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by minimax 4495 days ago
Collusion is a pretty big charge. If investors are upfront about the fact that they talk to each other (and, hey, it's right there in the blog post) then investor A calling up investor B to verify he has made an offer to a startup isn't collusion. It's just due diligence. I'm also unclear about the analogous situation in the public markets that you alluded to.
2 comments
michaelochurch 4495 days ago
On the public markets, using social sway or inside connections to intentionally up- or downregulate the reputation or market price of another company for personal profit (say, a pump-and-dump scheme) will put you in prison. No question about it; it's unambiguously illegal to do that. You don't get to, for example, spread negative rumors about a company and ruin its reputation because you think you should be able to buy it at a discount.

Investors do the same thing, and it wrecks peoples' careers and makes it hard as hell for people to get started amid that feudalistic reputation economy. The excuse is "well, investors talk".

I say: fuck that and fuck them. If Silicon Valley entrepreneurs are really going to tolerate that shit-- which only hurts them-- instead of agitating for proper laws to be written, then they're a pack of self-hating losers for not knowing how to fight for themselves.

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minimax 4495 days ago
It is illegal to give false or misleading statements in order to defraud other investors, but it isn't illegal to "talk your book" if you aren't outright lying about what you are saying. You can flip on CNBC and expect to see lots of hedge fund managers hyping up their positions. That's not fraud.

If you are saying there is some fraudulent behavior involved in one investor calling another investor to fact check a founder's claim, I'm still not seeing it.

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michaelochurch 4495 days ago
The main difference is that, in this case, the investor is playing to screw the founder, not other investors.

If you want to argue that it's only unethical but not strictly illegal, then fine. I still think we should aim to do better, and it's sad that Silicon Valley doesn't care about better than "not clearly illegal" when it comes to ethics.

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lawnchair_larry 4495 days ago
It's really not a big charge, and being upfront about it doesn't make it acceptable.

http://en.wikipedia.org/wiki/Angelgate

That was the one time someone actually caught them. Anyone who thinks that is the only time it happened is very bad at statistics.

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minimax 4495 days ago
Michael Arrington runs into a bunch of VCs having dinner together and that is somehow conclusive evidence of collusion? What?
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