This Week in Startups
00:02:17 · Jason Calacanis, Molly Wood
[00:02:17] S0: Maybe more private club than working spaces than vibe I got having been there once. I think so. More like the battery or Soho house than WeWork, but kinda trying to do both maybe. [00:02:27] S1: I'll give it that. Kinda trying to do both, yes, is a big part of it. And it turns out that the wing abruptly has closed. There was a long article in fortune about how it failed despite billionaire backers, a $365,000,000 valuation and a 35,000 person waiting list. I mean, the wing was like super flashy, raised a ton of money and then abruptly closed. And in our group chat about it, Jason made this comment saying, it always seemed to be in service of the founder's ego, not the experience of the customers. And this seems like a really good prompt, if you will, topic prompt, book club prompt. Yeah. Sure. For BC Sunday School. How can you tell the difference when you talk to a founder? [00:03:13] S0: Yeah, I think, listen, ego is a healthy thing for a founder, being driven is healthy, but sometimes you can have blind spots. And if you look at this as a product objectively, it was an awesome product. There was market demand. Women in social clubs, the feedback I got was maybe they didn't always feel welcome, maybe they didn't feel comfortable and a women first or a women only, now there's some legal issues around this, they had gotten sued for discrimination because you can... There's always a guy who can sue for that, like when they have female poker tournaments. [00:03:48] S1: And some of guys who
00:03:50 · Jason Calacanis
[00:03:50] S0: show up for the female poker tournament and they're like, I'm going to ruin this and you can't stop me. And it's like, okay, dude, just let... We're trying to get more women to play poker, can you just... It's one tournament. And then these guys would show up, these poker trolls, as women and then still pay. And so they finally came up with, you know, the laws are you can't discriminate against people by gender I guess, including private clubs. Which seems right, but it also seems right that people should be able to have their own spaces if they want to self organize. I don't know, you know, what I think of this legally or whatever. All I know is if women wanted to have a space for themselves, I'm cool with it, I don't need to troll them. So what they did in poker was, they could charge men a different price, so that men had to pay 10,000 and women paid 1,000, so women got paid 10 to one for these, you know, guys who came. Anyway, this thing was so beautiful and well constructed, they understood their customers the design was gorgeous. You came to the space and it felt like your friends, your friend with the best taste, who had the best apartment that always hosted the greatest parties or brunches, just really well done. And then they also did amenities that seemed to really appeal to women. They had a beauty salon in it with a shower, you had all the products there for free, so if you wanted to do your hair, you were having a meeting, just all really good stuff. Now, there seemed to be a leak in their game that came up over and over and over and over again. And I don't know enough about this, so I'm just going based on what I saw on TikTok and in the articles, which was, instead of having this be run, you know, this perfect product, what I think had perfect product market fit. Yeah. How they applied the membership was to be very selective and people felt like it was run like a sorority, where you had to be cool and had to exclude people and maybe not run for the bottom line, the profits of the business, the sustainability of the business. Because the sustainability would say, well keep raising the prices, have a good profit margin, service the customers. If you're running a hotel, people come in, they pay for the hotel room, you treat everybody the same. You're not saying like, oh, apply to come stay at this hotel.
00:06:13 · Jason Calacanis, Molly Wood
And they certainly got this reputation, and you might know more than me if people in your circle talked about this place, that they let in a certain demographic, a certain type of person and maybe excluded other people. [00:06:28] S1: I think there was that and so there was all of that. There were like a bunch of lawsuits. It sounded like it was like a lot of like yucky rich white women is how it ended up feeling to people. And there were specifically accusations about racism and about members treating staff at these places really poorly, which is awful. [00:06:46] S0: There seem to be a lot of white women were the target membership perhaps, and maybe people of color were working at the front desk. Right. Weird That founder did not, I mean, get that. And then you'd have white woman berating person of color at the front desk for the conference room not being set up the way they wanted it to be. I mean, this is where you really have to check yourself and just think about how you're implementing your ideas. [00:07:19] S1: You really do, and you have to think about what, you know, it's like every founder at some point has to consider the worst case scenario, the like Sure. Worst side effects. Worst interpretation, worst side effects. Like, imagine you know, what is that bat busting drug that gave people explosive diarrhea? I I have given... I've... I have been known to say, is... What's the explosive diarrhea that could happen? Yeah. As a result of your [00:07:45] S0: You're talking about side effects. Talking about side effects, [00:07:49] S1: but then
00:07:49 · Molly Wood, Jason Calacanis
[00:07:49] S1: but then [00:07:49] S0: also in the industry edge cases. [00:07:52] S1: Okay, yeah, good, yep, like that. They also, it sounded like tried to expand really fast. That's always a challenge. Which is always a challenge. So I wonder like, at what point do you as a, if you're on the board, if you're a VC, at what point do you as a VC, this is a great place to start with this conversation actually. In those early meetings, do you ever press founders on what they think is the worst case outcome?
00:08:22 · Jason Calacanis
[00:08:22] S0: Yes. For their business? Here's how I frame it. And so this is when you have to give founder some counsel, you don't want to tell them what to do because you hired people who are hopefully leaders and you don't want to be like, here's how to lead necessarily. What you want to do is have a dialogue and say, let me tell you the worst interpretation and how this will be spun by the press, by a competitor, by a disgruntled employee, by an investor who didn't come into the round, just somebody who's an enemy of yours. And you know, you're gonna collect people who are not fans of yours over time. You have them, I have them, everybody has them. You fire somebody, you're basically... Your Wikipedia page is written by the people you fired if you're a CEO. You know, like that's basically what it is. As a journalist, your Wikipedia page, if you are unlucky enough to have one, is going to be written by the people who disagree with whatever you're most passionate about and whatever they hate you for being most passionate about. This is the nature of, you know, being high profile, whatever. So the way to phrase this is, hey listen, founder, what is our criteria for accepting people? And they'll say it and say, okay, where is that documented? How do you train people to do that? And if you were to attack yourself, if you were to attack this firm, if you were trying to take us out, if you were trying to lead a misinformation campaign on us, a slander campaign on us, just attack us, what would be the worst interpretation? How would you attack this policy, right? And that is when I write policies, like I'm writing our work from home policy as but one example here at launch, because we move from a in person to a thing. And so I'm writing this with the full knowledge at some point it will leak. And I don't want to be perceived as being like crazy for saying you should have an ethernet cable, should have a quiet room, you know, you should work these specific hours, we have overlapping hours, but of course you can change them.
00:10:15 · Jason Calacanis, Molly Wood
So I write it in the spirit of, hey, if this was to leak, you know, somebody would say like, hey, we are in the customer facing business, we're on Zoom all the time, you need to have an ethernet cable, and you need to have a proper microphone, and you need to have proper lighting, and you need to be in a quiet room where you're not gonna have a dog barking, a baby crying, a roommate barging in, because it would look unprofessional. Now if that happens, it's not the end of the world, of course, people understand, but that's our standard, we should try to hit that note. So you have to write these policies with that understanding. I don't think they had that kind of forethought here. If your email box was public, if your Slack was public, if your texts, I don't know how this would happen, were public, would you be able to stand by them? Would you feel fine with them? Like I feel fine my texts, I don't know, some people might not feel fine with them. I write my texts, I write my emails as if they were going to be read. So I think that's what... That's how I would explain it to this person, and I think if they had been more thoughtful about the membership, and maybe run the membership for profit and for servicing those people, and then maybe thought about this disparity in the optics, if you will, and what could happen. Like maybe the op... Maybe the reality wasn't that it was a bunch of white women and women of color working at the front desk. Maybe that wasn't reality. [00:11:38] S1: Right. But