I returned from a quick trip to London on the day of Thanksgiving, thus missing the bonhomie of the weekend. While I did miss the slices of pie, it was good to spend the time watching The Silence of Water on PBS Masterpiece (via Amazon Prime.) The Italian crime show is beautiful in location, cinematography, and acting. And despite having to follow the subtitles, it is worth binging. 

The show was an excellent way to stay away from the incessant come-hither siren call of Black Friday — a disease that has also spread to the United Kingdom. I used the opportunity to stock up on memory cards, but that’s all. For the rest of America — despite economic doldrums, it seems to be the season of shop till you drop. I call this the consumerism curse.

The long weekend was also a good time to reflect and read. 

What I am reading

Amazon was losing $10 billion a year on its Alexa business. Google, too needs to learn how to make its voice-interface business profitable. And Apple’s Siri is not going anywhere as, well. So what is the future of voice interfaces in this era of economic frugality

Talking about Apple is becoming an ad company. On its blog, Proton, the privacy company, breaks down how Apple’s tracking works. I, for one, am disgusted by this direction taken by Apple. (Related: The golden noose around Apple’s neck.)

If you are struggling with the whole FTX and Sam Bankman-Fried’s shenanigans, here is a very easy-to-understand explainer of how the whole con worked. Alex Tabarrok has done a good job, and worth a read. 

On the other end of the spectrum is a breakdown of the disaster that was FTX by an accomplished finance professor who digs into the intricacies of the con.(https://www.coindesk.com/)

Ken Kocienda, a former Apple user experience guru, breaks down the design and user experience challenges of Elon Musk’s proposed changes to Twitter’s verification systems. The whole piece is worth reading

Given all the obsession with Twitter, we must remember that the new generation of Internet natives doesn’t care much about the platform or its peer Facebook. For them, it is all about YouTube and TikTok

The A to Z of climate change by Elizabeth Kolbert is the most sobering piece I have read this weekend, and it is an important reminder of the existential threat we are facing as a collective. 

November 27, 2022. San Francisco

red and blue light streaks
Photo by Maxim Hopman on Unsplash

Ever since the FTX story broke, I have had two recurring thought. This company reminds me of Enron, the energy company that wanted to make markets in everything — especially in gullibility. I wrote about their remarkable similarities in my piece for The Spectator, which is a news outlet where I have recently become a contributor.  

In my piece, I wrote:

“Tiger Global, Sequoia Capital, Softbank, Lightspeed, Temasek, Blackrock and others invested over a billion in the company which at one time was valued at $32 billion. FTX and Alameda Research’s intermingled ownership should have raised eyebrows, but history shows greed trumps diligence.”

According to media reports, Sequoia wrote off its entire $213.5 million investment in the company. The question is not just Sequoia, but how did all these giants of risk capitalism not notice the most basic of all risks?

They aren’t alone: FTX’s investor list is a who’s who of Silicon Valley and technology investing.

And no, I don’t include SoftBank in that list. The Vision Fund might as well rename itself a “vision less” fund, for they have shown a great propensity for losing a lot of other people’s money. The other investors, however, did surprise me. Paradigm is likely going to lose its $278 million investment. And they were the crypto experts. So many of the crypto insiders I have spoken to have nothing kind to say about SBF and aren’t surprised that a strong puff of wind took down the house of cards. 

But I suppose when you have deal fever and a severe case of FOMO, you choose to believe anything that helps you convince yourself to do the deal. I know how that feels —  I have had that feeling myself many times, but I had smart voices around me (and seeked them out) to talk me off of the ledge.

The reality is what we want to believe. The magical story of SBF is something that everyone wants to believe. Sequoia, I suppose, wanting to not miss out on the next Mark Zuckerberg, wanted to make the investment. There is an article on the Sequoia website about FTX that explains why FTX was able to raise money from those white shoe firms. It was through arrogance and disregard for the establishment. Not very different from the time when Facebook was out raising money. It is remarkably well written for a puff piece and gives a rare insight into FTX and its edifice built with ahems and groans. 

***

This company has raised over a billion dollars, yet none of the investors had a whiff of what was going on! 

“Their check sizes, while large in a vacuum, were small in terms of ownership percentage,” Dan Primack, a veteran VC industry scribe, wrote in his email newsletter. “Ultimately, had to accept Bankman-Fried’s terms or walk. They chose FOMO.” As one investor told Primack, “Even if we’d been on the board, why are you so sure we would have been given accurate information?” 

Dan Primack, Axios

I guess that’s what made SBF the smartest guy in the room! In hindsight, SBF’s legacy will be that of a guy who made sure everyone thinks crypto is a fraud and an industry that wanted to snub the rules getting regulated out of innovation. 

Read: The fall of Sam Bankman-Fried is crypto’s Enron moment – The Spectator World

November 10, 2022. San Francisco