[cool_man_bob]

> The founder is known con-artist involved in such other things as solving nuclear fusion and stealing $2.5M in a Kickstarter scam.

Haha, am I still supposed to believe VC’s are competent, intelligent people who deserve their stature when they fall for scams that should be more obvious than a Nigerian prince scam.

[darth_avocado]

Lack of due diligence often gets characterized as a failed investment. And failed investments are often justified as a cost of running a VC firm, as long as one of them is a 100x success, the 99 failed ones don’t matter. But yes, you’d expect more due diligence from investors, but a lot of times it’s just about how likeable you are and who you know. We wouldn’t have VCs funding Adam Neumann’s new venture with hundreds of millions of dollars as soon as his Wework nonsense got exposed and collapsed.

[burnte]

The worst part of DD is when your report clearly states some massive red flags and that the deal should not happen, and the money guys go forward anyway. Why? Because then 6-12 months later they’re angry that what you said was true and you get tasked with fixing it. I recently had to quit a company because they money guys kept wanting me to do dumber and dumber things because they refused to acknowledge the fundamental failure of their plan and were determined to do it their way. I quit, and then everything I was holding up fell down as they tore out the supports to do it their way. Within months the board finally fired the CEO and COO, asked me back, and I declined. It was a purely ego driven failure.

[SilverElfin]

> investments are often justified as a cost of running a VC firm

> But yes, you’d expect more due diligence from investors, but a lot of times it’s just about how likeable you are and who you know.

I think both of these can be true simultaneously. The limits of due diligence and the practical ability to evaluate an investment opportunity (quickly and at low cost) mean you sometimes do make mistakes, even “stupid” ones. But also, access and networks and old boys clubs are rampant in the VC ecosystem.

[stri8ed]

Is it fair to characterize a founder of a failed startup as a con man? I.e. did he make claims that were factually untrue, and intentionally deceived investors?

[random3]

Disclaimer: Subjective opinion, as a founder.

It’s as fair as characterizing an athlete saying he’s competing to win.

A common logical/semantic mistake is that claims about future facts are lies. They can be exaggerations, and we do see this often and I’m personally annoyed when I see it. These claims can be genuine or not. I often think it’s easier for a founder to be naive (or crazy) than not, because they can believe (sometimes strongly) the things they say.

But neither are lies. A lie is when you misrepresent a fact, something that already happened. That’s a big causal difference.

The large gray area is when someone misrepresents intent (as with most cases for cons). This, I suspect, is the main questions you should be asking, but I suspect it falls into the ethics rather than legal debates.

[FromTheFirstIn]

Yes! He did, so it is.

[embedding-shape]

What investors were intentionally deceived and what were the lies specifically? I saw something about a Kickstarter, but it's trickier as there is no promise of delivered products, it ends up being an donation basically, although Kickstarter try to make that intentionally vague.

[Arainach]

> There is no promise of delivered product

There absolutely is a promise. Even if you manage to legally find a way to not get sued, taking advantage of the fact that everyone who gave you money believed it was a promise is still scamming them.

[embedding-shape]

Isn't the whole thing (or two) with Kickstarter is that if it's not funded, everyone gets their money back and if it's funded, the creator tries to deliver the goals according to the timeline but if they don't, they're not held liable for that? So if for some reason the creator run out of money before they could send actual products, you as a donator don't have the right to get your money back? Maybe I misunderstood the whole concept of Kickstarter.

[Arainach]

James Proud:

* Promised an alarm clock that would do a bunch of things

* Took $2.5M in funding from Kickstarter

* Took another $50M in funding from elsewhere

* Delivered a piece of hardware that did essentially none of what was promised.

It's all detailed in OP and the linked Verge article. That's a scam and I'm not interested in your legalese arguing whether they can be sued or not.

[freejazz]

>"Even if you manage to legally find a way to not get sued"