Graphic done by Annie Peterson
Has Silicon Valley lost its way?
By Alice He
Innovation, disruption, and divergence. These are the virtues which have propelled Silicon Valley to success and mobilized the most prolific tech-companies who emerge from the hub. But the recent downfalls of two of their startups raise the concern of whether these values still resonate. Moreover, the growing number of inviable companies emerging from the region beg the question of whether Silicon Valley will be able to sustain itself, if it continues down the path of ignorance, isolation and lack of ingenuity.
A few months ago, Juicero, a Silicon Valley startup which had raised over $120 million in investments from groups including Google Ventures and Kleiner Perkins, for their Wi-Fi-connected, in-home juicing machines, announced that it would cease operations and shut down. Coming less than a year after the company’s initial launch in March 2016, the closure took the venture community by surprise.
In the same month Juicero announced that it would shut down, a “smart” corner store, Bodega, was launched in New York City by two ex-Google employees, Paul Mcdonald and Ashwath Rayan. The idea behind Bodega was to set up Artificial-Intelligence-run pantries — in public spaces like gyms and offices — from which people could purchase items with an app on their phone. This concept was inspired by traditional corner stores by the same name, historically run by immigrants. Clearly, investors, among the likes of Josh Kopelman of First Round Capital, and executives from Facebook, Twitter and Google found the idea innovative as they poured approximately $2.5 million into the project. Despite this, the company faced turmoil almost immediately after its official launch. Bodega was vilified online, ultimately resulting in the founders issuing public apologies. And while there have been no official plans by Rajan and McDonald to cease operations, there has been little in the way of business expansion.
The cases of Juicero and Bodega beg the question of why the startups were able to raise millions in funds from experienced investors, but struggled to succeed as businesses in the world beyond Silicon Valley. Which elusive, unpredictable factors are being overlooked by the investors and founders of these companies? More importantly, what drove Bodega and Juicero not only to operational ruin but public degradation and ridicule? The failures of both Juicero and Bodega can be ascribed to the fact that the startups lack genuine innovation but more importantly, the ability to create a positive association with their brand.
Despite initial claims by the founder Doug Evans that Juicero had complex, custom parts and latches supporting 16 000 pounds of force , Bloomberg news published an article claiming that the juice packets found in the machines could be hand squeezed . Customers did not, in fact, have to purchase the $700 piece of machinery in order to enjoy freshly squeezed juices. This revelation, amongst others, was added to a growing list of complaints regarding the lack of innovation presented by Juicero. Consumers found the product bulkier than expected and the Wi-Fi feature, which was intended to provide produce information, unnecessary. Doug Evans, who had once likened his engineering of Juicero to Steve Jobs’ ground-breaking conception of the first Apple computer , was criticized for creating an unnecessary, overcomplicated product, which failed to address the genuine needs of consumers.
Bodega faced similar criticism. Almost immediately after the prototype reveal, Twitter users and websites, such as Eater equated the product to an overcomplicated vending machine — offering the same basic unmanned commerce, only with smaller, fancier machines requiring intensely complex logistical apparatus .
Both the businesses were excoriated for a lack of innovation to actually solve consumer problems, but lack of innovation alone did not lead to the degradation of these startups. The practice of creating over-complicated, Wi-Fi, AI and tech-based products in the name innovation is the current modus operandi in the Valley, with examples of similar companies thriving. Consider Vroomba — the self-guiding, robotic vacuum that has now become a common household appliance or Ditto — a plastic clip that buzzes to alert users of an incoming call or message on their phone — essentially serving as a pager. Other products like the Light Phone — a credit-card sized device that connects to the user’s current smartphone, enabling them to only take calls or make them — essentially a flip phone, have also been launched successfully. Considering that these companies have created products no more inventive than Bodega and Juicero, ingenuity, alone, is not a determinant of startup’s success.
Further examining the cases of the two companies in question, one can link their failure to become profitable businesses to the poor perception of their products and company image and their subsequent vilification on social media websites like Twitter and Facebook.
