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I have the same question. My best guess is that these VCs need to deploy so much capital that they don't really do due diligence, instead they go by "founder v
by huevosabio 4y ago
I have the same question.
My best guess is that these VCs need to deploy so much capital that they don't really do due diligence, instead they go by "founder vibes" and "vision", a watered down version of "invest in the team, not the product". Sequoia, SoftBank, a16z all seem to be guilty of this.
Anecdotally, Chamath Palihapitiya, in the recent All-in Podcast [0], said that they met with SBF and as a condition to invest they wanted to get rid of dual class voting shares (or something like that) and a board. FTX leadership (not necessarily SBF) replied with "fuck you".
So I guess you have some VCs trying to do the right thing, but if founders can get capital with no strings attach elsewhere, then your ability to deploy that capital is hampered. Essentially, until recently there were was more capital than founders, so founders could just do whatever (and SBF did).
I would expect that this changes a bit with raising interest rates and a tech downturn, but a16z's $350M investment in Adam Neumann's newest Thing makes me think that we are still flush with money ready to be thrown at anyone that has the connections to get a coffee chat in Sand Hill Road.
[0] https://open.spotify.com/episode/3CKYt4mKxndPkEfAvc7SM0?si=eb3387650ff943e7 https://open.spotify.com/episode/3CKYt4mKxndPkEfAvc7SM0?si=e...
- itsoktocry 4y ago>but a16z's $350M investment in Adam Neumann's newest Thing makes me think that we are still flush with money ready to be thrown at anyone that has the connections to get a coffee chat in Sand Hill Road. They have loose morals. Kevin O'Leary, of Dragon's Den fame, who is now a creditor in the FTX bankruptcy (ie wiped out) recently said in an interview that he would invest with SBF again. The guy literally had money stolen from him. How do you even explain that?
- MichaelCollins 4y agoTim Draper still supports Elizabeth Holmes: https://fortune.com/2022/01/05/venture-capital-tim-draper-elizabeth-holmes-guilty-fraud-theranos/ https://fortune.com/2022/01/05/venture-capital-tim-draper-el... I don't know how. Maybe he's just fucking stupid, or too prideful to admit he was wrong.
- kevinventullo 4y agoIt may be less about pride and and more about reputation management. It’s the same reason Trump never admits he’s wrong; it’s simply not strategically beneficial to do so.
- jalapenos 4y agoI'd say Trump is never wrong because he's a fairly overt narcissist, and never being wrong goes with that territory. That may also be why the above figures are like that too.
- xdavidliu 4y agoits also possible that ego is simply a “Kahneman type 2 brain” manifestation of unconscious reputation management, kinda like how instinctively shrinking away from large scary animals is unconscious life expectancy preservation
- spaceman_2020 4y agoI'm not entirely familiar with Theranos, but as far as I know, she only defrauded VCs - entities that are designed to take on risk (which can include Theranos-like fraud). FTX defrauded average people, many of whom were lured by the big name ads, the friendships with Tom Brady, the marquee investors list. Supporting that is deeply immoral.
- Regnore 4y agoHolmes defrauded many average people who thought they were getting medical tests with accurate results when in fact they were not.
- kikokikokiko 4y agoHolmes "blood tests" were giving people useless results. This is LITERALLY putting lives in danger. She probably is guilty of the deaths of some unknown people, we'll never know. Holmes is just as sociopathic and despiclable as SBF, if not worse.
- subsaharancoder 4y agoChamath Palihapitiya has an uncanny ability of appearing when others are left holding the turd bags and then waxing some insight of how they foresaw something. All he cares about is being in the news cycle and making money, he did the same thing with the GameStop short squeeze..