More Startups that Died in 2023

A couple of grocery delivery services, a neobank catering to the LGBTQ+ company and a company that used robots to make pizza walk into 2023. No one gets out. Here are the stories of more startups that failed in 2023.

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:04):
Welcome to Tech Stuff, a production from iHeartRadio. Hey there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and How the
Tech are You. So we're continuing our episodes about tech
startups that met their end in twenty twenty three. Last

(00:28):
episode we covered a cloud services company, a cybersecurity firm,
an organization that provided telemedicine services to pet owners, as
well as a music streaming service, all of which had
to close up shop in twenty twenty four for various reasons.
Though I should add that cybersecurity firm did later emerge
out of bankruptcy earlier this year and has a new

(00:51):
lease on life. So it was only, in the words
of Miracle Max, mostly dead. But what other startups had
their end downs in twenty twenty three? See what I
did their startups and downs? Well, how about a real
estate company that went on to embrace technology. You can
think of it as kind of like a cyborg real

(01:12):
estate company if you will. It didn't start off as
a tech company, but it would embrace tech as part
of its DNA. I think of a lot of tech
companies when you boil it down, or at least a
lot of tech startups end up not really being that
much about tech. Tech tends to get tacked on or

(01:34):
you know, sloppily incorporated into the company identity, but in
reality you're really just talking about some other business. We Work,
I think, is the perfect example. Right. We Work is
treated as a tech company. You find articles about we
Work in like websites that cover tech news, But we
Work is really just a real estate company. You know,

(01:54):
it's a company that ends up purchasing or leasing office
space and then sub leases it to tenants. That's it.
The tech thing is kind of superfluous, but we still
treat it like that because it's part of this startup culture.
So please forgive me that some of these intrigues are
tech light, But I think, if anything, they really illustrate

(02:19):
problems that exist in the venture capital community. And I
would argue venture capital has caused so many problems by
elevating ideas that weren't ready like, ideas that just could
not be viable, and then pushing them to the moon,

(02:40):
and then ultimately these ideas failed. The example that well,
besides we Work, the example that leaps to mind is Therhanose, Right,
Theharrannose was a company that was based on a critically
flawed premise, one that could not possibly have worked, and

(03:00):
there was a lot of sunken cost fallacy going on
around Thearrahnose. I've done an episode or two or three
about Pharahnose in the past, so we won't go over that. Plus,
we're focusing on stuff that died in twenty twenty three.
Therhos's old news. So we are turning to this real
estate company, and its story is a doozy because this

(03:21):
particular company had raised hundreds of millions of dollars just
one year prior to having to liquidate everything. So I'm
talking about a company called viv v EEV, and Viv
is a special case for us, partly because the tech

(03:41):
part of tech startup is debatable, but the other big
reason is that Viv was a unicorn. That's a startup
that reaches a valuation of at least one billion with
a B dollars. So for a company to hit Unicorn
benchmarks and still fizzle out just one year after achieving

(04:01):
unicorn status, in fact, that's noteworthy. I mean, that's a
that's a precipitous fall. So Viv's origins are rooted back
in two thousand and eight, when a'm A Holler and
Ami Avrahami founded an asset management and real estate development
company in Israel. So Holler and Avrahami had met in

(04:23):
the early two thousands back in Israel. Holler had founded
a mobile handset company called IXI Mobile and Avrahami had
served as the product manager for that company, and then
they continued to go into business with one another, and
they would co found a different real estate startup called
Really r Eali that launched in twenty fifteen, so that

(04:45):
came after VIV, but it would shut down in twenty
twenty two after interest rates and inflation hit the real
estate market really hard and it just became an unsustainable business.
And as it would turn out, Really would be kind
of a preview of what would happen to VIV. Like
VIV predated Really and it lasted longer than Really, Like

(05:06):
it closed after Really did, but like Really, it would
not be able to stick around. So VIV originally started
off with a different name. The one that it was
known for for the first few years of its existence
was the Dragonfly Group, but it switched to VIV in
twenty nineteen. By then, VIV was also changing its focus,

(05:26):
like it had been kind of a more classic real
estate company, but it would describe itself as quote a
vertically integrated developer focused on building innovation end quote. And man,
you gotta love buzzwords that don't actually tell you anything.
You know, you got to keep it vague, y'all. Anyway,
VIV was emphasizing homes made out of prefabricated elements. So

