4 ms·

> Taking the money of some clueless holder of money - optimistically calling themselves as investors, never as suckers for sure - and fraud away. Generally, in

> Taking the money of some clueless holder of money - optimistically calling themselves as investors, never as suckers for sure - and fraud away. Generally, investors in early-ish-stage startups, that is those which are most likely to unexpectedly implode, scattering office furniture all over the place, know very well what they're getting into; they're specialist VCs who invest in, say, 50 startups in the hope that two or three will be worth something. Though, the nature of the game is that sometimes, one of these will have a truly massive breakout success, by accident, and it will totally screw up their view of risk from then on, leading them to put vast amounts of money into things which could not possibly work. Looking at you, Softbank.

mihaaly 2y ago
Right. So it sounds like rolling the dice with unknown numbers (both negatives and gigantic ones) on the faces as many times as the vallet bears in the hope of a lucky jackpot kind of unsophisticated cluelessnes to me then. National lottery for the wealthy. Likely this is not their money, and not hard earn money then but some easy come easy go furtune perhaps? Otherwise I'd expect a bit more cautious sophistication arond wealth generated by an intelligent body of people rather than the '2-3 out of 50' kind of strategy those VC specialists represent. Success is a conscious journey for only those eventually succeed and always retrospectively - to serv as a sellable recipe then for the hungry aspirings seeking foolproof methods - so a lot of luck is involved in the birth of great things, any great things, but come on! This level of fortuitous attitude is a crime, huge distortion, misuse, and disrespect of the funds representing the value created by someone else elsewhere. Is this all there is about VC professionals? This apparently open secret of lavish games, seemingly by overgrown greedy children whose talent is in puffery?
- fragmede 2y ago
  There's a lot of due diligence and background checks and other things that happen, that this framing glosses over, but given due diligence let FTX and Theranos through, it's easy to see why some would choose to see it that way. Still, thats just how the numbers work out. If you have $1,000,000 to blow, and you invest $100,000 at a time, and one pays off 100x, you're up $9 million. But if they all fail you're down to zero. If they all hit 100x, you'd be up $100 million! So there is actually a lot of effort put in to try and only pick only the winners. It's just the fact of the matter is that there's just so much luck involved, on top of being good at business and sales and product development, that, as an investor, there's no such thing as a sure bet.
  - rsynnott 2y ago
    Theranos in particular didn't have many _proper_ VCs involved; it was a lot of, essentially, individual dumb rich people (and/or their family offices). IIRC a proper VC turned them down at some point because they couldn't produce audited accounts. At all. Not even from a dodgy auditor. It was a weirdly amateur fraud, when you look at it; an awful lot of it came down to "trust me, bro". FTX was a far more professional fraud, granted.
renewiltord 2y ago
Haha of course they know what they're doing. Their money is from the California pension funds. But they have returned well. So no hate.
- Apocryphon 2y ago
  I wonder how well CDOs performed for pensions before the bottom dropped.
  - renewiltord 2y ago
    They did well but that loss was bad because of knock-on effects to the market. CalPERS lost some half of its value back then. But exposure to VC is very small (1-2% of fund size). They've marked down a lot of investments by more than the GFC losses but it barely affects CalPERS because <15% is in private markets and a small fraction of that is in venture. That fund alone is over half a trillion so that's still a lot of money to allocate.

mihaaly 2y ago

Right. So it sounds like rolling the dice with unknown numbers (both negatives and gigantic ones) on the faces as many times as the vallet bears in the hope of a lucky jackpot kind of unsophisticated cluelessnes to me then. National lottery for the wealthy. Likely this is not their money, and not hard earn money then but some easy come easy go furtune perhaps? Otherwise I'd expect a bit more cautious sophistication arond wealth generated by an intelligent body of people rather than the '2-3 out of 50' kind of strategy those VC specialists represent. Success is a conscious journey for only those eventually succeed and always retrospectively - to serv as a sellable recipe then for the hungry aspirings seeking foolproof methods - so a lot of luck is involved in the birth of great things, any great things, but come on! This level of fortuitous attitude is a crime, huge distortion, misuse, and disrespect of the funds representing the value created by someone else elsewhere. Is this all there is about VC professionals? This apparently open secret of lavish games, seemingly by overgrown greedy children whose talent is in puffery?

fragmede 2y ago
There's a lot of due diligence and background checks and other things that happen, that this framing glosses over, but given due diligence let FTX and Theranos through, it's easy to see why some would choose to see it that way. Still, thats just how the numbers work out. If you have $1,000,000 to blow, and you invest $100,000 at a time, and one pays off 100x, you're up $9 million. But if they all fail you're down to zero. If they all hit 100x, you'd be up $100 million! So there is actually a lot of effort put in to try and only pick only the winners. It's just the fact of the matter is that there's just so much luck involved, on top of being good at business and sales and product development, that, as an investor, there's no such thing as a sure bet.
- rsynnott 2y ago
  Theranos in particular didn't have many _proper_ VCs involved; it was a lot of, essentially, individual dumb rich people (and/or their family offices). IIRC a proper VC turned them down at some point because they couldn't produce audited accounts. At all. Not even from a dodgy auditor. It was a weirdly amateur fraud, when you look at it; an awful lot of it came down to "trust me, bro". FTX was a far more professional fraud, granted.

renewiltord 2y ago

Haha of course they know what they're doing. Their money is from the California pension funds. But they have returned well. So no hate.

Apocryphon 2y ago
I wonder how well CDOs performed for pensions before the bottom dropped.
- renewiltord 2y ago
  They did well but that loss was bad because of knock-on effects to the market. CalPERS lost some half of its value back then. But exposure to VC is very small (1-2% of fund size). They've marked down a lot of investments by more than the GFC losses but it barely affects CalPERS because <15% is in private markets and a small fraction of that is in venture. That fund alone is over half a trillion so that's still a lot of money to allocate.