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

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

#51

Post by peter_d_sherman »

CharlieDigital wrote: post #44
valianteffort wrote: post #8

Are softbank actually the biggest idiots in VC? It almost seems like everything they invest in is a handshake deal built on "just trust me bro" numbers.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

Hi Charlie!

You could be onto something here... what you have enumerated seem to be examples of various forms of "Social Proof" (for lack of a better way of saying/defining it).

It would be interesting, highly interesting, I think, to try and enumerate all of the possible forms of Social Proof.

You've definitely nailed 4 of them -- but are there others? What if we broaden our search outside of the VC world?

Whatever the case, whether we call this "Social Proof", "Trust as it manifests in the world of VC", or some other name/nomenclature -- I think you're definitely onto something here...

It's sort of like what you've said could be the summary/abstract of a Ph.D. paper. That is, I think there's some more knowledge to be gained by exploring this set of ideas further, perhaps in writing, perhaps in blog article, I don't know...

But I do know that you're definitely on to something...

I would love to see more exploration of what you've just said...

There's definitely something there...

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

#52

Post by kkielhofner »

RGBCube wrote: post #31
WheelsAtLarge wrote: post #4

I guess this is the way to get rich quick now. Imagine a company with millions of fake users all created by a LLM app.

Hey, Reddit was all fake users at the start, making people think it was active and persuading them to join.

YouTube famously spent many of their first years turning a blind eye to blatant copyright infringement.

Shady “growth hacking” is more the norm than not for many of these early stage social companies that have chicken/egg Metcalfe’s Law issues for user adoption.

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

#53

Post by FormerBandmate »

rossjudson wrote: post #47
CharlieDigital wrote: post #44

Earlier quoted context omitted.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

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?

Tiger Global and SoftBank made tons of money by doing zero due diligence in 2020. It inexplicably became a phenomenon

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

#54

Post by FormerBandmate »

shortcake27 wrote: post #28
irl_chad wrote: post #16

Earlier quoted context omitted.

It raises the cost for any spammer, including determined actors. More code, more complexity, plus the cost to actually rent the numbers. A lot of tech bros need to touch grass and realize that the rest of the world doesn’t mind giving their phone number to a chat app.

People shouldn’t be expected to give up their privacy and anonymity and put themselves at greater risk of identity theft because big tech can’t be bothered figuring out a different way to solve spam. Just because the rest of the world doesn’t mind giving out their phone number, it doesn’t mean it’s harmless. I don’t know about you, but I don’t want to get sim swapped and have all of my bank accounts drained because s…

Unless you have beef with a state sponsored actor, you’re safe with Signal. Possibly even then

If you have beef with a state sponsored actor I’m not really sure what you’re doing on HN. The Taliban uses WhatsApp lmao

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

#55

Post by makestuff »

rossjudson wrote: post #47
CharlieDigital wrote: post #44

Earlier quoted context omitted.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

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?

I think the issue is in the last few years hot startups would just say sorry we are going with another firm. There was so much money flying around it was similar to home buyers buying houses with all cash offers and waiving inspections.

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

#56

Post by peter_d_sherman »

peter_d_sherman wrote: post #51
CharlieDigital wrote: post #44

Earlier quoted context omitted.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

Hi Charlie! You could be onto something here... what you have enumerated seem to be examples of various forms of "Social Proof" (for lack of a better way of saying/defining it). It would be interesting, highly interesting, I think, to try and enumerate all of the possible forms of Social Proof. You've definitely nailed 4 of them -- but are there others? What if we broaden our search outside of the VC world? Whatever…

Actually, when I think about it some more -- perhaps the broader topic area here is not necessarily that about "trust" or "social proofs" -- maybe it's about "Credibility" -- what causes a person or organization or business or business idea -- to have credibility (or apparent credibility as some cases may be) -- especially when large amounts of money, large financial transactions, large investments -- are at stake?

Well, I don't know... but again, I reiterate that I think you're on to something with your observations...

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

#57

Post by gizmo »

rossjudson wrote: post #47
CharlieDigital wrote: post #44

Earlier quoted context omitted.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

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?

VCs don't invest their own money. VCs are paid a percentage of the money they invest in startups. As a result VCs only care about the quality of the investment they make insofar it helps them raise more money in the future. Because more money = more fees.

VCs care about technology sometimes, but not always. If a startup doesn't grow because their tech is bad that's something VCs care a lot about. If a startup grows fast with snake oil tech (e.g. crypto, theranos, wework) VCs will happily throw more money at them.

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

#59

Post by pintxo »

rossjudson wrote: post #47
CharlieDigital wrote: post #44

Earlier quoted context omitted.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

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?

Same here, I had some of the most fun checking out potential investors in my last company. I'd certainly enjoy also checking Startups, but really just any sort of tech-related due-diligence would be awesome.

Now, how to make a business out of that?

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

#60

Post by nickstinemates »

rossjudson wrote: post #47
CharlieDigital wrote: post #44

Earlier quoted context omitted.

I have brought this up in another comment, but my experience in the VC world is that it operates too heavily based on 4 types of "trust": 1) Institutional trust (Stanford, Harvard, MIT, "ex-FAANG", "ex-McKinsey", etc.), 2) Social trust (someone you know that has already established one of the three other kinds of trust), 3) Serial trust ("3-exits", "former CEO/CTO/VP of..."), and 4) Transitive trust ("Sequoia investe…

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?

VCs have technical people they go to for advice. I have served in such a capacity a number of times. Good to trade in favors.
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