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They Just Don’t Listen': SF Kimchi Maker Saw 'Food Tech' Practices Up Close
- keenmaster 6y ago"A tenant with a meal kit company wanted to automate filling a container with a few ounces of sauce, so Albrecht says they bought a giant machine to squeeze sauce into cups. It came in on a big pallet, and it was a huge operation to assemble. Albrecht says they were really excited about this machine. But when they finally got it hooked up, it didn’t work as expected. She can’t help laughing while she tells the story. “When the sauce comes out of this machine and lands into the little saucer cup it doesn’t land 'pretty' enough. So they just stopped using it. They just left it there.” The giant machine sat hulking on a pallet, unused, for months." You can't make this stuff up. Silicon Valley season 8 material right there.
- dbancajas 6y agoi mean somebody has to hire minimum wage worker for 1000+ hours before it probably breaks even with equipment cost. It seems like the business is in scamming everyone with the skyrocket valuations and pocketing the salary. Then rinse and repeat.
- lotsofpulp 6y agoWho did the business scam? The investors not doing their due diligence? I invest in businesses, and my responsibilities go further than signing a check.
- catalogia 6y agoMaybe it's your responsibility to not get scammed, but if you get scammed the fact remains that there was scamming going on, regardless of whether or not you were to blame.
- _-___________-_ 6y agoThis word "scam" gets thrown around so much these days that it's basically meaningless. It's really unlikely that the failing startups described in TFA developed a food tech idea, pitched it to investors, rented space in a kitchen, etc just to scam people. It's far more likely that they were just clueless.
- catalogia 6y agoBe that as it may, I was addressing the curious "if it was my fault, then it wasn't a scam" logic. If scamming isn't scamming when you to it to clueless investors, does that mean Elizabeth Holmes should be a free woman? The people she scammed didn't do any due diligence, but that doesn't make her scam any less a scam.
- lotsofpulp 6y agoElizabeth Holmes falsified data and made false representations. That is a scam. Buying a machine that turns out to not do what you need it to do is not a scam.
- quantified 6y agoScale, baby, scale
- jjeaff 6y agoIt's such an ignorant, yet arrogant way to run a business, especially considering many of these startup founders were likely pretty young with little to no industry experience. Having an experienced business owner running an actual, profitable business in your midst should be treated as a gold mine of information. I have actually seen an attitude of "don't listen to or hire industry veterans because they are stuck in the old way of doing things and if they knew any better, they would have already disrupted the industry." Few if any highly successful "disruptive" companies completely reinvented their segment. Uber wasn't the first taxi company, it wasn't even the first ride sharing company. Heck, they weren't even the first app based taxi service. Airbnb was preceded by VRBO by about 15 or 20 years.
- simonebrunozzi 6y agoTo double down on your examples, AirBnB was preceded by Couchsurfing, which proved that people were willing to host strangers in their own house.
- hombre_fatal 6y agoCouchsurfing was a completely different arrangement though and that's why it was free. It's like comparing staying at your aunt's house for a weekend to booking a room at a motel, the expectations are just a lot different.
- inopinatus 6y agoIf only it was piping onto a pie.
- gwbas1c 6y agoReminds me of every unreasonable product manager I've encountered.
- jfb 6y ago> They just don't listen Quelle surprise.
- zdragnar 6y agoWhat ever happened to the "do things that don't scale" saying? Every time I see a food tech startup, flush with automation tech, I cannot help but wonder who has the money to throw away on such obviously flawed plans.
- WrtCdEvrydy 6y agoThere's a theory we're in another tech bubble and people are just throwing money at everything hoping they pick a winner... if you look around, it's probably true.
- ZephyrBlu 6y ago> throwing money at everything hoping they pick a winner That's the whole point of VC, so while I see what you're saying about a tech bubble I'm not sure that this proves it. Tech is very lucractive, so it makes sense that a lot of money is being thrown at it regardless if there's a bubble or not.
- MattGaiser 6y ago> people are just throwing money at everything hoping they pick a winner Isn't that called Y Combinator?
- thinkingemote 6y agoHow should we be able to profit from this bubble?
- WrtCdEvrydy 6y agoSell tools to trendy technology companies that are just going to be resold... or get into used hardware sales.
- sxxahsuxh 6y agoMy theory is that everyone is afraid of doing 'old' business practises because doing something that someone else is already doing is bad and wont make you a billion dollars (not true btw). California startup culture is a victim of its own ego.
