I can't speak to WeWork, having not seen its books. It seems a more real business than FTX.

This is... not saying much.

The FTX collapse has been eye-opening on this front. FTX was a less serious business than the coffee shop your neighbor opened in 2018, in terms of the books it was keeping. The IRS will be up that coffee shop's ass at the drop of a hat if they claim a bedroom at home as an office, and your neighbor's coffee shop will have a thick packet of receipts and books accounting for every penny spent, at least after they learn their lesson after the first year. FTX could literally not answer the most basic of business questions with any specificity. I'm not talking projections, I'm talking past history. FTX's books were basically a one page napkin scrawl in Excel.

And the list of venture capital was not just long, but prestigious.

Jeepers, Sequoia, give me a billion dollars as an "investment" and I'll personally guarantee you that you'll lose no more than half of it. I've got a napkin right here that says "cryptocurrency" on it. Apparently that's enough for you; where lambo?

Crypto collapses taught me so much about media management and public perceptions.

When the rumors first broke out that 3AC was toast, no one believed it. Zhu Su was perceived as the smart, wise man of crypto. No way HE would be so reckless.

Then when FTX rumors broke out, no one believed it, again. He was on the cover of magazines, hanging out with Tom Brady, writing these thoughtful pieces about crypto, and was our torchbearer in Washington...

Ironically, the folks with the scammiest public reputation (Justin Sun, Tether folks, even CZ/Binance) are still standing.

I predict Binance will collapse before the end of this year.

Was all their lax attitude to bookkeeping etc because they were in the bahamas?

All of those, I'd bet. But also less.

VCs are notorious for being herd animals. We've been in (and are hopefully leaving) an era of easy money. I think people don't generally question what they're doing as long as it's working, and easy money plus a bubbly tech sector means that investing hasn't been particularly challenging.

So I suspect a lot of them have just been uncritically doing what worked for them in the past. And "worked" here isn't defined by building successful businesses, because that's a very long feedback loop, but by more immediate proxies like praise from bosses/colleagues, chasing clout in the industry, getting more money from LPs, getting paid themselves, and feeling smart when people listen carefully to what they think is wisdom.

All that is hopefully about to change. As Buffett says, "Only when the tide goes out do you see who has been swimming naked."

> VCs are notorious for being herd animals

s/VCs/humans/

Social proof is a thing wherever you go, whatever you do?

I think that if you have free/easy money, with low risk of a meaningful downside (e.g. going to jail), and there is increasing competition from other VCs with access to the same money, then you greatly increase the risks you're willing to take. It's a game of homeruns, not singles.

So to answer your question, I think this is way they think: "If this goes wrong, I don't have any real personal skin in the game, and there are a bunch of smart people at other firms that are putting their money in. I better be in because if I don't allocate this capital it goes away. And if I miss a big one, that's worse than losing."

And, while FOMO is often presented as an anti-pattern, another way of framing the same thing is that if everyone else thinks X is the hottest thing since sliced bread and I'm skeptical... Who am I to be so certain that I'm the smartest guy in the room?

Add the complexities of timing. In fact, even if you thought crypto (or various stocks) was bullocks, you could have made a whole lot of money if you got in and out at the right time.