Man how insane is it that these guys and gals raised 400 millions on tech without any raw data, nothing to show for it? It was never reproduced? They just said they got it?
The more I live in this world, the more I realize that its winners are pretty much exclusively charismatic bullshitters. I used to think that professional investors actually were a little smarter than the rest. I mean, here they are making huge bets on particular numbers on the roulette wheel--they must know something we don't! But they keep getting fooled!
They have gobs and gobs of money to invest. Rich people chasing ever riskier rewards just handing money to them! They have to find something promising to throw it at. But who is it going to? Evidently, a lot of it goes to founders whose primary skill is storytelling. I used to think, no matter how handsome and smooth and persuasive you are, you at least have to have a little substance behind your enchanting narrative and ivy-league mannerisms. But here we are with failure after failure (and a once-a-decade colossal failure like Theranos) where all the warning signs were visible to someone not under the spell, and these bullshitters are still getting funding shoveled at them.
It's pretty sad that "look like you know what you are doing and convince gullible people" is probably the best future career advice I can give to my school-age daughter.
> I used to think that professional investors actually were a little smarter than the rest.
It's been my experience that you can't tell who's smarter than who by what they do for a living. On the whole, no group is actually smarter than any other group.
> It's pretty sad that "look like you know what you are doing and convince gullible people" is probably the best future career advice I can give to my school-age daughter.
I don't agree with that takeaway. I think the takeaway is that confidence is the primary thing that people take as a proxy for competence. It's not really about gullibility as much as people engaging in a heuristic. So learn to fake confidence, but have the chops to back it up.
I'd venture that professional concert piano players or chess professionals (just to pick two random ones that popped into my head) are on average more intelligent than other fields which I won't name.
I suppose it depends on the definition of smart which I understand as intelligent/good rational decision making but maybe you mean somthing else.
I think the point GP was trying to make was about individuals in the groups, not averages. There are some brilliant janitors, and some professional piano or chess players have had savant syndrome. You're unlikely to find unintelligent or savant biochemists, but I'm sure more than a few are hyperfocused on their discipline to the exclusion of competency in other areas.
I doubt a biochemist would have savant syndrome. It's possible, maybe. It would probably look like someone who could recall all of the enzymes (and their variants) and intermediates in various biosynthetic pathways and could tell you without research which enzymes would need to be expressed together to get from one starting chemical to another.
> It's been my experience that you can't tell who's smarter than who by what they do for a living. On the whole, no group is actually smarter than any other group.
I assumed they meant professional investors are smarter about evaluating potential investments. Not generally smarter, just smarter about what they put their money into.
OP here. I guess rather than "smarter" I meant to convey: less gullible, less vulnerable to being influenced by silly signals like someone's mannerisms and confidence, less reliant on unexplainable gut feels.
I guess when I think of professional investors picking some of these dogs, my mind imagines that scene in Moneyball[1] where the old timers are trying to pick baseball players by who "looks good," "has a good jaw," "how the ball sounds when it pops off his bat, and "what the player's girlfriend looks like."
I don't know that that's proven. I think it has been shown that index mutual funds generally do as well as actively managed funds. One explanation is that the fund managers don't know better than anyone else. Another explanation is that the fund managers do know better, but their fees are so high that it cancels out the benefit of their expertise. That is, their expertise is real but overpriced.
On a practical level, there's also the matter that, even if some fund managers do beat the market, some other fund managers don't, and it's hard to tell which is which. By going with an actively managed mutual fund, you take on "how do I know my fund manager is one of the good ones?" risk, which you don't have with index funds.
> It's been my experience that you can't tell who's smarter than who by what they do for a living.
There are always exceptions of course. But it is most definitely true that (for example) the average IQ of people doing high end physics is way higher than the average IQ of people laying bricks.
You're ignoring GPs first sentence: "It's been my experience that you can't tell who's smarter than who by what they do for a living."
This first sentence indicates that they are writing about individuals with a vocation, not a group average. Statistically, in developed countries, any given manual laborer is likely to be less smart than any given venture capitalist, but Elon Musk, for instance, has been both. If you'd randomly picked him, in December of 1989, from the pool of manual laborers, you would have been wrong.
I view investors like I view critics of media: necessary for society in small doses, but otherwise contributing little value of their own into the world.
And my threshold for having "too much" of these is pretty low...
