I've been apart of two companies who did similar things DOMO is doing and neither ended well. Both had millions of VC money and the CEO burned through it all on executive boxes at several pro teams, remodeling an office that didn't need it, travel expenses, and paying himself exorbitantly.
Because of their spending, both companies slashed their runway in half, and within months, both companies went under before being able to ship a viable product.
Reading this whole article and it isn't until the end you find out what Domo even does. Can't believe they've built an 800million deficit this quickly. Besides the wasteful expenditures described in the article, where is the money going? This isn't like Uber where they have to spend to grow. They are a software-only company.
They are a BI dashboard company with lots of data integration connectors. They've been burning money with ads declaring 'spreadsheets are dead' and silly Domopalooza[1] lifestyle events
Reminds me of a particular west coast startup I was associated with that took its final round of funding and blew most of it on a massive out-of-town party. Flew in all of the A-list bankers and tech types it could find.
The idea was to make the (failing) app look like a huge deal in the eyes of investors and get bought, thus fulfilling its exit strategy.
FWIW I had a startup as a contract client that sounds like they did something similar. Spent hundreds of thousands throwing a "relaunch party" to pander to investors. I assume this strategy is not rare. Only difference is that it didn't work for them and they went under a few months later.
$1.8m leasing a jet from the CEO and $300k on catering from a restaurant owned by the CEO and his brother is part of it, according to FT Alphaville (free, but registration required):
Sure, but that stuff is ubiquitous in the biz world, it's just not usually done so flagrantly as you say. So it's not as interesting to me as the GP's question, how in the holy heck can a brand new company run through $800MM in 3 years?
If this is routine, then shit, I'm wasting my life.
Josh James got immediate and easy buy-in from investors because he founded Omniture, a $1B+ exit. So you'd probably need at least one successful exit to get this much leash. Presumably, investors will start to watch much more closely if he can't make good on Domo.
Please give me the benefit of the doubt as per the forum guidelines.
$1.8 million dollars on a private jet isn't exactly a standard expense for a tech startup. The profligacy is compounded by the fact that the CEO also apparently owns the jet, which suggests a conflict of interest in the lease.
One might safely assume that parent did just that, given the detail of what they posted.
How do people pulling down six figures a year (in somewhere other than SV) not have any money at the end of the month? One $4 latte and NewEgg impulse buy at a time. I get the impression that you're looking for the big ticket item(s). Maybe there isn't one. Maybe it's just one $1.8MM jet rental at a time. $1.8MM for jets + $600K for catering = $2.4MM. Do that about 350 more times and there's your $800MM. And I'm dead serious about the 350 number. I'll bet they pay too much for payroll because "only the best and brightest", the in-house gym with state-of-the-art equipment didn't come cheap, the $100K espresso machine, and on and on...
I don't know if I'd say I'm blasé about it, but incredulous I'm not. Now, this is one of the more egregious examples, probably why it's in the LA Times. And $800 MM is a number that would take some effort to blow on stupid shit. So if one were to ask, "how on earth did they manage to spend...", as you did, I might not be able to give you an exact accounting, but I can make some educated guesses along with being not at all shocked by their spending.
Having attended BYU and lived in the Utah Valley area for a while, I can say they were pretty extravagant. They have tons of billboards, many of which don't even really state anything about the business or the product. Just stupid, meme-like quips. They also would come to Career Fairs with 3x as many reps as any other company, most of whom didn't seem to really know what roles they were there looking for, and had tables of all sorts of Domo-branded swag.
In general, the company itself kind of felt like a caricature of the ridiculousness sometimes found in tech these days. Kind of reminded me of the character Richard Hanneman from Silicon Valley.
I first heard of Domo last year when we were trying to find a better alternative our BI system. And boy, we were in for a ride.
The first warning sign was that their pitch was full of cool sounding words. They kept referring to the product as a "cloud based operating system", whatever that meant.
When we asked them to demo, their presales consultant struggled to create anything other than a canned demo.
> When we asked them to demo, their presales consultant struggled to create anything other than a canned demo.
The opposite experience is what sold me on Looker - super competent team and very clear in how “the magic works”. All logic and queries are right there to copy/paste into your own editor to fiddle with if you so choose, or use the built-in SQL runner. At the same time, non-tech users need not worry about such stuff.
Same here... I just wish Looker had visualizations at least on par with ... Excel. They’ve been promising to remedy that for two years now, and now they are promising a move to HighCharts by end of year... but will they fix all the issues, or just slap on a new coat of paint?
Haven’t ran into much as our needs are fairly basic right now.
Biggest gripe for me is the lack of comparison period within the tiles that display numbers. For example you have 1k users doing X. Is that good or bad?
Data in context is much more usable - if X is leaving and it’s a 50% drop from last week, that’s great news!
Conversely, if X is feature use, you have 100m users and the change is 2% from last year, maybe it’s not so good.
At least? Excel has excellent, top-level visualizations. They might not look sexy, but for everyone who works in the area of data visualization it's obvious how much effort and thought have been put into designing Excel charts. Getting data visualization right is far far less trivial than it might seem.
Hmm - that was not my experience. They set up a demo environment and allowed us to upload example data sets so that we could fully play around with it.
It's a matter of utility, not low value. One hour of rental jet costs like 33 $100 airline tickets: even considering saved time, many people need to go to the same place at the same time, and it has to be a rather distant place (Utah <-> either coast?), to make a rental convenient.
"Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market. We continue to identify technical compliance solutions that will provide all readers with our award-winning journalism."
It just seems ridiculous that an organisation as big as the LA Times can't manage a develop a solution on time. It doesn't provide a great deal of faith in the quality of their technology department.
Or maybe it shows that the LA Times still tries to be, ya know, a paper for people in LA so they are happy to wait for a one click GDPR solution from upstream or whatever, and prioritize the technology investment for something else.
I take this as one of the two central themes of this article:
"...points to a persistent flaw in Silicon Valley financing: the willingness to give start-up founders unassailable control of their companies, to the point that investors have no recourse if things go blooey."
That's not a flaw, it's a fundamental part of how it is meant to work.
The investors generally don't want to invest in companies run by a committee of investors... or else they would certainly do just that. Not to mention the larger investors could self-fund their own companies, if that's what they wanted to do, and retain all control. They are investing in the ideas, talent, and execution of the founders and other principal executives. It would be pointless to turn around and take control away from them.
