A lot last week Investors were left with egg on their faces after FTX valuations went from $32 billion to zero in New York minutes. The VCs were left wondering, “What the hell happened?“And you’re still thinking.”Wait – did I make a mistake? that’s me?“
Why yes, indeed, you are.
People are often led to believe that investors are sharp-eyed and data-driven people who carefully scrutinize the financial backing of the companies they invest in. There is little room for feelings like jealousy or fear of missing out (FOMO) at all. And these people who are pouring in billions of dollars have their eye on the ball, don’t they?
Well, not exactly.
Former Softbank COO Marcelo Claure, who was ousted in late January following a war over pay, was surprisingly candid on Twitter. He had this to say about the FTX fiasco:
This is the same person whose previous firm invested heavily in WeWork, another example of poor judgment on the part of investors. Steve Jobs once said, “Everything around you is made up of people who are no smarter than you.” At the time, Jobs was talking about building products, but apparently this also applies to people funding the startup ecosystem.
While it’s good that Claure is open, honest and reflective, perhaps we should all remember that investors are no smarter than anyone else. After all, they’re human, and their usual lack of self-awareness combined with the myopia of venture enthusiasts may be the problem. Most investors and the founders they invest in are white men, and you get double points if you went to Stanford, Harvard, or MIT. These people are given the mantle of genius in everything they do and touch. It’s rare to predict that the next Warren Buffett will be a black man.