Even so, these people of the Power Elite were visibly much smarter than average mortals. In conversation they spoke quickly, sensibly, and by and large intelligently. When talk turned to deep and difficult topics, they understood faster, made fewer mistakes, were readier to adopt others' suggestions.
Nice find! The author, it seems, falls for the same sorts of things I mentioned. He talks about an "executive-nature" that sets these people apart. Their "aura". Whether they "sparkle with extra life force." People who "just came across as... formidable, somehow." And over and over through the article, he confuses these things with genuine competence and intelligence.
The author, it seems, falls for the same sorts of things I mentioned.
That was not my intent. The point of the essay was exactly the opposite. Maybe I fall for the same stuff, but Eliezer is a very smart guy who was predisposed (as he makes clear in the essay) to believe that the people he met were all fluff. He was surprised that they were not just demonstrably knowledgeable, but, in addition, had other appealing characteristics.
Having sat on the other side of the table reviewing pitch decks and proposals, most investment decisions seem to be taken on either a very obvious "this is complete nonsense", or on a completely gut feel of: does this sound reasonable, do the numbers look sensible, does the team look good.
> a completely gut feel of: does this sound reasonable, do the numbers look sensible, does the team look good.
That's really the only way you ever could do it. But the key words there are "reasonable" and "sensible". Reasonable and sensible things don't revolutionize the entire world. They're not brand new, unprecedented technologies. It's not sensible to claim you'll create a ten-billion-dollar+ market overnight. It's not reasonable to claim that a problem that 10,000 smart scientists have worked on for decades was just solved in an unexpected way by this twenty-something "wunderkind" upstart and no you can't see behind the curtain. And yet these people get hundreds of millions in investment anyway. That's the question: why the hell did that ever sound reasonable; why the hell did those numbers ever look sensible!?
To me it's a natural consequence of wealth inequality. When you have mega funds like the oil countries have, where even losses like this are not really relevant, you will have this behavior. They know it's a moonshot. It's high risk high reward. And many will fail - but in the end, it doesn't really matter that much.
I sometimes think that the real reason ChatGPT scares/excites so many tech business types, is that it has automated the one skill they have and are looking for in startup founders, which is to BS convincingly.
> It's pretty sad that "look like you know what you are doing and convince gullible people" is probably the best future career advice I can give to my school-age daughter.
I would like to think that you would want your daughter to get more out of life than just raw cash.
we really need to stop talking about these situations with legitimate terminology. They aren't "VCs" or "Investors". They're marks, and they got scammed.
"you can't cheat an honest man" definitely applies.
Not sure why you were flagged, but many people handling millions say that they can do it because they know how to do it. There is a case to be made that some of them actually don't.
VCs aren't marks. They're fencers, hoping to get rid of the product before anyone realizes it's worthless or stolen. The (possibly sometimes subconscious) reason they don't care to deeply investigate is because if they're convinced by a shallow inspection, they're pretty sure they'll be able to convince others.
It's a greater fool shockwave, pretending to buy into something and betting that you can get someone else to buy into it before the bottom falls out. Not that you know for sure the bottom will fall out, but if you're going to buy in based on how marketable the pitch is, examining it too hard might weaken that pitch or make it fall apart. In that case you've wasted time and money and have to find something else. If you're committed, the last thing you want to do is examine the business; you're shortening your bullshit runway.
I know of a company, in a totally different field, operating on the same principles, with the same warning signs. They raised close to one billion and are in the process of raising 200 million more. Happens all the time, but never to me (quoting a line from the classic Margin Call).
That sounds a little bit like "If I can tell this company is defrauding investors, how can I get in on the fraud?" Whoever you borrow that stock from is now your mark that you are defrauding -- indirectly, of course, since you're not forging fake results or something. It still feels icky.
> That sounds a little bit like "If I can tell this company is defrauding investors, how can I get in on the fraud?"
That's not how I meant it. I was thinking more generally about pre-IPO companies that you think (for reasons that you can legitimately use when investing in this manner) have dim prospects.
Look at the stock market and fixed income investments around you. There is nothing there, very modest growth. That explains in part why so many people shifted part of their pile of cash to VC investments. The pile is not growing fast enough. Too many suckers out there who have not realized that we are in a new normal: low growth, low productivity, an aging, less dynamic society.
> Man how insane is it that these guys and gals raised 400 millions on tech without any raw data, nothing to show for it? It was never reproduced? They just said they got it?
Got to stop thinking that people with money are smarter than anyone else.
