Then he went all-in on SPACs... Which ended up being the ultimate Ponzi.
[1] https://www.cnbc.com/2018/10/10/start-up-economy-is-a-ponzi-...
You can criticize the fees or the fact that they are essentially trying to get around regulatory and reporting requirements. They did well a few years ago now they are doing poorly. But how is it a ponzi? Not everything that loses money is a ponzi
So, sure, more accurate to say "SPACs make passing laughable-business-plan Ponzi schemes off as real businesses and cashing out to public investors" than "SPACs are ponzis directly" but... I'm not sure this hair needs splitting.
"Holmes duped just about everyone about the efficacy of Edison. For 12 years, she essentially ran a Ponzi scheme by attracting millions of dollars from primarily venture capitalists that saw it as a unique opportunity to cash in on the boom in Silicon Valley."
https://www.ethicssage.com/2022/01/fake-it-until-you-make-it...
Also illegitimate businesss. Theranos was definitely illegitimate (and had the characteristic of little fish investors trying to sell to bigger fish), but it would be a pretty severe category error to call it a ponzi scheme.
"Holmes duped just about everyone about the efficacy of Edison. For 12 years, she essentially ran a Ponzi scheme by attracting millions of dollars from primarily venture capitalists that saw it as a unique opportunity to cash in on the boom in Silicon Valley."
https://www.ethicssage.com/2022/01/fake-it-until-you-make-it...
I would appreciate, for my own edification, what specific things you believe are different between what Ms Holmes did and what Maydoff or Ponzi did. I'm genuinely curious.
Ponzis are accounting malpractice that don't even necessarily involve defrauding anyone.
It's a problem if you're going to call everything that goes south a ponzi scheme, because it elides failure modes and dulls peoples ability to distingush and analyze bad situations. Is social security, for example, a ponzi scheme?
It's a very specific type of fraud. Most fraud isn't a ponzi, just like every injury isn't a broken arm. It's silly to go around calling all injuries a broken arm.
But as you point out, I don't think deception per se is really the defining feature of the Ponzi.
I can interpret this in many different ways. Maybe they mean "no different than" in the sense of "no better than", ie.: as a moral or value judgment.
But if I interpret the words literally, then these people are just wrong. Theranos was a terrible waste of capital, and there was plenty of fraud involved, but it was not a Ponzi.
You're paying attention to the technical definition. "It's just an investment vehicle!"
He's paying attention to the real-world outcome. Insiders made money by offloading bad investments onto retail suckers.
I think there's value in using precise language, so I reget this usage, but it's common whether I like it or not.
Later investors = SPAC pawns putting up money for a bad investment that doesn't require the normal regulatory scrutiny that an IPO requires.
If not Ponzi, seems very Ponzi-like.
> essentially trying to get around regulatory and reporting requirements.
It's just a great tool for a ponzi scheme. A ponzi tool rather than a ponzi scheme. When it gets so tightly coupled to the schemes it enables specifically to get around regulatory and reporting requirements... Tomato, Tomahto.
Suddenly you hear they are going public through a SPAC. Why? Why aren't they going through the usual channels, crossing their eyes and dotting their tees? Laying everything out on the table so everyone can feel confident?
The very fact they are going for this SPAC backdoor is a HUGE red flag.
Yes, I agree with you, it doesn't have the features of the Wikipedia definition of a Ponzi scheme. But language changes over time. I think the salient point that people now think about when calling things a Ponzi scheme is "Early investors are aware that, at its root, the investment sucks. So their goal is to entice new investors to buy into the original investment, which has the effect of transferring wealth from new to old investors, with the hope that the old investors can get out before the gig is up, thus leaving the newer investors as bag holders." That description applies both to the original definition of a Ponzi scheme, and to newer uses that don't include other features of the original Ponzi scheme.
Using imprecise wording should be discouraged and it reflects poorly on people who do so.
But, IPOs became rather passé post-2010ish, for the truly depraved. Too much regulation, you see. SPACs are ever so much more exploitable. Though, IPOs continue to be successfully used to funnel money from the have-nots to the already-haves.** And so, here we are.
Yes, there have been people legitimately trying to use SPACs to finance efforts they truly believed in. My sense, having traded SPACs myself during the height of the frenzy was: much less than 50% had much of any real legitimacy. And, solidly more than 10% or even 20% were scammy as hell ... particularly at that time when the money taps were wide open and fraud was absolutely rife across many vehicles etc. (helped along by ... survey says: the very "internet" Silicon Valley made such a massive economic force...).
* On a much larger scale and with a much more "legitimate face" than some of the other "operators" better known in this area, generally
** See, for example: https://www.businessinsider.com/venture-capital-big-tech-ant... ... I'd provide more refs in general, but sadly, super pressed for time right now ... so, obviously, I would advise anyone to take what I've written without solid refs with the usual grain of salt. Plenty can be found with some searches (quite neutral searches ... i.e., no "leading the search engine" required).