(I think the other main theme of this article is that Domo is a mess... which is probably true. I only know what I read in the article, but it seems they have real revenue? It would have to more than double to match their rate of spending, but that can happen if they really provide value. It's hard to have confidence, though, in a CEO who is funneling money out of the company to his family and himself. Just the willingness to put that kind of cloud over the company, is a red flag.)
Yes, founders always have ownership, but it is not always the case for the founders to own more than 50% of the company after a few financing rounds. Startups that do super well can pull this off, but I think it is safe to assume most normal startups do have super majority voting schemes that give founders total control of the company.
That's not what's being discussed at all. There is no question of ownership, but of voting rights. e.g., Brin and Page own something like 14% of Google stock combined, but control >50% of the votes.
That's the exact setup that Domo is attempting, giving its CEO >90% of votes by virtue of getting 40 votes per share.
Even a single founder can be under 50% by the end of the series A, as you not only have two rounds of investors, but you have to carve out a chunk of equity for employees (10-15%). And if you have multiple founders, which is typical, no one founder may own more than 50% past the seed round.
It wasn't even that much the case with Google, where remember the board/investors installed "adult supervision" for like a decade.
Facebook, on the other hand, was always Mark's. He has had ironclad control of the company from inception to the present day. And when Facebook became the success story of its generation of companies, investors took the lesson that you always had to have the founder(s) have complete control of the company. That led to the modern trend of founder worship, which probably lasted more-or-less until Travis Kalanick, Elizabeth Holmes, and Parker Conrad swung the pendulum in the other direction.
> That's not a flaw, it's a fundamental part of how it is meant to work.
And, as the article demonstrates, it is not without risk. A CEO spending huge amounts of company money on other ventures he owns for no discernable reason is a pretty great example of why this SV model can be hugely problematic.
It can be problematic, but so can investors in SV companies demanding that scale-out takes off too early or too quickly. It's difficult to quantify which of many problems are a bigger issue, or even relevant from case to case.
Practically speaking Satya Nadella runs MSFT, not the board of directors. Nadella does not have control of MSFT (he isn't the majority holder of shareholder voting rights), though.
Investors don't want to run the company. But the question is should they be able to fire the person running the company, even if that person is acting against the interests of the rest of the shareholders.
* ps, yes, the BoD can fire a CEO even if the the CEO has majority control of voting rights through various share classes. But the CEO can turn around and fire that board in that case (and the CEO has presumably already used their voting power to install a friendly BoD)
Shouldn't the law prevent the CEO from doing just that? I mean, the board is presumably the only check on the CEO's power, so even if the CEO is the majority shareholder, they shouldn't be able to control the board.
I'm not telling you that you shouldn't care about these things, but this is how American Capitalism works. Someone owns a thing, and does pretty much whatever they want with that thing.
That is a old armchair argument made from those in an ivory tower.
If it was YOUR business, you would want to control your dream, your vision -- not a bunch of rich folks who could decide to kick you out from your dream if your main goal is not to _remain profitable to the shareholders_.
There are some checks; the controlling shareholder still has to respect the other shareholders.
But yes, as the controlling shareholder, you can fire the board. That's what being the controlling shareholder means; the one and (basically, only) thing you get to do is appoint a board to run your company on your behalf. And you can keep firing the board until you find some lackeys who will agree to do whatever you want, including hiring you in any position you care to to name, including, why not, the CEO role. That's totally legit.
If what you want harms the minority shareholders, then they can sue, and depending on the details, they'll have a great change of winning. CBS and Viacom are currently working through this right now; the controlling shareholder wants to ram through a merger, and the CBS board thinks it's a bad idea. Under pretty settled law, she can fire the board in revenge, but if the merger is actually bad (and the fact that the current board found it so is strong evidence that it might be), then she can't just replace the board with people who will agree to it.
> the board is presumably the only check on the CEO's power
The board is there to look after shareholders. If they fail, then lawsuits from shareholders are the final check on CEO power. That doesn't change much just because the CEO is the controlling shareholder.
> The investors generally don't want to invest in companies run by a committee of investors
There are governance structures between one where the CEO spends "$600,000 for catering services from...[a] sandwich and salad restaurant...owned by Josh James and his brother," and committees of directors. Uber, where a supermajority of the Board (which contains independent directors) can vote off the CEO, is one amongst many examples.
Not only that but the whole point of a limited liability corporation is that the stockholders cannot be held responsible for the debts of the corporation- and in return they relinquish control of it. That's the trade off. That's the defining characteristic of the corporate form. It creates a division between capital and labor, up to and including the CEO. That's why we call it "capitalism".
Yeah, I found that same point quite problematic. There are basically two possibilities:
1) the founder is able to get this plane off the ground
2) the founder is not able to
In case (1), running it by committee is going to mess it up. The nature of a startup is that it is not doing ordinary, well-tested things, so no committee is going to approve what they do. Only a founder (or two) can get things off the ground with a coherent vision.
In case (2), you are screwed whether the founder has absolute control or not. Just don't invest, whether you get control or not.
Now all this may be very different for a Fortune 500, twenty or thirty year old company with an already established business model and good cashflow, etc. But this is talking about new companies, which absolutely should be under control of the founder.
Even in the case of older companies, the example of Apple after they kicked out Steve Jobs, before they brought him back, ought to give one pause about not letting the founders have too much control.
You have a false dichotomy between "running by committee" and "giving the founder complete control." Trying to have the board literally run the company is not generally a great idea. Having one or more non-founders in the leadership of the company, including possibly the CEO spot, is a fine idea and was how it used to pretty routinely be done.
When the company is very small, it probably doesn't make sense to inject an outside leader. The company isn't worth anything at that point: if it fails, it just fails.
But by the time the company has product-market fit, traction, revenue, and is trying to scale up, there may be plenty of reason to have non-founder leaders. Way before 20-30 years old.
Certainly there is a continuum there, but the decisions that a founder makes that are most likely to be critical for a startup's success, are the very ones that are most likely to be opposed by non-founders, because they will be the most unconventional. Typical startups fail.