(05:51):
think of like modular homes made up of various cubes,
or a homemade of prefabricated walls that essentially click into place.
That kind of thing. It's meant to drastically reduce the
time and money it takes to construct a building. But
a lot of stuff hit around the same time, and
I'm sure it made it very challenging to maintain a

(06:13):
home building business posing as some sort of tech company.
I guess the prefabricated part was largely seen as the
tech element, but the pandemic and inflation and interest rates,
all of these things contributed to runaway real estate costs.
While potential home buyers were holding back because I mean,
who could afford to buy a house in that market

(06:34):
In March twenty twenty two, Viv secured a four hundred
million dollars in funding. That is when VIV officially hit
Unicorn status in its valuation. But by November of twenty
twenty two, just a few months later, the company had
had to downsize by around thirty percent, which meant they
laid off about one hundred employees. The following year, VIV

(06:57):
would be forced to go into liquidation after the company
could no longer deliver upon financial obligations they had to
their various partners and their employees, meaning they couldn't afford
to pay anyone. All US based employees were let go.
At that point, VIV ownership transferred to the real estate
company Lenard. That's a that's an enormous real estate company,

(07:19):
and according to an Israeli tech journal, the transaction was
for quote several dozen million dollars end quote now several
dozen million dollars. That's a big junk of change. I
wouldn't mind finding several dozen million dollars in my couch.
That would be awesome. But we also have to remember

(07:40):
that just a year earlier, VIV had hit a billion
dollar valuation, so being sold for a few dozen million
dollars was a heck of a markdown. Avrahami was let go,
as was another co founder named Dafna Akiva, who had
served as the chief revenue officer for the company. And
hitting a billion dollars of value only to go bust

(08:03):
a year later is really rough. Like it's hard to
put into perspective how something like that happens. Now. Obviously
we're talking about an incredibly expensive business. Anything that's involved
with home construction. We all know that those costs went
up around the pandemic era. I mean, there were supply

(08:26):
chain issues. Raw material costs were through the roof, Like
if you wanted to build a house around twenty twenty
to like twenty twenty two, it was suddenly way more expensive.
Then you also had things like labor shortages, which made
it even more complicated. You had shortages in skilled labor,
so if you needed someone like a skilled electrician or plumber,

(08:49):
that was really hard to come by. There were just
not that many out there that you could get access to.
So there were a lot of factors that all happened
at the same time, and it's possible that VIV would
have stuck around had it been just a little bit
more established. I don't necessarily know that it was mismanaged
or anything, but there were a lot of external factors

(09:11):
that were stacked against it. But you know, hitting a
billion dollars of value only to go bust a year
later is tough. What if instead you hit two billion
dollars in value and still went bust. And what if
the company was known for pizza making robots. That's right,
we have pizza making robots coming up next with our

(09:34):
story of a company called Zoom. Zu me. I will
tell you that sad tale after we come back from
this quick break to think our sponsors. Okay, so the

(09:56):
super easy but not entirely accurate description of Zoom is
that it was a startup that used a kind of
food truck delivery service for pizza, but it had other
tech elements to it. For example, a robot back at

(10:16):
Zoom headquarters would do some early prep on a pizza,
so you would have this pizza dough, it would already
be formed into the shape of a pizza, and a
robotic arm would apply pizza sauce, the idea being that
it would be a consistent amount of sauce and consistently
distributed because you've got a robot, it's just going to
do the same thing over and over and over again.

(10:37):
You never have to worry about having repetitive stress injury.
You just might have to do some maintenance every now
and then. That was the first part. You might say, huh,
that seems like a pretty high tech solution to something
that's not really a problem. That's a key early indicator.
After that, you would actually have a human staff member
who would add toppings according to the order that were

(11:00):
coming in to Zoom. So customers would order a pizza
with certain stuff. The robot would put some sauce on
a pizza, a human would put toppings on the pizza,
and then they would load this uncooked pizza into the
back of a delivery truck. Now, the delivery trucks had
ovens with GPS trackers in them, so the oven would

(11:20):
know quote unquote where it was, and it was programmed
so that it would bake the pizza at a rate that,
in theory, would mean the pizza would be fully cooked
shortly before the truck would actually arrive at the customer's location.
So the idea is that this pizza is hot and ready.
Little Caesars, eat your heart out hot and ready as

