The fake vc | Hacker News Reader

The fake vc

shaf.co

72 pointsJayEnn16 comments

This brings back very uncomfortable memories. When I was 25 I was helping a friend who was creating the first structural analysis software for the PC. I introduced my friend and his partner to this strange guy in Dearborn, Michigan. There were meetings at the airport and in his office in Dearborn. This guy claimed to be a wizard at arbitrage and arcane financial instruments. He said he worked out all the algorithms for Ford Motor for hedging copper futures. He was overweight, had greasy hair, and, I kid you not, his back pockets were usually turned inside out. We figured, eccentric genius. At least at first. All he ever provided were excuses. He was waiting to flip some sort of bond issue overseas that would give him $10 million, etc. That business never got off the ground.

Then a year later my own partner and I got a call. We had been looking for a manufacturing business to acquire. The crazy guy had a contact in Chicago who was looking for an operations team to come in on a deal to acquire a manufacturer of audio mixing boards. This company was still run by the founder who had practically invented the industry. There were 50 employees and customers included major studios and venues around the world, including the US Senate and the Kremlin. The deal maker, lets call him DB, proposed that each of four partners -the founder, me, my partner, and him- put $25K into a holding company. He would arrange a $250K line of credit from the Korean bank in Chicago that he was friends with. Then we would operate the company out of bankruptcy. Well we three each sent him $25K (my dad lent me the money). We did all the legal paper work, and I showed up the next day as one of the new owners of a $3 million/year company. Very exciting for a 27 yr old. To make the story short. DB was a complete crook. He needed $75K to pay off someone else he had screwed and was threatening his life. The business shut down. 50 people lost their jobs. It took me years to get back on my feet financially.

I'm the author of the blog, I'm sorry to hear that. It sounds an order of magnitude worse than my story. Luckily I didn't outlay any money or hand over any important documents. It sounds like you should share your story too - I wonder if there's a place somewhere people can share startup horror stories?

The Valley has been filled with these types since it became known for loose money and fame. I've met perpetual VCs without money, Founders with no real startup other than a logo and domain name, and name-dropping nobodies since they first day I came here.

In general be suspicious of flakiness and an inability to meet any agreed upon timeline, and always validate information in person when possible. Even if they are real and show these attributes, you likely don't want them involved with your business ventures anyways.

None of these questions or tactics will be offensive to real angel investors. In fact, they will give the real ones more confidence in you.

This is a big sticking point for first time founders because it by definition turns the tables and now the founder is the one who is challenging the supposed expert investor.

This can be tough for people to do if they aren't used to it.

This is absolutely insane. Why not out Fredo publicly?

It's a tough call. The behaviour isn't acceptable, and it's in fact very harmful to others - and he'll continue to do it to others until he can't. When he can't will likely be determined by a) jail time, though I'm not sure any of the behaviour mentioned is actually illegal, or b) that he has no options for work and job offers and no other possibilities because his credibility is shot. Of course from my own experience with people who are like this, they burn their bridges locally - and then just move to a different city where they can be and act however they want again.

> my own experience with people who are like this

have you met many of them? i mean, perhaps some people oversell themselves, some might even tell outright lies -- but this guy fabricated entire identities.

i'd like to think that this is not exactly commonplace.

but if it really is, then this kind of thing more common in the tech industry, or does pretty much everything with a "business" angle attract a few people like this?

Depends who you're dealing with.

For example, corporations and election campaigns are well-known to deploy scores of false identity sock puppet accounts across social networks in order to create a false "grass roots" following.

I have known a few. They are generally not grounded at all - stuck in their logical mind, avoiding and blocked from emotional feelings; Long-term suppression / repression as a coping mechanism. They feel safe in the logical plain because they can highly understand the functioning of the world, which then can allow for a very good ability at manipulating others - though many humans are good bullshit detectors, so long as their story gets more and more complex. Calling them out on the behaviour, even with the intent of no harm, and explaining to them their behaviour - so they can see it reflected back at them, from my experience, has them moving towards a defensive posture with their guard up. You have to be careful because they are very sensitive, hypersensitive almost, and fragile, and they may direct and project anger towards you as you could be seen as a threat.

I can only imagine this kind of behaviour evolves from a deep and intense fear of survival, also associated with reward from positive interactions with others. If people get away with this behaviour when they're young and it "is helpful" to them as a coping mechanism, then it'll follow them into adulthood. The people who are successful enough at it will be able to gain resources and relationships, at least for long enough to keep perpetuating the behaviours, and they won't stay in one area for long - this is the only way they could maintain succeeding with this kind of behaviour. You can have sociopath who doesn't lie though, too. It's just when you combine it with someone who feels they're getting away with lying, then they'll see how much they can get away with.

