Most Frauds Work As Intended: On SBF, Elizabeth Holmes, and Elon Musk, and Meaningful Work

Work on something of lasting consequence...

Elizabeth Holmes, sentenced to 11.2 years.

You might have noticed a before and after photo making the rounds on social media.

Here it is.

Lauren Chen @TheLaurenChen

Twitter before Elon vs Twitter after Elon

You're supposed to note that there are far fewer women in the hardcore version of Elon’s Twitter. (And presumably a lot more H1B visas who, being slaves, have nowhere else to run, except presumably home to their shithole countries. “Death before dishonor!” you can almost hear them say.)

Now I’ve long taken the view that a major reason women don’t (really) tech is that men do tech to get women and that men, not women, are particularly obsessed with abstraction and machines. Women, being smart and emotional, are way more practical, way more grounded in the here and now, because, evolutionarily speaking, they have to be. Babies need your attention. Yes, I know this invites controversy.

This insight isn’t particularly unique to me and there was some version of it that science fiction writer Ray Bradbury used to employ when asked about the genre’s appeal.

There are two races of people -- men and women -- no matter what women's libbers would have you pretend. The male is motivated by toys and science because men are born with no purpose in the universe except to procreate. There is lots of time to kill beyond that. They've got to find work. Men have no inherent center to themselves beyond procreating. Women, however, are born with a center. They can create the universe, mother it, teach it, nurture it. Men read science fiction to build the future. Women don't need to read it. They are the future.

This view is particularly chauvinistic but — alas — I don’t think totally wrong. Women flee conflict and run toward riches and presumed stability.

But you know what else is heavily male-dominated? The battlefield, and as we’ve been over many times before, Twitter isn’t a business; it’s a battlefield. The question, of course, then, is has the enemy already picked the field of combat?

Consider the Master Sun Tzu: “The supreme art of war is to subdue the enemy without fighting.”

Have we already been subdued? Think of it this way — the most powerful country on the planet (or is it?) is droning on and on about what’s to be done with its fake public square. Is Twitter really worth $44 billion? Of course not. But is this nontroversy depriving a generation of the time of the most productive and interesting people in the world. Yes, and for what?

Doesn’t the richest man in the world have better things to do with his time? And if he doesn’t, isn’t this an indictment of how our system really works?

“We wanted flying cars and we got 140 characters,” says Peter Thiel. Twitter has a lot more characters these days and Thiel is investing in German drones but yeah, it sure seems like we can do a lot better.

Or can we?

*****

For whatever reason I am particularly good at spotting frauds. I suspect it has something to do with pattern matching or recognition. Or it might be that I’m the jerk who is asking, “Does this actually work?” before writing the big checks. I usually invest my own (or my progeny’s) money so I have no choice but to be right. (My portfolio includes satellite companies, rare earths, solar-powered car companies, submarines, genetics, and a few other things. So far, so good.)

Anyway, spotting frauds is a mixed blessing, as you might imagine, because a lot of frauds don’t like being spotted and will do everything, up to and including killing you, to make sure you don’t spot them. So it’s best to be polite and to shut up about the frauds you spot.

Some years ago I spotted Elizabeth Holmes and stupidly warned people — only to be told that I wasn’t supporting “female entrepreneurship” whatever that means. Now she’s going to jail for 11+ years for fraud. Of course, we’re still not allowed to look too closely at whether or not the Theranos operation was itself a Chisraeli op. It’s gauche to point to the intelligence operations likely running behind Madoff too.

Most recently I told a Jewish-American billionaire not to invest tens of millions behind SBF — he ignored my counsel and did it anyway because Sam Bankman-Friedman is a fellow Jew an “effective altruist” whatever that means.

Ethnic nepotism wasn’t the only sort of nepotism going down. Both SBF and Holmes could lay claim to membership in the Stanford network though admittedly tangentially. (SBF’s parents are Stanford Law professors and Holmes was a Stanford dropout.)