"how it used to pretty routinely be done" was kind of like what was called "adult supervision", as I recall, back in the late 90's. I don't find that the success rate of the late 90's startups (the dot-com bust) to be all that much better than the current boom (which, granted, is not totally bust yet but no doubt will).
> Domo actually is part of the Salt Lake City region’s “Silicon Slope,” one of several regional offshoots of Silicon Valley.
Going off on a tangent, this is really dumb. It’s not an “offshoot” of Silicon Valley. It’s a distant, unrelated region that happens to also have a tech industry. Are Austin, Seattle, and Portland also “offshoots” of Silicon Valley? How about New York? Zurich?
Its a lazy way to jump on the SV bandwagon. So Austin is/was known as Silicon Hills or something and there are many other Silicon Something monikers for other places.
Silicon Hills actually refers to the boom in chip manufacturing in ATX in the 80s and 90s. After the dot-can boom and bust it now has the “like Silicon Valley but ‘weirder’” connotation.
I sometimes hear Cambridge referred to as Silicon Fen, and always thought it was dumb (there should be enough strength in the Cambridge name on its own).
I've heard it called Silicon Prairie, which it was called way back in the 70's and 80's. It does make sense though, since Texas Instruments and various computer companies were based there, which is the same reason Silicon Valley got its name.
If anything, Austin is more deserving of the "Silicon X" moniker than the Bay Area, as TI invented the silicon transistor and the integrated circuit.
Right on. "Silicon Slopes" is surprisingly effective attempt by Utah County people to get investors to dump money there.
Quick summary of the companies in "Silicon Slopes": Qualtrics (surveys), Domo (vapor), Adobe, Micron (fab only, but claim to "silicon" in the name), Nu Skin (MLM cosmetics/diet supplements) , doterra (essential oil MLM), NatureSunshine (MLM).
Also it pre-selects for people who don't say, "But this story makes no sense whatsoever" after your pitch.
419 scammers use deliberately poor grammar and other choices to weed out the people who will figure out it's a scam before they hand over any money, same for an MLM. You want the people who'll lie and cheat and pump every dime they have into your MLM, not the ones who attend a seminar, make interested noises then walk away after losing less that $100.
> Also it pre-selects for people who don't say, "But this story makes no sense whatsoever" after your pitch.
Thanks for exposing your biases, but you are wrong. It's more of a quid-pro-quo exchange on some of these MLMs or trying to be supportive of someone else's venture in your community. Nearly all know it is overpriced and not necessarily what they need, but it is the rapid exchange of social capital that keeps those communities the way they are. Before MLMs it was casseroles, cookies, tools, helping hands, and babysitting.
Because what you are supporting is not your neighbors venture but the those who conned your neighbor venture.
I'm really surprised there isn't strongly worded statements from Mormon Leadership on this but instead there is a big Nu Skin sign on BYU cougar stadium (or was when I was last in Utah). That isn't good.
Buying items via MLM is no more immoral than buying a used car through a dealer. It's the abuses of that method that are well known, much like the sleezyness of the prototypical used car salesman. But there are actual good MLM salespeople as well as used car salesmen. The method itself is not immoral (It's not gambling) just some of the practitioners.
That being said every single printed congregational directory I've seen has a statement "For Church Use Only - Do not copy without permission from your local church leaders. Not to be Used for Any Commercial, Business, or Political Purpose" - So there is a strongly worded statement about using church resources for your business.
I think the method (MLM as opposed to a person who is just selling something) is immoral in the same vein that gambling is.
Because it's a consuming and addictive negative expectations game that (generally) takes a persons money and effort without growing the social pie so to speak.
It feeds on persons natural desire to better themselves, to make it in life but this effort is subverted into the pockets of hucksters and scammers rather than actually producing good for the world. In this sense it's like pornography as it subverts a natural tendency into nonproductive or counterproductive outlets.
People become wrapped up in these schemes, they ruin relationships, families and lives. I find this very immoral.
It's mostly just that particular part of Utah. Mormonism is also highly correlated with successful and honest businesses. See https://www.economist.com/node/21554173
I hate MLMs as much as the next guy, but "Silicon Slopes" does have some legitimate tech companies as well: Podium, Canopy Tax, MX, InsideSales, Pluralsight, Lucid, HireVue, Entrata, Workfront, Ancestry, Jolt, Teem to name a few.
I know. I also listed some (Qualtrics, Adobe). However, I have no way of telling if some of the companies on your list are any more legitimate than Domo, which has for years been heralded as a legitimate tech company in the area.
To clarify (since not all of the companies you listed are in Utah Valley), my criticism was directed specifically at Utah County, not the whole state (i.e. not Salt Lake City or Davis county).
s/seem/are/ imnsho . best place i've worked at in 25+ years :)
strong engineering culture. great products. really, really smart people. management that understands the value of management (and what can be detrimental of management).
Again to clarify, I didn't mention them because they are based in Salt Lake. There are lots of great places in Salt Lake, but the discussion above was focused on Utah County (Provo, Orem, Lehi, etc.)
To clarify, you are the only person who has mentioned this split between Utah County and Salt Lake City. You've clearly got a chip on your shoulder, and I feel it is detracting from a productive conversation.
There is a split between Utah County and Salt Lake City. Though according to a friend (I moved away a decade ago) the "Silicon Slopes" locally refers mostly to the area in between (centered around north Lehi where Adobe's building is). However there's always https://en.wikipedia.org/wiki/Silicon_Slopes -- while the region spans SLC and Provo, the claim by 'tntn that the marketing purpose of "Silicon Slopes" was largely to concentrate on the more rural areas in between (i.e. most of Utah County) doesn't seem that unreasonable.
To clarify, I started this trend of listing companies, and failed to recognize that apparently "Silicon Slopes" refers to larger region than Utah County. Before looking into it more, I would have said that it was only Utah County, since there are massive billboards on I-15 southbound around Draper that say "you are now entering silicon slopes" and the phrase was coined by the founder of Domo.
My mistake. Since the edit window on my original post closed, I tried to explain in subsequent comments what I had in my head when making that first list so that people would realize they don't need to explain to me that all of Utah is not like MLMs.