(11:42):
the truck is pulling up to deliver this pizza, and
then there was another robot in the trucks that could
cut the pizza, slice it into the proper slices, and
then boom, the customer would have themselves a really, really
fresh pizza delivered to their home or play of business. However,
just saying that zoom was this, that's doing a disservice

(12:04):
to the company, which was more than just pizza. They
had larger ambitions. When they actually formed those ambitions, that's
hard to say. A lot of the accounts suggest that
at least after the pizza business failed spoiler alert, that
they were like, oh, well, that was just kind of
a use case, a test case for what we want

(12:26):
to do, which is a much larger idea. Some people
have suggested that maybe they said that only after the
pizza thing failed, when they said, how can we take
these ideas we had and turned them into something viable.
I don't know the truth of the matter, but the
story goes that they had these larger ambitions. Unfortunately, just
delivering on the promise of a well made pizza would

(12:47):
turn out to be a lot harder than they anticipated.
Let alone, the more lofty goals of doing stuff like
using data to predict consumer behavior so that you can
maximize your fleet of delivery vehicles and thus, you know,
deliver more than just pizza, and to do so really efficiently,
not to mention, you know, be able to anticipate things
within the supply chain so that you're able to cut

(13:09):
costs that way. Those were sort of the big ideas
that would form when they formed. I don't know if
it was actually part of the plan all along to
make this a larger business, or if it was just
something that kind of came up after the pizza delivery
business started to falter. I can't say for sure. Now

(13:29):
for this particular entry in our list of startups that
failed in twenty twenty three, I am relying heavily on
an amazing piece, truly. It's a great article and it's
written by Jared Herman. It's a ja ryd Jared Herman
and Herman wrote an article titled Why Zoom Died, How
Melting Cheese Burnt a two point three billion pizza delivery

(13:53):
startup run by robots. It's a great title. You can
find that piece on how they grow. That's the website
it's a thorough explanation of the mistakes that led to
Zoom's demise by someone who really understands business far better
than I do. So if you want insights as to
what went wrong that go well beyond my capabilities, I

(14:15):
recommend checking out that article, all right. So co founders
Julia Collins and Alex Garden got the initial idea for
Zoom sometime around twenty fifteen, and the goal was to
take a lot of the labor costs out of making pizza.
You would automate as much of the process as possible,
and this would be disrupting the pizza market Silicon Valley style. Now,

(14:37):
the plan included a big data element as well, not
just consumer behavior, but everything up and down the supply chain.
So the thought was, if you can be nimble, then
you can take advantage of the market. You can buy
from different suppliers to minimize costs while you are guaranteeing
the best quality ingredients for your pizza, and you can

(14:57):
measure the convenience of buying from one place that might
charge more, but that place might be closer to your operations. Therefore,
it would reduce transportation costs and minimize food waste through
stuff like spoilage, so like, there are all these different
factors that usually are very difficult to account for, and
the idea was that with data you could start to

(15:19):
anticipate these things more effectively and thus run at a
level of efficiency that's never been seen before and that
would really save you money in the operation side. So
this was an audacious plan from the get go. Just
a bit about preparing pizzas in the back of a
moving vehicle would prove to be really tricky. Zooms soon
discovered that cooking pizzas in a moving vehicle isn't the

(15:41):
best if you want predictable, consistent outcomes, because there are
a lot of forces at play, Like there are bumps
in the road, their stops, their starts, you know, acceleration, deceleration,
all of that can have an effect on the construction
and cooking of a pizza. So while the pizzas would cook,
Zoom discover that cheese would slide around and burn, and

(16:03):
topping's distribution would be inconsistent due to this, and it
just wasn't a very smooth production as was first envisioned,
and it meant that consumers were disappointed, like they would
get pizzas, and they would look terrible because it wasn't
like a pizza that had been cooked in a stationary
kitchen and then shipped over to the customer. It was

(16:23):
cooked in an oven that was moving all over the place.
And sure, you might say that the founders should have
anticipated this. That anyone who has ever ridden in a vehicle,
especially if you've had to stand up in a moving
vehicle like on a bus or a subway train or something,
you know that even a boring, uneventful trip can cause
some lurching and such. And perhaps that bit of the

