How To Build a Killer Business (Part 2)
Inaugurating the Startup Hall of Shame
Comrades: Startup founders are brave for taking risk to create something out of nothing. Some build amazing companies, but some are frauds and clowns who sully the reputation of the industry.
Most have heard the wild tales of Elizabeth Holmes (Theranos), Adam Neumann (WeWork), and Billy McFarlane (Magnesis, Fyre Festival). They are sociopaths (somehow I forgot to include Holmes’ frightening unblinking sanpaku eyes on the list) who deceived employees, investors, and bootlicking media to get rich or get jailed trying.
Anyone thinking of starting a company should watch this 90-second MBA before investing additional time and effort:
The party of low interest rates, bountiful cheap capital, and minimal diligence is ending. Over the past 2 years, many funding rounds were raised over Zoom without in-person meetings. I’d bet dollars to donuts that there are several Theranos level frauds out there, waiting to be exposed. We shall soon see who is swimming naked.
You may not have heard of the entrepreneurs and companies below, but today they shall be enshrined in the Startup Hall of Shame.
DEI Hustler: Carlos Watson (Ozy Media)
The poster child of DEI gone haywire. Carlos’ nauseatingly long official bio ticks every elite box: Harvard, Stanford, Goldman Sachs McKinsey, CNN, MSNBC; interviewed Barack Obama, George W. Bush, Jameela Jamil, Heidi Klum, and Bill Gates. His company Ozy Media pushed woke content while raising $83M from fellow WEF/Davos shills like Laurene Powell Jobs and The Ford Foundation. However, it was a Potemkin village of inflated viewership and subscription numbers. In one of the most brazen attempted grifts in startup history, he had his co-founder pretend to be a YouTube executive in a diligence call with Goldman Sachs. The Vampire Squid caught them red handed and even the New York Times called out his fraud here. He should have gone the nonprofit grift route like BLM.
Slick Accent Bro: Domm Holland (Fast)
Domm’s LinkedIn profile already contains several obvious red flags: t-shirt, arm tattoo, mouth wide open, lowercase spelling of name, hashtags. All he’s missing is the pronouns. Aussie Domm attempted to live the modern American dream by using his slick accent to charm investors, but in reality he was just continuing his grift from Down Under. Fast raised $125M at a $1B valuation while burning $10M per month, but it generated less just $600K revenue in its final year before shutting down. Well that was fast.
Most Out of Touch: Doug Evans (Juicero)
$400 for a WiFi connected juicer and a subscription to $5 mush packs, a classic solution for rich people solving a non-problem. CNET’s post mortem was delicious: “The sleek machine, the connected app, the five flavors (and their corresponding chakras/packet colors) were all targeted at cashed-up Californians who wanted to actuate the gastro-intestinal wellness mood board they'd created at last year's Cupertino Ayurvedic Cleansing Retreat.”
Rich Mean Girlbosses: Maddie Moelis & Sierra Tishgart (Great Jones), Audrey Geller & Lauren Hassan (The Wing), Steph Korey & Jen Rubio (Away)
Many D2C millennial consumer brands follow the same playbook.
Step 1: Founder comes from extreme wealth. Moelis is an heiress to her billionaire father’s eponymous banking empire and Tishgart was her exclusive summer camp friend. Geller worked for HRC and is friends with Lena Dunham from Oberlin (the leftist campus that now has to pay a local baker $25M for smearing them when they tried to stop a student shoplifter); both she and Hassan were real life NYC prep school Gossip Girls. Korey grew up in literally the largest house in Ohio and Rubio married a billionaire CEO.
Step 2: Charm thirsty investors and journalists to give you money and glowing publicity.
Step 3: Establish an unsustainable business model with low margins and negative cash flow that becomes even more unprofitable with scale.
Step 4: Foster a cultish company culture where underpaid minions are expected to work brutal hours with very little upside (gory details in the links above)
Step 5: CATFIGHT!
VC Tryhard: Mike Rothenberg (Rothenberg Ventures)
Mike Rothenberg was once dubbed Silicon Valley’s “party animal”. His firm threw bashes at baseball stadiums and exclusive clubs. The only problem was that it was all fake and now he faces multiple wire fraud charges.
The Based Executioner: Vishal Garg (Better.com)
Vishal fired 900 employees simultaneously over Zoom, which must be a record. Before that, he wrote a few epic emails to an investor who disagreed with his strategy and whiny employees who wanted the day off for Indigenous People’s Day. I will let his words do the talking:
“Even a rocket ship needs a garbage disposal bin and a shitter. Can you please help me take out the barnacles and the sewage. We are in orbit and we still haven’t been able to take care of these issues… Howard, I am done with getting triggered by you and wasting my time with you. You are an ingrate and a thug. And a miserable miser. And I appreciate that your misery loves my company, you have robbed me of the joy of building this unbelievable company for the last time. I am blocking your email. Anything you have to say to me you can say to our general counsel. Bye bye Howard.”
“How do you feel that celebrating indigenous people day as a company holiday will result in actions that correct this historical wrong? It is not economic reparations, it is not political power. Our payroll runs about $5M / business day… Better has ZERO obligation to do this… just like we don’t take Diwali , or the day of the mutiny of 1857 or the boxer rebellion off, we won’t be taking this as a company holiday without a discussion of how else the company could spend those monies, to actually effect the change we seek… But in the interim, there is no power without capital. So please continue to help our customers and earn us our capital, and therefore our freedom. Thank you.”
After stepping away from the company as the controversy swirled, he was able to return and keep his job. At least he tells it like it is.
Honorable mentions:
Several companies provide subscription gourmet pet food and are solid high margin subscription businesses. However, they are symbolic of Karenland FUPAZ society. In San Francisco, there are more dogs than school-aged children. Karenland dogs eat better than 90%+ of human beings. Why are our some of our best and brightest spending time on this instead of solving humanity’s biggest problems or procreating more smart humans?
CNN+ spent $300M to acquire 10,000 daily viewers. Quibi spent over $1B and folded before launch. Google Glass and Snapchat spectacles failed spectacularly because they didn’t realize people would think they’re creepy and weird looking. Who would have thought?
PS: In case you were looking for another example of how worthless and insecure elite MBAs are….
This statement applies to the MBA grad having an existential crisis: The only opinion you should be allowed to have at this point is whether your shoes are too tight or not. Get some real life experience. Get off social media. Learn how to live.
You can apply this to most of these people.
I had a good laugh reading about the rich mean girlbosses Vishal Garg. They've run out of "deplorables" to turn on, so now they are eating their own. In my experience it has been much better working under men. Less drama, gossip, backstabbing and micromanaging in the workplace.