Lehi is much closer to Salt Lake City than San Francisco is to Palo Alto (or, for that matter, Cupertino is to Palo Alto). In fact, you can get from Lehi to Salt Lake City faster than you can get from San Jose to Palo Alto. If you're looking to subdivide regions by a 20 minute drive on the freeway and call one bad and the other good it's going to be a difficult argument to make.
Honestly differentiating between Salt Lake City and Utah County is splitting hairs and pointless. The vast majority of people in Utah live on a 40 minute stretch off of I-15, and the "Silicon Slopes" brand is centered right in the middle of it. Basically any tech company in Utah in that stretch from SLC to Provo is considered "Silicon Slopes".
It takes more than not being an MLM to be a legitimate company. Many you named overspend, spread massive hype, and acquired funding with a story that doesn't match their product and its quality. All traits they share with Domo. As a Utah native I hope we can all start thinking a bit more critically about the companies we work for. Domo's collapse will be felt.
The history is important. Silicon Valley has a history of creating undeniably valuable innovations and legitimate companies dating back 60+ years: HP, Shockley, SRI, Fairchild, Intel, Cisco, Apple, etc. This is the backdrop for Silicon Valley.
In contrast, Utah Valley has a history of MLMs. This is the backdrop for Silicon Slopes.
What about Qualtrics (profitable) MX (profitable) Omniture (IPO, sold for $1.8B), and if we're digging as far back as Fairchild Utah has Novell, Wordperfect, etc.
I left Utah to come to Silicon Valley, and definitely hate MLMs more than you, but to claim that Utah is only MLMs is just silly.
It doesn't have to be headquartered there, nor a startup to be relevant to the tech scene. Its not like its a small office building or anything, its a giant, state of the art campus that employs thousands and they've already committed to expanding further.
Are we going to say Amazon isn't going to be hugely influential in the tech scene of wherever they choose their HQ2 to be, simply because they aren't a startup and are based in Seattle?
In the sense of being consciously modeled on Silicon Valley, copying many of the practices, I think it's fair to call some other tech scenes offshoots. New York I'd call different in that it's very media- and finance-heavy and leans on existing business tradition more. But even in NYC I can think of some companies that strike me as much more SV in culture than the NY median. And Seattle I don't know well enough to say.
I think it's absurd to claim that every tech center is an offshoot of Silicon Valley. No one does this for other industries. Milan isn't considered an offshoot of Paris because it has a fashion industry. Chicago isn't considered an offshoot of New York because it has a financial industry. Similarly New York isn't considered an offshoot of London because it has a financial industry.
I've heard Wellington referred to as Silicon Welly before, which is sort of cute. I think that I've only ever heard it used tongue in cheek though, never seriously.
Why isn't something like buying goods and services from a company you (or your brother) own with investor money illegal? Unless I'm missing a reason why that would be ok, that should be criminal?
And then I don't understand the link between founder control and unethical behaviour. I've seen plenty of cases of corruption in investor-controlled companies. The article doesn't even attempt to make a concrete connection despite implying it over and over.
The implication is that because the founder owns so much of the company, there are very few options left to the investors to correct this behavior. Here the options are to not invest in a new round or bring a lawsuit. At a normal company, the investors could force the founder out as CEO, bring in other execs or force the company to address specific issues.
I share the name of the CEO (it’s quite common) and I own the domain hack joshjam.es. A few years back I drove out to Salt Lake City to see if he would have any interest in purchasing it... now that I know the company is throwing money away, I’m tempted to retry!
Never heard that word before. Other than that, the isn't really anything new in this article. Successful startups are rare. It's rare that they even survive going public.
I'd love to see the LA Times go back and revisit the Utah Valley region and the culture that helped contribute to this. The Utah Valley is chock full of startups with a serious inferiority complex to their big brothers in Silicon Valley, hence derivative name. More importantly, Utah is the “multi-level marketing capital of the world [1]” This kind of sales and growth tactic is not limited to the diet smoothie and cosmetics world, but is absolutely pervasive in the valley. Note- SLC and the Utah Valley may be united in the Silicon Slopes moniker, but they are about as similar as Austin and Waco, TX.
A few observations on Domo
1) The product is weak. It’s pretty dashboards with very limited “real” BI capabilities. The connectors are custom, not OOB/end user configurable – unless end user happens to be IT.
2) They seem to be aware that the product is weak, as their demos include an NDA. Until recently there was almost no “real” information available on what exactly Domo is or does. Only void marketing speak.
3) Their absurd domopalooza (or DP for short, no joke) events included artists like Kesha and Macklemore.
4) Their totally overblown marketing hype surrounds an incoherent me-too product roadmap. Rather than focusing on building a quality product they are going for checkboxes and chasing after Slack etc with features like Chat
5) They have a billboard that reads “If Hillary Had DOMO She would have won.”
I've been predicting for a while that DOMO’s hubris would cause it to be one of the first in the scene to fail spectacularly. What worries me about that prediction is the economic harm that would do to the rest of the Valley especially given the impact of MLM economics.
I should say, in full disclosure, that it worries me because I'm a product manager in the region. So, I am concerned about economic blow back to firms that have better business practices and therefore my ability to practice here. Though, I'm currently seeking remote work opportunities as this is a pervasive issue.
I work in Utah Valley at a tech startup in the space.
While I agree that there are some startups with 'inferiority complex' etc, there is a growing number who are happy and proud to be a Utah startup and what that entails, not just chasing Silicon Valley.
The instant connection to MLMs is unfortunate and something we are trying to move past. I would argue Utah has a very strong sales culture not solely because of MLMs but for other reasons.
Pluralsight being a prime example of a proud Utah startup focused on making a quality product with great management.
The instant connection to MLM's is unfortunate but it's real. It's not something that can be moved past unless there's meaningful change. I would argue there hasn't been meaningful change. If anything they've gained strength and notoriety see vivent, domo, etc. Would love to be convinced otherwise that meaningful change has come or is coming.
As far as a strong sales culture, I agree. MLM's are prevalent in Utah because of the sales culture. Not the inverse.
Like door to door summer sales, and the massive bro culture associated with that.
That gripe aside, there are a lot of lifestyle companies. And it's great. They aren't chasing silicon valley, they are just some small business owners trying to make a good living and provide employment for people in the region.
I feel explaining this for everyone not in the know is appropriate.
