The privilege to fail April 7, 2017 0 Comments Share tweet Fiona Kelliher Managing Editor of News By: Fiona Kelliher | Managing Editor of News A bird guided between pipes with a few snappy turns of the wrist. Virtual assistants hired on-demand. A photo that vanishes in moments, adorned with finger drawings and new effects. An “invention platform” where people vote on their favorite newfangled ideas. A delivery system for doughnuts, coffee, sushi. For undergraduates at Stanford, the air has become so saturated with startups it’s hard not to choke. To stand out from the slew of projects posted to class pages and requests for app downloads, undergraduate founders have to be zealous, persistent and completely convinced of the sanctity of their ideas. But above all, they must be in a position to risk their academic standing and a shot at a stable income. For some would-be founders at Stanford, taking this risk is a far-flung luxury. I traced three Stanford-originated ventures from their roots in a world where failure is forgivable to the obstacles that plague them today. One founder is convinced his app will make it big after several years without profit. Two more see themselves as renegades in a town of fluffy ideas and misguided social good. Another just loves business. They use the words “growth hacking” and “bootstrapping” while embodying the privilege of the bubble they want to disrupt. Moving on from failure, or not (RYAN COHEN/The Stanford Daily) Failure in Silicon Valley — or, less dramatically, a lack of stunning success — doesn’t always lead to the most thrilling stories. (Unless you’re Theranos). Nine out of 10 startups close their doors, some with a spectacular bang, others with a slow and miserable creak. Over spring break of his sophomore year, Teddy Jungreis ’18 sat in an airport punching out shapes from a foam sheet with a paper clip. His startup, SolTat, produced foam “tattoos” to wear in the sun, but the Chinese factories that produced the little sticky figures hadn’t punched them out correctly. He couldn’t figure out a faster way of doing it that was affordable and didn’t involve laborers – so he and his cofounder Konner Robison ’18 frantically poked holes around each shape to free them from the foam sheet. In fact, Jungreis and Robison poked out almost every shape their company made that spring. “It was miserable,” Jungreis said. “So that sucked.” SolTat was constantly untangling snafus. Early on, they had to part ways with a money-hungry designer, seeking outside legal counsel as well as paying Robison’s lawyer father to read over legal documents. After that, it took months to get Chinese factories to make their product correctly; Jungreis’s brother happened to be living in Hong Kong at the time, but even fluent Chinese couldn’t help the tattoos from coming out warped and wrongly-sized. They didn’t have the pitch or the pricing right and couldn’t get the product into cruise ships, hotels, music festivals or just about anywhere they had hoped. Still, the important thing was the process. “That’s really how you grow as an entrepreneur, is just by doing it,” Jungreis said. “You have people who say ‘don’t start a company just to start a company’— I totally disagree with that.” Jungreis moved on, though he did come to see Stanford students as “cynical about everything.” Meanwhile, Adam Halper, who dropped out of Stanford to start the app Whatsgoodly, is still holding onto hope despite the venture’s lack of profitability. Whatsgoodly lets users create anonymous polls for “hyperlocal” communities such as fraternities, where the app was born, but has suffered from initial booms of popularity that wear off on college campuses. The app is now marketing itself as an alternative to SurveyMonkey, and recently worked with Silicon Valley Bank (“Actually, fuck it, I think it’s fine,” Halper said after debating whether to share the name). “If your app’s not gonna be an app like Snapchat, Facebook, with really high retention of users, you have to develop a model that, you know, makes that work regardless,” he said, adding, “That’s the nice thing, every year there’s thousands of new students.” Whatsgoodly co-founder Chris Sebastian ’17, who didn’t respond to requests for comment, went back to school after a one-quarter absence working on the app. In fact, everyone on the original team besides Halper has since left. Halper attributes this to the “opportunity cost of losing the college experience,” noting that he, at times, particularly misses his fraternity SAE’s social events. The privilege to fail (EDER LOMELI/The Stanford Daily) For some students who hope to found startups, however, the “opportunity cost” is much more immediate: financial insecurity. Halper was able to ask his father, who works in private equity, to provide the starting capital for his venture, and his father also participated in angel round