speaker 1: you know, sloppily incorporated into the company identity, but in
Speaker 1: reality you're really just talking about some other business. We Work,
Speaker 1: I think, is the perfect example. Right. We Work is
Speaker 1: treated as a tech company. You find articles about we
Speaker 1: Work in like websites that cover tech news, But we
Speaker 1: Work is really just a real estate company. You know,
Speaker 1: it's a company that ends up purchasing or leasing office
Speaker 1: space and then sub leases it to tenants. That's it.
Speaker 1: The tech thing is kind of superfluous, but we still
Speaker 1: treat it like that because it's part of this startup culture.
Speaker 1: So please forgive me that some of these intrigues are
Speaker 1: tech light, But I think, if anything, they really illustrate
Speaker 1: problems that exist in the venture capital community. And I
Speaker 1: would argue venture capital has caused so many problems by
Speaker 1: elevating ideas that weren't ready like, ideas that just could
Speaker 1: not be viable, and then pushing them to the moon,
Speaker 1: and then ultimately these ideas failed. The example that well,
Speaker 1: besides we Work, the example that leaps to mind is Therhanose, Right,
Speaker 1: Theharrannose was a company that was based on a critically
Speaker 1: flawed premise, one that could not possibly have worked, and
Speaker 1: there was a lot of sunken cost fallacy going on
Speaker 1: around Thearrahnose. I've done an episode or two or three
Speaker 1: about Pharahnose in the past, so we won't go over that. Plus,
Speaker 1: we're focusing on stuff that died in twenty twenty three.
Speaker 1: Therhos's old news. So we are turning to this real
Speaker 1: estate company, and its story is a doozy because this
Speaker 1: particular company had raised hundreds of millions of dollars just
Speaker 1: one year prior to having to liquidate everything. So I'm
Speaker 1: talking about a company called viv v EEV, and Viv
Speaker 1: is a special case for us, partly because the tech
Speaker 1: part of tech startup is debatable, but the other big
Speaker 1: reason is that Viv was a unicorn. That's a startup
Speaker 1: that reaches a valuation of at least one billion with
Speaker 1: a B dollars. So for a company to hit Unicorn
Speaker 1: benchmarks and still fizzle out just one year after achieving
Speaker 1: unicorn status, in fact, that's noteworthy. I mean, that's a
Speaker 1: that's a precipitous fall. So Viv's origins are rooted back
Speaker 1: in two thousand and eight, when a'm A Holler and
Speaker 1: Ami Avrahami founded an asset management and real estate development
Speaker 1: company in Israel. So Holler and Avrahami had met in
Speaker 1: the early two thousands back in Israel. Holler had founded
Speaker 1: a mobile handset company called IXI Mobile and Avrahami had
Speaker 1: served as the product manager for that company, and then
Speaker 1: they continued to go into business with one another, and
Speaker 1: they would co found a different real estate startup called
Speaker 1: Really r Eali that launched in twenty fifteen, so that
Speaker 1: came after VIV, but it would shut down in twenty
Speaker 1: twenty two after interest rates and inflation hit the real
Speaker 1: estate market really hard and it just became an unsustainable business.
Speaker 1: And as it would turn out, Really would be kind
Speaker 1: of a preview of what would happen to VIV. Like
Speaker 1: VIV predated Really and it lasted longer than Really, Like
Speaker 1: it closed after Really did, but like Really, it would
Speaker 1: not be able to stick around. So VIV originally started
Speaker 1: off with a different name. The one that it was
Speaker 1: known for for the first few years of its existence
Speaker 1: was the Dragonfly Group, but it switched to VIV in
Speaker 1: twenty nineteen. By then, VIV was also changing its focus,
Speaker 1: like it had been kind of a more classic real
Speaker 1: estate company, but it would describe itself as quote a
Speaker 1: vertically integrated developer focused on building innovation end quote. And man,
Speaker 1: you gotta love buzzwords that don't actually tell you anything.
Speaker 1: You know, you got to keep it vague, y'all. Anyway,
Speaker 1: VIV was emphasizing homes made out of prefabricated elements. So
Speaker 1: think of like modular homes made up of various cubes,
Speaker 1: or a homemade of prefabricated walls that essentially click into place.
Speaker 1: That kind of thing. It's meant to drastically reduce the
Speaker 1: time and money it takes to construct a building. But
Speaker 1: a lot of stuff hit around the same time, and
Speaker 1: I'm sure it made it very challenging to maintain a
Speaker 1: home building business posing as some sort of tech company.
Speaker 1: I guess the prefabricated part was largely seen as the
Speaker 1: tech element, but the pandemic and inflation and interest rates,
Speaker 1: all of these things contributed to runaway real estate costs.
Speaker 1: While potential home buyers were holding back because I mean,
Speaker 1: who could afford to buy a house in that market
Speaker 1: In March twenty twenty two, Viv secured a four hundred
Speaker 1: million dollars in funding. That is when VIV officially hit
Speaker 1: Unicorn status in its valuation. But by November of twenty
Speaker 1: twenty two, just a few months later, the company had
Speaker 1: had to downsize by around thirty percent, which meant they
Speaker 1: laid off about one hundred employees. The following year, VIV
Speaker 1: would be forced to go into liquidation after the company
Speaker 1: could no longer deliver upon financial obligations they had to
Speaker 1: their various partners and their employees, meaning they couldn't afford
Speaker 1: to pay anyone. All US based employees were let go.