- strken 6y agoNotice that the article never tells you what advice they didn't listen to, and mentions a single mistake by a single company. The only general principle that's useful (as opposed to the obligatory observations on age and race) is hiring people with food industry experience.
- ClumsyPilot 6y agoSilicon valley startups ignore established industry expertise, burn cash in silly ways, dont prioritise business sustainability and try to reinvent the wheel with a strange mixture of ignorance and arrogance? No, never happened before!
- renewiltord 6y agoSometimes you lose. Sometimes you invent the modern consumer electric car and the modern commercial space program. The beauty of SV startups is just that - high variance.
- Apocryphon 6y agoThe trick is to ignore survivorship bias every step of the way
- renewiltord 6y agoOh no, it's the opposite. Established companies could be established for no good reason. ULA was in space, they're the experts, but they could be beaten. The incumbent could be just a result of survivorship bias. That's what presents an opportunity. If the incumbent is just very good at the product, the only part you can disrupt is margin (or verticalize or something, but lets set aside that) and you don't want to be in a price war unless you're uniquely suited to it. So you don't fight those guys. So you count on the market leader being disruptable, which is often because they're just there as accidental survivors.
- 6y ago
- cardamomo 6y agoRequired (fiction) reading for anyone interested in this space: "Sourdough: A Novel" by Robin Sloan. It's fantastic!
- creddit 6y ago> Many of the people she knows trying to make a living selling food are immigrants, women and people of color — far different than the food tech would-be entrepreneurs. “They are young, white,” she says, “the kind of people you see in a J. Crew catalog.” > There is also a big difference in who they bring in to work at their companies. Albrecht hires local workers to make her kimchi, many of whom have worked preparing and handling food for years. They look very different from the workers at the food tech companies. > “All these people they hire are also from Silicon Valley companies who have no experience in a food manufacturing company,” Albrecht says. “Often these positions are for logistics, operations, marketing, all those people. Those are the people they hire.” Amazing what is an acceptable thing to be upset about these days.
- steve_adams_86 6y agoI don't interpret that as being upset, just pointing out the stark contrast in solutions and people involved in (ultimately) trying to make a living selling food.
- 9nGQluzmnq3M 6y agoI don't see the article being "upset" about anything? If anything Albrecht seems to mostly find the startups comical, at least until they stop paying her bills.
- Apocryphon 6y agoMonetizing the engineer's disease https://ask.metafilter.com/297591/Origin-of-the-term-Engineers-Disease https://ask.metafilter.com/297591/Origin-of-the-term-Enginee...
- MattGaiser 6y ago> Before the pandemic, she says the company was super late paying her for the products she sold them. > “It was not a lot of money, but it made me really upset,” Albrecht says. “I don’t know why they run the business like this.” This is a well established albeit scummy practice and very common. They do it basically as a way to borrowing from you for free. My family used to do a lot of business with grocery stores. Except for Walmart, none of them paid on time. Plenty made you chase the money constantly.
- ars 6y ago> Except for Walmart I've heard that's why so many supplies are willing to work with Walmart despite the lower prices: Walmart doesn't mess with them, and they don't artificially hold the money till some date (NET 90 or the like).
- MattGaiser 6y agoYep. We made next to nothing on our Walmart contracts, but they were a reliable source of cashflow and extremely low on the nonsense.
- mathgladiator 6y agoThere is an entire software company dedicated towards optimizing around this. Like, if you invoice net-90, then they will wait, and there is software that lets you compete with others to minimize the discount to get money now versus later. It's a crazy world.
- MattGaiser 6y agoOh I am sure. Cash management is a billion dollar segment of consulting. Unsurprising that software has arrived to manage it.
- owyn 6y agoReally? Can you name the company? I had some "is this a good idea for a start up" conversations with someone like 5 years ago who had a similar idea but didn't pursue it and I'd love to be able to point to a company that was actually doing it.
- beervirus 6y agoThe point is not to sell food. The point is to separate credulous VCs from their money.
- quickthrower2 6y agoSelling selling food
- xbmcuser 6y agoIn the past stock market existed to provide capital for business. Now the stock market is the business for many startups they are not listing to get capital rather to make profit for it's stake holders.