funding last fall. Students who lack the same resources may find it much tougher to “stay self-funded as long as possible,” per Uber founder Garrett Camp’s advice. According to Romeo Umaña ’19, a low-income, first-generation computer science student and Irving Rodriguez ’16, a machine learning engineer at doc.ai, not having parents who can write the check for the starting capital is just a small part of the problem. Some students need to provide for their families immediately, which often creates enormous pressure to attain stellar grades and land a stable job. The effects of income level on risk aversion has been well-studied in behavioral economics and psychology — individuals who earn incomes below the poverty line tend to be significantly more risk averse compared to those who are better off. “It’s not like you have the luxury of saying, ‘If this doesn’t work out, then I can find another means of providing for myself pretty easily, or I have my parents to fall back on, or have some source of wealth to support me while I go through this very risky process,’” Rodriguez said. At the same time, Rodriguez explained that many low-income or first-gen students have been so focused on education and upward mobility that they have not had a chance to reflect on who they are, what they really want and the path to achieving their ambitions. This sets them apart from peers who have had leisure time and constant encouragement to develop those aspects of themselves. College, in this sense, can be a chance for first-gen students to come into their own. But as they’re trying to understand their calling and purpose for the first time, as Rodriguez put it, being held up as “model citizens” in their communities back home can be a barrier to breaking out on their own, said Umaña. “While a first-gen/low income student is out there taking risks, their families may be struggling to put food on the table,” Umaña wrote in an email to The Daily. “All of this is assuming the student would have somewhere to live and at least be self-sustaining, which may not even be the case.” Other hopeful entrepreneurs may be drowned out by the buzz of white male voices in the Valley. In 2014, 93 percent of California founders were men and 87 percent were white. Black women startup founders receive on average $36,000 in venture funding while white men receive $1.3 million. Like Halper, dropouts Axel Ericsson and Zach Lawrence are “bootstrapping” — Valley speak for self-funding — their venture, which they hope will lead to the internet’s decentralization. Holed up in a two-story apartment in downtown Palo Alto, they describe themselves as primarily dedicated to the intellectual pursuit of their project, not the potential monetary gain. Jungreis’s parents also provided his share of starting capital, which Jungreis said was “just a little bit of seed money.” Robison said he paid for his share with money saved from internships, “much to the chagrin of my parents who were not aware of the financial toll of the company until much later,” as he put it. They eventually made it into Ron Jon’s Surf Shop on the East Coast and sold out their units, though Jungreis declined to share how much money they made or how many units were sold. “The money’s not really an issue,” Jungreis said. Two faces of “anti-establishment” (EDER LOMELI/The Stanford Daily) If the four founders have anything in common, it’s a commitment to ideas over income — even if many would challenge them on their ideals. Whatsgoodly’s founder Adam Halper said he’s still committed to his profitless product because it unearths “uncomfortable truths.” Part of the app’s purpose, especially in the beginning, was dismantling what Halper saw as a troubling Silicon Valley orthodoxy: political correctness. When interviewed by The Daily Beast, Halper said that he launched the app in hopes of “finding out what is considered good through the silent moderate majority.” This model led to bullying in the app’s initial stages, most notably of then-sophomore Tess Bloch-Horowitz ’17, who was falsely accused of reporting SAE to the Title IX office for misogynistic jokes. SAE members used the site to make her name “synonymous with tattletale” alongside in-person harassment. Halper noted that Whatsgoodly’s creators have now banned certain words from the app, including the “N-word” and “Jew.” Still, Halper isn’t one to regret: He attributes the company’s early indiscretions to the growing pains of a “scrappy startup” and said that the app’s controversial nature made it easier to go viral. His favorite recent poll on the site was one that asked users if they would agree to receiving a certain amount of money if they knew a random child would die; his team asked another set of users the same question, but changed the word “child” to “African child.” Another question, “How long should [guys] wait before asking for your [girls’] number?” stratified responses in part by whether female respondents were virgins. Although Halper may see himself as a renegade, his mission may be less radical than he thinks. This commitment to upending PC culture — or “empowering” people to share their unpopular opinions — has been described as an appropriation of activist rhetoric that paints the wealthy, white male as victimized in college contexts. Whatsgoodly in particular has received notoriety for its role in expelling SAE from Stanford’s campus and its crude language; The Daily Beast went so far as to say the app was “born out of privilege, and laden with classism,” alluding to Halper’s prep school pedigree and his legacy status at Stanford. More troublingly, the political correctness that Whatsgoodly takes aim at may be cosmetic rather than genuine. Silicon Valley’s dogma of diversity and globalization have always been at odds with its workplace representation, while Uber and Palantir have recently come under fire for sexism and anti-immigrant efforts, respectively. When pressed on the exclusionary nature of some of Whatsgoodly’s polls, Halper said what matters is who is asking. The question “Would you date a black guy?” for instance, was allowed to remain on the site because it was asked by a black man, although users cannot see anything about the identity of the asker. He added that the app has an LGBT section and that everyone should feel welcome. Meanwhile, Ericsson and Lawrence, who dropped out with ambitions of decentralizing the internet, see themselves as revolutionaries in a much different way. They have profound gripes with computer science culture at Stanford, particularly the kind of ventures that Jungreis has tried. Most ideas that come out of the Valley, they say, are devoid of any intellectual value. “We’ve gotten super used to the one-hit wonder in CS,” Ericsson said. “There’s some guy in a dorm room doing some piece of code, and the next day everyone starts using it and it becomes super popular, and that’s the company.” Instead, the would-be juniors aspire to completely restructure the internet. They contrast their plans with the staid interests of most Stanford CS students — machine learning and artificial intelligence. True to the revolutionary impulse that birthed it, the details of the startup are off the record, and what the founders can say is filled with inscrutable tech jargon: It involves building protocols on Ethereum, a platform for blockchain applications. The current Internet stores most data in a small number of corporations who share users’ personal information amongst themselves, and the blockchain movement hopes to change this. Its basic function is to store data on a peer-to-peer network instead of a client server, which according to Ericsson and Lawrence gives it enormous potential to restore the Internet’s “decentralization.” On blockchain, everything that happens between users — financial transactions, purchases, medical records — is kept accountable through a public ledger. The ledger is shared between all machines, but users’ personal information is not, meaning that they are safe from “malicious actors” like the government. For Ericsson and Lawrence, what drives this seemingly esoteric work is not the hope of getting rich quick. In fact, it’s much the opposite: They think that the Valley is headed rapidly in the wrong direction and that it’s on them to save it. Ericsson and Lawrence are rebelling against the politics and conventions of the Digital Age at a new level — by taking aim at the Internet itself. Anarcho-capitalism, or the complete absence of government, is the ultimate goal of the blockchain technology movement. The traditional tech community of Silicon Valley does not support this vision, they say, particularly at Stanford. Instead, machine learning and AI are an easy sell to students because of their “do-gooder” applications. “You can always frame it in such a way as to be completely apolitical,” Ericsson said. “Oh, we can use this technology to identify cancer or tumors in pictures — no one’s going to tell you, why would you spend time on that?” But some alums in the very industries that Ericsson frowns on are trying to realize their ideals through their work in a way that he might relate to. Rodriguez of doc.ai, who studied physics as an undergraduate, now works to use machine learning and natural language processing for social good. His main research interest is using machine translation to revitalize indigenous languages in the U.S., and he has genuine hopes that Silicon Valley can lead the world in rethinking urgent social issues. Yet he too expressed frustration that entrepreneurs like to “put that spin on it, that we’re going to change the world,” and has come to his own conclusions on founders’ intentions. “A lot of times, for lack of a better word, that’s just bullshit,” he said. “The