Mormon missionaries are usually young men ages 18-20 who go out into various places around the world for two years. They learn a lot, generally work really hard, and when they return they usually go off to school.
Someone figured out that 2 years knocking on doors to talk about God isn't that different from knocking on doors to talk about <insert product here>. Various companies selling pest control, home security systems, etc. have set up summer sales programs. You sign up, get sent to a random city for the summer and sell the crap out of whatever it is you are selling. Top sellers will clear $50k for the summer. Even moderately successful sellers will make $10k or so.
After a summer of sales, many of the companies will allow their top sellers to get recruitment bonuses. So they spend the school year holding information meetings with free pizza to try and recruit for the next summer.
This leads to a huge bro culture. The top sellers flaunt their success by driving BMWs to school, wearing high end designer watches and stuff. Some of the bigger sales companies even have lounges close to school where sales people can hang out and study. It ends up being very clear who is into summer sales, and most students shake their heads and try to just ignore it all.
Wow - just wow! You nailed it on the head! I've been trying to figure out what was off here, and you succinctly identified the key areas that make the "valley" the way it is! (I'm recently retired from the Air Force, moved here from Hawaii and ended up working in the tech field - I'm also a "member", did the whole missionary thing, and I've been racking my brain trying to figure out why the culture here seems to be so "off" compared to my military background and being around LDS outside of Utah). This place has become a huge multi-marketing campaign with everyone trying to squeeze each other for every buck they can make! Sorry, I better stop my rant! Thanks for the insight though!
A few years ago I was able to guess Domo's documentation wiki, it was public and not protected by password. The product was really unimpressive, not surprised they required NDAs to show it.
Nah, we should look at New York. WallStreet has always been the master in money extraction from other people's money. Other's are beginning to execute such playbook.
Regarding 5, that's actually better than a lot of their billboards. A lot of the one's I've seen in the area over the years have literally nothing to do with the product.
Domo is an analytics company: "The pitch for Domo was that it would fill in some of the gaps in enterprise data analysis that Omniture had left open, providing access to real-time marketing information that would help CEOs run their companies more efficiently."
"Domo also has spent $600,000 for catering services from Cubby's Chicago Beef, which describes itself as 'a cute little sandwich and salad restaurant.' It’s owned by Josh James and his brother Cubby. ('The menu does look delicious, but there must be caterers in American Fork, Utah, that aren’t owned by the boss,' remarked Shira Ovide of Bloomberg). Domo also has bought $200,000 in furnishings from Alice Lane Home Collection, an interior design company partially owned by James, at which Drew James, another brother, is an executive."
Having lived in Utah and eaten at Cubby's, that's the one part of the story that shouldn't raise an eyebrow. If it's between Cubby's or Kneaders give me Cubby's all day.
I'm so glad the Domo chickens finally came home to roost. It's been pretty painful to observe all the undeserved hype around this company over the year, I felt for a long time like I was taking crazy pills.
I work for a BI startup (competitor to Domo), so as part of my work, we did our own analysis of Domo product, and also chanced across prospects/customers that are current/ex-Domo users.
Domo is very "business users friendly", they do this by:
- Very pretty (and drag-and-drop capable) visualization. Not as compared to Tableau though, but still.
- Native mobile apps
- Their Domo cache + datasets concept, that makes it easy to load simple data into Domo and visualize
- Their commenting system?
I suspect that it's these things + all the marketing that made them sell well in certain contexts.
They have the dataset concept that ties to their cache, which makes it easy for business users to upload a file and "just explore", but then joining these datasets together is not quite straightforward. And you have to load each dataset one by one. So it's good for very basic use cases, but for advanced stuff that requires proper data preparation, it starts to fall behind.
Also soon Domo customers would run into performance problem, since Domo hosts the data for the customers.
Besides that, I feel like the entire product is a patch work, without proper thorough design/thinking. Feels like they hire a lot of different product managers, each responsible for one feature, but the features they don't fit together very well.. Some I even find redundant (seriously what's the 3D visualization of datasets/data sources in the product homepage for?).
It's been very interesting for me to observe the space. Our startup, we took the directly opposite approach to Domo in building our business: totally bootstraped with no funding. We've been profitable since year 1, working with customers from unicorn startups, public companies to fast-growing startups. We're very conscious/aware about the space to shape our product strategy.
I think ultimately the team and the product are the most important in the long-term success. I can say that among the solutions, we're most impressed by Tableau, PowerBI and Looker.
I was at the conference referenced in the photo - SAASTR 2017. The level of arrogance of the CEO was striking - down to the literal slouch in the chair for the entire talk.
I've remarked several times to people that he was the most arrogant conference panelist I've ever seen. The line between confidence and arrogance is pretty distinct in my opinion and at that time this ceo had no idea where that line is.
Here’s what was left unanswered.... How will the investors do? If the investors at a 2 billion valuation take a bath, they will think twice. If they make money, they won’t care. Same with IPO investors. Nobody forces them to invest, and there is a move to take these companies out of indexes.
The strange thing is the self dealing. The founder is already wealthy. Why create the risk of a stink to get a little more money? The damage to the IPO is much higher than whatever he pocketed. This is the true hubris.
As an example of what can go wrong with two tier voting stock, look at the conflict between CBS and Viacom. I don't agree that a founder should have a greater voting share than his or her ownership. I know that has got to be a really unpopular view here. But even if you don't agree with me, how long is that voting ratio supposed to last? Can it continue after you break up the company into pieces? Should it apply to ancestors of the founder?
Shouldn't the criticism for IPO terms like this be directed at the money managers buying these shares on behalf of their clients?
It is ultimately those making the capital allocation decision to push back on unreasonable terms. Seems like they "sort of are":
"Domo acknowledges in its disclosure statement that Standard & Poor’s will be excluding companies with these structures from some of its indexes, and other index owners may follow suit. That’s a problem for Domo, because the rise of passive investments keyed to stock indexes means that many investors won’t be buying its stock."
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[ 3.3 ms ] story [ 240 ms ] threadhttps://www.outline.com/9eSGhG
(i can't think of anyway to write a post recommending something that doesn't look like a spam link!)
Because of their spending, both companies slashed their runway in half, and within months, both companies went under before being able to ship a viable product.