For both organizations, the detrimental branding began as a function of leadership hubris. In the case of Juicero, founder Doug Evans was widely mocked after an interview in which he stated that he believed his juicer would have one of the greatest impacts on humanity . In the same tone-deaf, viral interview, Evans explained proudly that Whole Foods had created the first self-service Juicero bar in Silver Lake, Los Angeles, allowing locals to purchase their own 7$ packs and juice them without having to buy the machinery. To contrast this with a dose of reality, 50% of Silver Lake’s population lives below the poverty line. While Evans mentioned this fact, his inability to see how his garish business may have been perceived as insensitive to the plight of these marginalized people living in gentrified areas, undoubtedly became a basis for general disdain and outrage among consumers — if they were not already disinterested in the product.
This insensitivity and lack of cultural awareness is consistent in the case of Bodega. Near the beginning of the company’s launch, McDonald (founder), stated proudly that with Bodega, “ centralized shopping locations (eventually) won’t be necessary because there will be 100 000 Bodegas spread out, with one always 100 feet away .” McDonald also reassured interviewers that he did not find the name culturally insensitive or appropriative and neither did “ 97% of the Latin American community .” Later, both comments backfired. Many, including those part of the Latin American and immigrant community took to social media, denouncing Bodega for its brazen insensitivity, calling for a boycott. Bodega was seen as a mechanism of gentrification- its name, an offensive appropriation of the Spanish term originally coined for the predominantly immigrant-owned corner stores in major cities. It was another product, like Juicero, brought in by Silicon Valley, designed for the upper-class, while further marginalizing and impoverishing communities and eliminating local businesses. Bodega, although released recently, appears to be following the footsteps of predecessors like Juicero who lack the social awareness to effectively design their business model and market it without offending an essential consumer base.
The failure of both Bodega and Juicero — due to a lack of this awareness and innovation — is indicative of a larger shift in the market for products. While innovation is important, equally crucial to the viability of a company is the awareness of social issues and proper brand promotion with consideration to these issues. With social media and an increasing consciousness among consumers, there are growing expectations for the values of a company. Businesses must critically examine the implications of their brand and their companies’ impact on communities.
Bodega and Juicero also reflect a growing problem among startups — the detachment from the cultural and social issues which surround them. Bodega and Juicero are only acute examples of this level of disconnect between Silicon Valley and mainstream America. There have been countless others, including LUXY — a dating app, which “weeds out low-income prospects by the neighborhood” and bans non-upper-class users. The growing aloofness of Silicon Valley companies is clearly demonstrated in the products they design — which are geared almost exclusively towards White, upper-class individuals, the frequently toxic company environment they foster and the culturally insensitive concepts they put forth.
While this is a disconcerting reality, what is more concerning is the growth potential of these companies, and, consequently, the bleak future they present to America. As startups, which have thrived on cultural insensitivity and a lack of social awareness, expand and amass wealth, their influence grows proportionately, as a result, deepening the income and racial inequalities which have long haunted America. Few entrepreneurs have displayed leadership in discouraging the ignorance and detachment from reality found so frequently in the tech industry.
Earlier this year, Facebook founder, Mark Zuckerberg, went on a tour across America, sitting down with victims of mass shootings, individuals impacted by the Opioid crisis, generations of farm owners and other “real” Americans — whose lives are often in the periphery of Silicon Valley’s innovators. Zuckerberg’s trip, which many have likened to a political campaign, was, for the purpose of gaining a broader perspective of the world from which he had grown detached while spending 10 years in Silicon Valley. Ultimately, he wanted to bring these voices back to Facebook — as the company’s influence on the lives of ordinary citizens grows.
That Zuckerberg needed to look so far beyond Silicon Valley for such grounding further emphasizes the disparity between the “bubble” and the real world. More than that, it signifies the need for a profound change in Silicon Valley for future sustainability. The next generation’s innovators must realize the greater purpose of their startups and more importantly, the larger role they play in the lives of consumers. But in order for culturally sensitive, socially-conscious innovation to occur, founders and management must make a concentrated effort to ensure that they look for inspiration beyond the Palo Alto, Sand Hill Road corridor and allow the diversity of the human experience to shape and form decision-making moving forward.