4 ms·

You've spot on described a startup I worked for. It was a recruitment startup, so of course they decided to replace recruiters with "AI". We weren't allowed to

You've spot on described a startup I worked for. It was a recruitment startup, so of course they decided to replace recruiters with "AI". We weren't allowed to call them recruiters anymore, but 'customer service', even though the customers were the people they were recruiting. The pitch to investors was that we're 80% there, even though the reality of the 80% was a manual SQL query that I wrote with some weights for certain columns. The end result was a system that was built with higher assumptions than the current state of things, thus for example a non-working filter was not considered important because in the future, filters will be auto-applied by "the AI"; also, a workforce of humans that were perceived as being almost replaced, so the value attributed to them by the leadership was of course abysmal. When I called quits I've been told that startups are not for me and they will be replacing me with an AI. The reality of the AI replacement is a team of developers barely keeping the system up, which maybe is what you'd expect for $500 for 5 people for a month. One has to wonder where the million invested in them is going.

jacquesm 5y ago
That's why you do tech DD as an investor. Hopefully. Some nuance: not all of these are scams in the sense that the people running those companies are aware of the fact that what they are doing is essentially fraud, they believe their own bullshit. And then there are plenty that definitely know that what they are doing is fraud.
- ThalesX 5y ago
  Heh, I'm pretty sure these people were gaslighted by 'external consultants'. Whenever someone internal would mention an obstacle in our way, instead of trying to understand and solve it, they'd go and pay a lot of money to an external consultant that would ... in all honesty, motivate them that it's not a problem.
  - jacquesm 5y ago
    That sucks even more, but it does put some question marks next to the 'gaslighting' after all, if all you are looking for is opinions that agree with your stated business goals then you carry part of the responsibility. As one of those external consultants I know how hard it is to get your bills paid when your opinion does not parallel that of the management, fortunately I'm not in a position where I would let that affect me (and I tend to demand payment up front for cases where I suspect this may be a problem ;) ).
ClumsyPilot 5y ago
I was shocked myself at the degree of wishfull thinking / deception / smoke and mirrors consodered acceptable in startup ecosystem. Often the only thing that separates startup from fraud is that the founders believe in what they are selling. How does one determine what is true belief and what is an act?
- jacquesm 5y ago
  Fake it until you make it is acceptable in terms of marketing or sales but I don't think it should apply to the tech powering your business, you can't fake that. But you can fake an active community (Reddit, HN) for a while until it takes off, and you probably could fake a classifier that you know you will be able to build once you have access to a particular training set given reasonable assumptions about failure rates. But that would be a borderline case: after all, you may never get that access. > Often the only thing that separates startup from fraud is that the founders believe in what they are selling. Unfortunately true. > How does one determine what is true belief and what is an act? You can usually tell once you point out that the technology isn't there and likely will not be there for the foreseeable future. The frauds press on, threaten lawsuits and move from one investor to another until one bites, the non-frauds pivot or give up. Personally I think that anything offered to customers should do what it says on the tin and if it doesn't then it might as well not be there, what the future will bring and when it will bring is anybody's guess so making definitive statements to that effect is not something that will make you friends during a due diligence. What is more surprising is that after many 100's of these borderline scams and outright scams that there are still investors that are willing to plunk down ridiculous sums of money because 'it would be so nice if the story were true'. I've had a couple of cases where I was pretty sure the start-up people knew exactly what they were doing and one (fairly famous) case where I will never know whether the founder knew that he was defrauding people or whether he truly believed that success was just around the corner. He died one day before making a big and irreversible step, there are rumors that the death wasn't an accident but no autopsy was ever performed so it will remain a mystery. https://en.wikipedia.org/wiki/Sloot_Digital_Coding_System https://en.wikipedia.org/wiki/Sloot_Digital_Coding_System For anybody with even a passing familiarity with data compression and the practical limits thereof the product is clearly an impossibility, and the demos they gave were fairly obviously rigged. Having it under 'lost inventions' in Wikipedia, even under 'questionable examples' is giving it more credit than it deserves.

jacquesm 5y ago

That's why you do tech DD as an investor. Hopefully. Some nuance: not all of these are scams in the sense that the people running those companies are aware of the fact that what they are doing is essentially fraud, they believe their own bullshit. And then there are plenty that definitely know that what they are doing is fraud.

ThalesX 5y ago
Heh, I'm pretty sure these people were gaslighted by 'external consultants'. Whenever someone internal would mention an obstacle in our way, instead of trying to understand and solve it, they'd go and pay a lot of money to an external consultant that would ... in all honesty, motivate them that it's not a problem.
- jacquesm 5y ago
  That sucks even more, but it does put some question marks next to the 'gaslighting' after all, if all you are looking for is opinions that agree with your stated business goals then you carry part of the responsibility. As one of those external consultants I know how hard it is to get your bills paid when your opinion does not parallel that of the management, fortunately I'm not in a position where I would let that affect me (and I tend to demand payment up front for cases where I suspect this may be a problem ;) ).

ClumsyPilot 5y ago

I was shocked myself at the degree of wishfull thinking / deception / smoke and mirrors consodered acceptable in startup ecosystem. Often the only thing that separates startup from fraud is that the founders believe in what they are selling. How does one determine what is true belief and what is an act?

jacquesm 5y ago
Fake it until you make it is acceptable in terms of marketing or sales but I don't think it should apply to the tech powering your business, you can't fake that. But you can fake an active community (Reddit, HN) for a while until it takes off, and you probably could fake a classifier that you know you will be able to build once you have access to a particular training set given reasonable assumptions about failure rates. But that would be a borderline case: after all, you may never get that access. > Often the only thing that separates startup from fraud is that the founders believe in what they are selling. Unfortunately true. > How does one determine what is true belief and what is an act? You can usually tell once you point out that the technology isn't there and likely will not be there for the foreseeable future. The frauds press on, threaten lawsuits and move from one investor to another until one bites, the non-frauds pivot or give up. Personally I think that anything offered to customers should do what it says on the tin and if it doesn't then it might as well not be there, what the future will bring and when it will bring is anybody's guess so making definitive statements to that effect is not something that will make you friends during a due diligence. What is more surprising is that after many 100's of these borderline scams and outright scams that there are still investors that are willing to plunk down ridiculous sums of money because 'it would be so nice if the story were true'. I've had a couple of cases where I was pretty sure the start-up people knew exactly what they were doing and one (fairly famous) case where I will never know whether the founder knew that he was defrauding people or whether he truly believed that success was just around the corner. He died one day before making a big and irreversible step, there are rumors that the death wasn't an accident but no autopsy was ever performed so it will remain a mystery. https://en.wikipedia.org/wiki/Sloot_Digital_Coding_System https://en.wikipedia.org/wiki/Sloot_Digital_Coding_System For anybody with even a passing familiarity with data compression and the practical limits thereof the product is clearly an impossibility, and the demos they gave were fairly obviously rigged. Having it under 'lost inventions' in Wikipedia, even under 'questionable examples' is giving it more credit than it deserves.