I’m torn about what to write about IfOnly, a new service I ran across last night:
IfOnly is an incredibly cool service. It allows you to purchase unique experiences like a group swim clinic for up to 10 of your friends with Olympic champion and TV broadcaster Summer Sanders–a mere $8,000.
I immediately looked up Kobe Bryant, of course, and found that I could get signed, game-worn shoes for $8,000, or request a quote for a post-game meet and greet at a Lakers game. Of course, being a cheapskate, I doubt I’d actually go for it, but I love knowing that it’s possible.
I also think IfOnly has done a good job of providing a high-end experience. I could get those same Kobe Bryant shoes on eBay, but the experience isn’t nearly as classy:
And eBay is practically Rockefellerian in comparison to Hollywood Is Calling, which, for the low low price of $19.95, lets you hire the guy who played Mr. Belding on “Saved by the Bell” to wish your friend a happy birthday.
Plus, because 70% of the purchase cost goes to the charity of the celebrity’s choice, I get to help out a good cause, rather than simply enriching a collectibles dealer.
The issue is, IfOnly has raised a staggering $15 million from a who’s who of investors. $15 million is a bet on a mass market, not a niche. I’m afraid that IfOnly will fall into the Silicon Valley luxury trap.
Silicon Valley investors (aside from me) are rich. Many have been rich long enough to forget that most people don’t have worries like, “Will the contractors finish my new 7-car garage before the rainy season?” As a result, they end up backing companies that appeal to them…and no one else.
In the dot com era, Jim Clark of SGI and Netscape fame tried to start a company called MyCFO to provide financial services to the super-wealthy (average net worth: $150 million) who thought a $25K/year retainer was a bargain. He raised almost $70 million for a company that didn’t have a prayer of serving a large market.
MyCFO ended up getting sold to a traditional wealth management firm after burning through that $70 million (!) and coming under Federal indictment for dodgy tax shelters.
I want IfOnly to succeed and be around (I’ve got a long bucket list!) but feel skeptical of its mass appeal.
2 thoughts on “The Silicon Valley Luxury Trap”
If you're in Silicon Valley – particularly if you own property – you're rich by most definitions. So, SV types tend to be impressed and overinvest in stuff I call "CEOware" – stuff that hyper-rich types care about and may use, but which have little appeal to people of more ordinary means.
Now, you can still do hugely well in business selling stuff to rich people, or to aspirationals, but you have to realize that you're doing that and not targeting a mass market.
Agreed. You have to be a multi-millionaire just to afford a house in Palo Alto.
Quora is another example of the Silicon Valley herd mentality. Useful site, but not as valuable as its investors think.