The good old “make a tech startup with a gimmicky product idea, get millions in VC for some reason, create an underwhelming product that was never meant to be any good, then get bought up by a big company that will sit on the IP and never do anything with it” strategy of making money.
As I described above. The endgame is to either IPO and sell off the shares to the dumb public, or find someone who’s willing to buy out the company because they hold a patent or have some interesting people on board.
Because the investors are always using Other People’s Money. They “invest” OPM and if it succeeds they take a huge cut and proclaim themselves to be geniuses. If it fails, they shrug and make up some BS to console the loser.
I’m not going to lie to you and tell you I know how all of this works, but from experience, the people running these scams are rarely the people who suffer.
Here’s one I’ve seen myself:
There’s a new hot startup. Wall Street rolls up to the C-suite of this company and makes an offer: Go public and we’ll give you thousands of “special” shares. (Some companies might even get multiple of these offers from different Wall St. investors.)
Once the company agrees to go public, Wall St. gives that company’s C-suite Special Shares. Wall St. also gives these shares to friends, family and power people they would like to reward and/or influence.
On the big day, the company goes public. (To the Moon, Baby!) Everyone with Special shares can sell anytime they like. Company employees have a 6-month “blackout window”. The general public is encourages to “invest now before the shares go up so they can sell after they go higher!”
After the stock climbs in value, the Special Stock holders dump their shares and rake in the cash. Everyone else is left holding the bag.
So who in this scenario are the losers? The people who bought the stock and watched it lose value? The people who sold their Special Stock after it went up and before it crashed? Who gets punished? Who goes to jail? Where does the money go?
You saw this whole scam condensed to it’s essentials during the Crypto Currency scams a few years back.
So many different variations on this scam. Keeps working too, so long as you don’t get sloppy and steal from rich people like Bernie Madoff did.
I think you overestimate the amount of knowledge, instinct and just plain research these VC people put on investments (I guess when you have money, if one of 10 hit you made it anyway?)
When the game Pokemon Go came out, Nintendo’s stock skyrocketed to the point Nintendo had to come out and publicly explain they had sold the IP, were not behind the game and made no money from it… “Investors” thought otherwise and started pouring money literally at the wrong company
The good old “make a tech startup with a gimmicky product idea, get millions in VC for some reason, create an underwhelming product that was never meant to be any good, then get bought up by a big company that will sit on the IP and never do anything with it” strategy of making money.
Look at the bright side, some engineers had fun working an a new thing.
I’d’ve had tons of fun working on it, but they probably paid their engineers chiefly in equity, so I never would have taken the position anyway.
deleted by creator
It’s called exit capitalism. They hope to create enough hype so they can sell off their share to the next idiot for a higher price.
deleted by creator
As I described above. The endgame is to either IPO and sell off the shares to the dumb public, or find someone who’s willing to buy out the company because they hold a patent or have some interesting people on board.
deleted by creator
Even as a dumb investor you can extract a lot of money via pump and dump. Just got to get in/out at the right times.
Spread that out over several portfolios, and you can get rich without ever contributing a single thing to your community!
deleted by creator
It does. Hype.
People and smaller investors are told that this company is the next big thing, so they buy it at high prices.
Because the investors are always using Other People’s Money. They “invest” OPM and if it succeeds they take a huge cut and proclaim themselves to be geniuses. If it fails, they shrug and make up some BS to console the loser.
deleted by creator
I’m not going to lie to you and tell you I know how all of this works, but from experience, the people running these scams are rarely the people who suffer.
Here’s one I’ve seen myself:
There’s a new hot startup. Wall Street rolls up to the C-suite of this company and makes an offer: Go public and we’ll give you thousands of “special” shares. (Some companies might even get multiple of these offers from different Wall St. investors.)
Once the company agrees to go public, Wall St. gives that company’s C-suite Special Shares. Wall St. also gives these shares to friends, family and power people they would like to reward and/or influence.
On the big day, the company goes public. (To the Moon, Baby!) Everyone with Special shares can sell anytime they like. Company employees have a 6-month “blackout window”. The general public is encourages to “invest now before the shares go up so they can sell after they go higher!”
After the stock climbs in value, the Special Stock holders dump their shares and rake in the cash. Everyone else is left holding the bag.
So who in this scenario are the losers? The people who bought the stock and watched it lose value? The people who sold their Special Stock after it went up and before it crashed? Who gets punished? Who goes to jail? Where does the money go?
You saw this whole scam condensed to it’s essentials during the Crypto Currency scams a few years back.
So many different variations on this scam. Keeps working too, so long as you don’t get sloppy and steal from rich people like Bernie Madoff did.
I think you overestimate the amount of knowledge, instinct and just plain research these VC people put on investments (I guess when you have money, if one of 10 hit you made it anyway?)
When the game Pokemon Go came out, Nintendo’s stock skyrocketed to the point Nintendo had to come out and publicly explain they had sold the IP, were not behind the game and made no money from it… “Investors” thought otherwise and started pouring money literally at the wrong company
There are plenty of similar examples…
They used the phrase AI and humane in the same sentence. Investors who aren’t very technical would get very excited about it of course.
deleted by creator
Investors are not smart people
You’re literally describing venture exit. Once the asset reaches the desired value, you sell your part and hop. Rinse repeat.
Obviously not the case for most of us wagoids
Then stop sitting on yo ass and unionize