Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

pubsonline.informs.org

Post reply on HN
Print view View original

51–60 of 102 posts

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#51

Post by duped »

umpalumpaaa wrote: post #15
Zigurd wrote: post #8

Earlier quoted context omitted.

In the current environment I doubt Elizabeth Holmes would go to prison. She would be saying the machine would work by early next year. After all a drop of blood is just a smaller quantity. Making the machine work is just an engineering problem. If she were really clever she would recruit a social media army of all the weird conspiracy theorists who think "medbeds" are real. Of course now we know that a drop of capill…

The big difference was that she was in the medical field. She used her machines that worked unreliability on patients and caused actual damage to humans. Then she noticed that this could be a problem and switched to blood analyzer from Siemens. But she still continued to say that the machines do work. She lied to investors. I still feel her case is a lot different to what musk is doing. I think you can definitely say…

The medical field is filled with charlatans and quacks. Elizabeth Holmes went to jail because she defrauded the wrong people.

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#52

Post by e40 »

throwaway89864 wrote: post #27
aliasxneo wrote: post #19

“Our theoretical framework captures how entrepreneurs facing minor, wide, and extreme expectation-reality gaps engage in evermore sophisticated efforts to detach the venture’s externally projected appearance from its actual operational reality.” Look, I’m not promoting fraud at all, but having been doing seed raising for the last eight months, there have been many times where I thought the only way to compete was by…

Was it fudging expected numbers (forecast), or fudging actual numbers (revenue, etc)? VCs are looking for a long-tail, if you have a 1% chance at 5B - 1T market, this is more interesting and impactful than 10% chance at 5M market. And yes, 1% chance of success is considered to be unrealistic by common sense standards.

IME, it's about pushing you to overextend on the forecast, so that when you don't meet it, they get more control or claw back funds promised or given.

Fudging actual numbers is a dangerous and illegal game to play and never pays off, except in the edge cases (e.g., Enron... but usually you have to pay the Piper).

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#53

Post by andsoitis »

sjsdaiuasgdia wrote: post #25
aliasxneo wrote: post #23

Earlier quoted context omitted.

I’m really not trying to virtue signal. There’s a lot more nuance to my reasoning to leave the traditional VC game. All of them led me to declaring it fundamentally incompatible with my world view. Which then led me to my current path of attempting to form a syndicate of like-minded individuals. But this study validates a lot of feelings I’ve had over the last several months. There’s a ton of people that never get ca…

Oh, I did not take it as virtue signaling at all! I do actually admire you for looking at a dirty game and saying "I will not play this, I will find a better way." If I ever win the lottery, I'm going to create the Joseph Welch Foundation. The foundation will give monetary awards to people who have demonstrably pushed back against corruption, lies, and bullshit. For those who don't recognize the name, Joseph Welch is…

> If I ever win the lottery

Now there’s a disgusting game.

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#54

Post by sjsdaiuasgdia »

andsoitis wrote: post #53
sjsdaiuasgdia wrote: post #25

Earlier quoted context omitted.

Oh, I did not take it as virtue signaling at all! I do actually admire you for looking at a dirty game and saying "I will not play this, I will find a better way." If I ever win the lottery, I'm going to create the Joseph Welch Foundation. The foundation will give monetary awards to people who have demonstrably pushed back against corruption, lies, and bullshit. For those who don't recognize the name, Joseph Welch is…

> If I ever win the lottery Now there’s a disgusting game.

It is, in the sense that it often acts as a tax on people who can least afford it.

The occasional lottery ticket does not particularly affect my budget, so I buy one now and then with the intent to use it for good should I win.

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#55

Post by bilekas »

> including the extension of U.S. Securities and Exchange Commission surveillance and whistleblower program, investor due diligence reform, and dedicated entrepreneurship education interventions

Wasn't the SEC essentially gutted to the point it's basically toothless right now?

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#56

Post by mindtricks »

firasd wrote: post #3

A lot of 'numbers' startups cite are basically fake I think. Like if someone says we have this many users as a statement to TechCrunch you have no idea what they are actually calculating But there is a clear line that gets crossed if you start actually making a database of millions of synthetic users and that's what happened with 'Frank' that sold to JP Morgan and eventually the founder was prosecuted

Not just users, but number of companies. So many startups list out all the companies using their products, who also happen to be an army of startups. I doubt they're all using each others products, just doing what they can to juice each companies perceived metrics.

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#57

Post by bogzz »

bilekas wrote: post #55

> including the extension of U.S. Securities and Exchange Commission surveillance and whistleblower program, investor due diligence reform, and dedicated entrepreneurship education interventions Wasn't the SEC essentially gutted to the point it's basically toothless right now?

The SpaceX IPO is perhaps the latest and most damning outcome of that gutting.

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#58

Post by woadwarrior01 »

FWIW, I left a VC backed startup where I was an equal co-founder because my co-founder was committing securities fraud (blatant lying about customers and traction in investor update emails, amongst other things).

I presented all the evidence to the investors when I was leaving, and I was told that they'd rather let the startup die a natural death than suffer the "reputational harm" that'd come from going after the charlatan. ¯\_(ツ)_/¯

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#59

Post by api »

I wonder how this compares to other fields. Whenever you have a market like this, there's a giant incentive for fraud, and the more people cheat the stronger the incentive gets to the point that you lose if you don't cheat.

That being said -- for my own co. I did not fudge numbers at all. In fact I understated them sometimes. We raised less money than our competitors, which probably hurt us, but we also got very high quality investors that are not a giant pain to work with and are not idiots. Those investors in turn introduced me to others and to our current CEO (hired to replace myself, was my idea in part) and they're all high quality.

I'll take it. Working with shitty people sucks, and my guess is the people you get when you bullshit are themselves bullshitters and assholes.

I could have bullshitted like mad and raised stupid money during the COVID era fund raising bubble. I'd be left with shitty people though, and a waterfall you'd never clear, so you'd never see an exit unless you went insanely vertical.

The last part is a nuance a lot of people don't get: raise too much and/or on too high of a valuation and you will never clear the waterfall unless you get an 0.000001% super-unicorn outlier growth curve. Every $1M in valuation means you have to go into more and more rarefied air to see a good exit. At that point you're basically gambling. Gambling is a tax on people who can't do math.

Re: Analyzing data from Silicon Valley ventures and founders prosecuted for fraud

#60

Post by timacles »

sjsdaiuasgdia wrote: post #39
ryandrake wrote: post #36

Earlier quoted context omitted.

What we should be doing, as a civilized society with rules and a regulatory apparatus that's woefully underused, is looking at the dirty game and saying "The game is over. The people/government is going to finally crack down on fraud and people who play the game are going to prison."

I absolutely agree. We need strong rule of law, and we need to start holding everyone accountable to the law. The era of "I'm too rich / popular / influential / 'important' to prosecute" must end.

well i've got some bad news, that era has now entered its maximum power phase. Our government has literally been systematically deconstructed to become unable to govern.
Post reply on HN