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I’d argue that it was largely dumb money that was scammed. Not Silicon Valley. Those so-called marquee investors named in the article were not even VCs. In fact

I’d argue that it was largely dumb money that was scammed. Not Silicon Valley. Those so-called marquee investors named in the article were not even VCs. In fact you see a lot of this in enormous funding rounds. You didn’t see the premier firms in there like Sequoia, Khosla, Founders Fund, a16z, Benchmark, ... DFJ was the only notable firm there and it looks like they came in early with Draper seeding it when it was still idea-phase. There are a million ways you could be screwed by an entrepreneur so due diligence is really about finding the 3-5 questions that will make or break a business. In the case of Theranos, the whole idea relied on an assumption that you could massively reduce the amount of blood needed to do an analysis. So that’s where your due diligence starts. But after 20 minutes of desk research you’ll find that small blood samples intrinsically heterogenous for many tests. VCs are trained and paid to ask the right questions. This was dumb money plain and simple.

dsfyu404ed 8y ago
>I’d argue that it was largely dumb money that was scammed. Not Silicon Valley. Bubbles have normal air in them. Economic bubbles include plenty of normal economic activity that has not much to do with the fact that it's a bubble. I would make the case that calling SV and "dumb VC money" one in the same is perfectly appropriate in the context of an article written for a general audience.
- abritinthebay 8y ago
  > I would make the case that calling SV and "dumb VC money" one in the same is perfectly appropriate in the context of an article written for a general audience Please do make that case, because its much easier to make the case that it's deliberately misleading to get clicks and make a headline than actually informative or accurate. The general audience is quite capable of understanding "dumb rich people" vs "experienced venture capitalists".
  - mcguire 8y ago
    "How did they get scammed?" "Because they're dumb rich people." "How do you know they're dumb rich people?" "Because they got scammed."
    - rdlecler1 8y ago
      No but thanks for putting words in my mouth. They were dumb because they clearly didn’t even bother to do basic due diligence. The fact that there were no other marquee VCs in on a $10b valuation should have raised some flags. It did not. And they weren’t taking a $100k punt. These were investments of tens of millions of dollars so you think that there would have been some basic technical due diligence. This is what I call dumb money. When a VC sees a huge valuation and the only other investors on the captable beyond the Seed/A rounds are celebrities, pension funds, SWFs, family offices and hedge funds they say: “we’re worried that this is the next theranos”
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IkmoIkmo 8y ago
DFJ defended them to the very end though, even today I think. Hard to make the claim they fell for the Theranos lies when the project had nothing to audit or do due diligence on, because they're still falling for them now.
- rdlecler1 8y ago
  Draper defended. He’s not DFJ and has left the firm.

dsfyu404ed 8y ago

>I’d argue that it was largely dumb money that was scammed. Not Silicon Valley. Bubbles have normal air in them. Economic bubbles include plenty of normal economic activity that has not much to do with the fact that it's a bubble. I would make the case that calling SV and "dumb VC money" one in the same is perfectly appropriate in the context of an article written for a general audience.

abritinthebay 8y ago
> I would make the case that calling SV and "dumb VC money" one in the same is perfectly appropriate in the context of an article written for a general audience Please do make that case, because its much easier to make the case that it's deliberately misleading to get clicks and make a headline than actually informative or accurate. The general audience is quite capable of understanding "dumb rich people" vs "experienced venture capitalists".
- mcguire 8y ago
  "How did they get scammed?" "Because they're dumb rich people." "How do you know they're dumb rich people?" "Because they got scammed."
  - rdlecler1 8y ago
    No but thanks for putting words in my mouth. They were dumb because they clearly didn’t even bother to do basic due diligence. The fact that there were no other marquee VCs in on a $10b valuation should have raised some flags. It did not. And they weren’t taking a $100k punt. These were investments of tens of millions of dollars so you think that there would have been some basic technical due diligence. This is what I call dumb money. When a VC sees a huge valuation and the only other investors on the captable beyond the Seed/A rounds are celebrities, pension funds, SWFs, family offices and hedge funds they say: “we’re worried that this is the next theranos”

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IkmoIkmo 8y ago

DFJ defended them to the very end though, even today I think. Hard to make the claim they fell for the Theranos lies when the project had nothing to audit or do due diligence on, because they're still falling for them now.

rdlecler1 8y ago
Draper defended. He’s not DFJ and has left the firm.