Venture Capital isn’t an asset class its an aspirational purchase.

The same way people buy Ferraris or iPhones because they want to be seen as a certain type of person. Its an extension of the American Psycho mentality. Wanting to fit in.

You see this playing out in real time recently with two high profile embarrassments. I hesitate to say failures because both these companies may yet turn it around. They have the capital.

1. Theranos. A 19 year old student has a great, though not original, idea. That we should be able to do blood tests from a drop of blood instead of a vial. She then raised $400 million in the next 13 years. It turns out that the technology doesn’t work. It never worked.

She didn’t raise the money because she had a marketable idea and business plan. She raised the money by preying on VC’s want to not miss the next big thing. On wanting to be seen doing something more than just another food delivery app. By creating the illusion of being a “tech founder”. She mimicked the lore and idolized Steve Jobs. And in all the flash and feel goods, the investors looked right past the fundamentals. They were not investing to make money, they were investing to feel good.

2. Mike Rothenberg’s VC firm. Young vc startup. He built a network at Stanford and Harvard business school purely based on networking skills. Turned that into a $5 million VC fund. Then raised another ~$30 million in the following years. Without any sort of track record. The entire amount of money was raised by making people feel good. Flaunting his connections.

Once he had the money, he spent it on more feel goods. Large parties with celebrities. Boxes at sports games. All things his investors could partake in. Could feel good rubbing elbows with celebrities. A few years in, the whole firm ran out of cash. There was no actual business model underneath the flash. It was just “lets be flashy and raise a ton of money. Then lets spend a lot of money being flashy and making people feel good. That’ll work.” And it does. And now all the employees are gone and the FBI is considering an investigation.

This happens over and over. Investors keep falling for it. Its because they’re not actually looking to make money. No matter what they say.

They want a ticket into the world. To belong.

^Day 62/90 413 words

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