
Trouble in the House of Rothenberg - smacktoward
https://backchannel.com/mike-rothenbergs-vc-firm-was-young-splashy-and-loaded-with-cash-now-it-s-all-come-crashing-down-e76fa076c7c5#.7227ltm2f
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chollida1
Charisma is the best and worst thing that you can find in a money manager.

It allows you to raise money, get deal flow and network with what looks like
almost no effort.

It also allows you to get way in over your head.

I mean, this could describe maybe 10% of hedge funds that get started.
Charismatic young leader, raises money, has a good year or two and then
success gets to their head.

They take their eye off of work and start believing their own hype, they throw
lavish parties, and fly in private jets.

Then the CFO quits, investor questions aren't answered in a convincing manner.
Requested documentation is harder to find that Trump's tax return.

If you wanted to look for fraud in a fund, you could probably get to 80-90%
success rate just by looking for

1) CFO or general counsel resignations.

2) CEO's who go from spending 16 hours a day working to 3 days a week working.

3) A pronounced decrease in fund transparency in the form of financials and
reporting.

This is why countries have accredited investor rules. Fraud, even if it
doesn't start out that way, too often creeps in when people who have initial
success find that sustained success is much, much, much harder to keep up.

~~~
rbanffy
There are multiple tools out there that can measure the bullshit levels of
press releases. That's usually enough.

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paul
This is a great list of all the things you shouldn't do. It's all ego and no
substance.

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arcticfox
Just absurdly irresponsible with other people's money...

> Many investors say they did not know — nor was it disclosed in annual
> reports — that he was founding and funding his own business with their
> dollars, despite the fact that the investment was roughly 50 times the size
> of the seed investments the firm normally makes.

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trhway
>He set out to bolster his new firm with spectacular events: BBQs with tutu-ed
ponies or luau dancers, puppy parties, luxury boxes at Warriors and Giants
games, a sponsored race car, and an all-day founder-and-investor soiree that
involved renting out the Giants stadium every year.

was the luau party held at Alcatraz?

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GraffitiTim
Boost VC, the other accelerator focusing on VR, is scrappy, focused, and cares
only about the startups it's funded. Quite a contrast.

edit: This Rothenberg article sounds pretty damning, but also reads like a hit
piece -- which makes me wonder what the other side of the story might be. I
don't know anything about Rothenberg personally.

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Kinnard
Is it correct that, from my reading, the authors did not speak to Mike
Rothenberg before publishing this piece? If so I'm forced to categorize this
more as gossip and speculation than as balanced investigative journalism.

It's clear that there are problems. But I'd rather see problems identified and
corrected than aired as dirty laundry.

~~~
smacktoward
Read all the way to the end.

 _> At 6:30 on a recent Wednesday night, Rothenberg offered to give one of
Backchannel’s reporters, Lauren Smiley, a tour of his Folsom Street office. I
rang the doorbell, but there was no answer. An inbox check yielded an email
just then from Rothenberg’s crisis communications flack: “Mike just called me
and is slammed with some deadlines. He’d love to show you the office but
overcommitted himself.” Soon after, an executive assistant I recognized from
LinkedIn answered the door, and asked if I had an appointment. She showed me
upstairs to the lobby. Rothenberg came out briefly in office casual to
politely say he was on a call with an investor, and retreated to his corner
office..._

 _Waiting for Rothenberg to get off the phone, the assistant handed me a HTC
Vive VR headset, and cued a video by Wevr, one of the fund’s portfolio
companies. Fitting it over my head, I found myself undersea in an underwater
cage... I took the headset off, and was back in a nearly abandoned Rothenberg
office, where I told the assistant I’d show myself out. Rothenberg remained
behind his office door, talking away._

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Kinnard
I read the whole piece. Not buying it.

1) When did the authors reach out for comment

2) What was the response

The authors craftily imply that they reached out, but did they?

> _At 6:30 on a recent Wednesday night, Rothenberg offered to give one of
> Backchannel’s reporters, Lauren Smiley, a tour of his Folsom Street office._

Did they just ask for a tour of the office? Was this last Wednesday? Did they
reach out for comment subsequently?

Furthermore, I can't Imagine that Mike is not actually completely swamped . .
. Asking to reschedule is not refusing to comment.

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tardo99
Yeah there's no bubble in tech.

~~~
tardo99
Downvote me all you want. Something nasty is coming in tech startupland.

~~~
jstandard
I didn't downvote you, but I suspect the reason you were downvoted is because
your comment isn't insightful and doesn't add to or create any discussion.
It's a kneejerk, oft-repeated one-liner.

My comment isn't much better from a discussion standpoint. Just helping clear
up what may be confusion.

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karma_vaccum123
So what. 95% of the poseurs doing "angel" investing are in it for the scene,
the cachet, the parties, the "networking", the name-dropping etc etc.
Rothenberg gave people what they wanted....a very exclusive club with
ridiculous membership fees and all of the very visible attributes that let the
"LPs" signal to their peers that they were "Valley players".

~~~
totalcrepe
That sounds like the descriptions of the IPO purchasers (being the cash out
providers for insiders) just before the last dotcom crash. They didn't know
what it was but they wanted to be invested in tech.. anything they couldn't
understand was going to have an absurd ROI, putting them in the rich crowd.

Like the nature of the dot com crash, if it ends like a pyramid scheme, that
reflects worse on the state of finance and analysis of our industry than on
the last "suckers" in another tulip season.