Speaker 1: At that point, VIV ownership transferred to the real estate
Speaker 1: company Lenard. That's a that's an enormous real estate company,
Speaker 1: and according to an Israeli tech journal, the transaction was
Speaker 1: for quote several dozen million dollars end quote now several
Speaker 1: dozen million dollars. That's a big junk of change. I
Speaker 1: wouldn't mind finding several dozen million dollars in my couch.
Speaker 1: That would be awesome. But we also have to remember
Speaker 1: that just a year earlier, VIV had hit a billion
Speaker 1: dollar valuation, so being sold for a few dozen million
Speaker 1: dollars was a heck of a markdown. Avrahami was let go,
Speaker 1: as was another co founder named Dafna Akiva, who had
Speaker 1: served as the chief revenue officer for the company. And
Speaker 1: hitting a billion dollars of value only to go bust
Speaker 1: a year later is really rough. Like it's hard to
Speaker 1: put into perspective how something like that happens. Now. Obviously
Speaker 1: we're talking about an incredibly expensive business. Anything that's involved
Speaker 1: with home construction. We all know that those costs went
Speaker 1: up around the pandemic era. I mean, there were supply
Speaker 1: chain issues. Raw material costs were through the roof, Like
Speaker 1: if you wanted to build a house around twenty twenty
Speaker 1: to like twenty twenty two, it was suddenly way more expensive.
Speaker 1: Then you also had things like labor shortages, which made
Speaker 1: it even more complicated. You had shortages in skilled labor,
Speaker 1: so if you needed someone like a skilled electrician or plumber,
Speaker 1: that was really hard to come by. There were just
Speaker 1: not that many out there that you could get access to.
Speaker 1: So there were a lot of factors that all happened
Speaker 1: at the same time, and it's possible that VIV would
Speaker 1: have stuck around had it been just a little bit
Speaker 1: more established. I don't necessarily know that it was mismanaged
Speaker 1: or anything, but there were a lot of external factors
Speaker 1: that were stacked against it. But you know, hitting a
Speaker 1: billion dollars of value only to go bust a year
Speaker 1: later is tough. What if instead you hit two billion
Speaker 1: dollars in value and still went bust. And what if
Speaker 1: the company was known for pizza making robots. That's right,
Speaker 1: we have pizza making robots coming up next with our
Speaker 1: story of a company called Zoom. Zu me. I will
Speaker 1: tell you that sad tale after we come back from
Speaker 1: this quick break to think our sponsors. Okay, so the
Speaker 1: super easy but not entirely accurate description of Zoom is
Speaker 1: that it was a startup that used a kind of
Speaker 1: food truck delivery service for pizza, but it had other
Speaker 1: tech elements to it. For example, a robot back at
Speaker 1: Zoom headquarters would do some early prep on a pizza,
Speaker 1: so you would have this pizza dough, it would already
Speaker 1: be formed into the shape of a pizza, and a
Speaker 1: robotic arm would apply pizza sauce, the idea being that
Speaker 1: it would be a consistent amount of sauce and consistently
Speaker 1: distributed because you've got a robot, it's just going to
Speaker 1: do the same thing over and over and over again.
Speaker 1: You never have to worry about having repetitive stress injury.
Speaker 1: You just might have to do some maintenance every now
Speaker 1: and then. That was the first part. You might say, huh,
Speaker 1: that seems like a pretty high tech solution to something
Speaker 1: that's not really a problem. That's a key early indicator.
Speaker 1: After that, you would actually have a human staff member
Speaker 1: who would add toppings according to the order that were
Speaker 1: coming in to Zoom. So customers would order a pizza
Speaker 1: with certain stuff. The robot would put some sauce on
Speaker 1: a pizza, a human would put toppings on the pizza,
Speaker 1: and then they would load this uncooked pizza into the
Speaker 1: back of a delivery truck. Now, the delivery trucks had
Speaker 1: ovens with GPS trackers in them, so the oven would
Speaker 1: know quote unquote where it was, and it was programmed
Speaker 1: so that it would bake the pizza at a rate that,
Speaker 1: in theory, would mean the pizza would be fully cooked
Speaker 1: shortly before the truck would actually arrive at the customer's location.
Speaker 1: So the idea is that this pizza is hot and ready.
Speaker 1: Little Caesars, eat your heart out hot and ready as
Speaker 1: the truck is pulling up to deliver this pizza, and
Speaker 1: then there was another robot in the trucks that could
Speaker 1: cut the pizza, slice it into the proper slices, and
Speaker 1: then boom, the customer would have themselves a really, really
Speaker 1: fresh pizza delivered to their home or play of business. However,
Speaker 1: just saying that zoom was this, that's doing a disservice
Speaker 1: to the company, which was more than just pizza. They
Speaker 1: had larger ambitions. When they actually formed those ambitions, that's
Speaker 1: hard to say. A lot of the accounts suggest that
Speaker 1: at least after the pizza business failed spoiler alert, that
Speaker 1: they were like, oh, well, that was just kind of
Speaker 1: a use case, a test case for what we want
Speaker 1: to do, which is a much larger idea. Some people
Speaker 1: have suggested that maybe they said that only after the
Speaker 1: pizza thing failed, when they said, how can we take
Speaker 1: these ideas we had and turned them into something viable.
