NameChangers Podcast

The “Bodega” Fiasco: “America’s Most Hated Startup” | NameChangers Episode 13

By April 24, 2020 April 25th, 2020 No Comments

In 2017, two ex-Googlers launched their startup to place 5-foot boxes filled with convenience store staples in gathering places all over big cities. They named their company “Bodega”, and on their launch day, immediately were hit with enough backlash that they apologized within hours and disappeared from the public eye. About 10 months later, they returned with a new moniker, “Stockwell”. Can laying low then returning after a while with a new name repair your past woes?

Transcription:

In 2019, and the idea of a dream job has changed. According to a recent survey, 86% of Americans 13-38 years old say their dream job is to be a social media influencer. Tons of  young adults in high school and college have aspirations to work at the big 4 tech companies: Microsoft, Apple, Facebook, and Google. And with the high rise in popularity of entrepreneurship, tech CEOs have become celebrities on the level of A-list movie stars.

So when Paul McDonald and Ashwath Rajan left their high-profile jobs at Google to start their own venture in Silicon Valley, it seemed par for the course to be a success.

Their vision: to create a 5ft cabinet with glass doors that housed convenience store items like snacks, deodorant, toilet paper and place them in the lobbies of apartment complexes, gyms, dorms, and other spots. A customer would download an app on their phone and enter their information, then cameras and AI inside the box would keep track of what they take and charge their credit card.

The idea would be to track the most purchased items from each box and adjust accordingly. Maybe in a gym, protein bars and Gatorade would be most popular, when it might be toilet paper and sugar in an apartment complex.

McDonald stated they wanted to install so many boxes in major cities, that a customer would not be more than 100 feet away from one at all times.

They set out and raised $2.5 million in funding from VC firms and prepared for their big launch day, September 13, 2017. What should have been the most exciting day in that startup’s young life turned into a PR nightmare.

I’m James Doherty, and this is NameChangers.

McDonald and Rajan dubbed their company “Bodega” meant to be a homage to the classic grocery store on almost every corner of New York City, LA, and San Francisco. They even made their logo a cat which s a common character in these stores, running around on counters and near items. There’s actually twitter accounts like @bodegacats_ and a tumblr you can check out to see their hijinx.

For their launch, they reached out to several media companies for a write up of their endeavor and drum up excitement. They’ve spent months on every little detail, impressing investors, and finally the day the public will find out about all of their hard work and join in their excitement.

Unfortunately for them, that is not at all what happened.

Fast Company published an article entitled “Two Ex-Googlers Want To Make Bodegas And Mom-And-Pop Corner Stores Obsolete”. In the article McDonald himself is quoted as saying: 

“The vision here is much bigger than the box itself. Eventually, centralized shopping locations won’t be necessary, because there will be 100,000 Bodegas spread out, with one always 100 ft away from you.”

Immediately after this article, a string of articles with the following titles were posted:

Bodega is either the worst named startup of the year, or the most devious,” from The Verge. The Guardian published “Tech firm markets glorified vending machines where users can buy groceries”. Countless others all showing the same theme, these two Silicon Valley big shots were declaring war on bodegas.

So why is this such a big deal? The term “bodega” has a lot of cultural context behind it. For the owners, these stores represent the American dream. Many Hispanic, Middle Eastern, and Asian immigrants come to America and open these stores for a better life for their families. And so many of them have been around for decades.

My mom actually grew up in Manhattan in the 60s and 70s, always told me stories of hanging out with her friends at the corner bodegas and playing with the cats. They is a sense of community and human connection. A lot of times, the same person is at the counter every morning for decades. This is where people get their morning coffee, their breakfast sandwich. It’s the epitome of supporting the local business.

But now you have two young men from the Silicon Valley bubble try and disrupt this industry. It’s extremely tone deaf.

McDonald was asked point-blank in the original Fast Company article about whether he thought that the name would come off as culturally insensitive and he said “Not really. I’m not particularly concerned about it. We did surveys in the Latin American community to understand if they felt the name was a misappropriation of that term or had negative connotations, and 97% said ‘no’. It’s a simple name and I think it works.”

Unfortunately for them, reactions from the Hispanic communities were quick and striking.

Frank Garica, chair of the New York State Coalition of Hispanic Chambers and Commerce, which represents tons of bodega owners, said this “It’s sacrilegious to use that name, and we’re going to do whatever we need to do to fight this. Garcia’s grandfather was actually the head of the Latin Grocery Association in the 60s and is part of the group credited for coining the term “bodega.” He continued, “To me, it is offensive for people who are not Hispanic to use the name ‘bodega,’ to make a quick buck. It’s disrespecting all the mom-and-pop bodega owners that started these businesses in the ’60s and ’70s.”

He even talked about how when 7-Eleven come into the community, they always meet with community leaders and representatives from bodegas, but these guys did not.

The timeliness was also discussed because at the time the Trump administration had been putting restrictions on immigrants. 

So of course, twitter also took them to task.

 Weird that they’re calling this heinous vending machine “Bodega” and not “Gentrification Box” https://t.co/xPCozclRRD— Tristan Cooper (@TristanACooper)

I’ve never longed for anyone to be mauled to death by actual bodega cats but here we are – Andi Zeisler (@andizeisler)

The Washington Post dubbed the company “America’s most hated start-up.” 