(16:47):
plan was just a little too unrealistic. But as Jared
Herrmann points out in the article I mentioned, a bigger
problem might have been that the team was looking at
multiple challenges all at the same time, rather than focusing
on just one before incorporating or attacking another challenge. Herman
argues that Zoom was quote trying to be three things

(17:08):
all at once, a technology company, a pizza shop, and
a sustainability play end quote. However, the pizza delivery service
was just part of this puzzle, right. The real goal
of Zoom, according to the co founders, was to figure
out how to leverage all these individual pieces, right, a
fleet of delivery vehicles. Now the logistics of operating those vehicles,

(17:30):
this message of sustainability, how to take all of that
and to apply all the data that was being gathered
for various purposes. The pizza delivery business was therefore just
a use case, sort of prototype test run. Now, the
pizza delivery business did not go smoothly, it was not
a success. But then the whole thought, or least is

(17:52):
how it was communicated, was that the team would learn
from their mistakes and their failures. They would correct those issues,
try again, and keep going down that route toward a
sustainable business that could run on proven technologies, and that
this business could then be ported for all sorts of
different use cases, not just pizza delivery. That's not exactly

(18:14):
what Zoom actually did, though, So while they might have
communicated that this was their plan, their actions spoke differently.
So first they tried to stick with the pizza delivery thing.
They switched gears so to speak, not to use a pun,
but rather than driving an oven around town, they would
park the truck's food truck style. They would cook the

(18:37):
pizzas in their food trucks, and they would rely on
delivery drivers to pick up finished pizzas at the trucks
and then deliver them to customers. I assume they also
depended on delivery drivers to bring the uncooked pizzas to
the food trucks in the first place, unless the food
trucks were just stocked with all the ingredients, because remember,
originally the idea was that the initial assembly of the

(19:00):
pizzas happened in a stationary kitchen. Anyway, it was just
that then the uncooked pizzas would be sent to the
delivery trucks. So I don't know if that step still
existed at this point where they went to the stationary
food truck model. If it did, that adds unnecessary steps,
right like why are you preparing a raw of pizza
in one place, shipping the raw of pizza to a

(19:23):
second location for cooking, and then shipping from that location
to the customer. That seems unnecessary. So I don't know
for sure that that's what they were doing, but if
it was, they definitely were not making it more efficient,
and no surprise, this still did not work out. It
did not make a successful business, so the company did
a pivot to a more farm to table food truck approach,

(19:46):
so again not just pizza but other stuff. This involved
licensing the technology to other companies, but none of that
seemed to really click right. It certainly wasn't becoming a
sustainable business. In twenty nineteen, zoo Zom shifted to something
entirely different. So instead of preparing and delivering food, the
company got into the business of producing food packaging. Not

(20:09):
food itself, but the packaging that food goes into, which
is wild like. That is a heck of a pivot.
The boxes that Zoom produced were made from plant based material,
so once again the goal of promoting sustainability was emphasized
as part of Zoom's mission statement. So rather than using
single use plastic, you could have food packaged in plant

(20:32):
based boxes. But there was one teeny tiny little problem.
These boxes contained polyfluoroalkyl substances or pfas. So these are
chemicals that have a long shelf life. They can be
found in various organisms that have absorbed these chemicals, and

(20:52):
they have potential links to quote harmful health effects in
humans and animals end quote. That's according to the Environmental
Protection Agent here in the United States. As such, some
places do not allow food to be packaged in boxes
that have pfas in them. One of those places happens
to be San Francisco, which is obviously where most tech

(21:14):
companies in the United States incubate and grow. So that
was a huge setback for Zoom, and it turned out
that all that data that Zoom was touting as being
like the key to their business strategy could not make
this business work despite more than two billion dollars raised

(21:34):
in various funding cycles over the lifespan of Zoom. So
in June twenty twenty three, Zoom shut down. If you
want to dive deeper into the various factors that led
to this sad end I recommend you check out that
article on how they grow, the one that's written by
Jared Herman. But way up among those reasons is an

(21:56):
argument that ultimately Zoom was a hammer in search of
a nail. It was a solution to a problem that
didn't really seem to exist. So just because an idea
is interesting doesn't mean it's going to be a practical
business in the real world. That is a pretty tough
lesson to learn, particularly if you're an investor who has
sunk millions of dollars into that idea. Okay, we've got

