Cautionary Tales of Innovation

by Mike Montgomery

There’s no such thing as a bad idea, right?

Wrong.

Even in San Francisco, the hotbed of innovation where a great idea can launch a legion of billionaires, bad ideas also tend to fly fast and furious.

Take Washboard, a recent startup that quickly turned aft in the air and sank in spectacular fashion. Launched as a way to make it easier for busy techies in San Francisco to keep up with their laundry, the big brains behind Washboard thought delivering quarters would be the next big thing. The catch? Every delivery required a fee, which charged $27 for $20 worth of quarters. Put another way…

While Washboard was a spectacularly bad idea — or at least its business model was — another new startup is outright sleazy. ReservationHop is the brainchild one Brian Mayer, and it aims to make it easier for people to get reservations at San Francisco’s hottest restaurants. Which is all well and good save for one rather massive problem: the company used fake names to make reservations in bulk, then charged users a fee for access to those names. To abuse another meme… ReservationHop was rightly been pilloried by journalists, with Valleywag’s Kevin Montgomery (no relation) even calling it “everything wrong with SF.” The problem, Montgomery and others pointed out, is that popular restaurants rely on reservations that, you know, are actually used by customers. By essentially hijacking reservations from restaurants, ReservationHop ran the very real risk of leaving a lot of seats empty at businesses where margins notoriously slim.

To his credit, Mayer seems to have taken to heart the criticism he’s received in his short time as a punching bag, writing on his blog:

The biggest criticism we have received has not been about the principle of selling reservations, but rather the methods we initially employed to hack this project into existence. We appreciate the criticism and honest feedback, which is why today ReservationHop is doing a “soft pivot” to address the same customer demand, and in addition work with the restaurants directly to cut them in on the deal. We believe that restaurants can benefit from selling reservations for a couple tables per weekend. This will not only reduce no-shows and mediate demand for their peak reservations slots in favor of off-peak times, but they will also get paid for filling these tables, instead of the other way around.

Whether this “soft pivot” will help ReservationHop survive its sleazy launch remains to be seen, but in a city already dealing with backlash over tech workers with big wallets taking over, it’s easy to see why Mayer’s bright idea got so many people in San Francisco riled up.  

Disruption is the name of the game in tech today, and by definition it challenges long-standing business models. That can be a good thing. But as Washboard showed, not every industry needs disruption, especially when your new business model (quarters with a service fee) is worse than the service (you know, machines that turn dollars into quarters) it’s replacing. ReservationHop may have been launched on a more solid financial footing, but that didn’t make it any better of an idea.  

Mike Montgomery is executive director of CALinnovates