Speaker 1: I don't know the truth of the matter, but the
Speaker 1: story goes that they had these larger ambitions. Unfortunately, just
Speaker 1: delivering on the promise of a well made pizza would
Speaker 1: turn out to be a lot harder than they anticipated.
Speaker 1: Let alone, the more lofty goals of doing stuff like
Speaker 1: using data to predict consumer behavior so that you can
Speaker 1: maximize your fleet of delivery vehicles and thus, you know,
Speaker 1: deliver more than just pizza, and to do so really efficiently,
Speaker 1: not to mention, you know, be able to anticipate things
Speaker 1: within the supply chain so that you're able to cut
Speaker 1: costs that way. Those were sort of the big ideas
Speaker 1: that would form when they formed. I don't know if
Speaker 1: it was actually part of the plan all along to
Speaker 1: make this a larger business, or if it was just
Speaker 1: something that kind of came up after the pizza delivery
Speaker 1: business started to falter. I can't say for sure. Now
Speaker 1: for this particular entry in our list of startups that
Speaker 1: failed in twenty twenty three, I am relying heavily on
Speaker 1: an amazing piece, truly. It's a great article and it's
Speaker 1: written by Jared Herman. It's a ja ryd Jared Herman
Speaker 1: and Herman wrote an article titled Why Zoom Died, How
Speaker 1: Melting Cheese Burnt a two point three billion pizza delivery
Speaker 1: startup run by robots. It's a great title. You can
Speaker 1: find that piece on how they grow. That's the website
Speaker 1: it's a thorough explanation of the mistakes that led to
Speaker 1: Zoom's demise by someone who really understands business far better
Speaker 1: than I do. So if you want insights as to
Speaker 1: what went wrong that go well beyond my capabilities, I
Speaker 1: recommend checking out that article, all right. So co founders
Speaker 1: Julia Collins and Alex Garden got the initial idea for
Speaker 1: Zoom sometime around twenty fifteen, and the goal was to
Speaker 1: take a lot of the labor costs out of making pizza.
Speaker 1: You would automate as much of the process as possible,
Speaker 1: and this would be disrupting the pizza market Silicon Valley style. Now,
Speaker 1: the plan included a big data element as well, not
Speaker 1: just consumer behavior, but everything up and down the supply chain.
Speaker 1: So the thought was, if you can be nimble, then
Speaker 1: you can take advantage of the market. You can buy
Speaker 1: from different suppliers to minimize costs while you are guaranteeing
Speaker 1: the best quality ingredients for your pizza, and you can
Speaker 1: measure the convenience of buying from one place that might
Speaker 1: charge more, but that place might be closer to your operations. Therefore,
Speaker 1: it would reduce transportation costs and minimize food waste through
Speaker 1: stuff like spoilage, so like, there are all these different
Speaker 1: factors that usually are very difficult to account for, and
Speaker 1: the idea was that with data you could start to
Speaker 1: anticipate these things more effectively and thus run at a
Speaker 1: level of efficiency that's never been seen before and that
Speaker 1: would really save you money in the operation side. So
Speaker 1: this was an audacious plan from the get go. Just
Speaker 1: a bit about preparing pizzas in the back of a
Speaker 1: moving vehicle would prove to be really tricky. Zooms soon
Speaker 1: discovered that cooking pizzas in a moving vehicle isn't the
Speaker 1: best if you want predictable, consistent outcomes, because there are
Speaker 1: a lot of forces at play, Like there are bumps
Speaker 1: in the road, their stops, their starts, you know, acceleration, deceleration,
Speaker 1: all of that can have an effect on the construction
Speaker 1: and cooking of a pizza. So while the pizzas would cook,
Speaker 1: Zoom discover that cheese would slide around and burn, and
Speaker 1: topping's distribution would be inconsistent due to this, and it
Speaker 1: just wasn't a very smooth production as was first envisioned,
Speaker 1: and it meant that consumers were disappointed, like they would
Speaker 1: get pizzas, and they would look terrible because it wasn't
Speaker 1: like a pizza that had been cooked in a stationary
Speaker 1: kitchen and then shipped over to the customer. It was
Speaker 1: cooked in an oven that was moving all over the place.
Speaker 1: And sure, you might say that the founders should have
Speaker 1: anticipated this. That anyone who has ever ridden in a vehicle,
Speaker 1: especially if you've had to stand up in a moving
Speaker 1: vehicle like on a bus or a subway train or something,
Speaker 1: you know that even a boring, uneventful trip can cause
Speaker 1: some lurching and such. And perhaps that bit of the
Speaker 1: plan was just a little too unrealistic. But as Jared
Speaker 1: Herrmann points out in the article I mentioned, a bigger
Speaker 1: problem might have been that the team was looking at
Speaker 1: multiple challenges all at the same time, rather than focusing
Speaker 1: on just one before incorporating or attacking another challenge. Herman
Speaker 1: argues that Zoom was quote trying to be three things
Speaker 1: all at once, a technology company, a pizza shop, and
Speaker 1: a sustainability play end quote. However, the pizza delivery service
Speaker 1: was just part of this puzzle, right. The real goal
Speaker 1: of Zoom, according to the co founders, was to figure
Speaker 1: out how to leverage all these individual pieces, right, a
Speaker 1: fleet of delivery vehicles. Now the logistics of operating those vehicles,
Speaker 1: this message of sustainability, how to take all of that
Speaker 1: and to apply all the data that was being gathered
Speaker 1: for various purposes. The pizza delivery business was therefore just
Speaker 1: a use case, sort of prototype test run. Now, the
Speaker 1: pizza delivery business did not go smoothly, it was not
Speaker 1: a success. But then the whole thought, or least is
Speaker 1: how it was communicated, was that the team would learn
Speaker 1: from their mistakes and their failures. They would correct those issues,
Speaker 1: try again, and keep going down that route toward a
Speaker 1: sustainable business that could run on proven technologies, and that
Speaker 1: this business could then be ported for all sorts of
Speaker 1: different use cases, not just pizza delivery. That's not exactly
Speaker 1: what Zoom actually did, though, So while they might have
Speaker 1: communicated that this was their plan, their actions spoke differently.
