Silicon Valley: History’s Greatest ‘Ponzi Scheme’ (Mini Documentary)
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-----------------------
When you think about a ponzi scheme, you typically think of Bernie Madoff. The thought of Silicon Valley being a giant ponzi scheme never really crosses your mind. And that’s perhaps exactly why Silicon Valley has grown to be perhaps one of the biggest ponzi schemes in human history.
It all starts with an idea, a new app, a new platform. A disruptive idea that will for sure turn this industry upside down. So the founder manages to get the startup going but they run into a problem. Their revolutionary idea needs a lot more up-front capital to get to the next stage. Luckily, that’s where the Venture Capital firms, or VC’s for short come in.
You come in and say “we wanna partner with you, you’re awesome, we backed this company”. You are what amounts to a fund manager who knows a lot of rich people. In exchange for a fee, Investors hand the VC firm money to be locked up in a fund for 10 years or more. So, if you raise a $100m fund, you’re guaranteed to make a minimum of $17m.
Grow super fast. The founders take the millions you gave them and shove it into things like Facebook ads, Instagram ads, YouTube ads, Amazon services. Basically, you want them to do whatever it takes to “grow” on paper. VC firms tell startups to not run at a profit.
Running out of money! So a year or so passes by and the founders have spent all your money. The startup you picked grew their user base by 400%! So you go back to the board meeting and say “hey guys, good job, but if we wanna keep this train going we’re gonna need to raise more money” Then they tell their buddies “look at the growth, you should invest in B”.
The Series B round, the second funding round a startup goes through is logically called the Series B. Series B money goes into FB, Goog, Amzn, buying more unprofitable growth, doesn’t matter if it’s sustainable, you’ve been told to grow.
Run out of money + Series C. So your friend, VC Bob, shows off their “returns” to his friends at another VC firm, and they raise a few more millions for the Series C funding round completing Step 7. And throughout all these funding rounds, since all the VC firms are buddy-buddy, they can value these companies at whatever valuation they want!
Look like a genius. That means on paper to your investment had a 4x ROI!
So for step 9, you start a second fund to invest in more startups, to have more money under management, collecting those management fees, starting the process all over.
The only reason this whole thing worked is because of the same reason why any ponzi scheme works: the money kept coming in.
-----------------------
All materials in these videos are used for educational purposes and fall within the guidelines of fair use. No copyright infringement intended. If you are or represent the copyright owner of materials used in this video and have a problem with the use of said material, please send me an email, jake@jaketran.io, and we can sort it out.
Copyright © 2020 Transcend Visuals, LLC. All rights reserved.
DISCLAIMER: These videos are for entertainment purposes only. This is not meant to be financial advice. Please always do your due diligence and never stop learning.
AFFILIATE DISCLOSURE: Some of the links in this video description are affiliate links, meaning, at no additional cost to you, I may earn a commission if you click through and make a purchase and/or opt-in.
