Yeah I am always astounded at stories like this, you acquired a company for 175 million dollars and didn’t even peak at some real data?

that’s pocket change for them. probably just file it under DEI budget for supporting a female founder

I mean from what I understand, they did peek at the “real data”, it’s just that it was convincingly fabricated.

You need to do more than "peek at" the real data, at least if you are buying a business for actual revenue and not for it's potential as an idea.

You need to follow at least some threads all the way down to the ground truth.

First, ask for 20 references of successful happy customers, talk to all of them, and do some verification. Then demand to see all the "real" data and select a random sample of 50 emails and track them all down to real people (or not), and ask the people at those endpoints what is going on.

Yes, this would take a week for a handful of interns/junior employees and one senior staffer. But you are about to invest $175 million. It is worth a bit of actual effort, not just a bunch of handwaving over expensed dinners.

This should be a career-ending move for anyone involved at Chase.

( Remember: should =/= is )

> Then demand to see all the "real" data and select a random sample of 50 emails and track them all down to real people (or not), and ask the people at those endpoints what is going on

Apart from the privacy/compliance/legal reasons that make this very difficult. A very low proportion of 50 real paying corporate customers are likely to respond to an email from a seemingly random source, change that to 50 students you’d hardly get any.

Not to mention, if you really did have a mailing list that was effectively worth $175m, why would you give the whole thing to anybody before you get paid?

For sure, you do NOT give them the whole thing. You let a (presumably skilled) data analyst run a few queries. Letting out 100 or even 1000 names/profiles out of 4 million is effectively commercially worthless beyond verification.

Even if you don't get responses & interviews, you can also use the profiles to do verification - just find correlated data in the wild showing that these people exist -or don't. Check the physical addresses - is the same family name resident? Check school records, does the student exist? Etc. Etc. Etc. Sure, you'll find a few failures, but when they all turn uo bad, you will have saved your team $175 million - worth a weeks effort.

When I say real data I mean data that was not handed to you by people who have 175 million reasons to fake it. Like another commenter added try to talk to some of their customers, in this case even trying to email them seems like it would have been enough.

> How much due diligence really occurred here?

A just question. How much due digilence was done on SBF / FTX by The New-York Times and by the VCs who poured hundreds of millions into a pure fraud?

> How much due digilence was done on SBF / FTX by The New-York Times and by the VCs who poured hundreds of millions into a pure fraud?

NYT isn't an investor, so that's a total non sequitur.

VCs on the other hand...VCs dont do much diligence. And who really cares really? They lost their money, not yours.

No, they lost limited partners money, which is to a large degree pension money.

Not sure how much VCs coinvest in their own funds but I'm willing to bet most of their retirement funds are not in VC investments.

> which is to a large degree pension money.

Then take this up with your local government then. There is a quantitative risk versus reward they take, and you should be glad that they take this bet. FYI - their portfolio mix for VC assets is usually like less than 5~10%. If a GP makes one bad bet, they hardly feel this.

> Not sure how much VCs coinvest in their own funds but I'm willing to bet most of their retirement funds are not in VC investments.

(1) most co-invest (2) no one in their right mind would put all of their assets in one VC fund. (3) if you're a partner a firm like Sequioa, you likely have a family office setup, which would follow a similar model to that of a pension fund.

When VCs skip diligence and invest in a bunch of frauds like Wirecard, Greensill, FTX, etc., it creates an externality we all have to deal with - we're basically subsidizing their credulousness by getting defrauded.

Since huge frauds propped up by VCs seem to collapse several times a year, it doesn't seem like losing their money is incentive not to invest in frauds. It seems like they've just priced it in.

Granted, this might be yesterday's war, money might be tight in the next few years and that might better align incentives.

> it creates an externality we all have to deal with - we're basically subsidizing their credulousness by getting defrauded.

No one made you buy crypto on FTX. You have to do your own diligence.

> It seems like they've just priced it in

Ding. Ding.

My mistake, I thought you were interested in a discussion about interesting topics, I see you're more interested in being patronizing on the internet. That's not really what I'm here for, so take care.

You made a bold and unfounded statement:

> it creates an externality we all have to deal with - we're basically subsidizing their credulousness by getting defrauded.

and I commented on why I thought it was wrong (e.g. "you don't have to deal with these externalities unless YOU choose to"). How is that not a discussion?

> That's not really what I'm here for, so take care.

Yet, you still responded...hence, discussion.

Sheesh, tough crowd.

VCs, yes, they should have done more due diligence. But putting the NYTimes on the same playing field, as if they can be expected to have the same access to business records as investors, is dumb.

At least FTX actually had users and customers...

Eh, optimal amount of fraud is not zero - they as a bank should know that better than anyone - and they are going back to sue and press charges against the fraudulent founder. If JP Morgan Chase is being defrauded all the time, it's a different matter, but there's no indication of that here - they're not Credit Suisse.

I'll quote another comment: > Javice interfered in due diligence in a very sophisticated way. JPMC tried to verify user data but Javice claimed they couldn't provide user personal information "due to privacy concerns". In the end Javice was able to convince due diligence team by engaging in multiple layers of fraud. Sure due diligence team could've done a better job, but Javice was a sophisticated adversary. It's not like due diligence team didn't have any concerns. But they wanted to balance their concerns against possibility of passing a good deal due to formality.