Last week many Investors were shocked after FTX’s valuation went from $32 billion to zero in one minute in New York. Venture capitalists were left wondering: “What the hell happened?And they still wonder,Wait, did I do something wrong? It’s me?”
Why yes, actually, it’s you.
People are led to believe that, for the most part, investors are clear-headed, data-driven people who carefully explore the financial fundamentals of the companies they invest in. There is little room for emotions like jealousy or fear of missing out (FOMO). Of course not. And these people who invest billions of dollars surely have their eye on it, right?
Well not exactly.
In a surprisingly honest tweet today, former SoftBank COO Marcelo Claure, who resigned in late January after a salary battle, reportedly had this to say about the FTX fiasco:
This is from the same guy whose former company also put a lot of money into WeWork, another spectacular example of poor judgment on the part of investors. Steve Jobs once said, “Everything around you that you call life was invented by people who were no smarter than you.” At the time, Jobs was talking about building products, but evidently this also applies to the people who fund the startup ecosystem.
While it is good that Claure has been so open, honest and thoughtful, perhaps we should all remember that investors are not smarter than anyone else. They are human, after all, and their classic lack of self-awareness combined with the myopia of corporate enthusiasts is perhaps the problem. Most investors and the founders they invest in are white males, and you get double points if you went to Stanford, Harvard or MIT. These people receive the mantle of genius in everything they do and play. It is rarely predicted that the next Warren Buffet will be a black man.