It’s been my contention that Stanford, MIT, and Harvard are all de facto Chinese and Chisraeli operations ever since China bailed out America after the 2007-2008 financial crisis. Maybe the reason that so many "founders” from these schools get money from major Silicon Valley venture funds is that those funds are de facto Chinese, too. There’s a lot of clowning on Sequoia for having invested $200+ million in FTX but maybe Sequoia is itself a Chinese op.

Once again you’re not supposed to notice weird stuff about Sam Bankman-Fried’s family. His dad, Joseph Bankman, was born in El Salvador — the place where all the bitcoin operation is supposedly running thanks to President Nayib Bukele of El Salvador. Professor Bankman seemingly helped his son set up an offshore system after years of arguing against tax shelters. Let me quote Professor Bankman from 2004.

Joseph Bankman, a law and business professor at Stanford University, said an increased audit rate means little if the corporation examinations don’t turn up hidden tax shelters.

“Does the IRS have the resources to find the shelter in a million-line return?” he asked. “There’s often advantage in being the one who hides something.”

You can peruse Lexis-Nexis and see that Bankman established himself as something of an expert in tax dodging and presumably how to abet it fix it. You know who else did that sort of thing? Also with a Caribbean nations involved? That would be Jeffrey Epstein. Might the Caribbean be a sort of place, like Hong Kong is to China, where the rules don’t totally apply?

Could it be that CZ of Binance was simply taking out his Chisraeli competition? You’re not allowed to ask that. Did we just watch a mob war between Binance (Chinese) and FTX (Chisraeli)?

*****

We’ve been trained to believe that the truth will always reveal itself and perhaps it does, but not before evaporating a lot of money with it.

In fact there’s a lot of power in spotting a fraud and then washing your money through their operations. That’s what a Ponzi scheme really does. It provides a patina of respectability, a soupçon of passibility. That’s what the celebrity endorsements and the political donations are all really about. All of this, though, is squid ink to avoid answering and addressing the fundamental question: “Does it work?” And if it does, “For whom does it work?”

A smooth criminal… Sam Bankman-Fried aka Sum Bankman Fried

If we asked those questions, we could avoid the real harm that the imaginary money is causing.

"Ontario Teachers put $75 million into two FTX entities in October 2021 as part of a $420 million fundraising round... Three months later, the Canadian fund made a follow-on investment of $20 million in FTX.US.

Imagine a world where fiduciaries, especially those entrusted with public money, were forced to sign off on the question of “does it work?” and not “does it make money?”

It’s dangerous to ask the question “does it work?” because then the fakers don’t like you very much and the fakers have control, at least in the short run and maybe even in the long run, too.

But then there’s this question, “Is it worth working on?”

That’s a difficult question. Many people will lie to you about whether or not it’s worth working on something. It’s most important not to lie to yourself and the temptations, particularly the monetary ones, can be considerable.

I know all about that. Once upon a time I used to play a mean Texas Hold ‘Em. How good? Well, I could help pay my tuition playing the game but one night, I went home and as I was counting my money in my head before I would count it on the hotel bed and I listened to one end of a very drunken and (yet) very sobering. “No, honey, I didn’t win tonight,” he said, through his slurred speech. I couldn’t hear her side of the conversation but I knew that I had caused some familial dress.

I didn’t given him his money back — I’m not crazy — but I haven’t played poker — professionally or otherwise — since that moment. I didn’t want my epitaph to be, "He played a mean Hold ‘Em.” How sad.

In much the same way, when President Donald Trump tweeted that he wasn’t a fan of bitcoin, I ultimately moved to get out of cryptocurrency altogether. He repeatedly called it a “scam” and praised the dollar. I listened to my president. I didn’t really believe that Trump was tweeting that, but it was my clue that some larger power had decided against bitcoin. I don’t really know why that is but I walked away and quietly cashed out. I didn’t want my epitaph to be "something, something, the blockchain.”

If you struggle to find a use for a technology, maybe the new economy will struggle to find a use for you. That’s the dark version. So stick to the more positive one — work on something meaningful.