WSJ on how Tesla alums are cleaning up on green energy

Governments everywhere are trying to build domestic clean-energy industries, from electric cars to solar panels.  No company has had more recent success doing that than Tesla, and no executives are in greater demand than the auto maker’s alumni. 

More than 30 companies led or launched by former Tesla employees have raised more than $26 billion in the past decade, most in the past few years, a Wall Street Journal analysis of data from PitchBook shows.  Much of that money went to a handful of companies in the electric-car and battery supply chain: luxury electric-vehicle company Lucid Group, European battery upstart Northvolt and battery-recycling firm Redwood Materials. 

Many of these companies focus on domestic manufacturing, as Tesla has for more than a decade.  They are well-positioned to take advantage of last year’s U.S. climate law and Europe’s response to it.  A key goal for both is to whittle away at China’s dominance in critical clean-energy industries. 

~ The Wall Street Journal, "Tesla Alums Win Big in Green Energy Bonanza: Executives who survived EV maker’s dark days have raised billions from investors," by Ed Ballard and Amrith Ramkumar, August 15, 2023

Luc Olinga on effective altruism's omnipresence in Silicon Valley and prestigious universities

Bankman-Fried had adopted a posture, nourished by the current philosophy of Effective Altruism, omnipresent within Silicon Valley and the prestigious universities.  The EA ideology boils down to "the most good can be done by choosing to make the most money possible in order to give it all away."  Earn-to-give is the community’s leitmotif. 

The FTX debacle shows that those who sign the checks are inspired by those who look like them, who have been to the same schools as them, who come from the same socioeconomic backgrounds as them, who share their realities.  If you're different, you're almost out of luck.

~ Luc Olinga, "Crypto Is Full of FTX's Bankman-Fried," TheStreet.com, November 24, 2022

Sequoia Capital on its initial investment in FTX

Alameda was not immune to the exchange-level shenanigans that gave crypto as a whole its sleazy reputation.  But FTX had an ambition to change that.  It was built to be the exchange traders could count on. SBF needed to get the word out.  He wanted FTX to be known as the respectable face of crypto.  This required ad campaigns, sponsorship deals, a charitable wing—and a war chest to pay for it all. 

FTX did need money, after all.  And it needed that money from credible sources so it could continue to distinguish itself from the bottom-feeders who came to crypto to fleece the suckers.  So, in the summer of 2021, when FTX started to raise its Series B from a who’s who of Silicon Valley VCs, [Sequoia partners Michelle] Bailhe and [Alfred] Lin hit the “Don’t Panic” button.  “Embarrassingly, we had never tried to reach out to Sam, because we figured he didn’t need us,” Bailhe admits.  “I thought they were just minting money and had absolutely no need for investors.”  Learning otherwise, they quickly contacted SBF and organized a last-minute Zoom call between him and the partners at Sequoia—at four California time on a hot July Friday afternoon.  Bailhe was adamant, putting her reputation with the other partners on the line: “I’m like, ‘No, it’s worth it. Cancel your afternoon.’”

~ Sequoia Capital, "Sam Bankman-Fried Has a Savior Complex - And Maybe You Should Too," September 22, 2022

(The account is based on an article by journalist Adam Fisher, commissioned by Sequoia.  The article, published last September, was posted on the firm's website under "We help the daring build legendary companies.”  It has since been removed.)

Kevin Duffy on the 2000 and 2022 tech busts

The great tech bust of 2000-02 could not take place if not for the boom that preceded it. And quite a boom it was.  As Grant’s Interest Rate Observer reports, U.S. venture capital investment doubled in 1999 and then again in 2000 to a record of roughly $125 billion (1.2% of GDP).  By comparison, the 2021 vintage doubled from 2020 to $342 billion (1.4% of GDP); worldwide figures were twice as large: $643 billion. 

The initial casualties, in both cases, were money-losing tech companies (ARKK is our present-day proxy). Both busts were sharp and unequivocal.  Both times investors early on failed to connect the dots to the suppliers of uneconomic ventures.

~ Kevin Duffy, "Summer of 2000: Déjà vu all over again," The Coffee Can Portfolio, September 18, 2022

Carla Harris on venture capital funds going to women and minorities

There was about $3.8 billion that were allocated to black and hispanic founders last year [2020].  That number was $11 billion this year [2021].  Now the amount of VC dollars distributed also skyrocketed, and with respect to women, while the percentage was down, the absolute amount went up.  It was $3.8 billion and change that was allocated to female founders last year [2020].  That number was over $6 billion this year [2021]: only 2%, but the absolute dollars is something we need to pay attention to.  Slowly but surely, it's starting to penetrate.

