A messaging app startup that raised $200M shuts down afters users were 95% fake

Post by CharlieDigital » Mon, Jun 26, 2023, 8:17 PM UTC

rvba wrote: post #77

rossjudson wrote: post #47

Earlier quoted context omitted.

I've always had this background thought that it would be a fun job to do "due diligence" on behalf of VCs. I remember being on the receiving end of some of that work, and I wasn't all that impressed. Do today's VCs take technical due diligence seriously? If not, why not?

Technical due dilligence isnt that important. The first thing is that the product has to scale, be popular, then maybe make money. You can always hire people who will rewrite. The opposite doesnt work. Technically brilliant product might be unpopular or unknown. Please note: I dont say that things should be built poorly.

Post by vkou » Mon, Jun 26, 2023, 8:59 PM UTC

lambertsimnel wrote: post #102

vkou wrote: post #98

Earlier quoted context omitted.

Why should you putting your money in a savings account ensure that you are protected from inflation? The whole point of an economy is for money to move and be invested, not hoarded by a dragon sleeping on a pile of gold coins.

Under fractional reserve banking, savings account deposits are lent out, which hopefully does result in productive investment As I understand it, western retail banks that take deposits are fractional reserve banks, and have to be if they pay interest on deposits; after all, banks don't generate revenue from just looking after your money (unless they charge you for it, perhaps in the form of a negative interest rate)

Post by smartest-on-hn » Mon, Jun 26, 2023, 9:22 PM UTC

CharlieDigital wrote: post #119

x0x0 wrote: post #74

Earlier quoted context omitted.

For the enterprise saas business we built, vc duedil was talking to customers, both directly via our introductions and backchanneled via their network. For the technical aspects, our vcs didn't / don't care. That's our job to figure out, and if we don't, they fire founders. I'm honestly not sure how you would seriously audit chat app numbers, and I suspect and hope Abraham Shafi is going to prison. For most businesse…

It's not that hard. - Look at the application logs - Look at the emails and reach out to a sub-sample of them to determine if they are real users - Look at the network traffic/volume numbers - Look at the architecture to see if it could actually support that volume - Look at the pattern of content in a random sampling to see if it's just "Lorem Ipsum" or actual, real content Just some heuristics I'd use off the top o…

Post by rvba » Mon, Jun 26, 2023, 9:44 PM UTC

vkou wrote: post #123

lambertsimnel wrote: post #102

Earlier quoted context omitted.

Under fractional reserve banking, savings account deposits are lent out, which hopefully does result in productive investment As I understand it, western retail banks that take deposits are fractional reserve banks, and have to be if they pay interest on deposits; after all, banks don't generate revenue from just looking after your money (unless they charge you for it, perhaps in the form of a negative interest rate)

They are indeed lent out, but mostly in very safe, boring investments, that don't really generate economic activity (mortgages). This is by design, as we generally don't want banks going pear-shaped, and taking people's savings with them! If your money is used to generate meaningful economic activity, that means you're investing it into something like stocks (Which anyone can do by opening a Schwab, or a Vanguard, or…

Post by lambertsimnel » Mon, Jun 26, 2023, 9:48 PM UTC

vkou wrote: post #123

lambertsimnel wrote: post #102

Earlier quoted context omitted.

Under fractional reserve banking, savings account deposits are lent out, which hopefully does result in productive investment As I understand it, western retail banks that take deposits are fractional reserve banks, and have to be if they pay interest on deposits; after all, banks don't generate revenue from just looking after your money (unless they charge you for it, perhaps in the form of a negative interest rate)

They are indeed lent out, but mostly in very safe, boring investments, that don't really generate economic activity (mortgages). This is by design, as we generally don't want banks going pear-shaped, and taking people's savings with them! If your money is used to generate meaningful economic activity, that means you're investing it into something like stocks (Which anyone can do by opening a Schwab, or a Vanguard, or…