(22:21):
a few more stories to get through. There's two in one,
and there's also a story I found incredibly unsettling. But
before we get into all that, let's take another quick
break to thank our sponsors. We're back with startups that

(22:46):
failed in twenty twenty three, and this is a two
for two different companies offering very similar services. And both
of these companies would fail in twenty twenty three, and
both are located or we're located in Europe. So first up.
In twenty twenty one, a group of German entrepreneurs founded
a same day grocery delivery service that catered primarily to Berlin,

(23:10):
Germany's population of Turkish and Arabic residents. This business was
called Yababa and secured more than fifteen million dollars in
seed funding. Initially, things seemed to be going pretty well,
and the co founders had aggressive plans to scale up
the company and launch services in other European cities, including

(23:31):
ones outside of Germany. Now that sounds to me like
those plans were perhaps a bit too aggressive. It actually
kind of reminds me of stories I would hear during
the dot com rush here in the United States. In
the late nineties, you had these companies that pushed to
scale super fast and rapidly reached a point where the

(23:52):
cost of operation was so great that it was outpacing
the amount of investment coming into the company, or the
investment plus revenue. Usually if the company had a way
of generating revenue in the first place. In the dot
com days, that was never a guarantee. There were companies
that had no business plan to speak of that still
got huge amounts of investment in those dot com gold

(24:14):
rush days. So providing same day grocery delivery services in
a single city is already a huge undertaking. There are
so many operations you have to take care of for
that to work, laying the groundwork to do the same
in other cities, and scaling up operations to support that
kind of work. That's a gargantuan task. It's hard to

(24:37):
stress how difficult that is, particularly for a startup. It's
not something that I think you should rush into. Yubaba, however,
embraced the challenge and in early twenty twenty three, despite
burning through investor cash at a heck of a rate,
the company launched a pr campaign to raise awareness of
the service in Berlin, and the hope was this would

(24:58):
help encourage another round of investors who, again, due to
global economics, we're being a little more conservative with their
cash than they might have been previously. Like, it's hard
to get excited and think you're going to get rich
quick if you're taking out a loan to invest in
a company and the interest rates are out of control.
When interest rates are low, It's amazing how willing people

(25:22):
are to spend money that isn't technically their own. I mean,
I guess that's generally true, right, It's amazing how how
quick some people are to spend other people's money. This is,
by the way, something I genuinely do not grow on
a personal level because I find it. I find myself
growing anxious if I am in charge of handling anything

(25:44):
that involves other people's money, like that includes using a
corporate credit card. I'm like, like, I have to be
one thousand percent certain that what I'm using it for
is in fact totally appropriate and approved before I use it,
because I have this sense of responsibility. It's not fear,
it's accountability. But some people they're really cool with using

(26:07):
things like corporate credit cards to buy all sorts of
stuff and then maybe they deal with the consequences later,
and that just blows my mind. Anyway, for whatever reason,
these investors were discouraged from putting more money into Yebaba,
and so this funding round failed to coalesce in early
twenty twenty three, and unfortunately Yebaba was at a point

(26:31):
where they needed that influx of investment money because buying
the stuff so that they could then sell it to
their customers, and it reached a point where they couldn't
afford to pay partners anymore, they couldn't purchase the stuff
they would need in order to meet their customer and demands,
and they had no real option other than to file

(26:51):
for insolvency. Now that being said, I did find that
the website still appears to work, or at least the
website still exists. I didn't make an account. I don't
live in Berlin, Germany, so I'm not sure that I
could make an account. I couldn't find any official reports
about whether ya Baba sold its assets to some other

(27:12):
entity which is then continuing its operations, or if the
website is just a holdover from before filing for insolvency,
and maybe the website is still active but doesn't actually work.
I don't know. Maybe ya Baba itself even rose from
the ashes, maybe it's operating as its own business again.
But again I'm not seeing any news articles that actually

(27:34):
say that. All the news articles reference ya Baba shutting down,
not a new ya Baba rising up, and sites like
Pitchbook list Yobaba as being officially out of business. So
in lack of any other information, that's what I'm going
with anyway. Over in the United Kingdom, there was a
similar company called Ojah Oja. It was founded in twenty twenty,