~ Carla Harris, Morgan Stanley senior client advisor, Bloomberg TV interview, February 1, 2022

Scott Galloway on the timing of business startups (and WeWork's IPO timing)

I've started nine firms and I'm, generously, 3-4-2 (win-lose-tie). In retrospect, and I think about this a lot, the only reliable forward-looking indicator of our firm’s success or failure was … timing. Specifically, the part of the economic cycle at founding. The firms we started in recessions had an easier time finding talent, controlling costs, and getting immediate feedback about if this thing worked as clients/consumers held their purse strings closed. Then, armed with a battle-tested value proposition, as the recession ended, we enjoyed the afterburner of confidence to spend more and try new things. #disco.

In frothy markets, it's easy to enter into a consensual hallucination, with investors and markets, that you’re creating value. And it’s easy to wallpaper over the shortcomings of the business with a bull market's halcyon: cheap capital. WeWork has brought new meaning to the word wallpaper. This is more reminiscent of the cheap marbled panelling you'd find in Mike Brady's home office — panelling whose mucilaginous coating will dissipate at the first whiff of a recession, revealing a family of raccoons or the mummified corpses of drug mules. 

~ Scott Galloway, "WeWTF," No Mercy / No Malice blog, August 16, 2019

Scott Galloway on the cult of personality at WeWork

WeWork's prospectus has a dedication (no joke): "We dedicate this to the power of We — greater than any one of us, but inside each of us." Pretty sure Jim Jones had t-shirts printed up with this inspiring missive. Speaking of idolatry, "Adam" (as in Neumann) is mentioned 169 times, vs. an average of 25 mentions for founder/CEOs in other unicorn prospectuses. Uber’s CEO, Dara Khosrowshahi, is mentioned 29 times in their prospectus. Granted, "Adam" is super dreamy, in sort of an Argentinian polo player way (he's Israeli). But he's not 6x dreamier than Dara, who has a whole “Omar Sharif, if he went to Brown” thing going on. But I digress. We's mission is "to elevate the world's consciousness." Maybe, but it's clear the mission of the prospectus is to dampen our consciousness ahead of the sh*tshow that is "The Story of Us: We."

~ Scott Galloway, "WeWTF," No Mercy / No Malice blog, August 16, 2019

Max Gulker on how antitrust actions stifle startups

The internet boom two decades ago demonstrated the special importance of startups in high-tech industries. Because the vast majority of startups fail, motivating their creation in the first place requires an especially large pot of gold at the end of the rainbow.

The only statistic you need to know is that among successful startups, 16 times more are bought by larger firms than issue their own IPO. Getting bought is the realistic light at the end of the tunnel for the quintessential computer geek toiling away in their garage. Major antitrust decisions with a chilling effect on big firms buying smaller ones in the tech space calls that path into question.

The FTC’s current course would effectively erect new barriers to entry in countless markets for technology. Such barriers are harmful in any industry; in high tech, they risk destroying the evolutionary process of startups that is a crucial source of growth in 21st-century advanced economies.

~ Max Gulker, "The FTC's Strategy Against Facebook is Bad Economics," American Institute for Economic Research, August 2, 2019

George Gilder on the new boom based on the Internet economy (2008)

From the pits of the crash of 2000, when the Internet and the dot.com siege were famously dismissed as a barren "bubble," came Google and MySpace to rise up and take all the chips and establish a new Internet economy.  If creativity was not expected, governments could plan it and socialism would work.  But creativity is intrinsically surprising and the source of all real profit and growth.

Because the U.S. remains the world's largest economy and still leads the world in business and technological creativity, the current crisis is mostly confined to boondoggles in finance.  It will pass rapidly and evolve into a new boom.  Emerging is a parallel unregulated financial system based on entrepreneurial creativity and invention.

At the heart of this multitrillion-dollar engine of growth are 741 venture capital firms that traffic in creativity as a business.  These firms command $257 billion under management and have launched companies generating $2 trillion in revenues.

~ George Gilder, "The Coming Creativity Boom," Forbes, November 10, 2008

BW SmallBiz: Startup capital grows scarce

With lenders spooked by late summer's credit crunch and the housing market continuing its slide, many entrepreneurs, particularly startups, are finding capital harder to come by. Banks have tightened the spigots, and even Small Business Administration 7(a) loans, which often are easier to obtain than other bank loans, may be tougher to land. Declining home values in many parts of the country are limiting the amount of equity that business owners can use as collateral for loans, as well as the amount of credit available to them.

~ BW SmallBiz, "Hungry for Cash: Startup capital grows scarce," October/November 2007