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Quintillion CEO’s Promise to Wire the Arctic Was $1B Scam
- investinme 7y agoI propose a new law: any sufficiently outrageous scam is indistinguishable from a unicorn This, Theranos
- Razengan 7y agoAn account created just to post that comment? Do you mean for it to be called the "Investinme" Law?
- jacknews 7y agoThere seem to have been quite a few high-profile outright tech frauds the last couple of years Quintillion Theranos UBeam etc
- lbstr_ftw 7y agoLesson learned: stay away from CEOs named Elizabeth.
- investinme 7y agoInteresting how these three all had a female founder/CEO, given how rare female founders are among big startups.
- ajiang 7y agoNot that interesting, just the result of a cherry picked list. https://www.cbinsights.com/research/biggest-startup-frauds/ https://www.cbinsights.com/research/biggest-startup-frauds/ Most are men. Not indicative of men, just that most VC-backed startup founders are men.
- jacknews 7y agoby outright tech fraud I mean that the tech itself is just not there Magic Leap should also perhaps be in the list, but that seems more a case of gross exaggeration than complete wishful thinking
- sp332 7y agoYeah, Magic Leap actually built a VR headset with two separate focal planes, which no one else has managed to ship. It might be wishful thinking but you can't do that without some serious tech chops.
- nikanj 7y agoDid Magic Leap manage to ship it?
- sp332 7y agoYeah, end of last year. https://www.theverge.com/2018/10/10/17960722/magic-leap-one-creator-edition-shipping-continuous-us https://www.theverge.com/2018/10/10/17960722/magic-leap-one-... You can apparently buy one at https://shop.magicleap.com/ https://shop.magicleap.com/
- jmull 7y agoBy that definition this company doesn't belong your list in the first place. edit to clarify: I mean Quintillion doesn't belong on the list.
- imglorp 7y agoThis may be the Glass Cliff: a tendency to appoint a female CEO to a sinking ship. https://www.fastcompany.com/90206067/what-is-the-glass-cliff-and-why-do-so-many-female-ceos-fall-off-it https://www.fastcompany.com/90206067/what-is-the-glass-cliff...
- TallGuyShort 7y agoAll 3 of those were founders, FYI, not that I agree with the female-fraud link.
- GhettoMaestro 7y agoArticles and memes like this are fucking annoying. Does the author think male CEOs aren’t fucked regularly as well?
- chrxr 7y agoThat's not the point of the glass cliff. The point is that women are more likely to be hired as CEOs when a company is in trouble than when a company is in good shape. It is specifically about the circumstances when a woman is more or less likely to be hired as a CEO.
- GhettoMaestro 7y agoSo the lesson here is don't accept a job that is destined for fail. I still fail to understand why it is a female-centric thing. Tons of guys have taken CEO jobs and gotten rick-rolled.
- lunchables 7y agoDidn't Holmes found the company?
- alasdair_ 7y ago>Interesting how these three all had a female founder/CEO, given how rare female founders are among big startups. https://xkcd.com/385/ https://xkcd.com/385/
- bpodgursky 7y agoAt risk of wading into a toxic swamp, I would interpret this more as "the hype around ambitious female founders makes it easier for a scam run by a woman to get media attention, prominent board members, and funding than an equivalent man" Not that women are any more likely to run a scam than men -- they just have had an easier time of it over the past 10 years. It's really interesting to look back at Elizabeth Holmes's media profile around 2014-2015. She was hyped as the next Steve Jobs, and not in a mocking way. The media, the tech industry, the country at large wanted a female founder to be the next tech titan, so they chose one. Unfortunately, it turned out to be vaporware. So I don't think there's much to read into here, other than selection bias from investors and the media attention. Lots of men run ambitious but failed startups or scams, but over the past decade, the women have had a better time getting attention. That will probably change as successful female founders becomes commonplace, not exceptional.
- Throway93894 7y agoI'm going to make a bet that the next one on the list will be infiBond. Israeli A.I. startup valued at something like 1.25B[1] but doesn't seem to have ever done anything. [1] https://sifted.eu/articles/infibond-investigation-israeli-startup/ https://sifted.eu/articles/infibond-investigation-israeli-st...
- WillPostForFood 7y agoThis wasn't a tech fraud like Theranos or Ubeam though. Quintillion did build a working fiber network. The CEO faked numbers to their investors, but they had a real working product, and the company is still in business providing internet access.
