New York Times writer covering start-ups and venture capital. 🦄 FOLLOW ME on threads (@ griffitherin), bluesky (@ ering), substack (@ erin), or linkedin!!!
just learned about a wild legal fight between a VC firm and startup:
1. Startup is fundraising, VC firm sends unsolicited term sheet.
2. Startup says sorry, the round is oversubscribed.
3. VC wires the money anyway.
4. Startup returns it...
(cont ⤵️)
Crazy lawsuit from an investor - Softbank - against a startup - IRL.
Softbank invested $150m in 2021 ($25m went to insiders) on the claim that IRL had 12m monthly users.
But the company was spending 50k a month on a bot army and the app was "a virtual ghost town."
"probably the biggest room that has ever been assembled online," says David Sacks of this new Twitter Space with Ron DeStantis and Elon Musk (first one didn't work and was canceled)
i have been in bigger Clubhouse rooms
SmileDirectClub has filed for bankruptcy and alongside the announcement, they included an infographic listing other brands that have gone bankrupt. All the cool companies are doing it!
4. VC firm FAKES signatures on the term sheet and threatens the startup with “nasty, public PR battles” and a “fight until the bitter end” if the startup doesn't take their $.
5. Startup sues, gets a different kind of $ - settlement.
full story:
my gamestop take is, what did we expect when we "democratized" day trading? social media democratized publishing and we got steak-umm and horse ebooks. the results are gonna be weird and random and terrifying and hilarious. i am enjoying it immensely
🩸Today is the final day of Elizabeth Holmes’s testimony. Since people have been asking, I thought I’d share my daily schedule for covering the trial.
(The Four Points San Jose does not have stationary so I made do with this, uh… menu.)
press release author: so, what does your company do?
ceo: we make software for call centers
PR: no no no that is way too easy to understand. how about,
Startups rarely die fast.
Bird, backed by $600m in funding and once valued at $2.5bn, is now at risk of bankruptcy and trades at a market cap of *$13 million.*
Crypto ppl writing me about this article saying "DUH! everyone knows that," might want to take a step outside the bubble. There's value in explaining things to the broader world and getting them on board rather than shitting on anyone who doesn't know.
Elizabeth Holmes has been convicted on four counts of wire fraud and conspiracy to commit wire fraud. She was found not guilty on four counts. And the jury was unable to reach a verdict on three counts.
NEW: The fallout from Theranos extends far beyond its own implosion. Female founders, especially in science and health care, have faced constant comparisons to Elizabeth Holmes.
My story ahead of the upcoming Holmes trial:
Fireworks from
@fredwilson
at the NYC Summit on VCs that hold stocks after IPO instead of distributing to their LPs (iykyk):
"They should be fired. Their LPs should fire them and never give them another dime. ... It was irresponsible what they did."
historic levels of mortification in the airport today after my mom INSISTED I take my high school varsity jacket home and it didn’t fit in my suitcase 😑
The whole time I was at Bitcoin 2021 I kept thinking "I hope everyone here is vaccinated." Then Ron Paul got on stage and said the pandemic was invented by politicians for entertainment, so I guess the reports of people getting sick shouldn't be a surprise.
Lately I've realized that asking a CEO about their return-to-office plans is FRAUGHT. A lot of startups are really grappling with this and the most salient point I've heard so far is that young employees want an office - mentorship, networking, camaraderie, learning etc.
feels like every week i get pitched on a startup with the same name as a defunct startup i covered years ago, which means i've been doing this too long or there aren't enough good startup names in the world
So the start-up fraud trial of the decade is about to begin.
Hope everyone’s ready, we’ve got three months of this then we start over again with Balwani.
In the meantime, here’s a thread of some stuff to read about it:
are we just programmed to default to zoom forever?
feels like every meeting i ask for a phone call and get a zoom invite
terrible development for those of us who like to pace :(
"Every time the bees were exposed to the coronavirus they stuck out their tongues."
I need to see a photo of a bee sticking its tongue out THIS INSTANT!!
