While it's true that VCs are acting mostly based on FOMO and herd mentality, there's also another incentive at play here: Tokens. Crypto VCs get paid in tokens, and thus they have the additional incentive to create as much fluff PR and hype as they possible can to drive up the token price.
While this is true for traditional startups as well (good PR helps), the cause-effect relationship is much more obvious for tokens because you don't need to have product-market fit to drive up price. As a VC you just need to exit before the other gullible VCs, even if you know it'll end up as a scam. It's essentially a VC-level rug pull.
Sequoia deleted the original puff piece. But it was telling of how they fawned over him. SBF was a golden boy, an ivy league elite child of Stanford compliance lawyers. And the article gushing over Sam playing League during a pitch is just icing on the cake. Where I come from, it's a sign of disrespect, but Sequoia saw it as some clue into his genius intelligence.
Sequoia rejected me wearing my best blazer because I chuckled when they asked my plan to make 100B - I should have just said I was a diamond support, eh? Haha
I think that’s overstepping. Investigated for what? Investors are allowed to lose money.
If you mean that Sequoia was complicit in fraud, that’s a claim that would need reasonable suspicion before an investigation, not after. Right now it looks like they lost money along with all the other investors, and they were all investing in good faith.
If we punish investors, that would have a devastating effect on the startup ecosystem. And that ecosystem is one of the US’s main advantages.
If the investors fund scams, then they are just as responsible for the consequences. They don’t live above the law. Startups that exist to launder money should not exist. That is not innovation.
Exactly. Imagine if a wealthy person were to fund a terrorist to harm people, won't the wealthy person also be called a terrorist?
The money these vcs invest is not their own either. They get this money from their lps. Lp should also investigate them...and so should the government. Funding scam boys cannot go unscathed. At leat shut them down
It's one of the most astounding things I've ever read - it's like capitalism, startup koolaid/cultism, intellectual moralism, celebrity, complete and utter glibness and lack of self-awareness, meet a huge pile of money, the anarcho libertarian fantasies of decentralized money, dark pools, 'feel good' modern ego validation therapy, all offshore 'away form the law' ... and a big supporting cast of fools from various industries all in one.
Just when you think it can't get nuttier ... they drop another gem.
It's funny because they thought they were maximizing utility when they really were maxing out on delusion.
This is 10x more insane than 'Wolf of Wall Street'.
It's just a beautiful bit of insanity and of course now, criminality.
For a well thought-out piece of ad hominem covering all that breadth and depth, have a look at David Gerard’s take on the philosophy of SV special smart boys. It’s worth a reread from time to time,— till the OpenSeas evaporate and the BlackRocks laid bare, I suppose.
Bonus is DG called out there the Berkeley-based EA (Effective Altruism) tribe, which inspired SBF..
This is a neat piece but mostly just stating that Eth is rubbish, not really making a case for it.
Buterin I think is what he is - it's not creating fake charities trying to enable his identity through some kind of fake moralism. I think he's the real deal even if he is ultimately 'created' by some other person, and it ultimately ends up a marketing gimmick, I think he's true to it. He's not taking other people's deposits and running off to Bermuda.
I'm fully skeptical about all of these techno-babble anarcho-libertarians but Vitalisk seems reasonable. He doesn't seem that weird dark streak many of them have.
> Bankman-Fried's net worth peaked at $26 billion. In October 2022, he had an estimated net worth of $10.5 billion. However, on 8 November 2022 amid FTX's solvency crisis, his net worth was estimated to have dropped 94% in a day to $991.5 million, according to the Bloomberg Billionaires Index, the largest one-day drop in the index's history. By 11 November 2022, the Bloomberg Billionaires Index considered Bankman-Fried to have no material wealth.
I think it's pretty well established at this point that many VCs are gullible herd animals swayed by people who are good at sales and check the right boxes. SBF is just the latest in a long line with recent notables Elizabeth Holmes and Adam Neumann (who is still getting more funding somehow).
David Gerard’s take on the “SV smart boys” is worth a reread from time to time, till the OpenSeas evaporate and the BlackRocks laid bare. He blames the Berkeley-based EA (Effective Altruism) community too (which inspired SBF).
> For me, it was simply a gut feeling. I’ve been talking to founders and doing deep dives into technology companies for decades. It’s been my entire professional life as a writer. And because of that experience, there must be a pattern-matching algorithm churning away somewhere in my subconscious. I don’t know how I know, I just do. SBF is a winner.
This is a fantastic insight into journalists. They need to fit their story into a narrative. If you match their stereotype, then they'll spin whatever tale they can imagine to convince themselves that it's really true. The level of self-deception that's needed is difficult to comprehend for me.
"if one’s goal is to optimize one’s life for doing good, often most good can be done by choosing to make the most money possible"
"I can help my brother better when I'm at the top" - Bunk from "Born to Die", Atlanta : ))) which just ended : (
That article is obscene in its idiocy. I don't spend too much time with VC's but really shit like this gives me a slight suspicion that some of these people's talent lies in landing in the right place at the right time once or twice.
VC is an insider’s game. I know of 9 figure acquisitions that have been done as favors. There is real value and productive companies funded but a lot of nonsense and shell games as well.
There is so much bootlicking right now in the Valley / VC / Tech Twitter communities, but more folks need to call out Sequoia's poor judgement directly.
You don't get to hide behind the veil of "oh we're taking bets & huge risks all the time" and get a free pass at such catastrophically bad character analysis.
(Don't get me started on the shitty "oh i don't read books" story that was part of that puff piece...)
They have egg on their face, publicly. That’s about the worst we can do.
It’s not merely to be nice that the veil you mention exists. VCs need to be able to take risk. If they can’t, then suddenly there won’t be future Ubers and Airbnbs. Some may be fine with that tradeoff, but the history of societies shows that wealthy societies tend to prosper. And startups are the engine that drive that wealth creation.
I honestly still believe the hype and feel this way about SBF. Call me naive but I think he is a good person. Sometimes good people do really stupid things. Sometimes if you just think about the numbers and financial system you can make yourself believe that you are doing “clever accounting”. It seems this was likely fraudulent although much remains to be disclosed. That’s why I am so disappointed. I really think he would have been a good leader and done great things. Additionally, this space will pay such a price for what he is done.
Counterpoint: Maybe he was egocentric and if not an outright grifter, someone who played it fast because they thought they had the midas touch. Believing that “only I” can make these choices and take these risks because I am so talented those things will never happen to me.
All around, it has been a pretty bad week for SBF, Crypto and alternative finance.
Seems like a good person wouldn't build a backdoor to siphon off funds without triggering the checks and balances. This requires planning and clear evidence of intent to commit a serious felonies amongst others.
I’m sorry, maybe I grew up too poor to understand that, but no - believing you have the Midas touch crosses you off the genius list all by itself.
The primary lesson of most of humanities literature is to be aware of hubris. Failing lesson one is far more important than doing well in a high end school. Then again maybe this is why I sucked at raising money.
Aside from Herculean levels of glib lack of self awareness - which maybe we could forgive if he was 'just taking risk' - he was gambling with deposits, now apparently embezzling money (more than $1B is missing) and maybe criminal enterprise stuff as there was a 'hack' in which FTX lost at least hundreds of millions, likely carried out by insiders, i.e. grab the money and stash it before the Feds get at it.
Stalin, his entourage and the part believed they were doing good even as they killed millions. They were believers to the end.
https://news.ycombinator.com/item?id=33549059
https://news.ycombinator.com/item?id=33571734
https://news.ycombinator.com/item?id=33573636