- NotSammyHagar 7y agoWe work, enron, endless examples. There seem to be a lot of male failures the last few years.
- puranjay 7y agoBadly managed, yes, but how is WeWork a fraud? They have a product that's well liked and used by thousands of people. They have real revenues and increasingly, assets they own. The founder did a lot of shady stuff, yes, but maligning an entire company with more than $2.5B in revenue as "fraud" is very harsh. $2.5B annual is higher revenue than the vast majority of businesses will see in their lifetime
- akiselev 7y ago> The founder did a lot of shady stuff, yes, but maligning an entire company with more than $2.5B in revenue as "fraud" is very harsh. $2.5B annual is higher revenue than the vast majority of businesses will see in their lifetime Using revenue as a measure of legitimacy doesn't make any sense. SoftBank has invested over $10 billion into WeWork since 2017. They'd have made more revenue if they sold $10 billion in $10 bills for $9 each.
- Amygaz 7y agoShould I be amazed at the lack of due diligence from investing firms, not just in this case, but generally? Or, maybe I shouldn’t be surprised, after all, this isn’t their money. If it sounds good it probably is. They only need to be right 10% of the time...
- hylaride 7y agoAt a startup I worked for, the founder once told me how surprisingly little due diligence was done for their series A. They showed the investors the product, explained the industry and their goals, signed some papers, and a week after the ink dried there was a wire for a few mil. I'm sure VC firms price in the risk of a few of their investments being incompetent/fraudulent (they can probably be written off as losses, too), but it's still one of those 'huh' moments. That being said, the scale of Quintillion, Theranos, etc should have had some more proper due diligence. Circular contracts should be a well understood red flag after Enron, etc.
- arethuza 7y agoThe only time I've been directly involved in that kind of scenario (as a co-founder during the first .com bubble) - there was some due diligence for the first round - but looking back it was almost comically superficial. Afterwards at subsequent rounds the amount of money grew stupendously but the due diligence disappeared completely - presumably because each of the myriad of investors assumed that somebody else was checking things.
- jandrese 7y agoDue diligence is like work. If these VCs are only putting a million bucks into something it probably doesn't even make sense to do more than a cursory look over of the company. Their time is too valuable to waste on that. Most of these investments are already assumed to be a total loss, they only do them because when they do land on a hit the returns can be astronomical.
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- areoform 7y agoIt is worrying that her actions might lead to blow back for female founders. A lot of the unicorn scams that have been discovered since 2015 were headed by women; Theranos, uBeam, and now Quintillion. WeWork is changing this, but these examples are objectively talked about more in the general ecosystem than all the other scams that have broken since 2015. - Hampton Creek was buying their merchandise to boost numbers and get better shelf space in stores. - Mozido raised $314M and the founder was indicted for fraud. - Not a startup, but Mark Rothenberg spent his LPs money on parties and sex instead of investments. - Bouxtie engaged in fraud to continue to get funding by fudging numbers. - Crescent Ridge Capital Partners was a ponzi scheme - WrkRiot forged wire transfers This list is long and illustrious, and only to grow. But will people just remember the few female founders who were scammers at the time? Will people forget the dozens of counter-examples? Even more importantly, what's going on in the minds of the traditional venture capitalists? Venture capital is more herd-like than anyone wants to admit. Will they remember these schemes and overfit their model? Will female founders find it harder to get funding in the future? --- There are already a few heavily downvoted comments on this thread harping on this "theme" https://news.ycombinator.com/item?id=21223462 https://news.ycombinator.com/item?id=21223462
- magashna 7y agoIt may be due to some of the media coverage for those companies led by women are "Wow! Billion dollar startup is led by a woman! Can you believe it!" so it's much easier to attack that point. It may not be their fault, but more the media looking for superheroines. There are already plenty of successful female business leaders. Look at IBM, PagerDuty, AMD. They probably don't get the coverage they deserve because they're not a supposed unicorn with some miracle elixir.
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- rchaud 7y agoI read a couple of articles on the case, and it doesn't seem like Pierce was the founder of Quintillion. She previously had a role as FCC advisor. She's a crook sure, but to think that this will have blowback on female founders is a bit of a stretch. They certainly face institutional barriers and negative stereotypes, but "more likely to commit fraud" isn't what VCs are usually thinking when they turn down female founders.
- golemotron 7y agoI've never heard of Quintillion but its name alone would make me suspicious.