I don't see a good outcome for this company.
And apparently it’s pretty good?
But yeah this isn’t going to end well.
[1]https://www.domo.com/news/press/domopalooza-2016-to-feature-...
[2] https://www.domo.com/news/press/kesha-joins-the-domopalooza-...
[3] https://globenewswire.com/news-release/2018/02/15/1349133/0/...
Reminds me of a particular west coast startup I was associated with that took its final round of funding and blew most of it on a massive out-of-town party. Flew in all of the A-list bankers and tech types it could find.
The idea was to make the (failing) app look like a huge deal in the eyes of investors and get bought, thus fulfilling its exit strategy.
It worked.
$1.8m leasing a jet from the CEO and $300k on catering from a restaurant owned by the CEO and his brother is part of it, according to FT Alphaville (free, but registration required):
https://ftalphaville.ft.com/2018/06/05/1528193040000/What-is...
If this is routine, then shit, I'm wasting my life.
Please give me the benefit of the doubt as per the forum guidelines.
$1.8 million dollars on a private jet isn't exactly a standard expense for a tech startup. The profligacy is compounded by the fact that the CEO also apparently owns the jet, which suggests a conflict of interest in the lease.
Smells like plundering and bad governance to me.
One might safely assume that parent did just that, given the detail of what they posted.
How do people pulling down six figures a year (in somewhere other than SV) not have any money at the end of the month? One $4 latte and NewEgg impulse buy at a time. I get the impression that you're looking for the big ticket item(s). Maybe there isn't one. Maybe it's just one $1.8MM jet rental at a time. $1.8MM for jets + $600K for catering = $2.4MM. Do that about 350 more times and there's your $800MM. And I'm dead serious about the 350 number. I'll bet they pay too much for payroll because "only the best and brightest", the in-house gym with state-of-the-art equipment didn't come cheap, the $100K espresso machine, and on and on...
In general, the company itself kind of felt like a caricature of the ridiculousness sometimes found in tech these days. Kind of reminded me of the character Richard Hanneman from Silicon Valley.
The first warning sign was that their pitch was full of cool sounding words. They kept referring to the product as a "cloud based operating system", whatever that meant.
When we asked them to demo, their presales consultant struggled to create anything other than a canned demo.
Personally, I even find their site annoying:
https://www.domo.com/
The opposite experience is what sold me on Looker - super competent team and very clear in how “the magic works”. All logic and queries are right there to copy/paste into your own editor to fiddle with if you so choose, or use the built-in SQL runner. At the same time, non-tech users need not worry about such stuff.
I can only wait and see for so long.
Biggest gripe for me is the lack of comparison period within the tiles that display numbers. For example you have 1k users doing X. Is that good or bad?
Data in context is much more usable - if X is leaving and it’s a 50% drop from last week, that’s great news!
Conversely, if X is feature use, you have 100m users and the change is 2% from last year, maybe it’s not so good.
I see: Domo is a fork of Plan9.
Two observations:
1. the ads made fun of Excel. "Still using Excel for data analysis? lol"
2. all top comments were invariably like "what's wrong with Excel for data analysis?", but Domo didn't care
Had a good laugh.
I am no expert. But this seems cheap to me ?
Can you really cross the USA in a private jet for less than $20K ?
Edit: i am assuming this is not a new fancy Drone ..
"Unfortunately, our website is currently unavailable in most European countries. We are engaged on the issue and committed to looking at options that support our full range of digital offerings to the EU market. We continue to identify technical compliance solutions that will provide all readers with our award-winning journalism."
It just seems ridiculous that an organisation as big as the LA Times can't manage a develop a solution on time. It doesn't provide a great deal of faith in the quality of their technology department.
It bit me too but it's their fundamental right.
"...points to a persistent flaw in Silicon Valley financing: the willingness to give start-up founders unassailable control of their companies, to the point that investors have no recourse if things go blooey."
That's not a flaw, it's a fundamental part of how it is meant to work.
The investors generally don't want to invest in companies run by a committee of investors... or else they would certainly do just that. Not to mention the larger investors could self-fund their own companies, if that's what they wanted to do, and retain all control. They are investing in the ideas, talent, and execution of the founders and other principal executives. It would be pointless to turn around and take control away from them.
(I think the other main theme of this article is that Domo is a mess... which is probably true. I only know what I read in the article, but it seems they have real revenue? It would have to more than double to match their rate of spending, but that can happen if they really provide value. It's hard to have confidence, though, in a CEO who is funneling money out of the company to his family and himself. Just the willingness to put that kind of cloud over the company, is a red flag.)
Is it? Up until recently this was not the typical result. Google did this and others have followed, but it’s not how it was done before then.
So unless you want to buy the founder out, the founder still has ownership.
Sure the moment it goes public, you need to ask the question 'who leads?', but you will have to buy out the owenership.
That's the exact setup that Domo is attempting, giving its CEO >90% of votes by virtue of getting 40 votes per share.
https://www.lawtrades.com/blog/answers/usual-share-percentag...
Even a single founder can be under 50% by the end of the series A, as you not only have two rounds of investors, but you have to carve out a chunk of equity for employees (10-15%). And if you have multiple founders, which is typical, no one founder may own more than 50% past the seed round.
I think you knew what I meant. Or your head is in the clouds.
Facebook, on the other hand, was always Mark's. He has had ironclad control of the company from inception to the present day. And when Facebook became the success story of its generation of companies, investors took the lesson that you always had to have the founder(s) have complete control of the company. That led to the modern trend of founder worship, which probably lasted more-or-less until Travis Kalanick, Elizabeth Holmes, and Parker Conrad swung the pendulum in the other direction.
And, as the article demonstrates, it is not without risk. A CEO spending huge amounts of company money on other ventures he owns for no discernable reason is a pretty great example of why this SV model can be hugely problematic.
Is this "embezzlement"? I'm not sure because the use of funds were for legitimate services even if they are owned by James and his family.
Is there a different word to describe the siphoning of company funds by directing business to self-affiliated parties? Is this covered by "nepotism"?
(Thanks, in advance, for any clarifications.)
Investors don't want to run the company. But the question is should they be able to fire the person running the company, even if that person is acting against the interests of the rest of the shareholders.