(27:59):
so it actually pre dates Yababa by a year. It
was founded by a woman named Mariam Jamo, a British
Nigerian citizen and a former banker. Like Yababa, Oja focused
on grocery delivery services in the UK, catering to a
niche market. In Oja's case, it was African and Caribbean
grocery items. Oja received a little modest two point nine

(28:22):
million pounds in initial seed funding. You know, ya Baba
had fifteen point five million, so it got much more
at its origin and later on Oja got an investment
from a noteworthy individual Raheem Sterling, a soccer or football
player of some renown. I don't know who Sterling is,

(28:45):
but I don't follow football, so that's that's on me.
Jamo was really boasting about Sterling's investment in twenty twenty three.
In May of twenty twenty three, and that's pretty brazen
because it was literally just weeks before for Oja, the
company that Sterling invested in, got shut down. In fact,

(29:05):
according to the Standard, Jimo was boasting about Sterling's involvement
in an interview with the Sun while simultaneously her company
was facing the second of what would become several legal
claims regarding unpaid bills. And it turned out that Oja
had run through its investment funds and had failed to
pay produce suppliers and other partners. So there were these

(29:28):
bills that were just not getting paid by Oja. Some
said it even looked that like Oja was selling produce
for less than what it cost the company to buy
that produce. That's clearly unsustainable, right, So maybe the idea
was to try and attract a customer base that this
was going to be a lost leader. But if you're

(29:48):
dependent upon investment to keep you afloat. Then you need
to have a pretty big cushion there for this to work.
And maybe the idea was that gradually OJA would increase
prices so that it would become a more realistic business.
But you know, if you're buying stuff for five pounds
and you're selling that same stuff for three pounds, you're

(30:09):
clearly only in the business of losing money. That's what
your business is. On top of all that, employees were
in a tight spot because the company had failed to
pay them as well. Some said it felt almost like
they were unemployed, but they still had to come in
to work a job, which is a big ol' yikes.
The standard also cited an internal Slack communication thread in

(30:31):
which Jimo responded to employees asking about their pay with quote,
there is nothing to pay you with Stop talking to
me about this end quote. Further complaints would result in
Jamo telling employees to take it up with HR. Here's
the rub with that. The head of HR was Jimo's
own mother, which I mean, come on, like nepotism right there.

(30:55):
That's that's rough. Customers felt the effects as well the cump,
and he began to miss deliveries, so customers found themselves
in a stalemate while seeking refunds for goods that were
never delivered to them. By the end of July twenty
twenty three, the company was done for and it stopped
delivering on July thirtieth and was handed off to administrators

(31:17):
for liquidations. That these two businesses failed isn't really that
big of a shock. While they provided services that their
customers likely really wanted. The margins for grocery delivery services
they're razor thin. They're so thin, and in the early
years of these businesses, a regular flow of investor cash

(31:38):
is often necessary to keep things going while you build
scale that ends up being sustainable. But both Yababa and
Oja launched just when factors were discouraging investors in general,
let alone people who might invest in a delivery service
that isn't likely to make them tons of money like
it might be a good return on investment down the line,

(32:02):
but it's not the sort of business that typically gets
you rich unless some other massive company acquires it for
a ridiculous amount of money. So the fact Ya Baba
and Oja both shut down in twenty twenty three isn't
so much a comment on how well they handled things,
because even if economic factors had been more favorable, it
still would have been a really challenging business to run,

(32:24):
just because of the nature of that business. So I
don't want to suggest that either Yobaba or Oja were
run poorly. Other people might have more insight into that,
but even if they had been run perfectly, there was
no guarantee of success in that climate. Okay, our final

(32:44):
entry is in my opinion, a real bummer, So apologies
ahead of time. This is also a story that has
allegations about the CEO that makes that CEO seem like
potentially one of the worst bus is to work for
in the tech space. And y'all know my opinions about
Elon Musk. That is, this is not Elon Musk I'm

(33:06):
talking about. So it's saying something if I think this
guy merit's mention in that space, if the allegations are true,
I need to say that because it could be that
the allegations aren't true. It's also very sad to talk
about this next one during Pride Month because we're going
to dive into the strange story of Daylight. So Daylight

(33:28):
was a neo bank platform with a focus on the
LGBTQ plus communities, and it sounds to me like this
startup had the terrible burden of a CEO who was,
at best the wrong person for the job. At worst,
he was allegedly a toxic influence who was very good
at making his staff feel incredibly unwelcome and uncomfortable. All right,

