Published in the San Diego Union-Tribune, May 8, 2017
Recently, I attended an event sponsored by the San Diego Venture Group. It was supposed to be a feel-good networking rah-rah, but when the question-and-answer time came around, there were some dark sentences and laments.
After you dismiss some of the usual suspects (we need venture money, we need unicorns, we need to celebrate the wins, we need to retain software developers, etc.), one topic rose to the top — namely what is San Diego’s brand?
Wow, that one really interested me. It seems that our technology sector suffers from a case of low self-esteem, coupled with being conflicted about our lifestyle and the weather. Should we embrace it and sell it to others, or should we hide it for fear of appearing too complacent?
I am not going to wade into this pond too quickly, but I am reasonably convinced that the issue of “what is our brand” is a citywide, industrywide problem. I will leave this puzzle to better minds — but in an effort to limit the self-flagellation, as well as indulge in some schadenfreude, allow me to remind you of how wonderful and famous and rich and talented and unicorn-ish our brethren in the northern part of our state are. Herewith, some reporting from Eliot Brown, writer for the Wall Street Journal.
He looked into Beepi, a company that sells used cars online. Eighteen months ago, they were expanding. Today, after burning through $120 million, they have closed, leaving behind two ping pong tables and a putting green. At the height of the game, they were valued at $500 million.
Note: After the big raise, the chief executive moved out of cramped offices into a glass high-rise and moved around the large space on a Segway. What more do you need to know to get out of this dog if you can?
We all know about lemmings. “There are companies that everybody wants to invest in, and there are a large set of companies that almost nobody wants to invest in,” said venture capitalist, Keith Rabois of Khosla Ventures, in the same Wall Street Journal article. “They are like the walking dead,” said David Cowan, a partner at Bessemer Ventures, who says he expects a steady stream of failures.
I ask you — is this any way to make a living?
In 2014 and 2015, 294 companies raised at least $50 million dollars APIECE. More than 70 percent of them (216) have neither raised money nor been acquired since the end of 2015. What is so great about dying a slow dog’s death? Maybe we should celebrate that we don’t have any of those disasters on our books.
Remember, the reason we do not have deep high-tech venture capital in San Diego is because we are asked by the Silicon Valley elite, “Why should I get on an airplane and come to San Diego when there is more food than I can possibly eat within a 30-minute drive from my office?”
Eating and then throwing up is a disease called bulimia; try swallowing those 216 companies.
More from Brown, “In recent months, mobile search startup Quixey shut down after raising $100 million, Zenefits laid off half their staff, after raising more than $500 million, and blogging platform Medium laid off one-third of the staff, after raising $132 million.”
No inferiority complex here, but tell me what is so great about burning through a billion dollars and still eating breakfast at Bucks of Woodside?
Again, “take startup Luxe Valet, a mobile app to summon parking valets in bright blue track jackets” — it raised $70 million and is now headed for the off-ramp.
Do you really think that there is a market for parking valets to come and get your car and deliver your car in any city other than San Francisco (and maybe Boston)? Even then, they lose money on every car, but hope to make it up on volume. Stop the madness.
Munchery, an executive meal-delivery service, raised $120 million. The executives have left the building (gone out to lunch, I guess), and the company is on a lifeline of $10 million and looking for paper plates and plastic utensils. Gimme a break. The whole thing feels like Monopoly money chasing American Idol.
Our burg needs to know and believe in who we are. We may not have a clear public-facing brand yet, but one thing is for sure — we are not stupid.
Rule No. 520: I’m going to take a walk on the beach.