Speaker 1: So first they tried to stick with the pizza delivery thing.
Speaker 1: They switched gears so to speak, not to use a pun,
Speaker 1: but rather than driving an oven around town, they would
Speaker 1: park the truck's food truck style. They would cook the
Speaker 1: pizzas in their food trucks, and they would rely on
Speaker 1: delivery drivers to pick up finished pizzas at the trucks
Speaker 1: and then deliver them to customers. I assume they also
Speaker 1: depended on delivery drivers to bring the uncooked pizzas to
Speaker 1: the food trucks in the first place, unless the food
Speaker 1: trucks were just stocked with all the ingredients, because remember,
Speaker 1: originally the idea was that the initial assembly of the
Speaker 1: pizzas happened in a stationary kitchen. Anyway, it was just
Speaker 1: that then the uncooked pizzas would be sent to the
Speaker 1: delivery trucks. So I don't know if that step still
Speaker 1: existed at this point where they went to the stationary
Speaker 1: food truck model. If it did, that adds unnecessary steps,
Speaker 1: right like why are you preparing a raw of pizza
Speaker 1: in one place, shipping the raw of pizza to a
Speaker 1: second location for cooking, and then shipping from that location
Speaker 1: to the customer. That seems unnecessary. So I don't know
Speaker 1: for sure that that's what they were doing, but if
Speaker 1: it was, they definitely were not making it more efficient,
Speaker 1: and no surprise, this still did not work out. It
Speaker 1: did not make a successful business, so the company did
Speaker 1: a pivot to a more farm to table food truck approach,
Speaker 1: so again not just pizza but other stuff. This involved
Speaker 1: licensing the technology to other companies, but none of that
Speaker 1: seemed to really click right. It certainly wasn't becoming a
Speaker 1: sustainable business. In twenty nineteen, zoo Zom shifted to something
Speaker 1: entirely different. So instead of preparing and delivering food, the
Speaker 1: company got into the business of producing food packaging. Not
Speaker 1: food itself, but the packaging that food goes into, which
Speaker 1: is wild like. That is a heck of a pivot.
Speaker 1: The boxes that Zoom produced were made from plant based material,
Speaker 1: so once again the goal of promoting sustainability was emphasized
Speaker 1: as part of Zoom's mission statement. So rather than using
Speaker 1: single use plastic, you could have food packaged in plant
Speaker 1: based boxes. But there was one teeny tiny little problem.
Speaker 1: These boxes contained polyfluoroalkyl substances or pfas. So these are
Speaker 1: chemicals that have a long shelf life. They can be
Speaker 1: found in various organisms that have absorbed these chemicals, and
Speaker 1: they have potential links to quote harmful health effects in
Speaker 1: humans and animals end quote. That's according to the Environmental
Speaker 1: Protection Agent here in the United States. As such, some
Speaker 1: places do not allow food to be packaged in boxes
Speaker 1: that have pfas in them. One of those places happens
Speaker 1: to be San Francisco, which is obviously where most tech
Speaker 1: companies in the United States incubate and grow. So that
Speaker 1: was a huge setback for Zoom, and it turned out
Speaker 1: that all that data that Zoom was touting as being
Speaker 1: like the key to their business strategy could not make
Speaker 1: this business work despite more than two billion dollars raised
Speaker 1: in various funding cycles over the lifespan of Zoom. So
Speaker 1: in June twenty twenty three, Zoom shut down. If you
Speaker 1: want to dive deeper into the various factors that led
Speaker 1: to this sad end I recommend you check out that
Speaker 1: article on how they grow, the one that's written by
Speaker 1: Jared Herman. But way up among those reasons is an
Speaker 1: argument that ultimately Zoom was a hammer in search of
Speaker 1: a nail. It was a solution to a problem that
Speaker 1: didn't really seem to exist. So just because an idea
Speaker 1: is interesting doesn't mean it's going to be a practical
Speaker 1: business in the real world. That is a pretty tough
Speaker 1: lesson to learn, particularly if you're an investor who has
Speaker 1: sunk millions of dollars into that idea. Okay, we've got
Speaker 1: a few more stories to get through. There's two in one,
Speaker 1: and there's also a story I found incredibly unsettling. But
Speaker 1: before we get into all that, let's take another quick
Speaker 1: break to thank our sponsors. We're back with startups that
Speaker 1: failed in twenty twenty three, and this is a two
Speaker 1: for two different companies offering very similar services. And both
Speaker 1: of these companies would fail in twenty twenty three, and
Speaker 1: both are located or we're located in Europe. So first up.
