They're not confessing... They're bragging

Rach -

So much 🍿 lately on the All In Podcast.

It's a great window into how the upper echelon of silicon valley think.

Here's some "rich people being sneaky in money and politics" insights they've divulged lately:

1. VC Investors who "lost" in web3 companies might have won

(starting at 52:30)
  • VCs invested in web3 companies at crazy valuations
  • However, those VC companies were actively teaching the crypto companies to create their own tokens
  • The VCs would get equity for the investment, which is of course locked up, but they would also get those tokens that they could (and would) dump onto retail investors (or should I say "investors") who were pumping these tokens up, without any lock up period
  • So did VC companies lose when they invested millions into crypto companies pre crypto crash? Well... yes, they probably still did lose a fair bit. But we don't know how much they made by selling tokens either.

2. Going into politics is a great way to cash out and avoid capital gains.

(1:19:15, two minute clip)

tl;dr:

  • get a position in politics
  • be "forced" to sell all your positions, capital gains free, because this is a rule for some political positions. They don't want you to have any conflicts of interest, like a stake in a company, so they make you sell them. But because you're forced to sell them, they don't make you pay capital gains tax.
  • ???
  • profit. And in Ken Griffin's case, make $30b or so by cashing out of Citadel, tax free.

3. Cap Tables are lying to you

(starting at 35:20. 36:44 for the money shot)
  • Start-up valuations have fallen significantly.
  • A VC firm might have invested $400m at a $2b valuation, but now the company is worth $300m - less than they even invested.
  • But they don't want the paper valuation to fall
  • Instead of reducing the paper valuation and buying four shares in the company at a $300m valuation, they will, for example, buy 1 share at a $2b valuation and get three or four shares for free or for a penny. This is typically done using warrants.
  • This means nobody knows how many shares have actually been issued. It's not in the cap table. It's in a document about warrants in the CFOs drawer somewhere.

4. You can buy foreign ambassador positions

00:05:28 - 00:07:10

"It's not written down anywhere, it's unspoken"

"The illuminati just revoked all our cards, we're not meant to talk about how you can buy ambassador positions"

  • Apparently the UK one is $10m
  • You have to spend out of pocket to throw mad parties, but you get amazing connections by meeting everyone who comes through the country, or something like that.
  • File under "rich people things that sound crazy but I do not understand".

5. Honorary mentions