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I worked for a fund that lost a lot of money once. It was all legit, nothing shady, just dumb investments gone wrong. We phoned one of these well known investo

I worked for a fund that lost a lot of money once. It was all legit, nothing shady, just dumb investments gone wrong. We phoned one of these well known investors to tell them what had happened. By that of course I mean the person in charge of the little piece of the massive fund that was allocated to us. On the call the guy goes "when I tell my boss in 5 minutes, I'm going to get fired for investing in you". He wasn't wrong. The thing that shocks me is the due diligence. There's a heck of a lot of things you have to do to get Ontario to invest in your fund. All sorts of documents, double signature statements from banks, meetings where you wear a suit. We'd have lost the investments if we were playing video games, there's no doubt about that. Maybe culture changed but it seems really odd, because part of due diligence is qualitative: does this team seem like serious people?

CPLX 4y ago
It’s because the Sequoia investors and funds and VCs were applying a pattern that actually sort of works for software onto a financial services company. If you’re building consumer facing software like a social network or app, and you have massive wild growth, you have a money printing machine in progress. It’s pretty straightforward to get there with a seed of blind luck and some sweaty immature skilled tech guys from top schools who have literally no fucking idea how to actually run a company. Everyone has seen that before. It works out. You invest the money they use it to hire people who know how to run a business and you win. You have no internal controls or systems for awhile and some accounts get nuked and there’s a breach or two and it doesn’t matter it’s a photo sharing website. Then you apply that logic to healthcare or financial services and they make a Netflix mini series about just how much of a fucking moron yoi were for not understanding those are fundamentally different business models.

CPLX 4y ago

It’s because the Sequoia investors and funds and VCs were applying a pattern that actually sort of works for software onto a financial services company. If you’re building consumer facing software like a social network or app, and you have massive wild growth, you have a money printing machine in progress. It’s pretty straightforward to get there with a seed of blind luck and some sweaty immature skilled tech guys from top schools who have literally no fucking idea how to actually run a company. Everyone has seen that before. It works out. You invest the money they use it to hire people who know how to run a business and you win. You have no internal controls or systems for awhile and some accounts get nuked and there’s a breach or two and it doesn’t matter it’s a photo sharing website. Then you apply that logic to healthcare or financial services and they make a Netflix mini series about just how much of a fucking moron yoi were for not understanding those are fundamentally different business models.