Speaker 1: In twenty twenty one, a group of German entrepreneurs founded
Speaker 1: a same day grocery delivery service that catered primarily to Berlin,
Speaker 1: Germany's population of Turkish and Arabic residents. This business was
Speaker 1: called Yababa and secured more than fifteen million dollars in
Speaker 1: seed funding. Initially, things seemed to be going pretty well,
Speaker 1: and the co founders had aggressive plans to scale up
Speaker 1: the company and launch services in other European cities, including
Speaker 1: ones outside of Germany. Now that sounds to me like
Speaker 1: those plans were perhaps a bit too aggressive. It actually
Speaker 1: kind of reminds me of stories I would hear during
Speaker 1: the dot com rush here in the United States. In
Speaker 1: the late nineties, you had these companies that pushed to
Speaker 1: scale super fast and rapidly reached a point where the
Speaker 1: cost of operation was so great that it was outpacing
Speaker 1: the amount of investment coming into the company, or the
Speaker 1: investment plus revenue. Usually if the company had a way
Speaker 1: of generating revenue in the first place. In the dot
Speaker 1: com days, that was never a guarantee. There were companies
Speaker 1: that had no business plan to speak of that still
Speaker 1: got huge amounts of investment in those dot com gold
Speaker 1: rush days. So providing same day grocery delivery services in
Speaker 1: a single city is already a huge undertaking. There are
Speaker 1: so many operations you have to take care of for
Speaker 1: that to work, laying the groundwork to do the same
Speaker 1: in other cities, and scaling up operations to support that
Speaker 1: kind of work. That's a gargantuan task. It's hard to
Speaker 1: stress how difficult that is, particularly for a startup. It's
Speaker 1: not something that I think you should rush into. Yubaba, however,
Speaker 1: embraced the challenge and in early twenty twenty three, despite
Speaker 1: burning through investor cash at a heck of a rate,
Speaker 1: the company launched a pr campaign to raise awareness of
Speaker 1: the service in Berlin, and the hope was this would
Speaker 1: help encourage another round of investors who, again, due to
Speaker 1: global economics, we're being a little more conservative with their
Speaker 1: cash than they might have been previously. Like, it's hard
Speaker 1: to get excited and think you're going to get rich
Speaker 1: quick if you're taking out a loan to invest in
Speaker 1: a company and the interest rates are out of control.
Speaker 1: When interest rates are low, It's amazing how willing people
Speaker 1: are to spend money that isn't technically their own. I mean,
Speaker 1: I guess that's generally true, right, It's amazing how how
Speaker 1: quick some people are to spend other people's money. This is,
Speaker 1: by the way, something I genuinely do not grow on
Speaker 1: a personal level because I find it. I find myself
Speaker 1: growing anxious if I am in charge of handling anything
Speaker 1: that involves other people's money, like that includes using a
Speaker 1: corporate credit card. I'm like, like, I have to be
Speaker 1: one thousand percent certain that what I'm using it for
Speaker 1: is in fact totally appropriate and approved before I use it,
Speaker 1: because I have this sense of responsibility. It's not fear,
Speaker 1: it's accountability. But some people they're really cool with using
Speaker 1: things like corporate credit cards to buy all sorts of
Speaker 1: stuff and then maybe they deal with the consequences later,
Speaker 1: and that just blows my mind. Anyway, for whatever reason,
Speaker 1: these investors were discouraged from putting more money into Yebaba,
Speaker 1: and so this funding round failed to coalesce in early
Speaker 1: twenty twenty three, and unfortunately Yebaba was at a point
Speaker 1: where they needed that influx of investment money because buying
Speaker 1: the stuff so that they could then sell it to
Speaker 1: their customers, and it reached a point where they couldn't
Speaker 1: afford to pay partners anymore, they couldn't purchase the stuff
Speaker 1: they would need in order to meet their customer and demands,
Speaker 1: and they had no real option other than to file
Speaker 1: for insolvency. Now that being said, I did find that
Speaker 1: the website still appears to work, or at least the
Speaker 1: website still exists. I didn't make an account. I don't
Speaker 1: live in Berlin, Germany, so I'm not sure that I
Speaker 1: could make an account. I couldn't find any official reports
Speaker 1: about whether ya Baba sold its assets to some other
Speaker 1: entity which is then continuing its operations, or if the
Speaker 1: website is just a holdover from before filing for insolvency,
Speaker 1: and maybe the website is still active but doesn't actually work.
Speaker 1: I don't know. Maybe ya Baba itself even rose from
Speaker 1: the ashes, maybe it's operating as its own business again.
Speaker 1: But again I'm not seeing any news articles that actually
Speaker 1: say that. All the news articles reference ya Baba shutting down,
Speaker 1: not a new ya Baba rising up, and sites like
Speaker 1: Pitchbook list Yobaba as being officially out of business. So
Speaker 1: in lack of any other information, that's what I'm going
Speaker 1: with anyway. Over in the United Kingdom, there was a
Speaker 1: similar company called Ojah Oja. It was founded in twenty twenty,
Speaker 1: so it actually pre dates Yababa by a year. It
Speaker 1: was founded by a woman named Mariam Jamo, a British
Speaker 1: Nigerian citizen and a former banker. Like Yababa, Oja focused
Speaker 1: on grocery delivery services in the UK, catering to a
Speaker 1: niche market. In Oja's case, it was African and Caribbean
Speaker 1: grocery items. Oja received a little modest two point nine
Speaker 1: million pounds in initial seed funding. You know, ya Baba
Speaker 1: had fifteen point five million, so it got much more
Speaker 1: at its origin and later on Oja got an investment
Speaker 1: from a noteworthy individual Raheem Sterling, a soccer or football
Speaker 1: player of some renown. I don't know who Sterling is,
Speaker 1: but I don't follow football, so that's that's on me.