* ps, yes, the BoD can fire a CEO even if the the CEO has majority control of voting rights through various share classes. But the CEO can turn around and fire that board in that case (and the CEO has presumably already used their voting power to install a friendly BoD)
Sometimes they do - I've certainly seen it happen at one company I've worked at, to the point where the board decimated engineering.
What's the worst they could do? It's their company. Worst case the CEO runs it into the ground and everyone loses their money.
CEO =/= President of the United States.
If it was YOUR business, you would want to control your dream, your vision -- not a bunch of rich folks who could decide to kick you out from your dream if your main goal is not to _remain profitable to the shareholders_.
But yes, as the controlling shareholder, you can fire the board. That's what being the controlling shareholder means; the one and (basically, only) thing you get to do is appoint a board to run your company on your behalf. And you can keep firing the board until you find some lackeys who will agree to do whatever you want, including hiring you in any position you care to to name, including, why not, the CEO role. That's totally legit.
If what you want harms the minority shareholders, then they can sue, and depending on the details, they'll have a great change of winning. CBS and Viacom are currently working through this right now; the controlling shareholder wants to ram through a merger, and the CBS board thinks it's a bad idea. Under pretty settled law, she can fire the board in revenge, but if the merger is actually bad (and the fact that the current board found it so is strong evidence that it might be), then she can't just replace the board with people who will agree to it.
> the board is presumably the only check on the CEO's power
The board is there to look after shareholders. If they fail, then lawsuits from shareholders are the final check on CEO power. That doesn't change much just because the CEO is the controlling shareholder.
There are governance structures between one where the CEO spends "$600,000 for catering services from...[a] sandwich and salad restaurant...owned by Josh James and his brother," and committees of directors. Uber, where a supermajority of the Board (which contains independent directors) can vote off the CEO, is one amongst many examples.
Just because it's intended doesn't mean it works.
In case (1), running it by committee is going to mess it up. The nature of a startup is that it is not doing ordinary, well-tested things, so no committee is going to approve what they do. Only a founder (or two) can get things off the ground with a coherent vision.
In case (2), you are screwed whether the founder has absolute control or not. Just don't invest, whether you get control or not.
Now all this may be very different for a Fortune 500, twenty or thirty year old company with an already established business model and good cashflow, etc. But this is talking about new companies, which absolutely should be under control of the founder.
Even in the case of older companies, the example of Apple after they kicked out Steve Jobs, before they brought him back, ought to give one pause about not letting the founders have too much control.
When the company is very small, it probably doesn't make sense to inject an outside leader. The company isn't worth anything at that point: if it fails, it just fails.
But by the time the company has product-market fit, traction, revenue, and is trying to scale up, there may be plenty of reason to have non-founder leaders. Way before 20-30 years old.
"how it used to pretty routinely be done" was kind of like what was called "adult supervision", as I recall, back in the late 90's. I don't find that the success rate of the late 90's startups (the dot-com bust) to be all that much better than the current boom (which, granted, is not totally bust yet but no doubt will).
Going off on a tangent, this is really dumb. It’s not an “offshoot” of Silicon Valley. It’s a distant, unrelated region that happens to also have a tech industry. Are Austin, Seattle, and Portland also “offshoots” of Silicon Valley? How about New York? Zurich?
If anything, Austin is more deserving of the "Silicon X" moniker than the Bay Area, as TI invented the silicon transistor and the integrated circuit.
Quick summary of the companies in "Silicon Slopes": Qualtrics (surveys), Domo (vapor), Adobe, Micron (fab only, but claim to "silicon" in the name), Nu Skin (MLM cosmetics/diet supplements) , doterra (essential oil MLM), NatureSunshine (MLM).
Great place to be. Lots of innovation in MLMs.
Religion and MLM companies seem to be strongly correlated.
I live in Utah and I hate MLMs so much.
419 scammers use deliberately poor grammar and other choices to weed out the people who will figure out it's a scam before they hand over any money, same for an MLM. You want the people who'll lie and cheat and pump every dime they have into your MLM, not the ones who attend a seminar, make interested noises then walk away after losing less that $100.
Thanks for exposing your biases, but you are wrong. It's more of a quid-pro-quo exchange on some of these MLMs or trying to be supportive of someone else's venture in your community. Nearly all know it is overpriced and not necessarily what they need, but it is the rapid exchange of social capital that keeps those communities the way they are. Before MLMs it was casseroles, cookies, tools, helping hands, and babysitting.
Because what you are supporting is not your neighbors venture but the those who conned your neighbor venture.
I'm really surprised there isn't strongly worded statements from Mormon Leadership on this but instead there is a big Nu Skin sign on BYU cougar stadium (or was when I was last in Utah). That isn't good.
That being said every single printed congregational directory I've seen has a statement "For Church Use Only - Do not copy without permission from your local church leaders. Not to be Used for Any Commercial, Business, or Political Purpose" - So there is a strongly worded statement about using church resources for your business.
Or perhaps you were looking for this - https://www.mormonnewsroom.org/additional-resource/personal-...
Because it's a consuming and addictive negative expectations game that (generally) takes a persons money and effort without growing the social pie so to speak.
It feeds on persons natural desire to better themselves, to make it in life but this effort is subverted into the pockets of hucksters and scammers rather than actually producing good for the world. In this sense it's like pornography as it subverts a natural tendency into nonproductive or counterproductive outlets.
People become wrapped up in these schemes, they ruin relationships, families and lives. I find this very immoral.
To clarify (since not all of the companies you listed are in Utah Valley), my criticism was directed specifically at Utah County, not the whole state (i.e. not Salt Lake City or Davis county).
strong engineering culture. great products. really, really smart people. management that understands the value of management (and what can be detrimental of management).
My mistake. Since the edit window on my original post closed, I tried to explain in subsequent comments what I had in my head when making that first list so that people would realize they don't need to explain to me that all of Utah is not like MLMs.
They had a billion dollar IPO in a few short years, they hire good engineering talent, and they pay their people well and with great benefits.
Sounds a lot like SV to me?
In contrast, Utah Valley has a history of MLMs. This is the backdrop for Silicon Slopes.
I left Utah to come to Silicon Valley, and definitely hate MLMs more than you, but to claim that Utah is only MLMs is just silly.
