Stick to the Thesis

I am still ruminating over the Cult of We—an incredibly well-written and researched book by Eliot Brown and Maureen Farrell. Now being made into a movie. Neumann said he got “smart people to do dumb things. That quote just sticks with me. How smart were they?

I just want to note that none of the investors around the table were women. There were C-players inside We Work, but there were no women on the investing side. The entire board was men. It makes me wonder about the SPAC frenzy too.

And there were some brilliant money people around the table, such as Jamie Dimon. I get that Chase wanted the ability to shine in the tech world to rein in more tech IPO’s. This was a great first step in, but the red flags were bright red. Was it that the amount of money it cost Chase wasn’t that big of a deal?

I understand why Bruce Dunlevie gave Neumann money. Dunlevie had so many scores that he was in semi-retirement, but he saw something of interest in Neumann’s salesman hustler behavior. Classic VC stuff. He figured here is a few million and let’s see what you can do. But what I don’t understand is how he let Neumann continue to blow through all that cash of Benchmark’s LP’s and that including signing off on letting Neumann buy a jet, take millions, almost billions off the table early on, and take out massive loans for his stock. How was that ok?

I know my fair share of VCs and the way they think. The ones I know would have stopped this earlier on but maybe not. There were no numbers; money was pouring down a huge drain as the founder spent more and more like he had an endless bank account, and the investors let it happen. They signed documents that put their guards down.

There is one thing that I have learned all these years. When it looks like a real estate business, it is a real estate business. The concept of all these companies spending billions on marketing something to be something it isn’t and then valuing it like a software company makes zero sense to me.

Stick to the thesis. It helps with the red flags. I understand it, but I just don’t get it.