These people, if they're to be behaving this way successfully, are very intelligent - very sensitive people to begin with. I've always thought they'd be able to be very successful if they were honest and kind in their dealings, however this makes me feel/realize like it really must be something traumatic that occurred for this behaviour to take hold; Fear of survival is a fucker, and I can sympathize with the possibility of this as a coping mechanism. Basically imagine a lost, lonely, terrified child - emotional state/maturity wise - and how that "child" may behave in order to have connection, relation with others.

To answer your question finally, business is basically where people can network easily, where people are open to relationship building. It's where there are resources available too, and so someone who's seeking relationships and has fear of survival - needing to pay for food, shelter, etc - will naturally more likely lead into a business environment.

To add as final, I don't believe they have the intent to be hurtful or harming - it's just what their past hurt that hasn't been healed, that's directing their logical behaviour; They may not understand this either or fully realize to the degree it's influencing them because it will have been deeply repressed emotion. Also, people will be at different levels of awareness and healing - and could be more aware - but still stuck in the behaviours that they know work for them (at least in the short-term), and may just need a situation and role to find where they don't need to use these coping mechanisms. Though I can imagine too that's a tricky situation too because they won't any longer have the incentive to need to change, but just to change enough to find something that causes less threats, e.g. continuously being found out as a liar, betraying people, breaking trust, etc..

It's very common. This is what many self proclaimed 'business people' are like. In places where aspiring business people congregate (like this site) it will be dressed up with euphemisms about 'social hacking' and 'disruption'. Go to some local startup/entrepreneurial meetups and you will find plenty of people like this. If you are a developer you won't need to be there very long before these types will be offering you all sorts of 'opportunities' and 'partnerships' that mostly just involve you investing your time and money on the promise of getting rich quick, but with very little ever written down. Plenty of kids fresh out of university get burned with these scams.

For an example, here in the UK the chairman of the current ruling party used fake identities to run his dodgy web marketing/scraping/consulting business and most people in the UK startup scene didn't think there was much wrong with what he did. http://www.theguardian.com/politics/2012/sep/21/grant-shapps...

>Grant Shapps, the Conservative party chairman, posed as a "multimillion-dollar web marketer" named Michael Green who spoke to reveal the secrets of his trade at a $3,000-a-head internet conference in Las Vegas while he was the Tory party candidate for Welwyn Hatfield.

>The pictorial evidence of his double life, revealed online by a fellow conference speaker, will pile pressure on Shapps to explain his links to a network of websites which have been blocked by Google for breaching its rules on copyright infringement and encouraging customers to plagiarise content.

>But at the age of 35, Shapps claimed already to have established "the world's largest internet marketing forum". A few years later while a member of the shadow cabinet, he also had time to run phone lines where for $297 an hour Green would give tips to aspiring entrepreneurs.

>Casting himself as an internet marketing guru with products and coaching services guaranteed to generate income, Shapps owned and ran until 2008 a series of websites making claims that still dog him despite attempts to downplay his personal role. Using the website MichaelGreenConsulting.com, which operated from 2004 until it was removed from the internet in 2009, Shapps claimed to run the "world's largest internet marketing forum" with his company How To Corp.

I don't know about these individuals, though I feel there's a difference between the business "act as if" people and someone who's a sociopath; Perhaps they are the same though, just less extreme.

Wait, all those reasons seem to point to it not being a tough call at all. The only reason not to would be fear about retribution. If you don't warn others, you are responsible for the ill that befalls them. Am I missing something?

You have to weigh out the circumstances. Does it make sense for you, in this moment, to take full responsibility for this person and all of their future actions? If you open a potential pandora's box, it's most responsible to be make yourself available to continue to help however you can. Unfortunately we don't currently have societal structures in place that really support these kinds of situations or people to be able to help them change their behaviours to less harmful ones.

Hi Dartanion7, I wrote the post - the only reason I haven't outed him is not to protect him but he scammed a couple of other people I know too. They have developed serious anxiety and trust issues due to him - I want to protect them form being outed as a 'victim'. I don't feel it is my call to do that. However saying that, I have left enough evidence in the post for readers to put the pieces together themselves.

What a fascinating story. Thank you for sharing it.

I totally hear you on fact that it was hard to see at the time, but obvious now. You want to believe, which completely messes with your mind.

Thank you for reading it. It was very cathartic writing it, I'm just as confused as I was then but at least I can take lessons from it and share with others.

Reply on news.ycombinator.com