Speaker 1: Jamo was really boasting about Sterling's investment in twenty twenty three.
Speaker 1: In May of twenty twenty three, and that's pretty brazen
Speaker 1: because it was literally just weeks before for Oja, the
Speaker 1: company that Sterling invested in, got shut down. In fact,
Speaker 1: according to the Standard, Jimo was boasting about Sterling's involvement
Speaker 1: in an interview with the Sun while simultaneously her company
Speaker 1: was facing the second of what would become several legal
Speaker 1: claims regarding unpaid bills. And it turned out that Oja
Speaker 1: had run through its investment funds and had failed to
Speaker 1: pay produce suppliers and other partners. So there were these
Speaker 1: bills that were just not getting paid by Oja. Some
Speaker 1: said it even looked that like Oja was selling produce
Speaker 1: for less than what it cost the company to buy
Speaker 1: that produce. That's clearly unsustainable, right, So maybe the idea
Speaker 1: was to try and attract a customer base that this
Speaker 1: was going to be a lost leader. But if you're
Speaker 1: dependent upon investment to keep you afloat. Then you need
Speaker 1: to have a pretty big cushion there for this to work.
Speaker 1: And maybe the idea was that gradually OJA would increase
Speaker 1: prices so that it would become a more realistic business.
Speaker 1: But you know, if you're buying stuff for five pounds
Speaker 1: and you're selling that same stuff for three pounds, you're
Speaker 1: clearly only in the business of losing money. That's what
Speaker 1: your business is. On top of all that, employees were
Speaker 1: in a tight spot because the company had failed to
Speaker 1: pay them as well. Some said it felt almost like
Speaker 1: they were unemployed, but they still had to come in
Speaker 1: to work a job, which is a big ol' yikes.
Speaker 1: The standard also cited an internal Slack communication thread in
Speaker 1: which Jimo responded to employees asking about their pay with quote,
Speaker 1: there is nothing to pay you with Stop talking to
Speaker 1: me about this end quote. Further complaints would result in
Speaker 1: Jamo telling employees to take it up with HR. Here's
Speaker 1: the rub with that. The head of HR was Jimo's
Speaker 1: own mother, which I mean, come on, like nepotism right there.
Speaker 1: That's that's rough. Customers felt the effects as well the cump,
Speaker 1: and he began to miss deliveries, so customers found themselves
Speaker 1: in a stalemate while seeking refunds for goods that were
Speaker 1: never delivered to them. By the end of July twenty
Speaker 1: twenty three, the company was done for and it stopped
Speaker 1: delivering on July thirtieth and was handed off to administrators
Speaker 1: for liquidations. That these two businesses failed isn't really that
Speaker 1: big of a shock. While they provided services that their
Speaker 1: customers likely really wanted. The margins for grocery delivery services
Speaker 1: they're razor thin. They're so thin, and in the early
Speaker 1: years of these businesses, a regular flow of investor cash
Speaker 1: is often necessary to keep things going while you build
Speaker 1: scale that ends up being sustainable. But both Yababa and
Speaker 1: Oja launched just when factors were discouraging investors in general,
Speaker 1: let alone people who might invest in a delivery service
Speaker 1: that isn't likely to make them tons of money like
Speaker 1: it might be a good return on investment down the line,
Speaker 1: but it's not the sort of business that typically gets
Speaker 1: you rich unless some other massive company acquires it for
Speaker 1: a ridiculous amount of money. So the fact Ya Baba
Speaker 1: and Oja both shut down in twenty twenty three isn't
Speaker 1: so much a comment on how well they handled things,
Speaker 1: because even if economic factors had been more favorable, it
Speaker 1: still would have been a really challenging business to run,
Speaker 1: just because of the nature of that business. So I
Speaker 1: don't want to suggest that either Yobaba or Oja were
Speaker 1: run poorly. Other people might have more insight into that,
Speaker 1: but even if they had been run perfectly, there was
Speaker 1: no guarantee of success in that climate. Okay, our final
Speaker 1: entry is in my opinion, a real bummer, So apologies
Speaker 1: ahead of time. This is also a story that has
Speaker 1: allegations about the CEO that makes that CEO seem like
Speaker 1: potentially one of the worst bus is to work for
Speaker 1: in the tech space. And y'all know my opinions about
Speaker 1: Elon Musk. That is, this is not Elon Musk I'm
Speaker 1: talking about. So it's saying something if I think this
Speaker 1: guy merit's mention in that space, if the allegations are true,
Speaker 1: I need to say that because it could be that
Speaker 1: the allegations aren't true. It's also very sad to talk
Speaker 1: about this next one during Pride Month because we're going
Speaker 1: to dive into the strange story of Daylight. So Daylight
Speaker 1: was a neo bank platform with a focus on the
Speaker 1: LGBTQ plus communities, and it sounds to me like this
Speaker 1: startup had the terrible burden of a CEO who was,
Speaker 1: at best the wrong person for the job. At worst,
Speaker 1: he was allegedly a toxic influence who was very good
Speaker 1: at making his staff feel incredibly unwelcome and uncomfortable. All right,
Speaker 1: So a ton of the information I'm relying upon here
Speaker 1: comes from an amazing article in New York Magazine by
Speaker 1: Jen Weissner and Jen, if I am butchering your name,
Speaker 1: and undoubtedly I am, I apologize, could be Weisner, but
Speaker 1: the article is titled the Meltdown of a Gay Bank
Speaker 1: and then what went wrong with an LGBTQ plus startup
Speaker 1: set out to disrupt finance. So in that piece, Jen
Speaker 1: and I apologize for the familiarity, but I feel like
Speaker 1: I can pronounce your first name. Jen reveals that Daylight
Speaker 1: was initially the idea of a Slovak entrepreneur named Mattege Fatacnik.
