The Darwin Awards of Technology

The Darwin Awards of Technology

Image by mohamed Hassan from Pixabay

IPOs are back! You don’t hear as much about FAANG these days as you do about LUPA – Lyft, Uber, Pinterest (which just went public) and AirBnB. Odd that the acronym wasn’t PAUL, considering the huge amounts of funding that went into these companies – all of whom we sincerely hope do well – and which have or had been engaged in the proverbial borrowing from Peter (investors) to pay PAUL in the IPOs.

And thank you for indulging us.

Now that so-called Net Neutrality is gone, it’s good to see some long-overdue air flowing back into the tech sector. Although, as Recode reminds us, Why companies like Lyft and Uber are going public without having profits The last time unprofitable companies went public at this rate was in 2000 — the year the dot-com bubble burst. Time will tell.

With huge amounts of investor money being thrown at companies that the Sultans of Silicon Valley and beyond deem the clear winners – eventually, maybe – despite the fact that some of these companies make you think, what are they thinking??? There are those cases in which that scratch-your-head reaction was well-placed, and we thought we’d highlight a handful of them. Without further ado, the Darwin Awards of Technology:

Homejoy The on-demand cleaning service raised $40 million in funding from such investors as Redpoint Ventures, Google Ventures, First Round Capital, Max Levchin, Andreessen Horowitz, et al. The official reason for their shutting down was problems with state regulators, as they were categorizing their home cleaners as consultants. The real problem: the business model. As Forbes reported, “A cleaning company charges north of $85 for a 2.5-hour house cleaning, but to rope in as many new customers as possible, it offers the service for a promotional price of $19. Guess what happens when the introductory deal is used up?” Yup, customers contract the cleaners outside of the platform. End result: Homejoy bit the dust.

Theranos. Theranos founder and Stanford dropout Elizabeth Holmes touted a breakthrough in blood testing. By 31, she was the world’s youngest self-made billionaire and raised $1.4 billion, with a $10 billion valuation at its peak. Reported Forbes, in 2015 the “Wall Street Journal published an article that laid bare the truth of Theranos: the blood-testing machines they created largely didn’t work – and worse and that the company had been both faking proficiency testing and using other commercial machines to complete the tests.” The company finally called it quits, with Holmes agreeing to pay a $500,000 penalty, while being barred from serving as an officer or director of a public company for 10 years. She did, however, live up to her own dream: her hero was Steve Jobs, and she may well go down as being the Steve Jobs of fraud.

Path Three months after launch, Google offered $100M to acquire the Facebook rival. Founder Dave Morin turned them down. When Facebook acquired Instagram for $1B, the consensus was that Zuckerberg was out of his mind. Of course, now Instagram is worth considerably more than that, but would they have succeeded to the extent that they have had they not had the Facebook engine behind them? Just look at Path. Wait. You can’t. They’re gone. Capital raised: $66.2M. Acquired by Kakoa: terms undisclosed. Note to founders: you may not necessarily want to turn your nose up at the path of least resistance.

Sahil Lavingia If the name is unfamiliar, Lavingia was Pinterest Employee No. 2, but left before his equity vested to build Gumroad, an e-commerce platform for creators that he believed would become a billion-dollar company. With Pinterest’s recent IPO, Lavingia would now personally be worth at least tens of millions. At Gumroad, not so much. Note to self, founders: when you’re early in at a company that’s a category creator like Pinterest, you might want to postpone your dream for a bit. No one will best you in a category you own – not immediately, anyway. Look at eBay. Or Facebook. Or Google. Or Amazon. Or Carfax. Or, yes, Pinterest.

Juicero When it launched, Juicero was the darling of the juicing set. For a mere $699. No, $399 Wait, $199, you had a juicer that was easy to clean. The company also offered veggie packs to use with the machine, so you didn’t even have to muck up your schedule by having to buy ingredients. The problem was, as a Bloomberg reporter discovered, you could crush the packs with your bare hands. No Juicero necessary. Oops. Bloomberg called Juicero, “a symbol of braggadocio and Silicon Valley excess.” Capital Raised: $118.5M. No liquidity event achieved.

Adkeeper. The idea behind this company was that it would give people the ability to save ads and view them later. Seriously. Show of hands: who doesn’t use adblockers? Or isn’t being followed around the web by a product that you may have clicked on once, and maybe even purchased months ago? The idea that consumers would want to keep ads and revisit them later seems insane, yet unbelievably, Adkeeper raised $43M prelaunch. Then again, it was founded by so-called successful serial entrepreneur Scott Kurnit, nee The Mining, which has been bought and sold a number of times, with acquirers taking a bigger hit each time. In which parallel universe could this ever have been considered a great idea???

The Darwin Awards honor Charles Darwin, of course, and “commemorate those who improve our gene pool–by removing themselves from it in the most spectacular way possible.” Investors aren’t always the smartest people in the room, and founders may not always think things through. But good to remember these lessons. Remember: technology is an industry that celebrates failure and we may want to rethink that one. Remember, too: the spirit behind the Darwin Awards themselves is that there are people out there who eliminate themselves and who might be just too bloody dumb to be allowed to continue breathing. Or start companies. Onward and forward.

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