Companies Blow Up

I enjoyed a tweet from Delian Asparouhov about the ongoing drama between FTX and Binance. The tweet talks about VC excitement surrounding FTX and founder Sam Bankman-Fried (SBF) when he met with Sequoia Capital.

Here's the link: https://twitter.com/zebulgar/status/1590394857474109441?s=20&t=eFRg8Vy_dDM96_17or9zTQ

There are lots of replies and other threads touching on, perhaps, overzealous investor excitement. But I think there is a certain level of story-telling that needs to exist in situations such as these.

If you ask someone for something, why should they give it to you if you aren't excited? Let's put aside need-based things. Some folks are asking for help because they can't get basic things they need (food, water, etc). But for many other things in life, that story is important.

Similarly, if you are starting a company, you probably want to build excitement, and you do that by telling the story about your business in a compelling way. It seems clear that SBF did just that.

Now, you have to remember, a good story can be full of problems. The story has to convince you it's spot on, but it doesn't factually need to be that way. So, we will see what happens to FTX over the coming days.

The real message to me is this: we all do this, and we're all susceptible to strong positive reactions to convincing stories. But remember to read between the lines.