How Mike Bloomberg’s Campaign Failed for the Same Reasons We’ve Seen in the Startup Ecosystem
April 3, 2020
few months ago, no one would have compared Mike Bloomberg to companies like
Jawbone, Solyndra, or Beepi. However, due to his failed Presidential Bid it’s
time to add his unlikely name to the list of startups that have had a ton of
money poured into them, generated massive buzz, and flamed out in a spectacular
fashion. On paper, these ideas all seemed like surefire winners. But once concept
turned into reality these endeavors ran into many of the same issues that
resulted in failure.
- Right Founder Wrong Business: It’s often assumed that someone who was successful in a previous venture is guaranteed to succeed in their next. That is not always the case, as evidenced with Bloomberg’s inability to adapt the strategies that won three mayoral campaigns into the Presidential Election. This is eerily reminiscent of Louis Borders’ Webvan in the Dot-Com Bubble. Borders had succeeded greatly with his eponymous bookstore and hoped to take the supply chain strategies he developed and use them to reshape the grocery industry. Unfortunately for both gentlemen, their previous accomplishments did not translate into future success.
- The Whole Market is Not Your Market: If you only spoke to the Country Club Set on either coast you would have believed that Bloomberg was sure to win every Democrat and a decent share of Republicans too. Similarly, Munchery, a ready-to-eat meal delivery service, had strong success in their initial test market. Once they tried to expand, they couldn’t find a workable business model. It is important to make sure you’re not just living in an echo chamber and have an accurate sense of the size of your opportunity.
- Misjudging the Competitive Landscape: Bloomberg jumped into the race because he believed no one candidate was compelling enough to win enough delegates to secure the nomination. Like Bloomberg, Jawbone, thought there was an opportunity in the fitness tracker market that only they and FitBit were pursuing. Little did they know, but Apple, Samsung, and other leading manufacturers were developing superior smart watches. These Companies benefited from brand recognition, established distribution channels, and scale of operations – leaving Jawbone in the dust. Joe Biden is Apple in this analogy.
- All Sizzle No Steak: The most lasting part of Bloomberg’s campaign might be the memes mocking his commercials. Unfortunately, they presented the mayor as a different candidate than the man who would be standing on the debate stage. Similarly, Theranos, the blood testing company whose founder is standing trial for fraud in July 2020, proved to be another Emperor with no clothes. It’s by no means fair to compare the Mayor to a fraud, but boy did they both have amazing buzz relative to how complete their products were.
- Tons of Money Can’t Fix Underlying Problems: Bloomberg’s campaign likely spent more money per delegate won than anyone else in U.S. Presidential History. Because the campaign was self-funded by one of the richest people in the world, they never needed to establish financial discipline. Beepi, a peer-to-peer marketplace for buying, selling and leasing used cars, similarly never had liquidity issues due to raising nearly $150 million of Venture Equity. However, they made the mistake of spending the money just as quickly as it came in without achieving enough growth – ultimately leading to their demise. This just goes to show, some situations can’t be solved by money alone.
Growing an innovative company is difficult and growth trajectories
are not a straight line. There isn’t a playbook for the best ways to handle
inevitable problems and what might seem like the most obvious solution could
lead to unintended issues. Studying both the biggest successes and failures can
help provide entrepreneurs and investors with the tools to help guide their companies