Opening arguments for Epic vs. Apple will begin shortly. I'm here in the courtroom and can report that Epic CEO Tim Sweeney has ditched his cargo shorts and t-shirt for a suit. 🕴️
Read our preview of the trial here:
Reading through texts between Elizabeth Holmes and Sunny Balwani in the latest filing from prosecutors... Come for the intense romantic texts, stay for the Alwaleed gossip
I just can't get over this.
These startups
-solicited detailed personally identifiable medical information about 100,000 customers
-told them their data is “protected” and “used only” by its care team
-SHARED IT WITH ADVERTISERS FOR YEARS
Epic v Apple verdict: Judge Gonzalez Rogers rules in favor of Apple on all but one on one count: Apple can no longer ban app companies from telling their customers to pay elsewhere.
New from
@yaffebellany
and me:
How did Sam Bankman-Fried get connected to so many rich, powerful and famous people?
Through Michael Kives, a Hollywood agent-turned-VC, whose firm got $700m from FTX (including $125m to him personally).
Testing out a theory: FTX is not going to put a massive chill on venture investment in crypto, as a lot of people are predicting.
I've talked to a lot of crypto investors this week and all of them say this doesn't change their conviction about the category. (thread)
NEW: Reid Hoffman is at the center of the AI action: He's on MSFT's board, he co-founded Inflection AI, he's invested in a bunch of AI companies including OpenAI and he frequently talks up AI to govt officials. (1/3)
This story has a little of everything! Angry, scared, wary and determined founders. Memes. Memos. Firesales. Apologies. Emergency bridge loans. Harrowing moments. Contingency plans. And Chick-fil-A.
VC exits have are already breaking records this year, driven by SPACs, per S&P. If the pace continues, "VCs will have seen more liquidity via M&A this year than the entire period from 2012-2020."
Sam Bankman-Fried says he was more focused on the upside scenarios and wildly underestimated how bad things could get in the downside.
He says his lawyers have told him to stop talking, but "that's not who I am."
Layoffs, cost cutting and the move to remote led tech companies to shut their offices en masse, clearing out offices full of expensive designer furniture. Some of it has never been used.
Amid the bust, a group of furniture hustlers sees opportunity. 🪑
@ranjanxroy
in that case u may enjoy the first draft of this thread that i abandoned after i realized it was too much work to shrink all the little logos in MS paint
the thing they don't tell you about covering trials is the glamour.
sitting awkwardly in a skirt on the hallway floor, pulling down your mask to scarf your 100th bad starbucks sandwich this month while also charging your laptop, banging out a draft and cold callling experts
John Bostic, asst US Attorney, cites a salacious quote from Holmes, where she apparently told a Walgreens exec, "They don't put attractive people like me in jail."
Kevin Downey, Holmes's lawyer, criticizes that reference as it wasn't part of the trial / evidence.
Bird investor presentation: "114% revenue growth"
Bird balance sheet: lol actually revenue fell 37% last year...
Bird footnote: hehe so uh... that was actually ESTIMATED revenue growth for the end of next year 🙃
It is the beauty and the curse of Silicon Valley’s innovation machine — so eager to fail fast, so focused on the future and the shiny new thing — that few ever seem to learn from its mistakes.
The conflict in these cases (like theranos, ftx, headspin and others) comes down to diligence. How did supposedly sophisticated investors get duped?
Here Softbank says it commissioned a third party report that showed IRL had only been downloaded 9m times...
My NFT story from this morning already needs updating - NBA Top Shot has done $48 million worth of sales in the last 24 HOURS, including a Lebron selling for over 200k!
I am sorry to announce that I am back in ⚖️trial twitter⚖️ mode.
Jury selection for US v Elizabeth Holmes starts tomorrow. Here's our preview of the case w
@erinkwoo
:
VC funding is down for the 3rd quarter in a row.
Total raised in Q3 was $43bn, a 53% drop from last year, per Pitchbook.
It is the largest such drop in the last decade.