Today, I’d love to shout into the wind about one of the most ridiculous home stories I saw last week. And yes, at one point Bob Marley’s legacy is used for the purpose of selling mid-range rugs by the Peloton guy? And it’s actually even worse than it sounds? It’s just…phew. I’ll build up to the ridiculous part. Let’s start at the beginning.
John Foley is the former founder and CEO of Peloton. He presided over Peloton’s rise and 70% stock price fall before leaving the company completely in September. I could spend the next few sentences talking about his business decisions that led to that rise and the fall. But instead I just want to share this excerpt from a 2020 New York Times profile of Foley that is just never far from my mind. Foley said,
“SINK DRINK Twenty years ago a colleague told me the key to your day is to hydrate at much as you can, so the first thing I do is drink 40 sips of water from my hand at the upstairs bathroom sink. It’s efficient. I drink until I feel like I’m going to throw up water. Every day.”
I don’t know. If the NYT was profiling me, I wouldn’t talk about being hunched over the sink, drinking 40 sips of water from my hands every morning. Not because it’s bad or weird. It’s just…if a woman said something like that, it’d be all she was known for, for a very long time.
People would joke about her not being as successful as the numbers claimed - she’s too poor to afford a glass! On Twitter, she’d be deluged by scenes with water cups from the movie Signs. Do you know how often creepy guys would DM her, “Are you thirsty?” None of this is Foley’s fault. It just struck me at the time. And strikes me now.
I should mention that towards the end of the profile, he talks about singing to his nine year old daughter every night before bed. So while he is cringe, as the kids say, that alone makes me predisposed to like him as a person. But he’s a person in a system that benefits him. And I don’t like that system.
When Foley left Peloton, he said he’d be starting another business soon. And he has. Well, it’s not just him. Foley is joined by seven other founders - most of them from Peloton. Foley et al is making another product for the home - rugs. I guess that Peloton has to go on top of something.
According to Forbes, Foley’s rug start up has a very basic business model. Foley and his team will, “source rolls of carpet in bulk, then cut them to order in a New Jersey warehouse to ship either directly or through logistics partners.” Each rug can be custom cut.
Foley says that because they’ll do their sourcing in the US and avoid storefront costs, the rug company will have “ 50% gross margins—even on its first orders when the company starts selling to customers in spring 2023.” And he might be right! It seems like half Instagram ads are for direct to consumer rug companies. So I imagine there is some profit there.
Back to Forbes quickly,
“research estimated that more than 100 million rugs are sold in the U.S. each year; a Custom Market Insights report from July estimated that U.S. residential rug sales would reach $18 billion this year, and $25 billion by 2030. To be successful, [the company] needs to capture only a fraction of such volume, Foley said.”
I wonder how many of those 100 million rugs were bath mats purchased from Walmart? Forbes reports that Foley is pricing his rugs at CB2 and West Elm levels - affordable for some, but too expensive for most. Still, all you need is some. I guess there’s no reason for him not to be successful as long as the rugs aren’t ugly.
So why is this one of the most ridiculous stories of the week? Two reasons.
Let’s start with the most obvious.
Founders need capital to start companies. They often rely on raising that money through venture capitalists. Foley’s company raised $25 million from venture capitalists for its Series A. That is a big raise for any startup. But this isn’t any start up. This is a company who’s big idea is “selling rugs that come in different sizes online.” This is not groundbreaking stuff! But Foley is a white man with connections. And it’s white male connections that break ground in VC, not ideas.
Venture capitalists overwhelmingly invest in white male founders. From Bloomberg,
“Black founders received only 1.3% of venture funding last year, according to data from Crunchbase. Among startups with a valuation of at least $1 billion, just 14% have a female founder.”
I want to put this in perspective. In the same quarter that Foley’s company raised $25 million to sell rugs, all Black founders in the United States raised $187 million. According to TechCrunch that’s “0.43% of the nearly $43 billion deployed in Q3.”
Now venture capital uses the term “raise.” Founders raise funds. But that’s kind of obscuring the truth. The right way to say this is “Venture capitalists invest money.” It’s the venture capitalists choosing where their money goes. And venture capitalists are choosing to invest in ideas for the home. But those ideas are almost exclusively from white men. And many of them are either unoriginal (WHAT IF RUGS! WHAT IF RUGS THAT FIT IN YOUR HOME?) or simply not…good.
On the “not good” front : A16z, a big player in the VC world, recently invested $350 million in failed WeWork founder Adam Neumann’s apartment management software/wallet/ahem, probable next scam. Yes, that’s more than was invested in all US Black founders in an entire quarter.
Here’s the thing: I am married to a white man who once co-founded a (tiny, no longer existing) company with (an itty bitty $50,000 check) capital from VC. He likes building things. If he ever decides to build again, I hope he gets investors! And! $43 billion dollars in one quarter is a fork-ton of money. That is enough capital to fund many, many kinds of founders with many, many kinds of ideas.
Instead of giving enough capital to many, VCs give too much capital to very few. They double-down on their investments in white manhood and concentrate all their capital on dudes trying to re-invent the apartment. And it’s not because the VCs believe the apartment can be reinvented - it’s because they want white male power to stay the same.
