Rejection of Marijuana Startup at Tech Competition a Case of ‘Cannabias’?

By Tony C. Dreibus

The cannabis industry has taken great strides towards entering the mainstream business world in recent years, but it apparently still has a ways to go.

Case in point: MassRoots, a publicly traded company that runs a popular social media app for cannabis consumers, was told this week it cannot advance in a prominent competition for tech startups because its technology and user community are “not significant” enough, the company’s chief executive officer told Marijuana Business Daily.

MassRoots presented at TechCrunch’s Startup Alley competition in New York, where entrepreneurs show an audience their ideas for tech products. Voters then cast their ballots for the company they think is the best startup.

Traditionally, the top vote-getter moves on to a larger competition called Startup Battlefield, where companies vie for a $50,000 prize.

MassRoots CEO Isaac Dietrich, who applied on the TechCrunch website and was told he qualified for the event, said his company earned about 5,000 votes – more than five times the next closest competitor.

It therefore stands to reason that it should have moved on to the Battlefield event. The company, however, was told by a TechCrunch editor that it would not be given a presentation spot at the Battlefield competition, providing little explanation.

TechCrunch – which runs a popular technology website – didn’t respond to several contact attempts by Marijuana Business Daily.

But Dietrich said he believes TechCrunch dismissed MassRoots because it’s a small company that doesn’t have the backing of large funds and fully embraces the marijuana consumer culture. TechCrunch is looking for “MBAs in suits” and didn’t like how he represented the industry since he’s young, a college dropout and a cannabis consumer, Dietrich said.

While the technology industry has shown great willingness to fund and work with cannabis companies – investors from the tech industry have invested millions of dollars in marijuana ventures – TechCrunch’s denial is a sign of continued inequity against some businesses within the nascent industry, Dietrich added.

“All MassRoots was asking for was an opportunity to compete in the Startup Battlefield,” he said. “Had we lost Battlefield based on our merits, that would have been fine, but to deny us the chance to tell our story on the main stage because I’m an unabashed cannabis smoker is nothing more than thinly veiled discrimination against the cannabis community.”

TechCrunch doesn’t seem opposed to the marijuana in general, though.

Brendan Kennedy, the CEO of Privateer Holdings – a private equity firm that operates several cannabis companies – was a speaker at the conference alongside Geoff Lewis, a partner at Founders Fund, which recently invested in Privateer.

Regardless, MassRoots won the competition and should’ve been given a chance to present in front of the Battlefield panel, which this year includes notable names such as Dennis Crowley of Foursquare, Alfred Lin of Sequoia Capital and Rich Miner from Google Ventures, Dietrich said.

“Brendan and Geoff are awesome and are definitely welcome in the cannabis community, but that doesn’t give TechCrunch a pass to completely ignore the votes (we) received,” Dietrich said. “We were stoked because this was the opportunity of a lifetime. It was our chance to tell our story to every Silicon Valley executive in the room.”

Voters at the Startup Alley event expressed their displeasure through – where else – social media. Comments on TechCrunch’s Instagram account were heavily in favor of MassRoots, with some chastising event organizers for ignoring the ballot and awarding the Startup Battlefield spot to the second-place competitor.

“It is a shame that you have decided to come out on the wrong side of history here,” one user with the handle Uncle_Buck13 said on Instagram. “Your condescension and dismissal of MassRoots not only demonstrates ignorance but also a sense of hypocrisy. If your platform, and event, are designed to find companies and technologies pushing the boundaries and filling a need for technology solutions, MassRoots entirely fits that bill.”

TechCrunch editors can exercise editorial discretion, something Dietrich said he doesn’t dispute. But with such an overwhelming victory, he figured MassRoots would be allowed to compete.

Instead, the spot was given to the second place competitor, which he said earned less than 1,000 votes.

The Disrupt events, held in Las Vegas, New York, San Francisco and London this year, are designed to find “disruptors” — companies that design and build products that challenge conventional wisdom, Dietrich said. That perfectly describes MassRoots, which earlier this year fought with Apple after the company removed its app from the Apple Store, and won.

“The point of TechCrunch Disrupt is to discover companies who are pushing boundaries, creating new markets and, ultimately, changing the world,” he said. “By any objective standard, MassRoots should at least have been given the opportunity to compete.”

Tony C. Dreibus can be reached at [email protected]

10 comments on “Rejection of Marijuana Startup at Tech Competition a Case of ‘Cannabias’?
    • Brian on

      Lmao .. Hotstocked?! They have 0 credibility. Anyway , I fail to see how their s1 registration or going public on the OTC has anythig to do with their technologies and innovation ?

      Reply
  1. Laurence on

    I fail to understand why individuals in this industry expect that their attraction to the cannabis culture or votes in a popular competition would substitute for business skill or experience. I’ve been involved in this area for well over forty years and it was the same wails from the paraphernalia magnates as their ship sank in 1980 – it’s all about the weed. No it’s not all about the weed, but being young and a college dropout with a penny stock that gyrates all over and no reliable metrics? Sorry pal, but you should have invested in that degree and a little financial experience, wait until it really goes legal and there’s real competition. The question is “was this a popularity contest or a business contest?” If Dietrich thinks that a pitch to these folks was the opportunity of a lifetime – what romance – that’s calling Shark Tank high finance. The adolescent bashing of MBA’s suits? I’m an MBA and I have a suit, what does he do, show up in sandals and cutoffs? You have graduate from college to get an Masters and a good business plan gets investors, periodo. You don’t need privateer if the numbers speak.