(33:52):
So a ton of the information I'm relying upon here
comes from an amazing article in New York Magazine by
Jen Weissner and Jen, if I am butchering your name,
and undoubtedly I am, I apologize, could be Weisner, but
the article is titled the Meltdown of a Gay Bank
and then what went wrong with an LGBTQ plus startup

(34:16):
set out to disrupt finance. So in that piece, Jen
and I apologize for the familiarity, but I feel like
I can pronounce your first name. Jen reveals that Daylight
was initially the idea of a Slovak entrepreneur named Mattege Fatacnik.
Talk about butchering names, I'm just going to keep doing this,

(34:37):
but it was Ftacnic who brought in Rob Curtis. Rob
Curtis is an Australian entrepreneur whose CV has so many
different companies listed. Then it begins to beggar belief. Although
you would later find out, or at least if you
read this article, you would find out that Rob Curtis
allegedly has been shown the door in more than one

(35:02):
of his experiences as an employed person. That's a polite
way to say he's been fired a lot. But Curtis
had worked at various companies and organizations with mission statements
that related to the LGBTQ plus communities over his career.
Not all of them do, but a lot of them do,
especially toward the more recent career choices he made, and

(35:23):
so he was very much in that world and had
made various connections. Curtis was brought in to this venture,
and he then brought in two other UK based business partners,
Billy Simmons and Paul Barnes Hoget. So these three, Curtis,
Simmons and Barnes Hoget would become known as the co founders.

(35:43):
As to what happened to Mattege, he would serve as
the chairman of the board. Some said that this was
essentially his project and then Curtis ran away with it.
I don't know the truth of that. I just know
that it's mentioned in the various articles, so that with
a grain of salt, but the concept of Daylight was

(36:04):
that this new bank would be a welcoming service for
folks who were in the LGBTQ plus space. People would
be treated fairly, They would not be discriminated against. People
would be able to secure credit and bank cards that
had their chosen name on them, not whatever legal name
had been assigned to them, but their chosen name, so

(36:25):
they didn't have to be dead named every single time
they used a card. Presumably, queer customers would encounter fewer
roadblocks for major transactions such as securing a mortgage or
other loan. The company hired extensively from the LGBTQ plus communities,
many of the staff identifying as queer or trans et cetera.
The New York magazine piece paints a rather unflattering portrait

(36:48):
of CEO Rob Curtis, which is to put it lightly so.
According to the article, Curtis had said that he had
been fired from jobs before due to being something of
a troublemaker, and the implication appeared to be that Curtis
was kind of saying he spoke his mind and he
stood up for his community, like he would stand up
for LGBTQ plus folks, and that this kind of behavior

(37:12):
where he was unapologetically standing up for his community was
seen as unacceptable in the very stuffy established English banking industry.
That appeared to be the implication. However, Staff told New
York Magazine that upon interacting with him on a professional level,
it seemed like Curtis wasn't so much a punk rock

(37:34):
kind of leader. He was more of just a punk
like someone who behaved poorly and showed little regard for
other people in his organization. There's a description of a
huge party that Curtis threw in his home that sounds
like something that came out of an over the top
nineties comedy, mixed in with a bit of the cluelessly
inappropriate behavior you would expect from Michael Scott in episodes

(37:56):
of The Office The US Office. I'm not going to
repeat the stories about that party here because I think
everyone should actually go read the article for themselves in
New York Magazine. It's free to read, there's no paywall.
I highly recommend it. But the party definitely doesn't come
across as remotely appropriate or at all respectful of employees.
And their feelings. You know, there's being disruptive, which is

(38:19):
not necessarily a bad thing, but then there's also being
downright disrespectful and in my opinion, cruel, and I feel
the descriptions of that event fall more in the second
category than the first. But that's my opinion. Curtis would
actually deny a lot of the allegations that various employees
brought against him in a federal lawsuit where they made
these claims and others, And I certainly don't have any

(38:41):
firsthand information as to what was going on behind the
scenes at Daylight. I do not know if the numerous
allegations against Curtis actually have merit. There are a lot
of them, and there seem to be a lot of
people corroborating them, but I don't have direct knowledge. If
they are true allegations, then I do think he'd be
in the running for worst boss to work for in