bottom line is that people want to make money.” Buying into the Valley Ideating. Design thinking. Leveraging. Sprinting. Pivoting. Buckets. The buzzwords of Silicon Valley make every thought feel like a discovery and every idea feel worthy of pursuit. At age 12 in Winter Park, Florida, Jungreis sold things he found around the house on a personal eBay account for pocket change. He chose Stanford because of its “entrepreneurship vibe,” and spent the summer before college devouring startup books and posting company ideas on the Class of 2018 Facebook page. Jungreis believed that Silicon Valley would give him opportunities — that he could make a mark here. He had imagined SolTat becoming as popular as Silly Bandz. People could adorn their arms with the sticky foam shapes and hang out in the sun long enough to get a tan around the shape, creating a “sun tattoo.” The foam shapes would be a staple of Greek life during rush (Jungreis is in Stanford’s Kappa Sigma) and of hipster designs at Coachella. In other words, he saw an opportunity for a fun, throwaway product that people could slap on at the beach. Jungreis’s venture fits into the Silicon Valley that starry-eyed teens have idealized from the success of Uber, Snapchat and Facebook: He believed wholeheartedly that he had “a good idea,” and that he could “make something that wasn’t there before” — in Valley speak, he was ready for a disruptive sprint. But when it didn’t turn out perfectly, Jungreis’s vision of the Valley remained largely intact. He believed that the next time could be different. As SolTat stagnated, he founded MarcoPolo with a friend from Kappa Sigma. The app sought to connect people with similar interests, but it required users’ Bluetooths to be on at all times and kept people’s identities secret. By the time Jungreis and his team made the app more practical, people were over it. He’ll keep trying. “It’s not about the idea,” Jungreis said. “The idea can be bad … it’s more about the drive to keep trying it and learning along the way. Just like with anything, it’s like a sport: Practice makes perfect. If you start a couple companies, by the fourth or fifth you’ll probably be pretty good at it.” This genuine belief in the ideals of Silicon Valley might set Jungreis apart from his anti-establishment peers, but Halper, Ericsson and Lawrence all expressed much the same zeal for the Valley’s capabilities and the inevitability of their places there. Halper thinks his technology can upend polling, burn down political boundaries and create a network of college campuses. Ericsson and Lawrence want to reform the internet because they believe in its potential to erase governments and and redefine the way people share, sell, connect and live. Six years studying and working in the heart of Silicon Valley has taught Rodriguez that the Valley’s two faces of “changing-the-world” and “getting rich” can create murky ground. He hopes that large companies will be more self-reflective about which side they are really prioritizing, particularly when it comes to their effects on local communities and extravagant amenities provided to workers. “There’s a lot of talented people here — a lot of really smart people — who aren’t bad people,” Rodriguez said. “A difficult component of that [image] is being honest … If we’re going to say we’re helping people, are we actually doing that?” Honesty and self-examination may be counter-intuitive for more than just the startups who have already made it big. As Halper, Ericsson, Lawrence and Jungreis seek to break the mold — whether that of day-to-day life as a student or the paradigm of Silicon Valley itself — they have relied on privileged beginnings. Virtuous ideals, Rodriguez says, have to be examined — as does the faith that Silicon Valley’s ideals of social good, risk-taking, creativity and monetary reward come together under a tidy rainbow banner. For some student founders, the money may not be an issue. But having a “backup plan,” as Rodriguez put it, might just be why they can afford to fail. Contact Fiona Kelliher at fionak ‘at’ stanford.edu. This article has been updated to reflect Robison’s commentary, which was not included in the original piece. The Daily regrets the prior omission. A previous version of this article reflected Jungreis’s statements that Robison’s parents also provided starting capital, which Robison refuted. Jungreis also said that he imagined SolTat becoming as popular as “Silly Bandz,” not “silly string.” The Daily has corrected these errors as well as clarified a sentence about legal “help” SolTat received to specify that SolTat paid Robison’s father and others for legal services. apps capital facebook privilege to fail SAE Snapchat startups theranos Whatsgoodly 2017-04-07 Fiona Kelliher April 7, 2017 0 Comments Share tweet Subscribe Click here to subscribe to our daily newsletter of top headlines.