Lowercase Capital Case Study: Chris Sacca, Midas List or Among The Gods Of Frauds?

Lowercase Capital Case Study: Chris Sacca, Midas List or Among The Gods Of Frauds?

March 26, 2016

This site often writes about the previously undetected pathological history of venture capitalists funding startup fraud, which caused the tech bubble to pop in 2008, and that costs employees their jobs, consumers/patients health and safety and long-term shareholders & taxpayers billions, while without accountability VCs are free to encourage, replicate and are rewarded for their fraud, known as The Sociopathic Business Model™.  Chronicled extensively  through my own personal story via:

Venture Capital, Incubator, Startup, Acquisition

sold in 2010

NEA & JJDC, ExploraMed, Acclarent, Johnson & Johnson’s Ethicon (purchased Startup Acclarent for $785 million)

Two former NEA JJDC, ElploraMed, Acclarent, Johnson & Johnson Ethicon executives were arrested, indicted on 18 counts of fraud and are currently awaiting their federal criminal trial on May 23, 2016, with the Honorable Allison D. Burroughs, in Boston.

The Sociopathic Business Model™ maintains that venture capital funded startup medical device industry is the little sister to venture capital funded startup tech industry, the only difference is the sales in medical device startups are in the hundreds of millions and in tech in the billions (unicorns).

 

I always assumed I’d make the cover of @muscle_fitness or @CountryLiving first, but @Forbes beat them to the punch. http://t.co/YJEVajzKpM

— Chris Sacca (@sacca) March 25, 2015

 

As much as I try and caution readers to take the billion-dollar blinders off of venture capital, because I too, was once blinded, it doesn’t help when The New York Times  publishes  the Top 20 Venture Capitalist’s in the World like it’s the second coming of Christ or, when not to be outdone, Forbes’ Midas List, which made the #CrimingWhileWhite hashtag, look like child’s play, does the opposite of taking the billion-dollar blinders off, in fact, it helps perpetuate the myth without exploring the real dangers the industry’s fraud poses to the rest of us.   And, let’s not forget the self-congratulating venture capital egos that can eclipse the sun, who humbly set Twitter ablaze.

The Sociopathic Business Model™ maintains that venture capital funded startups often disguise innovation as manipulation to evade the law putting their profits above employees, consumer/patient safety and at great expense to long-term shareholders (underperforming post-IPO or sale) and taxpayers.  So, it was interesting and timely when Lowercase Capital Chris Sacca was crowned beauty queen Midas List winner and sent out the following tweet:

As @djkhaled would put it, “The names on this list didn’t want to hire me, so I decided to be on the list.🔑” https://t.co/cCl2agw7Fo

— Chris Sacca (@sacca) March 23, 2016

 

Followed later by this tweet:

@MelaynaLokosky Venture capitalist #ChrisSacca took his toys and pouted home. #GodsOfFrauds pic.twitter.com/ul1zYbzjdS

— KillingMyCareer (@MelaynaLokosky) March 26, 2016

 

This isn’t about being right, it’s about doing what’s right for the benefit of the greater good and not just for the profits of a few, but again for the stability of many.  And, before Chris Sacca becomes blinded by the gold from the#MidasList, or before he humbly buffs up for the cover Muscle Fitness, let’s look at a few of  Lowercase Capital’s venture capital funded startups that either IPO’d or were acquired (or sold to an established conglomerate) for:

The Sociopathic Business Model™ Case Study: Signs Venture Capital Funded Startup Fraud:

(The accordion drill down below has all of the companies sold under Lowercase Capital per their website).

Let’s keep four things in mind first:

• Underperformance post-IPO or sale is a sign of executive mismanagement stemming from venture capital
  • Likely claims of racism and sexism were ignored which is an indication of even greater unethical and or illegal activity.
  • False projections + Hypergrowth = Overvaluation = Fraud
  • Fraud is not sustainable sales model and not the fault of employees but rather is a sign of mismanagement
• Employee layoffs are a sign of executive mismanagement stemming from venture capital
• Underperformance AND employee layoffs likely confirm fraud from the venture capital-funded startup stage
• Acquisitions mask fraud easier than IPO’s

Breakdown:

• 32 Lowercase Capital venture capital funded startups IPO’d or were acquired (sold to a conglomerate)
  • 2 IPO’d (Facebook & Twitter)
    • Harder to mask fraud
  • 3o were acquired
    • Much easier to mask fraud and why most venture capital funded startups opt for this option
    • VCs get their 8-10 x’s ROI just as long-term investors start questioning underperformance

Happy birthday, @Twitter! Here’s to our long and complicated history. #TwitterLove https://t.co/wCOdMi52Li

— Chris Sacca (@sacca) March 21, 2016

The Sociopathic Business Model™ has already written extensively about unethical and or illegal behavior of both Facebook and Twitter previously; and, one company that’s still on Lowercase Capitals’ current startup list, waiting (and waiting, and waiting for an IPO) Uber.  These three companies?  Textbook for The Sociopathic Business Model™.

Uber, which predictably will not be able to IPO anywhere near their current overvaluation (already rebranded, another sign of unethical and or illegal behavior) and will likely be acquired at a loss to investors.  Uber (founded in 2009) isn’t a unicorn it’s a dinosaur in terms of startups and should have IPO’d or been acquired long ago, which again is another RED FLAG, as is Uber’s CEO, Travis Kalanick blocking me on Twitter. I personally wouldn’t invest in Uber if someone else gave me money to invest specifically with that caveat.  

However, our focus for the Case Study is the two IPOs and  acquisitions:

• Facebook 2012:  “The Decades Worst Large IPO” or “The Biggest Flop Ever”
  • Eleven days before the historic IPO, Morgan Stanley found out Facebook had cut revenue projections — a nearly unprecedented last-minute correction. OR…
    • The Sociopathic Business Model™: false projections + hypergrowth = overvaluation/fraud
  • Underperforms post -IPO
  • Employee Layoffs-No record found post-IPO (doesn’t necessarily mean there haven’t been any)
  • Face Investor Class-Action over IPO
• Twitter 2013: “Why Twitter’s IPO was A Failure” or “Twitter IPO a Debacle,”
  • Overvaluation
  • Underperforming post-IPO
  • Employee Layoffs

The problem, looking at companies valued at billions and referring to them failures is hard; but, long-term fraud is costly for employees, consumers and investors, which is not the concern of VCs but, is, and should be a concern, for the rest of us. There is a similar pattern in acquisitions which is best explained by example, comparing the little sister to tech, medical devices to best illustrate the point:  Johnson & Johnson’s very public failing of startup medical devices underperforming post startup-acquisition finally caught the attention of investors; but, not for the right reasons. Clueless executives either fearful to keep their jobs masking fraud or who are completely inept blame everything but the actual cause: fraud.  And worse, Johnson & Johnson through their venture capital subsidiary (JJDC) is still funding people linked to medical device fraud.

My next @ABCSharkTank episode is April 29th! There are still some good seats available. Act now!

— Chris Sacca (@sacca) March 27, 2016

Egos at the acquisition level  will not allow the perception of deception, so they’d rather not discuss how they were sold smoke and mirrors, allowing the venture capitalists off without accountability, free to replicate this cycle of fraud on another company.  Take, for example, Lowercase Capital’s startup Path social networking and CEO Dave Morin, who “agreed to” sell the company he started in 2010 to Daum Kakao Corp.; and, uncharacteristic of the industry, sold without a Silicon Valley parade in his honor or without disclosing the final sale amount, which are RED FLAGS. VCs & founders never miss the opportunity to tell you how great they are, unless they aren’t.  No disclosure of the final sale price should be illegal for a venture capital firm, in that that they’re still linked via other investments to the SEC.

It’s no surprise that Abc’s Shark Tank VC, Lowercase Capital founder Chris Sacca and Lowercase Capital funded startup Uber CEO Travis Kalanick, both blocked me on Twitter, their negative truth regarding their companies doesn’t reflect the golden touch of Midas, but more like they’re hanging with #GodsOfFrauds.

 

Test your skills: Track some of these current Lowercase Capital funded startups and see how many (IPO-harder to do if fraud based sales) and how many sell or are acquired and look for the fraud #RedFlags along the way.

*Lowercase Capital is one of many venture capitalists who fund each of the startups listed; however, for this Case Study we looked at just Lowercase Capital as a means to help employees, consumers, patients, or potential long-term investors understand the process as it possibly relates to unethical and or illegal behavior to prevent job loss or fraud. It’s up to each person reading to look at the facts and make the best personal and professionals decisions based on what is best for themselves or their families.