We asked members of the local business community what lessons could be taken away from the collapse of Bitwise Industries. Here's what they said. Photo illustration by Cynthia Padilla

After all the lawsuits have been filed, and Wednesday’s anticipated bankruptcy filing has run through the courts and (hopefully) all the employees have been paid and employed once again, what is left to learn from the quick and dramatic collapse of Fresno-based Bitwise Industries?

The loss of Bitwise Industries has touched more than the 600 employees — per the company’s delayed layoff notice delivered last week. Some 367 of those employees are in the Fresno area, with the remainder spread throughout California and several other states. The community has rallied to find ways to help these employees as well as absorb lessons that could prevent such a catastrophe in the future.

Here are some of the suggested lessons that business owners and employers could learn from the story of Bitwise Industries, as told through members of the community:

Think twice about master tenants

Commercial real estate broker Veronica Stumpf of Stumpf & Co. Real Estate in Fresno weighed in from a commercial real estate perspective — specifically about Bitwise’s status as a master tenant at the State Center Warehouse building in Downtown Fresno. The arrangement later devolved into a breach of contract lawsuit by the property owner.

“Even though it’s easier to lease an entire building to one tenant (or master tenant in Bitwise’s case), Bitwise’s shutdown is a valuable reminder for a landlord to diversify their tenant mix at their property,” said Stumpf. “No matter how strong a tenant seems, things beyond a landlord’s control can happen.”

Stumpf said this doesn’t just happen to businesses like Bitwise — it can be seen when a government agency decides to relocate and leaves a large vacancy in a specific area or building.

“We also see this when a large department store moves out of a small shopping center,” Stumpf said.

Outside funding traps

Eric Rawn, founder and president of Fresno technology firm BCT Consulting, shared some thoughts about the pitfalls of outside funding such as venture capital and private equity. Bitwise reportedly raised more than $150 million in outside capital, leading many to speculate on where that money went.

Rawn offers his advice from experience, acquiring, purchasing, selling and managing more than a dozen different companies in various industries over the last 30 years. He said his guiding light has been to stick to best business practices and place the highest value on integrity.

“Shareholders and venture capital funding often comes with high expectations and demands for rapid scaling, which we saw with Bitwise as they grew throughout the country,” Rawn said. “That often leads to excessive spending, inefficient operations, and a lack of focus on core business fundamentals. We have seen all of those take place over the last few years as the short-term profit was prioritized over the long-term sustainability.”

He believes that, over time, the truth will come out about how much information the Bitwise board of directors had about the company’s operations.

“The absence of proper management and oversight mechanisms can result in a lack of control over critical aspects of the business and potential financial instability,” he added.

Lessons from the political realm

A pair of voices from the Fresno County Board of Supervisors carries the weight of experience in business. Supervisors Steve Brandau and Sal Quintero shared their perspectives as current and former business owners.

Brandau shared two takeaways — one related to a 2016 letter from Bitwise with a goal of helping create 250,000 tech jobs in Fresno, and the other related to the company’s high-profile efforts to promote diversity, equity and inclusion.

Brandau started his company, Blue Ribbon Carpet Care, in 1995, serving customers from Visalia to Merced.

“When someone says they are going to add 250,000 jobs in downtown Fresno … run screaming,” said Brandau.

He also added, “Go woke, Go broke.”

In 1974, Quintero partnered with his brother John in owning commercial property and apartments. In 1984, Quintero started his marketing consulting firm, focusing on nonprofit health centers, ballot initiatives and political campaigns.

As a former business owner, Quintero shared two famous quotes that he continues to follow.

President Ronald Reagan famously said “trust but verify” when it came to nuclear disarmament during the Cold War Era.

This quote reminds Quintero to seek the facts before settling on a business decision.

The other quote is from the movie “Jerry Maguire” — “show me the money.”

Stick to the plan

Marcos Cortes, regional leader-recruiter with Primerica Life Insurance, was on hand as an employer at the job fair for former Bitwise employees hosted by the City of Fresno on June 16.

He said finances likely played a large role in the company’s sudden collapse.

“Don’t do more than you can actually handle financially,” he said. “If you know your budget is capped at a certain rate, I wouldn’t necessarily go above and beyond that budget.”

Cortes said that despite the way things have appeared to end for Bitwise, their workforce was and continues to be a boon to the Valley, praising their skills and training in a variety of fields.

Communicate your role

One common refrain heard about Bitwise after its collapse was that people simply didn’t know what the company did. Though it had high visibility and name recognition, its unique mix of real estate venture, coding courses, web development and other services was hard to grasp for some folks.

Also at the job fair was Steven Ray, information systems manager at Electric Motor Shop in Fresno. He said that despite having such a large footprint in the Valley, he was uncertain about what Bitwise actually specialized in.

“Honestly, I don’t know what business model they were in,” he said. “They had multiple companies and things they were involved in and really didn’t know the true business model that they were doing.”

Ray said that he believes they spread themselves too thin into too many different markets at the same time.