This is the part I don’t understand. Pretty much everyone agreed these would be terrible products and yet these companies somehow drum up tens of millions of dollars in investments. How?
Seems like you can slap AI on anything and it just becomes a money-printing machine. Which is why we’ve seen it slapped on seemingly every tech product in the last decade…
As I described above. The endgame is to either IPO and sell off the shares to the dumb public, or find someone who’s willing to buy out the company because they hold a patent or have some interesting people on board.
Because the investors are always using Other People’s Money. They “invest” OPM and if it succeeds they take a huge cut and proclaim themselves to be geniuses. If it fails, they shrug and make up some BS to console the loser.
Well sure, but aren’t those “other people” concerned to see their money being spent that way? Or that they regularly take huge losses? Aren’t the “investors” concerned at all that people are no longer going to trust them with their money?
I’m not going to lie to you and tell you I know how all of this works, but from experience, the people running these scams are rarely the people who suffer.
Here’s one I’ve seen myself:
There’s a new hot startup. Wall Street rolls up to the C-suite of this company and makes an offer: Go public and we’ll give you thousands of “special” shares. (Some companies might even get multiple of these offers from different Wall St. investors.)
Once the company agrees to go public, Wall St. gives that company’s C-suite Special Shares. Wall St. also gives these shares to friends, family and power people they would like to reward and/or influence.
On the big day, the company goes public. (To the Moon, Baby!) Everyone with Special shares can sell anytime they like. Company employees have a 6-month “blackout window”. The general public is encourages to “invest now before the shares go up so they can sell after they go higher!”
After the stock climbs in value, the Special Stock holders dump their shares and rake in the cash. Everyone else is left holding the bag.
So who in this scenario are the losers? The people who bought the stock and watched it lose value? The people who sold their Special Stock after it went up and before it crashed? Who gets punished? Who goes to jail? Where does the money go?
You saw this whole scam condensed to it’s essentials during the Crypto Currency scams a few years back.
So many different variations on this scam. Keeps working too, so long as you don’t get sloppy and steal from rich people like Bernie Madoff did.
I think you overestimate the amount of knowledge, instinct and just plain research these VC people put on investments (I guess when you have money, if one of 10 hit you made it anyway?)
When the game Pokemon Go came out, Nintendo’s stock skyrocketed to the point Nintendo had to come out and publicly explain they had sold the IP, were not behind the game and made no money from it… “Investors” thought otherwise and started pouring money literally at the wrong company
This is the part I don’t understand. Pretty much everyone agreed these would be terrible products and yet these companies somehow drum up tens of millions of dollars in investments. How?
They used the phrase AI and humane in the same sentence. Investors who aren’t very technical would get very excited about it of course.
Seems like you can slap AI on anything and it just becomes a money-printing machine. Which is why we’ve seen it slapped on seemingly every tech product in the last decade…
It’s called exit capitalism. They hope to create enough hype so they can sell off their share to the next idiot for a higher price.
Uh-huh. And how is that supposed to work?
As I described above. The endgame is to either IPO and sell off the shares to the dumb public, or find someone who’s willing to buy out the company because they hold a patent or have some interesting people on board.
That doesn’t explain why the “dumb public” are buying these shares.
Even as a dumb investor you can extract a lot of money via pump and dump. Just got to get in/out at the right times.
Spread that out over several portfolios, and you can get rich without ever contributing a single thing to your community!
Yes but in order to do that you have to have another “dumb investor” lined up and convinced that the stock is going to continue to appreciate.
It does. Hype.
People and smaller investors are told that this company is the next big thing, so they buy it at high prices.
Investors are not smart people
Because the investors are always using Other People’s Money. They “invest” OPM and if it succeeds they take a huge cut and proclaim themselves to be geniuses. If it fails, they shrug and make up some BS to console the loser.
Well sure, but aren’t those “other people” concerned to see their money being spent that way? Or that they regularly take huge losses? Aren’t the “investors” concerned at all that people are no longer going to trust them with their money?
I’m not going to lie to you and tell you I know how all of this works, but from experience, the people running these scams are rarely the people who suffer.
Here’s one I’ve seen myself:
There’s a new hot startup. Wall Street rolls up to the C-suite of this company and makes an offer: Go public and we’ll give you thousands of “special” shares. (Some companies might even get multiple of these offers from different Wall St. investors.)
Once the company agrees to go public, Wall St. gives that company’s C-suite Special Shares. Wall St. also gives these shares to friends, family and power people they would like to reward and/or influence.
On the big day, the company goes public. (To the Moon, Baby!) Everyone with Special shares can sell anytime they like. Company employees have a 6-month “blackout window”. The general public is encourages to “invest now before the shares go up so they can sell after they go higher!”
After the stock climbs in value, the Special Stock holders dump their shares and rake in the cash. Everyone else is left holding the bag.
So who in this scenario are the losers? The people who bought the stock and watched it lose value? The people who sold their Special Stock after it went up and before it crashed? Who gets punished? Who goes to jail? Where does the money go?
You saw this whole scam condensed to it’s essentials during the Crypto Currency scams a few years back.
So many different variations on this scam. Keeps working too, so long as you don’t get sloppy and steal from rich people like Bernie Madoff did.
I think you overestimate the amount of knowledge, instinct and just plain research these VC people put on investments (I guess when you have money, if one of 10 hit you made it anyway?)
When the game Pokemon Go came out, Nintendo’s stock skyrocketed to the point Nintendo had to come out and publicly explain they had sold the IP, were not behind the game and made no money from it… “Investors” thought otherwise and started pouring money literally at the wrong company
There are plenty of similar examples…