The limitations of the tech industry have been on full display lately. Silicon Valley Bank and FTX’s collapse has increased scrutiny of tech companies. This has brought an increased focus on Silicon Valley’s other failed endeavors.
Last week, Lila MacLellan over at Fortune covered how a group of Silicon Valley entrepreneurs failed to build a futuristic village at Powder Mountain in Eden, Utah. In 2013, Elliott Bisnow, Brett Leve, Jeff Rosenthal, Jeremy Schwartz, and Greg Mauro bought the Utah ski resort for $40 million, saving it from foreclosure.
Bisnow, Love, Rosenthal, and Schwartz are the founders of the Summit Series, an invitation-only conference that features workshops, parties, and speeches from many famous people. Mauro is a venture capitalist who spends his winters in the town of Eden and convinced the Summit Series owners to buy the mountain. Their goal with Powder was to harness the energy generated from the Summit Series to create a utopia that would chart the future of the planet.
Their plan for Powder Mountain was complex. For real estate, 500 single-family homes would be built. Their other ambitious ideas included “a science center, convention space, an outpost for the U.S. Institute of Peace, a satellite campus for an online university, a Montessori school, and an alternative medicine center.” Today, only around 10% of the planned 500 houses have been built. They have failed to build hotels, shops, and restaurants, among many other projects.
So why did they fail? Here are some reasons that Fortune pointed out, along with a theory of mine:
- Challenging Construction Environment: While most ski villages sit at 5000-6000 feet above sea level, Powder Mountain’s village is situated at nearly 9000 feet. Due to snow and heavy winds, construction becomes impossible during the winter. In addition, the access road is very steep, leading to challenging driving conditions for construction crews. Further issues arose due to COVID and supply chain delays. When you combine a group with a lack of development experience with these factors, the result has been a very slow buildout.
- One With The Wilderness: Due to being in a high-alpine environment, residents face significant snowfall, heavy winds, bears, mountain lions, and raccoons. When they attempted to host a Summit Outside event in the summer of 2013, it was described as a “logistical nightmare” due to the challenges of finding lodging for a large group. They’ve hosted some small weekend events since, but there have been no major events that have occurred there.
- Tensions With Locals: While the Summit group had a collaborative relationship with the Weber County Commission, locals weren’t fond of them. They feared that the teenagers and young adults that worked at Powder Mountain would be exposed to the tech bros’ acts of debauchery. Their increased water usage made many locals put protest signs on their lawns, which had the slogan: “Summit Sucks Water.”
- Lawsuits: One of the major lawsuits the ownership group has faced is over a $120 million loan from Chinese investors. This loan was part of an EB-5 immigration program, which has had its fair share of issues in the ski industry. Summit only got $40 million from this loan until there were conflicts over the details of the contract. The investors sued Powder for defaulting on the loan, and Powder countersued. They have also faced other lawsuits from investors over false promises, one of which has been settled, and one that is ongoing.
- Failure To Add A Board of Directors Until 2017: In a newsletter from today, Lila pointed out that for a couple of years after acquiring Powder Mountain, Summit didn’t add a board of directors. Board members from outside of Summit could have helped them navigate challenges. Elliott Bisnow admitted to Fortune that he wished that “we’d put a board together even sooner.”
- My Take-Other Utah Resorts Are Popular With Rich People: Creating a new ski resort hub for rich people is tough when you’re starting from scratch. For one, there’s Park City, which has multiple ski resorts, many restaurants, and fancy shops, has many well-off people decide to buy a second home there. Most recently, there’s the Wasatch Peaks Ranch, a private ski resort that has modern lifts and a developing real estate community. With Powder Mountain being on a remote access road, not every rich skier wants to live there.
I will say a few things to their defense. For one, their real estate development has been very modest. The maximum square footage for a single-family home is 4,500 square feet, or 5500 square feet if they want a garage and another living space in the basement. This is far from the McMansions that have become a symbol of excess in many skiing communities. Some rich residents have built homes here, including Reed Hastings from Netflix. This development has allowed Powder to have more overnight condominium lodging for guests, which was much needed.
Two lift-serviced terrain expansions have taken place over their time there, which added Mary’s and Village chairlifts and 1000 skiable acres. They limited the number of day tickets sold and season pass holders, creating a peaceful environment that has kept many powder stashes available for days after a storm. They’ve been able to create a more year-round product with the addition of a downhill mountain biking park, which opened last year. The issue has been with the real estate/village development, but the ski resort remains one of the best places to shred in the state of Utah.
Ultimately, Lila explains this whole situation more succinctly than I can: “This partially built-out, mostly stalled ski resort feels almost too on-the-nose as a metaphor—and as a cautionary tale. It’s a 9,000-foot monument to the hubris of Silicon Valley’s big ideas.” You can read the full feature here, along with this detailed list of the famous investors and homeowners that have been involved with the project.