Видео Silicon Valley: History’s Greatest ‘Ponzi Scheme’ (Mini Documentary) канала Jake Tran
Subscribe to @Arvid the Insider's channel (the President of Jordan Belfort) here: https://jake.yt/arvid
🎥 Business is complicated. Subscribe to curiosity: http://bit.ly/jt-sub
✉ Be the first to watch new videos with email notifications: http://bit.ly/jt-inbox
📸 Follow me on IG: @jaketran.io // http://bit.ly/jt-ig
👨👦👦 Join the Tran Mafia Family here: https://bit.ly/patreon-jt
💬 Join the community Discord: http://discord.gg/BmK8EnQ
Support this channel monetarily:
💻 𝗟𝗮𝗽𝘁𝗼𝗽 𝗟𝗶𝗳𝗲𝘀𝘁𝘆𝗹𝗲 𝗔𝗰𝗮𝗱𝗲𝗺𝘆: Learn exactly how I landed my $40/hr work from home job ($83k/yr) at 19 years old: https://jake.yt/LLAd
🌐 Best affordable website hosting: https://jake.yt/bhd
🖥️ Website platform I use: https://jake.yt/kd
💽 Editing software I've used for 7+ years: https://jake.yt/ccd
📒 Online bookkeeping software I use: https://jake.yt/benchd
🧾 Best affordable bookkeeping software: https://jake.yt/fbd
📜 The exact resume I used to get my $40/hr remote web dev job + a lot of bonuses: https://jake.yt/DRBd
📚 Get 3 free audiobooks for life: https://amzn.to/2v58PSu
🎥 My video gear, setup, tech, books: https://jake.yt/stored
✉️ Email me:
Advertising inquires: JakeTran@ibg.yt
Everything else: jake@jaketran.io
Subscribe to the backup channel on LBRY, use reward code "jake-cast" for free coin: https://bit.ly/LBRY-jt
📰 Sources & visuals: https://bit.ly/39aXIrm
-----------------------
When you think about a ponzi scheme, you typically think of Bernie Madoff. The thought of Silicon Valley being a giant ponzi scheme never really crosses your mind. And that’s perhaps exactly why Silicon Valley has grown to be perhaps one of the biggest ponzi schemes in human history.
It all starts with an idea, a new app, a new platform. A disruptive idea that will for sure turn this industry upside down. So the founder manages to get the startup going but they run into a problem. Their revolutionary idea needs a lot more up-front capital to get to the next stage. Luckily, that’s where the Venture Capital firms, or VC’s for short come in.
You come in and say “we wanna partner with you, you’re awesome, we backed this company”. You are what amounts to a fund manager who knows a lot of rich people. In exchange for a fee, Investors hand the VC firm money to be locked up in a fund for 10 years or more. So, if you raise a $100m fund, you’re guaranteed to make a minimum of $17m.
Grow super fast. The founders take the millions you gave them and shove it into things like Facebook ads, Instagram ads, YouTube ads, Amazon services. Basically, you want them to do whatever it takes to “grow” on paper. VC firms tell startups to not run at a profit.
Running out of money! So a year or so passes by and the founders have spent all your money. The startup you picked grew their user base by 400%! So you go back to the board meeting and say “hey guys, good job, but if we wanna keep this train going we’re gonna need to raise more money” Then they tell their buddies “look at the growth, you should invest in B”.
The Series B round, the second funding round a startup goes through is logically called the Series B. Series B money goes into FB, Goog, Amzn, buying more unprofitable growth, doesn’t matter if it’s sustainable, you’ve been told to grow.
Run out of money + Series C. So your friend, VC Bob, shows off their “returns” to his friends at another VC firm, and they raise a few more millions for the Series C funding round completing Step 7. And throughout all these funding rounds, since all the VC firms are buddy-buddy, they can value these companies at whatever valuation they want!
Look like a genius. That means on paper to your investment had a 4x ROI!
So for step 9, you start a second fund to invest in more startups, to have more money under management, collecting those management fees, starting the process all over.
The only reason this whole thing worked is because of the same reason why any ponzi scheme works: the money kept coming in.
-----------------------
All materials in these videos are used for educational purposes and fall within the guidelines of fair use. No copyright infringement intended. If you are or represent the copyright owner of materials used in this video and have a problem with the use of said material, please send me an email, jake@jaketran.io, and we can sort it out.
Copyright © 2020 Transcend Visuals, LLC. All rights reserved.
DISCLAIMER: These videos are for entertainment purposes only. This is not meant to be financial advice. Please always do your due diligence and never stop learning.
AFFILIATE DISCLOSURE: Some of the links in this video description are affiliate links, meaning, at no additional cost to you, I may earn a commission if you click through and make a purchase and/or opt-in.
Видео Silicon Valley: History’s Greatest ‘Ponzi Scheme’ (Mini Documentary) канала Jake Tran
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