Speaker 1: Talk about butchering names, I'm just going to keep doing this,
Speaker 1: but it was Ftacnic who brought in Rob Curtis. Rob
Speaker 1: Curtis is an Australian entrepreneur whose CV has so many
Speaker 1: different companies listed. Then it begins to beggar belief. Although
Speaker 1: you would later find out, or at least if you
Speaker 1: read this article, you would find out that Rob Curtis
Speaker 1: allegedly has been shown the door in more than one
Speaker 1: of his experiences as an employed person. That's a polite
Speaker 1: way to say he's been fired a lot. But Curtis
Speaker 1: had worked at various companies and organizations with mission statements
Speaker 1: that related to the LGBTQ plus communities over his career.
Speaker 1: Not all of them do, but a lot of them do,
Speaker 1: especially toward the more recent career choices he made, and
Speaker 1: so he was very much in that world and had
Speaker 1: made various connections. Curtis was brought in to this venture,
Speaker 1: and he then brought in two other UK based business partners,
Speaker 1: Billy Simmons and Paul Barnes Hoget. So these three, Curtis,
Speaker 1: Simmons and Barnes Hoget would become known as the co founders.
Speaker 1: As to what happened to Mattege, he would serve as
Speaker 1: the chairman of the board. Some said that this was
Speaker 1: essentially his project and then Curtis ran away with it.
Speaker 1: I don't know the truth of that. I just know
Speaker 1: that it's mentioned in the various articles, so that with
Speaker 1: a grain of salt, but the concept of Daylight was
Speaker 1: that this new bank would be a welcoming service for
Speaker 1: folks who were in the LGBTQ plus space. People would
Speaker 1: be treated fairly, They would not be discriminated against. People
Speaker 1: would be able to secure credit and bank cards that
Speaker 1: had their chosen name on them, not whatever legal name
Speaker 1: had been assigned to them, but their chosen name, so
Speaker 1: they didn't have to be dead named every single time
Speaker 1: they used a card. Presumably, queer customers would encounter fewer
Speaker 1: roadblocks for major transactions such as securing a mortgage or
Speaker 1: other loan. The company hired extensively from the LGBTQ plus communities,
Speaker 1: many of the staff identifying as queer or trans et cetera.
Speaker 1: The New York magazine piece paints a rather unflattering portrait
Speaker 1: of CEO Rob Curtis, which is to put it lightly so.
Speaker 1: According to the article, Curtis had said that he had
Speaker 1: been fired from jobs before due to being something of
Speaker 1: a troublemaker, and the implication appeared to be that Curtis
Speaker 1: was kind of saying he spoke his mind and he
Speaker 1: stood up for his community, like he would stand up
Speaker 1: for LGBTQ plus folks, and that this kind of behavior
Speaker 1: where he was unapologetically standing up for his community was
Speaker 1: seen as unacceptable in the very stuffy established English banking industry.
Speaker 1: That appeared to be the implication. However, Staff told New
Speaker 1: York Magazine that upon interacting with him on a professional level,
Speaker 1: it seemed like Curtis wasn't so much a punk rock
Speaker 1: kind of leader. He was more of just a punk
Speaker 1: like someone who behaved poorly and showed little regard for
Speaker 1: other people in his organization. There's a description of a
Speaker 1: huge party that Curtis threw in his home that sounds
Speaker 1: like something that came out of an over the top
Speaker 1: nineties comedy, mixed in with a bit of the cluelessly
Speaker 1: inappropriate behavior you would expect from Michael Scott in episodes
Speaker 1: of The Office The US Office. I'm not going to
Speaker 1: repeat the stories about that party here because I think
Speaker 1: everyone should actually go read the article for themselves in
Speaker 1: New York Magazine. It's free to read, there's no paywall.
Speaker 1: I highly recommend it. But the party definitely doesn't come
Speaker 1: across as remotely appropriate or at all respectful of employees.