Only hours after the initial announcement, McDonald released another trying to backtrack on his earlier statement, saying that the name was meant to be a “homage” and they had never had any intention of putting mom and pop corner stores out of business.

And right after that, they disappeared from the public eye.

Then suddenly, on July 18, 2018, about 10 months after the initial incident, McDonald posted that they have changed their name to Stockwell and were still going strong.

Their press release said: “Stockwell, is a better expression of our mission and our unique offering to consumers”

A spokesman told TechCrunch “It was a difficult time and transition and we learned a lot from it,” “As a company, we put our heads down and focused on building our business. We kept a low profile and concentrated on our core product, the mission, and the people who work for us. We’re excited for the progress we’ve made but won’t forget the path that got us here.”

During this time, they raised over $45 million dollars in venture capital funding.

So what can we learn here?

So the reason I picked this story is because it beautifully combines some of the topics we talked about in recent episodes. It talks about what happens if your name is too controversial,  but also what happens if two companies have the same name.

Because there is a clothing store in Boston named Bodega they were accidentally attacked on twitter by many people thinking they were the startup. They had released statement after statement saying they are not that company, and in return, got a lot of positive attention from people learning about them.

So the question becomes how come that company can use the term “Bodega” and not have any problems?

It’s all about intention. Although they denied it, the startup’s initial intention was to replace the corner store. So they used this name that had a lot of cultural connotations as well, and use it as sort of a slap in the face to these Bodega owners. These bodega owners aren’t rich they don’t have these venture capitalists throwing millions of dollars at them. So these young,  rich entrepreneurs in Silicon Valley are kind of slapping them in the face saying “Hey, we’re taking over your business and there is nothing you can do about it.” Even if they had a story behind the bodega, say, one of the founders had parents who owned a bodega and they wanted to bring the experience to people who didn’t have it. That’s a good story. But, you’re targeting areas that have bodegas. If you were targeting more metropolitan areas that aren’t huge in the bodega culture, say Tampa, FL or St. Louis, MO, you might have a case here. Those are some up and coming cities that have a lot of young people in them so having something like this, bringing the bodega experience to them, might have been seen as a positive.

But by going to cities that are known for their bodega culture and trying compete was just very tone deaf and they just missed the point entirely.

So how could it have been avoided?

Honestly, like I said, they picked the worst name they could have. It is a cute at first thought, but then there’s many avenues they could go down. Really, if they would have gone in the route of naming it some sort of disrupting vending machine or some sort of futuristic, millennial vending machine, I feel like they wouldn’t have had any problems. People would have no seen it as a corner bodega, people would have seen it as a really cool vending machine where I can get some stuff I need, where I need it. 

But instead, they picked a word that had offensive problems and it’s funny because they even said that they asked cultural communities if it was offensive. When you have to ask the cultural community if something if offensive, you might want to rethink what you’re doing. Is it worth it? I talked about this in the episode about controversial names. Is it worth it to have that possibility? You can’t ask everyone. And in today’s day and age with Twitter calling out everyone who does something wrong there is going to be someone who is going to be mad. 

If that person has any influence, they’re going to influence more people to be mad. And then all of a sudden your startup is screwed before it even started.

Tyler Perry, not the “Madea” movie making one, but the writer for TechCrunch put it really well:

“If you think you need to survey an ethnic group to see if your chosen name will be perceived as offensive, just choose another name. Given today’s climate and the work we need to do to establish a better way to relate to each other as a society, I would just avoid them. Drop a vowel if you are feeling spicy, but leave out any potential offensive content. 

One more point to touch on here is the idea of if you disappear for a little while after some controversy and then come back with a new name, does that erase all your past problems and your pass woes? This one is a little tougher to answer because after they came back with their new name, there were a lot of articles still calling them out on their past. Eater published the story titled

 “Loathed startup Bodega changes name to Stockwell”. Fast Company, the publication that had the original article, said for their title “Glorified vending machine startup Bodega. finally kills off its offensive name”.

However there weren’t as many articles as there were for the initial announcement of Bodega when Twitter exploded. So it sounds like even though they’re still getting some negative press they are able to overcome it by waiting for that long period. As I mentioned in the rebranding episode time heals all and I guess it also applies to controversies.

In that silent time that they went away, they raised 45 million dollars in funding. They’ve opened a whole bunch of new Stockwell machines and they’re really going strong in their mission to make sure that there’s a Stockwell machine a hundred meters away from you at all times in a big city. So I guess there is a lesson to be learned here. If your company’s running into some big controversy, laying low for a little while, letting time take its course. With the internet people forget things within the day or two and come back in a few months and maybe all will be forgiven. It’s been about a year since they’ve had the new name, so it’s still a little early to tell but we’ll keep track and let you know if there are any updates.

NameChangers is made in association with NameStormers, a naming agency in Austin, TX. Find out more about them at NameStormers.com. If you want to learn more about Bodega, you can go to their current website Stockwell.ai. If you like the show, please leave a review on Apple Podcasts.  It really helps people find us and we’re really trying to grow the show. If you have any questions at all, you can send them to namechangerspodcast@gmail.com. I’m James Doherty, we’ll see you next time.

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