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 invested in X; I trust Sequoia; therefore, I should invest in X")
Do today's VCs take technical due diligence seriously? If not, why not?
Serial trust is especially interesting for me.
Someone could have founded 3 companies that weren't good investments (possibly all lost money), and VCs will throw money at that person before they try someone new.
Transitive trust is also interesting. The majority of "rockstar VCs" made one good investment. Not really possible to rule out luck... And the majority of the people there now had nothing to due with that decision way back when.
- #3 is king. If you have a track record, trust comes quickly.
- #2 is probably how 80% of investors invest.
- #1 is when an investor takes a bet on an unproven entity (i.e. precursor to #3)
- #4 is a bad investor, most likely a lemming. do not give them any power. they are dumb money with an investment strategy of "playing with the house"
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...
That, however, doesn’t mean that later or faster investment rounds are any more informed.
It doesn’t look like this strategy worked out well for them.
In early 2017, while being ousted from another banking system, he advised me to invest in a Retail Mall Holdings company, instead of Bitcoin (because the latter is "idiotic").
I did NOT take his advice. See CBL's returns verse BTC's.
>Masayoshi Son. He had for many years the distinction of being the person who had lost the most money in history (more than $59bn[38] during the dot com crash of 2000 alone, when his SoftBank shares plummeted),[39] a feat surpassed by Elon Musk[40][41][42] in the following decades.
This, in sports, finance, startups - everywhere. Dirty players skew the dynamics of any system leading to worse outcomes for those that choose to remain honest.
We need the supposed ‘smartest guys in the room’ to be less dumb and do due diligence and we need strong consequences for founders that misstate their company’s position.
Indeed. Many don't quite understand technology, and investors are no exception.
There are smart ones, but those not necessarily make good investments -- they may simply look for good future exits and leave the bomb on the laps of the next suckers.
Mind you that Huffman and Ohanian did this manually, while founders today can use LLMs to fill their platforms with bots that can interact "naturally" with users. I wonder how many are already doing it.
I think the average person thinks social media is the drizzling shits but if they have to use it, they'll just stick to the large platforms.
The history of social media platforms suggests to me that users are fickle and have no strong connection to any platform. Friendster, MySpace, Facebook each had their moment and then most users either left the platform or spend more time on other platforms.
We are in an interesting phase where lots of different new platforms are experimenting with differentiation strategies. There is a whole ecosystem of “political right” social media (Truth Social, Gab, Parlor, Rumbl, etc). The federated social media platforms are selling the “you won’t lose access to everything due to moderation/banning” niche. I’m sure there are Web3 (the blockchain one) social media platforms, but I can’t be bothered to look into their details.
for facebook to be displaced, an app has to offer something else facebook isn't offering, and most new apps offer less - going for the simpler approach. I think that's a loosing strategy myself. I remember how long I used msn messenger just because it had the email tied into it at the time. You need to offer more, not less.
s/computers/furniture/, or kitchen ware (cooking), or any other daily thing that some people have significantly above-average interest in.
This also goes for software: word processors, machine learning frameworks, browsers.
App trustworthiness is at an all time low if you ask me. It's like each store you walk in to is a scam operation out to get money for returning the littlest amount of value back. There is no more organic or honest growth, even users on platforms are faking their statistics too... This entire ecosystem will eventually end up eating itself in my opinion.
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.
Personally, I found it striking how similar this looks to the other doomscrolling sites (sure, it's only superficial, but if you don't "dig" you might not catch that it's all simulated).
Double whammy of screwing poor people with monetary policy.
Who is doing this?
None of the mentioned apps have managed to do this. Maybe that is because there is no consumer interest, but it doesn't make the goal any less appealing.
It'll be nice when we get to the point where we can have a proper working chat app that doesn't require one. Hangouts used to be great but Google has to always make sure their chat doesn't work.
https://www.businessinsider.com/13-slides-softbanks-vision-f...
https://finance.yahoo.com/news/golden-geese-unicorns-inside-...
> Earlier this year, a former employee alleged that IRL—the name stands for “in real life”— had fired him after he voiced concerns that many users were bots
It's hilarious that "In Real Life" was 95% bots.
It boasts of 10M+ downloads in Google Play
Oh dear. I wonder if there will be a Fund 3
The employees, investors and friends and family off?
There are some people on it just not enough to warrant that valuation.