- skybrian 7y agoIt sounds like a bunch of investors lost their money, but the undersea cable was built and some parts of Alaska got better Internet. As frauds go, this seems to have more to show for it than most?
- the_watcher 7y agoHad the same reaction. Pierce was more outright in her fraud than other CEOs, but the company was less fraudulent in terms of actually doing the thing they claimed to be doing.
- cortesoft 7y agoBecause it is illegal to forge signatures but is not illegal to make ludicrously optimistic promises about what you can accomplish.
- the_watcher 7y agoYes. That is correct. One is outright lying about facts critical to those making decisions to invest. The other, even if ludicrously optimistic, is not and relies on the listener to evaluate the facts backing said promises.
- the_watcher 7y ago> Much of Pierce’s behavior, though, wasn’t so different from that of other tech founders and CEOs promising financiers vast rewards right over the horizon. It seems pretty clear that her behavior was very different than any tech founder who declined to forge signatures on contracts.
- dmix 7y agoI also don't see much of a connection between hyped up "unicorns" and overtly defrauding multiple companies and investors through forged contracts. That's far worse than even the few non-software tech companies (Uber, Airbnb, maybe WeWork?) who skirted some grey areas disrupting entrenched markets. Even in biotech with Theranos that's extremely rare. Its just trendy to broadly attack SV these days.
- the_watcher 7y agoYea, it looks like this was an extremely clear, open-and-shut fraud case when it came to trial, and it was discovered fairly easily once any pressure was applied.
- Mathnerd314 7y agoI think he's saying that a casual visit to the office wouldn't have displayed anything incriminating, and the business plan was typical beyond the huge capital requirements. And startups are overly rosy about future revenue all the time. So there weren't a lot of "red flags" in the beginning, although he goes on to describe a lot of discrepancies later. Clearly most companies don't engage in fraud though, or at least they're better at not getting caught.
- ljw1001 7y agoYou wouldn't see anything like that at, say, Theranos, or (to a lesser degree) at WeWork, which was about to be a superhot IPO a few weeks ago and is now struggling to survive. Defrauding investors in an IPO is still defrauding investors.
- the_watcher 7y agoWhat's amazing is that this is both more obviously fraudulent behavior by the CEO of a (seemingly) less fraudulent company than Theranos. While Quintillion might not work, what they're doing is at least technically possible!
- the_watcher 7y agoI assume there are legal implications here, but I'm surprised that Quintillion hasn't tried to make the woman who "invested" $40,000 whole. $40K isn't a huge sum to pay for the positive PR. If the issue is that returning that money could set a precedent for other investors to try to pull their money out, could they issue her $40K in shares? Even at the highest price she could have been subject to, it would at least expose her to upside.
- ralph84 7y agoQuintillion is owned by a NYC private equity firm. When has private equity ever cared about PR? But I'm surprised the woman hasn't sued Quintillion to get the equity. I don't see how the company could argue the CEO wasn't acting on behalf of the company when the CEO took the money and said it was for 225 shares. It's not like this was some dodgy third party stock broker, it was the CEO.
- 0000011111 7y agoI spent a year teaching school in Kalaskage, AK. Our internet speed was that of 1994. Supper slow maybe 1mbps up and down. Imagine that being your norm and then going to fiber speed? The completion of this project has undoubtedly made a positive impact on the lives of the villagers in Barrow, AK.
- NeedMoreTea 7y agoYou have a very rosy view of 1994 internets. ;) By 94 work maybe had 128k, though I think it was still 64k. In 1992, work was very, very proud of having one of very few permanent hooks to the internet. 64k leased line that they paid around £1,000 a month for. I think that was on top of the Pipex peering connection. Can't remember how much Pipex charged. I remember being shown the box and blinkenlights at interview, which is why I remember early 90s internet speeds at all. They really were proud of this. :) At home I was probably on 9k6 or 14k4 dial up with £500 of US Robotics HST. 1994 was around the year, give or take, that 28k8 finally arrived, after a wait that had seemed like forever. Now you needed to shop for a new modem. :)
- rasz 7y agoT1 cost ~$10K in 1995 in NYC (@cafe had one).
- rdiddly 7y agoNobody wants to drop me a breadcrumb like "also known as Barrow" or "previously known as Barrow" up in here?
- neonate 7y agohttp://archive.is/CNKUY http://archive.is/CNKUY
- rasz 7y agoNo one told me "The Hummingbird Project" 2019 was a documentary.