Speaker 1: And their feelings. You know, there's being disruptive, which is
Speaker 1: not necessarily a bad thing, but then there's also being
Speaker 1: downright disrespectful and in my opinion, cruel, and I feel
Speaker 1: the descriptions of that event fall more in the second
Speaker 1: category than the first. But that's my opinion. Curtis would
Speaker 1: actually deny a lot of the allegations that various employees
Speaker 1: brought against him in a federal lawsuit where they made
Speaker 1: these claims and others, And I certainly don't have any
Speaker 1: firsthand information as to what was going on behind the
Speaker 1: scenes at Daylight. I do not know if the numerous
Speaker 1: allegations against Curtis actually have merit. There are a lot
Speaker 1: of them, and there seem to be a lot of
Speaker 1: people corroborating them, but I don't have direct knowledge. If
Speaker 1: they are true allegations, then I do think he'd be
Speaker 1: in the running for worst boss to work for in
Speaker 1: my book. But maybe those allegations aren't true. I try
Speaker 1: and maintain a level of objective fairness, but boy howdy,
Speaker 1: it sounds bad. The New York magazine piece also mentioned
Speaker 1: some questionable and shady stuff on the business side, including
Speaker 1: manipulating numbers to make Daylight look better to investors, like
Speaker 1: inflating the number of customers that the company had. In
Speaker 1: some cases, it just means making stuff up. For example,
Speaker 1: there are allegations that management invented a fake study to
Speaker 1: make it seem like Daylight had a much broader reach
Speaker 1: than it really did. And I guess really it's more
Speaker 1: than allegations, because apparently the company owned up to fabricating
Speaker 1: the study, and that's crazy. Fast company actually wrote a
Speaker 1: piece that was based off the findings of this study,
Speaker 1: and the study ended up being bogus. The day after
Speaker 1: the piece came out, Curtis allegedly revealed that Daylight had
Speaker 1: managed a revenue of just one dollar forty seven cents,
Speaker 1: not one point four to seven million dollars, but a
Speaker 1: dollar forty seven at least, assuming I'm reading the article correctly,
Speaker 1: that is abysmal. Daylight launched new features, including tools meant
Speaker 1: to help customers with family planning, including tools meant to
Speaker 1: help secure financing for fertility treatments or to help queer
Speaker 1: couples pursue an adoption. But it was either too little,
Speaker 1: too late, or it was the nail that sealed the coffin.
Speaker 1: In May twenty twenty three, Rob Curtis posted on Medium
Speaker 1: that quote, I'm incredibly sad to announce that today we
Speaker 1: are closing Daylight, the first and only LGBTQ plus banking
Speaker 1: platform in the USA end quote. He would also write
Speaker 1: quote I feel now is the right time to exit
Speaker 1: this market end quote, which I bet is true. I
Speaker 1: bet he felt that that was the time to exit.
Speaker 1: In fact, he probably felt it was a little late.
Speaker 1: He laid much of the blame for the company's failure
Speaker 1: on larger economic factors, things like interest rates, primarily which
Speaker 1: admittedly that is a huge issue. He claimed the company
Speaker 1: had quote opened thousands of trans inclusive debit accounts, supported
Speaker 1: thousands of prospective LGBTQ plus parents' plans for their families
Speaker 1: end quote, which might be true, But the various articles
Speaker 1: I've read have suggested that the customer base was much
Speaker 1: smaller than that. However, again, those are from articles. They're
Speaker 1: not from like internal documents from the company itself, so
Speaker 1: maybe the articles got it wrong. As for that federal
Speaker 1: lawsuit that was filed against Daylight and its co founders
Speaker 1: that ended up getting settled out of court in the
Speaker 1: summer of twenty twenty three, the settlement was filed like
Speaker 1: in late July. I do not know the details of
Speaker 1: that settlement. I don't have access to that document. But
Speaker 1: the settlement would mean that the matter would be dismissed.
Speaker 1: So you could say that the court case was dismissed.
Speaker 1: But to me, that sounds like the court found that
Speaker 1: there were no merits brought to the court, like that
Speaker 1: the plaintiffs had no real basis for the lawsuit. The
Speaker 1: fact that it was a settlement changes that narrative, right.
Speaker 1: But Rob Curtis would go on to found a tequila company,
Speaker 1: so that's why he went to next I think that's
Speaker 1: interesting because one of his earlier jobs was working for
Speaker 1: a company or an organization called drink Aware, which is
Speaker 1: dedicated to helping customers quote develop a personal strategy to
Speaker 1: reduce harmful drinking end quote. So now Curtis runs a
Speaker 1: company that pairs influencers with booze. The mind boggles, right,
Speaker 1: Like to go from a company that's meant to help
Speaker 1: people manage their drinking in a way that's responsible to
Speaker 1: promoting a tequila brand by bringing influencers in. It's just wild,
Speaker 1: Like it's given me whiplash, y'all. And this particular story
Speaker 1: stings a lot for me. I get particularly upset when
Speaker 1: people who are coming from disadvantaged or vulnerable communities encounters
Speaker 1: setbacks like this. I have no doubt that many of
Speaker 1: the people who worked for Daylight truly believed in the
Speaker 1: company's mission and to know that they found themselves out
Speaker 1: of work in the spring of twenty twenty three, as
Speaker 1: well as the company supposedly dedicated to supporting these communities
Speaker 1: had failed so spectacularly that must have been really hard.
Speaker 1: I hope they all found gainful employment with organizations that
Speaker 1: value and respect them. Because dang, y'all. Okay, that's a
Speaker 1: look at some more startups that failed in twenty twenty three.
Speaker 1: There are more than just those, Unfortunately, you know. I
Speaker 1: wish that I could say, like we covered them all,
Speaker 1: but no. Lots of other startups also met their untimely
Speaker 1: end last year. Maybe I'll do another episode to kind
Speaker 1: of wrangle up some of the stragglers, because there's some
Speaker 1: good stories in there too, some good lessons to be learned.
Speaker 1: I think. In the meantime, I hope all of you
Speaker 1: are well. We're coming to the end of it. But
Speaker 1: happy Pride Month, everybody. I really hope you take care
Speaker 1: of each other, show compassion toward one another. It's the
Speaker 1: only life we have. Let's make it a good one
Speaker 1: if we can. And I'll talk to you again really soon.
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