Why is collusion of GameStop or AMC Wall Street Bets meme investors to drive up the price of a stock against hedge funds not worthy of banning? It was cut short in a way, by RobinHood which quickly stopped living up its “for the people” namesake.
Why is collusion of investors to drive up the price of certain startups in private rounds, like Adam Neumann’s WeWork or Travis Kalanick’s Uber not worthy of banning?
Or banking at the same Silicon Valley bank? Or Peter Thiel starting a run on this bank and many of them in unison pulling money out and wiping out the shareholders in a bank that served Silicon Valley for decades?
I mean, I don’t think any of that should be illegal, but what is your consistent criterion and why should others go with whatever your criterion is, versus something else? Or is it just all about “I don’t like that particular thing?”
Can you ban investors “colluding” to all invest in a startup? They do it for many reasons:
Signaling (social proof)
Reducing risk (other investors are likely to top up if needed)
Network opportunities (if others are opening doors for this startup, it’s more likely to succeed)
Networking opportunities (getting into the same round as a famous VC)
Strength in numbers (banding together)
As we found out, half the VCs in Silicon Valley even banked at the same bank!
Even the government overseers supposed to oversee these industries (eg Wall Street, Big Pharma etc) are also part of the revolving door.
But nevermind all that. I have that simple question. There are many reasons why emergent behavior occurs among investors who collude to invest in the same startups, the old boys’ clubs, the demo days.
What will you do to ban all that natural emergent behavior, to “prevent emergent collusion”?