(39:03):
my book. But maybe those allegations aren't true. I try
and maintain a level of objective fairness, but boy howdy,
it sounds bad. The New York magazine piece also mentioned
some questionable and shady stuff on the business side, including
manipulating numbers to make Daylight look better to investors, like

(39:24):
inflating the number of customers that the company had. In
some cases, it just means making stuff up. For example,
there are allegations that management invented a fake study to
make it seem like Daylight had a much broader reach
than it really did. And I guess really it's more
than allegations, because apparently the company owned up to fabricating

(39:46):
the study, and that's crazy. Fast company actually wrote a
piece that was based off the findings of this study,
and the study ended up being bogus. The day after
the piece came out, Curtis allegedly revealed that Daylight had
managed a revenue of just one dollar forty seven cents,
not one point four to seven million dollars, but a

(40:08):
dollar forty seven at least, assuming I'm reading the article correctly,
that is abysmal. Daylight launched new features, including tools meant
to help customers with family planning, including tools meant to
help secure financing for fertility treatments or to help queer
couples pursue an adoption. But it was either too little,

(40:29):
too late, or it was the nail that sealed the coffin.
In May twenty twenty three, Rob Curtis posted on Medium
that quote, I'm incredibly sad to announce that today we
are closing Daylight, the first and only LGBTQ plus banking
platform in the USA end quote. He would also write
quote I feel now is the right time to exit

(40:50):
this market end quote, which I bet is true. I
bet he felt that that was the time to exit.
In fact, he probably felt it was a little late.
He laid much of the blame for the company's failure
on larger economic factors, things like interest rates, primarily which
admittedly that is a huge issue. He claimed the company
had quote opened thousands of trans inclusive debit accounts, supported

(41:14):
thousands of prospective LGBTQ plus parents' plans for their families
end quote, which might be true, But the various articles
I've read have suggested that the customer base was much
smaller than that. However, again, those are from articles. They're
not from like internal documents from the company itself, so
maybe the articles got it wrong. As for that federal

(41:35):
lawsuit that was filed against Daylight and its co founders
that ended up getting settled out of court in the
summer of twenty twenty three, the settlement was filed like
in late July. I do not know the details of
that settlement. I don't have access to that document. But
the settlement would mean that the matter would be dismissed.
So you could say that the court case was dismissed.

(41:57):
But to me, that sounds like the court found that
there were no merits brought to the court, like that
the plaintiffs had no real basis for the lawsuit. The
fact that it was a settlement changes that narrative, right.
But Rob Curtis would go on to found a tequila company,
so that's why he went to next I think that's
interesting because one of his earlier jobs was working for

(42:19):
a company or an organization called drink Aware, which is
dedicated to helping customers quote develop a personal strategy to
reduce harmful drinking end quote. So now Curtis runs a
company that pairs influencers with booze. The mind boggles, right,
Like to go from a company that's meant to help
people manage their drinking in a way that's responsible to

(42:41):
promoting a tequila brand by bringing influencers in. It's just wild,
Like it's given me whiplash, y'all. And this particular story
stings a lot for me. I get particularly upset when
people who are coming from disadvantaged or vulnerable communities encounters
setbacks like this. I have no doubt that many of
the people who worked for Daylight truly believed in the

(43:03):
company's mission and to know that they found themselves out
of work in the spring of twenty twenty three, as
well as the company supposedly dedicated to supporting these communities
had failed so spectacularly that must have been really hard.
I hope they all found gainful employment with organizations that
value and respect them. Because dang, y'all. Okay, that's a

(43:25):
look at some more startups that failed in twenty twenty three.
There are more than just those, Unfortunately, you know. I
wish that I could say, like we covered them all,
but no. Lots of other startups also met their untimely
end last year. Maybe I'll do another episode to kind
of wrangle up some of the stragglers, because there's some

(43:46):
good stories in there too, some good lessons to be learned.
I think. In the meantime, I hope all of you
are well. We're coming to the end of it. But
happy Pride Month, everybody. I really hope you take care
of each other, show compassion toward one another. It's the
only life we have. Let's make it a good one

(44:06):
if we can. And I'll talk to you again really soon.
Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio,
visit the iHeartRadio app, Apple Podcasts, or wherever you listen
to your favorite shows.