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Theoretically, if he has fiduciary duty, he has to act in the best interest of his clients. I'm not sure if he has that duty (I've googled but can't find anythi

Theoretically, if he has fiduciary duty, he has to act in the best interest of his clients. I'm not sure if he has that duty (I've googled but can't find anything) but if he did they could argue leaving money in cash is clearly not what's best for investors.

blackflame7000 7y ago
Yea but investing in a startup is far from a sure thing. They could easily lose their money
- human20190310 7y ago
  It's possible that the best performing startup fund will be one that invests in nothing, collects a fee, and returns the rest of the money later.
  - themgt 7y ago
    It's possible the best performing knee surgeon will be the one that doesn't perform knee surgery, collects a fee, and returns your knee in the same condition it was in. Nonetheless, that would be fraud.
    - ukoki 7y ago
      > the best performing knee surgeon will be the one that doesn't perform knee surgery, collects a fee, and returns your knee in the same condition it was in. Why not? Eg: "Sorry sir, but as you are a weak/old/high-risk patient, knee surgery would be very dangerous — my advice is to stay in a wheelchair"
      - blackflame7000 7y ago
        This situation occurs fairly regularly with cancer when they find out it's inoperable once they open you up. You still gotta pay for it though.
    - Scoundreller 7y ago
      That’s called a consult fee! Or a salary.
    - mrnobody_67 7y ago
      The data on the ineffectiveness of common surgeries is overwhelming, yet they continue to be performed, because compensation is tied to it. The "Do something" syndrome is strong - https://fs.blog/2015/06/do-something-syndrome/ https://fs.blog/2015/06/do-something-syndrome/
      - goatinaboat 7y ago
        I think it was Taleb who said the best way to assassinate a public figure is to provide them with a personal physician
- EpicEng 7y ago
  But these clients have already expressed a desire to invest in startups. If your idea of working in their best interest is to "not invest in startups" then you shouldn't take the capital (and fee$) in the first place.
  - blackflame7000 7y ago
    I agree that if everyone is being ethical then that is the right thing to do. I'm just worried about the situation where a fiduciary might actually be doing what they think is best by waiting for a better opportunity and I'm not sure how you judge whether they are doing that criminally or sincerely.
    - EpicEng 7y ago
      I imagine the burden of proof would be pretty high. Like you said, it's hard to prove.
- magashna 7y ago
  They need to prove he was acting maliciously. These cases are hard to win because you can easily say you thought you were doing the right thing.
mywittyname 7y ago
I don't consider investments over cash to be clearly better. There is the idea of a "cash is king" economy, when investments are exceedingly cheap due to liquidity in the market. But to capitalize on these events, you need to have the cash on hand for it. Berkshire Hathaway is well known for sitting on mountains of cash if they don't have access to what they feel are good investments.
- pmart123 7y ago
  Isn’t he operating a VC fund? Shouldn’t he just be doing capital calls for the fund when needed versus sitting on cash typically?
- perl4ever 7y ago
  I've read recently that some if not all brokers are largely supported on the money they make on uninvested cash balances, so they actually would be better off if their customers didn't do anything.
AznHisoka 7y ago
What if the startup ecosystem took a downturn, and it lost 50% its total valuation? Would investors then have a problem with Mithril sitting on the money, doing nothing?
- wmf 7y ago
  Investments shouldn't be judged in hindsight, the ends don't justify the means, etc.
  - caymanjim 7y ago
    Hindsight is the only meaningful metric for investments. Was it a good bet or not? Full stop.
    - perl4ever 7y ago
      That's like saying the supreme court's verdict is the only metric for whether something is constitutional. If that's so, then where do they get their rulings from? You're implicitly denying the difference between correlation and causation.
Gibbon1 7y ago
> has fiduciary duty, he has to act in the best interest of his clients Reminds me of a friend who was sued in 2009 for parking a trust in CD's at three and a half percent.

blackflame7000 7y ago

Yea but investing in a startup is far from a sure thing. They could easily lose their money

human20190310 7y ago
It's possible that the best performing startup fund will be one that invests in nothing, collects a fee, and returns the rest of the money later.
- themgt 7y ago
  It's possible the best performing knee surgeon will be the one that doesn't perform knee surgery, collects a fee, and returns your knee in the same condition it was in. Nonetheless, that would be fraud.
  - ukoki 7y ago
    > the best performing knee surgeon will be the one that doesn't perform knee surgery, collects a fee, and returns your knee in the same condition it was in. Why not? Eg: "Sorry sir, but as you are a weak/old/high-risk patient, knee surgery would be very dangerous — my advice is to stay in a wheelchair"
    - blackflame7000 7y ago
      This situation occurs fairly regularly with cancer when they find out it's inoperable once they open you up. You still gotta pay for it though.
  - Scoundreller 7y ago
    That’s called a consult fee! Or a salary.
  - mrnobody_67 7y ago
    The data on the ineffectiveness of common surgeries is overwhelming, yet they continue to be performed, because compensation is tied to it. The "Do something" syndrome is strong - https://fs.blog/2015/06/do-something-syndrome/ https://fs.blog/2015/06/do-something-syndrome/
    - goatinaboat 7y ago
      I think it was Taleb who said the best way to assassinate a public figure is to provide them with a personal physician
EpicEng 7y ago
But these clients have already expressed a desire to invest in startups. If your idea of working in their best interest is to "not invest in startups" then you shouldn't take the capital (and fee$) in the first place.
- blackflame7000 7y ago
  I agree that if everyone is being ethical then that is the right thing to do. I'm just worried about the situation where a fiduciary might actually be doing what they think is best by waiting for a better opportunity and I'm not sure how you judge whether they are doing that criminally or sincerely.
  - EpicEng 7y ago
    I imagine the burden of proof would be pretty high. Like you said, it's hard to prove.
magashna 7y ago
They need to prove he was acting maliciously. These cases are hard to win because you can easily say you thought you were doing the right thing.

mywittyname 7y ago

I don't consider investments over cash to be clearly better. There is the idea of a "cash is king" economy, when investments are exceedingly cheap due to liquidity in the market. But to capitalize on these events, you need to have the cash on hand for it. Berkshire Hathaway is well known for sitting on mountains of cash if they don't have access to what they feel are good investments.

pmart123 7y ago
Isn’t he operating a VC fund? Shouldn’t he just be doing capital calls for the fund when needed versus sitting on cash typically?
perl4ever 7y ago
I've read recently that some if not all brokers are largely supported on the money they make on uninvested cash balances, so they actually would be better off if their customers didn't do anything.

AznHisoka 7y ago

What if the startup ecosystem took a downturn, and it lost 50% its total valuation? Would investors then have a problem with Mithril sitting on the money, doing nothing?

wmf 7y ago
Investments shouldn't be judged in hindsight, the ends don't justify the means, etc.
- caymanjim 7y ago
  Hindsight is the only meaningful metric for investments. Was it a good bet or not? Full stop.
  - perl4ever 7y ago
    That's like saying the supreme court's verdict is the only metric for whether something is constitutional. If that's so, then where do they get their rulings from? You're implicitly denying the difference between correlation and causation.

Gibbon1 7y ago

> has fiduciary duty, he has to act in the best interest of his clients Reminds me of a friend who was sued in 2009 for parking a trust in CD's at three and a half percent.