    Reply
  2. CO 420 Websites on

    TechCrunch has recently made a number of steps to try to modernize their look – look at the HBO series Silicon Valley. The issue wasn’t the cannabis at all. They ruled on whether tech boundaries were being pushed, not social ones (which MassRoots is rocking!). I agree with the final line however “..MassRoots should at least have been given the opportunity to compete”.

    Reply
  3. Nurse Nature on

    Lawrence if you don’t believe the cannabis industry is a real business opportunity. YOU are on the wrong side of history Tech Crunch are a bunch of cowards!

    Reply
  4. Laurence on

    Dear Nurse Nature – when you feel comfortable about using your real name, and not a feel good nickname, and look at my name and see how it is spelled and not misspell it, you’d be closer to my comment. I did the hard time in graduate schools and cannabis for forty years and I never called myself Green Boy or Lotta Weed or any of the other names I see. The facts are that when people reach a certain level of competence people know who they are, put cannabis after my name in Google and get six pages of substantial contributions in nearly every area – every amateur in town is shining a light on him/herself – but they never seem have qualified for membership in mainstream professional group. Those that do, like the Bronners and their steadfast work that changes the rules for hempseed oil, or my own lawyers who introduce the concept that doctor/patient trumps legal/patient which was central to Judge Francis Young’s decision to downschedule cannabis – do you have any idea of the work involved to argue for cannabis alongside NORML and Bob Randall at the DEA’s highest court? I think its grand that we have this period when anyone can speak their mind but remember – credibility has only two legs and it’s best to remember them. Affiliation and following. If Nurse Nature is your real name and you have either of those, it might help, but even though as a nurse you’re not adequately trained or experienced to judge “technology” you have every right to act as a cheerleader. Carry on.

    Reply
    • Skyhigh on

      I put cannabis behind your name and a whole bunch of different guys name Laurence came up, so it’s for me to see what you have contributed if anything at all but shining the light on yourself.

      Do you care to offer your last name? Yes I used the name skyhigh and I don’t care if you think it gives me any validity. I have plenty of validation with the people I am affiliated with and I’m certainly not a follower. I hope I’m not a shining the light on myself to much.

      You seem like a nice guy but definitely rubbed me the wrong way and seem as if you are putting yourself on a pedastal because you have a MBA and so call 40 years of dealing with cannabis.

      Reply
  5. Patrick Rea on

    I’m the Co-Founder & Managing Director of CanopyBoulder, the industry’s first business accelerator, so I feel qualified to comment on this one. We’re working with 10 start-ups in ancillary products and services right now.

    It’s a shame and disappointment that MassRoots wasn’t selected by TechCrunch. Isaac and Dan are impressive and bright guys. Doug Leighton has a knack for picking smart entrepreneurs and structuring great returns. MassRoots will likely be a leader in the cannabis industry for some time and I’m excited to see what they do next.

    I was somewhat surprised when Isaac & Dan told me they were headed to TechCrunch in NYC after ArcView. They have certainly achieved more than many others in the cannabis industry, and are viewed as leaders and successful within the cannabis industry. It’s never fun to feel rejected.

    However, I’ll guess that MassRoot’s 275,000 registered users for a consumer web/app platform, didn’t impress the TechCrunch committee. And what % are regular users? More transparent data is needed here and I encourage Isaac and Dan to be more forthcoming with their user stats.

    In the CanopyBoulder accelerator, we have a web business start-ups that garners nearly 250,000 unique users every month to their site ColoradoPotGuide.com, and we’re driving them to crack 1M as soon as possible by expanding into other states ASAP. 250,000 isn’t enough for us, and it won’t be for investors, even though we do use MassRoots 275,000 as a comparable data point.

    Additionally, we all know that the finance road to riches is a well worn path. Deviating from this path makes you exceptional, but not in the way most want to be exceptional. Seed to Angel to VC to PE to IPO or Strategic acquisition is what investors like and expect to see. Deviation from this path generates logical and emotional alarm. Investors, media, and partners will have questions, and as an investor in the cannabis industry, I’m not looking to add questions about atypical finance machinations to the existing list.

    Of course, there are limited options for raising capital in the cannabis industry and “going public” can make your investment more appealing to some investors, especially those looking for quick liquidity, but being public is a DRAG…just ask any of the publicly traded cannabis companies. The rule of thumb when I entered finance (1997) was that without revenues of $50M or more, you shouldn’t go public. Today the number is much higher.

    And TechCrunch has an audience and brand to serve. Like so many established companies out there, they must ask themselves, “Are we ready to bring on cannabis?” It only takes one big investor, thought leader, advertiser or sponsor to say “No” for the answer to be “no” to MassRoots. Not everyone is a pioneer and visionary, so we can’t expect everyone to share our pioneer spirit and bravado.

    So there’s a couple of questions “beyond cannabis” that could be considered…if we’re all honest.

    In the end, it could just be “cannastigma” and if so, that’s unfortunate.

    We must accept this cannastigma but work to fight it every day. It’s a war with many battles, and thanks to the achievements of MassRoots, Dutchess Capital and many others (including The ArcView Group & CanopyBoulder) we will prevail.

    Reply
  6. Rick Fague on

    Someone once told me that the best revenge is living well, therefore I recommend that MassRoots ignore TechCrunch, keep doing what they’re already doing, then buy TechCrunch once MassRoots is big enough and open up the competition to everyone in the MJ industry.

    Ha, that’ll show ’em…

    Reply

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