I agree. That's why I have not made that claim.
It’s like having Oregon claim EBay because a tiny fraction of the company is in Portland.
Are we going to say Amazon isn't going to be hugely influential in the tech scene of wherever they choose their HQ2 to be, simply because they aren't a startup and are based in Seattle?
There're a lot of them out there
Broadly, though, there are a ton of places that are (or would very much like to be seen as) Silicon Valley offshoots. Wikipedia lists dozens: https://en.wikipedia.org/wiki/List_of_technology_centers
Only for tech do we do this.
I've heard Wellington referred to as Silicon Welly before, which is sort of cute. I think that I've only ever heard it used tongue in cheek though, never seriously.
And then I don't understand the link between founder control and unethical behaviour. I've seen plenty of cases of corruption in investor-controlled companies. The article doesn't even attempt to make a concrete connection despite implying it over and over.
Never heard that word before. Other than that, the isn't really anything new in this article. Successful startups are rare. It's rare that they even survive going public.
A few observations on Domo
1) The product is weak. It’s pretty dashboards with very limited “real” BI capabilities. The connectors are custom, not OOB/end user configurable – unless end user happens to be IT.
2) They seem to be aware that the product is weak, as their demos include an NDA. Until recently there was almost no “real” information available on what exactly Domo is or does. Only void marketing speak.
3) Their absurd domopalooza (or DP for short, no joke) events included artists like Kesha and Macklemore.
4) Their totally overblown marketing hype surrounds an incoherent me-too product roadmap. Rather than focusing on building a quality product they are going for checkboxes and chasing after Slack etc with features like Chat
5) They have a billboard that reads “If Hillary Had DOMO She would have won.”
I've been predicting for a while that DOMO’s hubris would cause it to be one of the first in the scene to fail spectacularly. What worries me about that prediction is the economic harm that would do to the rest of the Valley especially given the impact of MLM economics.
1- http://kutv.com/news/local/follow-the-profit-how-mormon-cult...
While I agree that there are some startups with 'inferiority complex' etc, there is a growing number who are happy and proud to be a Utah startup and what that entails, not just chasing Silicon Valley.
The instant connection to MLMs is unfortunate and something we are trying to move past. I would argue Utah has a very strong sales culture not solely because of MLMs but for other reasons.
The instant connection to MLM's is unfortunate but it's real. It's not something that can be moved past unless there's meaningful change. I would argue there hasn't been meaningful change. If anything they've gained strength and notoriety see vivent, domo, etc. Would love to be convinced otherwise that meaningful change has come or is coming.
As far as a strong sales culture, I agree. MLM's are prevalent in Utah because of the sales culture. Not the inverse.
Like door to door summer sales, and the massive bro culture associated with that.
That gripe aside, there are a lot of lifestyle companies. And it's great. They aren't chasing silicon valley, they are just some small business owners trying to make a good living and provide employment for people in the region.
But just sign up, you'll make $50000 in 3 months!
/s
Mormon missionaries are usually young men ages 18-20 who go out into various places around the world for two years. They learn a lot, generally work really hard, and when they return they usually go off to school.
Someone figured out that 2 years knocking on doors to talk about God isn't that different from knocking on doors to talk about <insert product here>. Various companies selling pest control, home security systems, etc. have set up summer sales programs. You sign up, get sent to a random city for the summer and sell the crap out of whatever it is you are selling. Top sellers will clear $50k for the summer. Even moderately successful sellers will make $10k or so.
After a summer of sales, many of the companies will allow their top sellers to get recruitment bonuses. So they spend the school year holding information meetings with free pizza to try and recruit for the next summer.
This leads to a huge bro culture. The top sellers flaunt their success by driving BMWs to school, wearing high end designer watches and stuff. Some of the bigger sales companies even have lounges close to school where sales people can hang out and study. It ends up being very clear who is into summer sales, and most students shake their heads and try to just ignore it all.
In all seriousness though, a few years ago, the bro culture in some of these Utah Valley startups made my job search a literal nightmare.
It is “The shitty version of ...” (insert Looker, Tableau, etc.)
I'm not surprised the same founder is running into issues here.
Wow.
Domo is very "business users friendly", they do this by:
- Very pretty (and drag-and-drop capable) visualization. Not as compared to Tableau though, but still.
- Native mobile apps
- Their Domo cache + datasets concept, that makes it easy to load simple data into Domo and visualize
- Their commenting system?
I suspect that it's these things + all the marketing that made them sell well in certain contexts.
They have the dataset concept that ties to their cache, which makes it easy for business users to upload a file and "just explore", but then joining these datasets together is not quite straightforward. And you have to load each dataset one by one. So it's good for very basic use cases, but for advanced stuff that requires proper data preparation, it starts to fall behind.
Also soon Domo customers would run into performance problem, since Domo hosts the data for the customers.
Besides that, I feel like the entire product is a patch work, without proper thorough design/thinking. Feels like they hire a lot of different product managers, each responsible for one feature, but the features they don't fit together very well.. Some I even find redundant (seriously what's the 3D visualization of datasets/data sources in the product homepage for?).
It's been very interesting for me to observe the space. Our startup, we took the directly opposite approach to Domo in building our business: totally bootstraped with no funding. We've been profitable since year 1, working with customers from unicorn startups, public companies to fast-growing startups. We're very conscious/aware about the space to shape our product strategy.
I think ultimately the team and the product are the most important in the long-term success. I can say that among the solutions, we're most impressed by Tableau, PowerBI and Looker.
In case you've read this far, do check us out: https://www.holistics.io
I've remarked several times to people that he was the most arrogant conference panelist I've ever seen. The line between confidence and arrogance is pretty distinct in my opinion and at that time this ceo had no idea where that line is.
The strange thing is the self dealing. The founder is already wealthy. Why create the risk of a stink to get a little more money? The damage to the IPO is much higher than whatever he pocketed. This is the true hubris.
It is ultimately those making the capital allocation decision to push back on unreasonable terms. Seems like they "sort of are":
"Domo acknowledges in its disclosure statement that Standard & Poor’s will be excluding companies with these structures from some of its indexes, and other index owners may follow suit. That’s a problem for Domo, because the rise of passive investments keyed to stock indexes means that many investors won’t be buying its stock."