- ALittleLight 6y agoI've recently been watching a lot of the Y-Combinator YouTube videos. One idea that comes up a lot is that you should listen to the problems that users have but not their solutions. It's an idea along the line of "If I'd asked what they wanted, they would've said 'A faster horse'." In other words, you would take away "Faster transportation" and discard "Faster horse". I can see how, from the perspective of this article, people who talked to you and listened to what you were saying and then never implemented or tried your suggestions would seem like negligent fools who never listened. The reality might just be that they are trying to do something very different. I get the sense that this article is scorning the VC backed food companies but I don't know why. They are spending their time and money working on hard and valuable problems. Scorning them is easy, since they'll probably fail, but it also strikes me cynical and soulless. Better, in my view, to wish them luck and to realize that a VC backed food tech start up probably will have different hiring patterns and employees than a small food business.
- donw 6y agoHyunjoo isn't a user. She is a professional, with years of experience in the space that various startups are trying to "disrupt". That's years of hard-won, hands-on experience that would benefit anybody trying to enter the market. Which the average San Francisco startup -- both the founder and employees -- totally ignore, because (a) she's over thirty-five years of age; and (b) she doesn't have a degree from Stanford/Berkeley/Harvard. We see this a lot in Japan when SV startups open shop here.
- ALittleLight 6y agoThere are a variety of food tech startups, some of them would see her as a (potential) user. "User" maybe isn't the best word, but she's definitely the kind of person who has problems that food tech startups would care about solving. If people are ignoring her, they shouldn't be. But neither should they (according to my interpretation of Y-Combinator advice) be following her solutions. If Hyunjoo knew how to solve these problems, they wouldn't be unsolved problems and there would be no startup in solving them. My point was that if people are listening to your problems and not solutions, it may feel like they're ignoring you, even if they aren't.
- cm2012 6y agoIt's very important to make fun of people who are trying to make something work and making mistakes. It's a lot easier and more comfortable than trying to do something myself. My intellectual curiousity is truly satisfied.
- sabujp 6y agoAPRN reported EPS of 0.08 (estimated was -0.45 according to tradingview), at least they are positive.
- dnprock 6y agoI think some investors are naive about the food cultures. Here's some advice for you. Food is personal. It's extremely hard to change the way people eat. Most of you are busy changing the world. You like the convenience of tapping a button and get what you want in a few minutes. You'd think that everyone would like to enjoy the same convenience. Food is personal. Name a favorite dish. You'd not know who invented it. Nobody knows how we got Chicken Tikka Masala. Food is decentralized. Attempts to centralize food cultures will fail. Conscious people are careful about what they eat. They'll end up cooking their own food. They're suspicious of the big food companies. Don't think about simplifying food, cutting down time. If you go down that path, you'd end up with another junk food company. Think about how to get people to eat healthier. That's the only thing I care about. I think many people will eventually realize this.
- greeniron 6y ago>you'd end up with another junk food company i'm not sure if i can agree with you on this. if i can create a successful junk food brand like mcdonalds, i'd do it in a second.
- woah 6y agoIf I ever want a landlord who is going to trash me in the press while I am renting, I know where to look.
- deleted 6y ago[deleted]
- dba7dba 6y agoI didn't really see it as trashing but a real person running a real business in a real world, who just can't believe these young people who live in a fantasy world that is funded by VC.
- slaman 6y agoOr you could see it as the often-overlooked perspective of an immigrant with a successful business in a traditional industry who is witnessing and exposing the absurdity of the valley capital bubble.
- archagon 6y agoMeh. She is clearly very experienced and I like her kimchi. Win-win!
- sumanthvepa 6y agoThe article is a little misleading. I too operate without VC funding and behave in a ways similar to the small business owner -- because I am one. But to apply the philosophy of a small business to a startup would be a big mistake. Startup founders and their VCs behave the way they do, because they are optimising for different things than a small business owner like me. I am optimising for survival, a startup founder is optimising for the expected size of the outcome. The possibility of ruin in that expected outcome is taken into account in the VCs calculation. As long as one is clear about what one is optimising for, both strategies are fine. Problems only begin when you take VC money and behave like a small business owner. Or behave like you have VC money when you are, in fact, a small business owner.
- mapgrep 6y agoThe article is pretty clear about the dynamic you bring up. The first subhed is, “A Different Business Philosophy.” At the same time, there is a valid critique from this small business veteran. She points out that startup founders tend to hire people from their startup world, even for specialized positions where much more experienced talent is readily available from within the food world. She also indicates they do not listen to input from others in the industry.
