Does an influx of cash from big investors… kill startups?
This week instead of focusing on the rights and wrongs in startup branding and marketing, we’re looking at what else can cause their downfall, primarily when it challenges the original/founders’ vision.
It seems to us, a brand strategist team with collective past experience in the startup world, finding funding is actually at the core of startup downfall. Now, that sounds counterintuitive, and it is in a way. Startups need money to plan, to launch, to work, to succeed. And with younger generations turning toward passion projects, gig economy, freelancing, remote work, and working for themselves, founders (like all of Gen Z and much of Gen Y) aren’t starting out with much savings. How can they, when minimum wage didn’t stay afloat for them and most are in a ludicrous amount of student debt?
And you’re right — we’re not bashing all investors and all money that startup founders garner for funding. But is there a type of person, a type of business, and/or a type of investor that is actually going around killing top-tier-idea startups? By funneling so much money in, taking over board seats, questioning company culture, pressuring for change (normally for traditional professionalism as opposed to the young person’s crave for authenticity and “be real” attitude)?
Are big investors swooping in on desperate startups, guised as a saving grace, only to tear apart the passion project with an iron millionaire fist?
Take SoftBank for example. The conglomerate dumps MILLIONS into startups, including Uber, WeWork, and Brandless. Three brands that, over the last 2+ years, seemed to have a perfect product for their market. Uber decreased drunk driving accidents and flourished in college towns. They even successfully did something really hard for a brand to do: made themselves a verb (to Uber, to Tweet. In the same vein, a Kleenex instead of a tissue, a Band-Aid instead of a bandage). WeWork created a great space for an increasingly remote and freelancing workforce. Brandless was seen as a top alternative to Amazon.
Yet, all three of these brands have crashed to the ground or almost to the ground in the last several months. Now I know, duh, this isn’t just because they got money from SoftBank. Uber had a (deserved) nightmare surrounding sexual assault allegations. WeWork had changes in leadership. But they do all have SoftBank involvement in common, coming in while they were starting to get successful, and now they are in the dirt.
Let’s look at Brandless specifically.
Amid a greater push (thanks Gen Z, no for real, thank you) for social justice and corporate social responsibility, Amazon was facing unending backlash for its ethics, primarily for the working conditions and pay rate of their employees across the world. As people searched for alternatives, and not always being able to find one because of Amazon’s monopoly on lowest prices, availability, etc., Brandless popped up as one of those alternatives, touting a more ethical, less showy, BrandTax™-less product line. But when SoftBank came in, Brandless nearly immediately toppled due to steep expectations that 1) couldn’t be met sustainably, and 2) went against what the heart of the company was. In only a year starting when SoftBank funneled $240M to them, the original founder resigned and Brandless closed down shop so that they’d be able to give severance packages.
We H8 Traditionalism
Now, I’m not sayin’ nothin’, but in my startup days, this sounds very, VERY familiar. Could it be that…. Alongside Gen Z and young Millennials’ disdain for the traditional and unacceptance that things must stay how they’ve always been, they’re going to change the startup world too? Is the core of these startups’ downfall that their heart, passion, and authenticity were maimed by traditional, big money? It seems as though a corruption of belief is handed down with the money being raised– a corruption of the original ideas of the startup. Forced closure of the new so that a traditional dollar can be either made or taken over or liquidated…. All I know is that I don’t like it, and I’m a startup junkie Zillennial (sorry for the buzzword, but there really is no better word for someone in between Millennial and Gen Z).
Will startups led by these generations change everything we know about startup funding? We, as in Rock Candy Media, as a top category marketing and naming agency in Texas, have never shut up about the importance of authenticity in branding and marketing strategy. We also aren’t too fond of traditional professionalism (duh). We’re a top integrated marketing firm with one founder and zero investors. And we like the way the startup future is looking, if the passion driven people can make it past that millionaire iron fist.
If you do, we’ll meet you on the other side. Supporting young minds and underdogs is kind of our thing.