Okay, second reason. What’s in a name? A lot.
Foley’s rug company is called Ernesta. He says it’s a feminized version of Ernest. As in Ernest Hemingway, his favorite writer. He says their rugs will be as efficient and economical as Hemingway’s writing. Phew. Again.
Folks. My land. Okay. There is just something about it, all right? Here we go.
Foley is a male founder, with a team of seven other founders. Only two of the seven are women. He made his first fortune peddling fitness to women in the home. His bikes can be used by any gender, of course! But the marketing was often geared toward women, sometimes with horrifying commercials. (And the last bit of data I saw showed women comprise the majority of Peloton users.)
Foley wants to make his second fortune by selling rugs. Rugs can be used by any gender, too! But rugs are a household purchase. Who is making those purchases? Mostly women! A 2021 CivicScience survey said 70% of women reported making most of their household purchases, 38% of men reported making a majority of household purchases. Foley knows this. So he’s marketing to women, again. With, again, very few women on his team.
And so back to the feminized name of the company. On the Ernesta website, Foley writes,
“Ernesta is the feminine extension of Ernest. That is important to us. It transforms our inspiration, Hemingway’s legacy, by embracing a more-inclusive future.”
What? Why? First of all, women are already VERY INCLUDED HOUSEHOLD GOODS MARKETING. That’s like…what the entire 1950s was about, don’t you know? So then, is the name of the rug company feminized to make it feel like a woman, who should make a home? Well, that’s not great! But also the name he’s chosen to feminize is ERNEST - AS IN ERNEST HEMINGWAY. A man who at best could be described as having complicated feelings about women. I just!
It’s not so much that he gives women insipid or malicious motives; he doesn’t spend a lot of time giving them any kind of inner life at all, really. But, in some ways, I think that’s preferable to the inner life he might have given them if he had actually dared to write it. I think it was that he was self-aware enough as a writer to know that he didn’t understand what was going on in those pretty little heads.
— Mary Karr, Hemingway
But that’s not all. And it’s not the worst bit. On Ernesta’s site, Foley says the team considered naming the company after two of their favorite Bob Marley songs,
“We considered two other names. Head Corner Stone and Simmer Down, both Bob Marley songs. The first, a beautiful, unreleased track about rejection and rebirth. That felt appropriate. “The stone that the builder refuse; will always be the head cornerstone.” The second song a call for peace in the streets of Kingston. Both from a man who transformed a genre and made the world brighter. Goals that we share.
While we didn’t select either, we did keep the connection to Bob Marley. And the power of music in a home. Robert Nesta Marley was his name. Er-Nesta. His (and all) music sounds better when hard surfaces are covered. A custom fitted rug means better sound.”
Friends, I am not going to pretend to be a Bob Marley expert. But everything I’ve read about Corner Stone says Marley wrote it, at least partially, as a response to being rejected by his absentee white father’s family. I get that the Peloton team left a floundering company and have come together to start a new company, but that is….not what Bob Marley and the Wailers were singing about.
And Simmer Down came out just after Jamaica became independent after hundreds of years of violent British colonization. The turmoil the song addresses is a direct consequence of all those years of colonization. Colonization is many things - including keeping resources and capital for the ruling class. Which is just … really a little on the nose in the current VC space.
Also, Bob Marley is still one of the most well-known members of the Rastafari Movement. A movement that developed in Jamaica in direct opposition to British Colonialism. A movement that rejects capitalism.
And just…do none of these founders have access to Wikipedia?
My migraine is coming back so I am just going to say this: I have no reason to believe anyone involved in Ernesta is a bad person. I know at least one of them sings to their kid every night. That’s nice.
In 2023, Ernesta will debut. I am sure it will have pretty rugs, great customer service and a compelling Instagram presence. It’ll get some of that rug market share. But when it comes up on most people’s IG feed, they will not know how it got there. And they will not know how many companies started by Black founders, women founders, Black women founders, and every other kind of founder are missing from their feed and their lives. They’ll just think…oh, that’s a nice rug. I wonder if it’ll fit in my home. And they’ll be delighted to find out it does.
And I just keep thinking - what else could fit within our homes, with the right investment?
I rely on Anne Helen Petersen to help me understand Peloton, at all times.
There are some VCs committed to investing in founders who are not white men.
Arlan Hamilton. Venture Capitalist. Author.
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My heart broke at ‘a more-inclusive future’ being white men creating things for white women. Totally missing the point. And missing the breadth of inclusivity going all the way back to where your money came from. And then my eyes rolled out of my head and off the table. Working in tech for almost 15 years, this is so so common. And digging in behind the scenes, hearing some of those marketing conversations... it’s a wonder I haven’t retreated to the woods already. This was a perfectly articulated rant. 👏🏼
" ... It transforms our inspiration, Hemingway’s legacy, by embracing a more-inclusive future.” Oh, this is a gem. This is priceless. Reminds me of the tiny-getaway-house-in-the-woods startup that was featured a few years back ... with actual screens in the windows. "Congrats, dude," the commenters wrote, "you invented the cabin." Same clueless energy, doubtless, same reward. Go to a local carpet store and tell them the size you want; they'll cut, trim and bind and you won't pay a Silicon tech bro for shipping.