The Diligence That's Due
investing1012dot0.substack.com
investing1012dot0.substack.com
> Similar to all investments, we conducted an extensive due diligence process on FTX, which took approximately 8 months from February to October 2021. During this time, we reviewed FTX’s audited financial statement, which showed it to be profitable.... We recognise that while our due diligence processes may mitigate certain risks, it is not practicable to eliminate all risks.
How about the risks that a16z had no trouble identifying, probably without spending 8 months thinking about it?
Like, the founder is an immature scumbag who plays video games during important phone calls, and who has no concept of "financial controls"? Was it practicable to eliminate that risk?
> Bain & Co. was among consulting firms that helped conduct due diligence for Tiger Global Management’s investment in now-defunct crypto exchange FTX, according to people familiar with the matter. Tiger Global, which pays Bain more than $100 million a year to research private companies, has now written down its $38 million FTX stake to zero.
https://wallstreetonparade.com/2022/11/ftxs-latest-casualtie...
> As of September 30, 2022, Silvergate’s total deposits from all digital asset customers totaled $11.9 billion, of which FTX represented less than 10% ... The stock has lost 28 percent since FTX filed bankruptcy on November 11 ... We know of four FDIC-insured banks whose share prices have already been hit: Silvergate Bank, Customers Bank, Signature Bank and Metropolitan Bank.
Possible solution for Substack popup: https://old.reddit.com/r/uBlockOrigin/comments/xisov1/blocki...
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##.subscribe-dialog-scroll-modal-scroll-capturePlenty of sites use full page modals. Only rarely will they have a 'decline all' button, it's almost always a) "Accept All" or b) "Want to Decline? then here use a complicated form that's different for every single site"
Silicon Valley is a weird ecosystem built on symbiotic/parasitic behavior.
The hyper focus on growth and scale might seem exciting on paper, but in practice I believe this financing system is doing more harm than good.
As a consumer you get lots of benefits from them throwing around huge amounts of money and selling things below cost (or giving away for free) because they have the theory that a losing bet is better than economic fundamentals leading to a profitable venture. Just keep throwing money in the pot until it either goes big or goes broke — or, I suppose, gets bought and they can cash out where it becomes somebody else’s problem.
Of course this isn’t so good if you’re in one of the “disrupted” industries where this is clearly predatory behavior (intentionally losing money to drive all the competition out of the market) to corner the market.
But people don’t care because they get their subsidized goods/services and all these displaced workers can just “learn to code”.
The incentives are overall very short-term. With a few exceptions.
What is bad is predatory tactics like running at a loss because you know it will put the competition out of business then raising prices to their true cost like Uber does. Ironically they still can’t make a profit without abusing their “employees” for whatever reason, probably because the margins are so low in that industry it can’t support multiple multi-billion dollar mega-corporations.