That was the question bouncing inside my head when I was reading about all those VCs that had to mark down their FTX investment because their teams made of dozens of MBAs collectively earning 9 figures forgot step 0 of the process: due dilligence. Seriously, how have I not landed a VC job already? I am stupid too! I'd fit right in. I'd be happy to bring into the investment committee a start-up from a guy who doesn't shower and won't show me his books. Sounds like the life.
But being serious now, why? Looking back (and even currently) at SBF it is clear that the kid is some kind of psychopath who thought that ALL of his investors were stupid. Of course, now we know that he was 100% right, but you should not treat people like that! You are supposed to pretend like they are not. But no, he was completely open about how much smarter he was than anyone else, specially his own investors. And yet they all invested in him. Theranos was exactly the same story. But here's a fun one: recently I had a flashback from that Facebook movie from many years ago. In that movie there was a scene where after Facebook got some initial success the Zucc went into a meeting with a bunch of suits and just started shitting on them. Is this some kind of boomer fetish? Seriously, are boomers getting off from having younger founders shit on them? Who knows, maybe this is what was going on at Epstein island all along. Good ol' Jeffrey would fly in Mark Zuckerberg and Jack Dorsey so that they could piss into the mouths of the wealthy elite which would, of course, immediately make them orgasm.
Following up this thought the other day I had an idea: why is it that investors don't just take these VC ideas and execute it themselves with an actual management team? And then I realized I am late to the party! That's exactly what TikTok did. When TikTok was originally launched its founder was over 30 already. He took Instagram (which is owned by a manchild), hired a bunch of cheap indian and chinese programmers to copy it exactly for like 5$, hired 2 product managers from California to tweak the product into a quicker experience, and then they took away 50% of Zucc's net worth. It is as simple as that.
Looking at the downfall of FTX, Theranos and even Facebook's recent demise, it is clear that these founder kids are only good at coming up with ideas. Facebook did succeed but it only did so when interest rates were 0% and there was virtually no competition at all. Now Zuckerberg is older but his only business experience was during these 0% interest rates times so it is likely that he will fail soon. Now, thinking it through, just how many psychopathic zoomer tech kids are there out in the world right now with a business idea? Probably hundreds of thousands! That means that it is pretty much guaranteed that at least one of them will have a non-stupid idea. Not because they are clever, but because there are only so many BAD ideas out there. Some of them get good ideas by mistake! Now, take FTX, and give it to a guy like the TikTok guy. Someone in his 30s or 40s which is old enough to have already gained some real experience, but also young enough to be very ambitious. And then make billions of dollars. And then hire me and give me some stock options.
It's posts like this that make me realize that you don't have to be intelligent or have EQ to get a job in finance.
I learned that when i joined WSO. It's how I knew i had a shot.
Feel like I was reading some sort of manifesto.
I think people fell for the “disruptor visionary” type and threw ez money at longshot ideas. It broadly worked for a long time so people kept doing it. It’s very easy to see in hindsight that the two most high profile startups were fraudulent but to see that and predict it correctly at the time is very hard.
It’s funny how there are multiple top VC firms that got the short end of the stick on FTX, WeWork and the likes. You’d think because you have e.g both a16z and USV as investors you’ll have double the diligence so the risk of it blowing up is lower. But I suppose the groupthink symptom is too strong even among these self-proclaimed “free thinkers” VCs. When other investors see Sequoia in the funding round they probably assume everything is fine and just sign the term sheet.
Simple, hubris. These VCs are all “brilliant”, they understand technology, therefore even if the product is far away from their domain expertise they still think they know everything. Never mind that the whole point of crypto is self custody.
That and also, the stereotype is that old people are bad with technology. If a 55 year old pitched FTX to some VC, they'd probably tell him to get lost.
It’s patently bizarre, I did a summer a long time ago at a MM boutique and every founder had >10 years experience prior to starting their business. Having experience generally helps you have an understanding of what does and doesn’t work, these founders usually have more to lose since they’ve presumably bought a home, saved some money and are generally more serious.
Seems you don't have any understanding of what VCs are looking for. Disruptive thinking/technology/companies are boom or bust but that one that hits can make your whole fund. Also, Zuckerberg built a company that IPO'd at a $80B valuation and currently has a $300B market cap. It was the most successful outcome of all time for numerous VCs who invested in it. I'm not sure what metrics you're using for success/failure but it's pretty tough to put Facebook/Meta in anything other than the extreme success category...
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