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The median return of 2022's SPAC mergers: -82%

pranshum.yarn.tech

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Re: The median return of 2022's SPAC mergers: -82%

#71

Post by sdwr »

bko wrote: post #58
Ozzie_osman wrote: post #41

Earlier quoted context omitted.

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] 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-...

How are SPACs a ponzi? My understanding is that its a pool of money that gets raised to essentially take a private organization public through a merger with (theoretically) less red tape and cost. You buy into the SPAC without knowing exactly what is being bought but at the time of purchase you have the option to redeem you investment. There are other clauses if the organizer can't find a suitable takeover target. Yo…

Book smarts vs street smarts

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.

Re: The median return of 2022's SPAC mergers: -82%

#72

Post by hn_throwaway_99 »

epgui wrote: post #62
Ozzie_osman wrote: post #41

Earlier quoted context omitted.

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] 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-...

Not everything that is a bad investment is a Ponzi scheme.

For some reason calling out "it's not achshually a Ponzi scheme!" is the new "correlation is not causation!!"

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.

Re: The median return of 2022's SPAC mergers: -82%

#73

Post by xiphias2 »

hn_throwaway_99 wrote: post #24

I'm always somewhat amazed that Chamath Palihapitiya doesn't have a much worse reputation: 1. My understanding is that he was the primary initial architect of "A/B testing for engagement" at Facebook that turned social media into a tribalistic, outrage generating machine (nothing engages like hate), and that the rest of SV essentially copied. I think this trajectory would have happened regardless, but he was first, s…

I don't hate on him because for me those SPACs were obvious money grabbers (I won't invest in an IRC client/server architecture. It can be useful but not _that_ useful. Virgin Galactic was also clearly nothing like SpaceX, especially for needing people inside it for manuevering).

I have sent my mom to full body MRI scan partly because of him and other people in her age generally getting cancer.

He's interesting when he's not pushing his own investments.

Re: The median return of 2022's SPAC mergers: -82%

#74

Post by DesiLurker »

epgui wrote: post #62
Ozzie_osman wrote: post #41

Earlier quoted context omitted.

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] 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-...

Not everything that is a bad investment is a Ponzi scheme.

But the point here is that SPAC as an investment vehicle allows sidestepping a bunch of due diligence in the name of 'just avoiding wallstreet commissions'. that basically ends up becoming prime target for any non-IPO-worthy-but-shiny security to be offloaded to general public. then the next argument from same folks will be .. well price of anything is what somebody will pay for it, so buyer beware.

Re: The median return of 2022's SPAC mergers: -82%

#75

Post by DesiLurker »

zitterbewegung wrote: post #49
hn_throwaway_99 wrote: post #24

I'm always somewhat amazed that Chamath Palihapitiya doesn't have a much worse reputation: 1. My understanding is that he was the primary initial architect of "A/B testing for engagement" at Facebook that turned social media into a tribalistic, outrage generating machine (nothing engages like hate), and that the rest of SV essentially copied. I think this trajectory would have happened regardless, but he was first, s…

He also headed the Facebook Phone and Facebook Beacon where the phone is something no one remembers and Beacon had a public apology from Zuckerberg after many lawsuits. But all of this is on his Wikipedia page… Now he even regrets his impact on social networks due to unintended consequences … https://en.wikipedia.org/wiki/Chamath_Palihapitiyawprov=sfti... https://en.wikipedia.org/wiki/Facebook_Beacon?wprov=sfti1

well, so did Greenspan after he found the 'flaw' in his thinking but the damage is already done. its not like he is taking his FB earnings and using it to do some philanthropy if he really felt that bad. these are mostly billionaire crocodile tears.

Re: The median return of 2022's SPAC mergers: -82%

#76

Post by tiffanyg »

epgui wrote: post #62
Ozzie_osman wrote: post #41

Earlier quoted context omitted.

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] 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-...

Not everything that is a bad investment is a Ponzi scheme.

This is true. However, much like "crackers" are always looking for the next exploit ... chasing that dragon of the next n00b who doesn't sanitize strings passed to their DB, or, above that rather script kiddie level, oh, say, something like infecting all the computers in Iran related to running centrifuges to enrich uranium ... there are various kinds of economic fraudsters looking for that next way to extract piles of money into their own personal "Scrooge McDuck"-style "money bins". And, Silicon Valley has been ground-zero of this sort of activity* in recent years as well.

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).

Re: The median return of 2022's SPAC mergers: -82%

#77

Post by stock_toaster »

hn_throwaway_99 wrote: post #24

I'm always somewhat amazed that Chamath Palihapitiya doesn't have a much worse reputation: 1. My understanding is that he was the primary initial architect of "A/B testing for engagement" at Facebook that turned social media into a tribalistic, outrage generating machine (nothing engages like hate), and that the rest of SV essentially copied. I think this trajectory would have happened regardless, but he was first, s…

He was also a _big_ supporter of crypto(currency), as I recall.

Re: The median return of 2022's SPAC mergers: -82%

#78

Post by [deleted] »

epgui wrote: post #69
mlyle wrote: post #65

Earlier quoted context omitted.

SPACs may not always be ponzi schemes, but plenty are of dubious, unvetted businesses and for the principle purpose of paying returns to prior investors.

Yes, but that's only superficially similar to a Ponzi scheme. They're just not Ponzi schemes.

[deleted]

Re: The median return of 2022's SPAC mergers: -82%

#79

Post by Ozzie_osman »

bko wrote: post #58
Ozzie_osman wrote: post #41

Earlier quoted context omitted.

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] 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-...

How are SPACs a ponzi? My understanding is that its a pool of money that gets raised to essentially take a private organization public through a merger with (theoretically) less red tape and cost. You buy into the SPAC without knowing exactly what is being bought but at the time of purchase you have the option to redeem you investment. There are other clauses if the organizer can't find a suitable takeover target. Yo…

I mean... How is VC a Ponzi? Obviously I'm using a very loose definition, not a technical one, but I'm using the same one Chamath used.

Re: The median return of 2022's SPAC mergers: -82%

#80

Post by duped »

Ozzie_osman wrote: post #41
hn_throwaway_99 wrote: post #24

I'm always somewhat amazed that Chamath Palihapitiya doesn't have a much worse reputation: 1. My understanding is that he was the primary initial architect of "A/B testing for engagement" at Facebook that turned social media into a tribalistic, outrage generating machine (nothing engages like hate), and that the rest of SV essentially copied. I think this trajectory would have happened regardless, but he was first, s…

The interesting thing is a few years ago (before becoming the "SPAC King") he did a media tour where he criticized Venture Capital as being a "massive Ponzi scheme". [1] 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-...

More of a pump and dump than a Ponzi scheme
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