- jelliclesfarm 6y agoThis is true with some Agtech/Farming startups too.
- 1propionyl 6y ago> As long as one is clear about what one is optimising for, both strategies are fine. I know this is HN orthodoxy, considering the audience and our beneficent hosts. But I think this assumption bears questioning. Is the startup model really morally equivalent? Clearly we wouldn't say that all cost functions a business could optimize are all equivalent. So why should the traditional small business and startup model be assumed to be equivalent? And moreover, even if it is morally equivalent... is it really that good of a strategy? By which I mean two things: 1) is it a fit strategy in of itself, and 2) is it good for the entire business ecosystem? As food for thought... why hasn't Silicon Valley adequately considered a "slow-up" model that combines the traditional survival and sustainable growth focuses with the advantages of massive cash influxes and rapid iteration towards a viable product (even if that means pivoting)? I think the answer is clear: venture capitalists want a return, and a large one, before they die. Is a business model optimized for generating returns before investors die really a healthy strategy to have so much capital allocated towards? Especially when these businesses in particular (tech startups) can often have such a large impact on culture and society.
- vondur 6y agoSeems like disrupting the food business is fraught with risk. Most restaurants work in pretty small margins. I guess using machines to eliminate labor is one way. One easy way to increase profits is to sell alcohol. Much better profits and if done right, easy to stop waste.
- analog31 6y agoI'm a musician, so I spend a lot of time in restaurants. ;-) I was chatting with the chef / owner of a fairly successful restaurant, and he told me: "Every chef dreams of making their living selling food, but quickly learns that their income comes from the bar."
- rdlecler1 6y agoThere seems to be an agenda here. But juat because a few companies failed (and in venture it’s 65% - 90%) not all fail. That’s the venture capital business model and it’s given us Google, Apple, Netflix, Amazon, Instacart, Impossible Foods, and probably a dozen goods and services we use every day. You don’t build these kinds of businesses as a lifestyle business.
- Apocryphon 6y agoThe majority of those companies you listed were not VC funded, or at least they were not the same sort of hyper-growth-chasing unprofitable unicorns that are the modern startup poster children.
- TrackerFF 6y agoNothing wrong with trying to disrupt some industry - but I think the way too many startups handle it is, well, almost arrogant. Traditionally, businesses grow very incrementally - in almost all aspects of the business. From the product itself, to infrastructure, etc. It's all mostly done on a need basis. When demand ramps up, you expand. But at the very core, there's a product/products which have been developed probably since before the company itself. It's the secret sauce, if you want. Of course, later down the road, some products unfortunately take the backseat in a business - but that's another story. With a lot of disruptive tech-fueled startups, it's a bit different - you start with some idea or desire of disrupting something, or identifying inefficiencies in traditional systems, through use and/or observation, or through surveying people. So too often, you get people / entrepreneurs with limited domain knowledge, that try to learn and solve/improve some complex business or field. Again - there's nothing wrong with trying to improve something, but throwing cash at something you may not know too well, can be a quick way to just wasting money. A lot of energy and resources are going towards trying to engineer some system which is ready to scale, IF demand explodes. It's the software engineering equivalent of writing "enterprise" software from the go, pouring cash on ridiculous servers, and hiring a team of expensive sales engineers - even though you barely have a MVP. You're still in the early stages where you need to direct most of your focus on creating a great product.
- spaetzleesser 6y agoI would prefer if Silicon Valley went back to creating new technology instead of forcing themselves into established markets where their main advantage is that they can burn a lot of money and underprice ("disrupt") the competition.
- tqi 6y agoInteresting to contrast the tone of this article with this one where the landlord is also giving advice to a tenant: https://sf.eater.com/2020/7/15/21325582/bernal-star-moonstar-buffet-trader-joes-robot-chefs https://sf.eater.com/2020/7/15/21325582/bernal-star-moonstar...
- Scene_Cast2 6y agoAs a complete aside, I really love their kimchi, it's probably the best store-bought kimchi I've had.
- raindropm 6y agoTo quote one of my favorite banter from Skyfall(2012) between Bond and Q. > Q : Age is no guarantee of efficiency. > Bond : And youth is no guarantee of innovation. At the end of the day, we all can learn from each other... Different perspective brings different insight.