Silicon Valley's Trust Enabled Fraud
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Sam Parr and Shaan Puri discuss how the FTX collapse has fundamentally changed their perspective on trust in the tech industry, particularly in Silicon Valley, where business has historically operated on high levels of trust with minimal verification.
Key Points:
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Silicon Valley's Trust-Based Culture:
- Business often conducted without contracts
- Money wired based on slide decks without deep verification
- Relationships built on surface-level trust and reputation
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Impact of FTX Collapse:
- Changed perspective on trusting new startups
- Particularly skeptical of banking/finance startups
- Moving away from "disruptor" mentality to established institutions
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Personal Actions Taken:
- Moving money out of newer platforms like Robinhood
- Returning to traditional institutions like E-Trade
- More skeptical of innovation claims without verification
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Future Impact on Crypto/Web3:
- Prediction of 5-10 year downturn in crypto
- Most NFTs expected to go to zero
- Only Bitcoin and Ethereum likely to survive
- Most Web3 startups expected to fail
- Coinbase might grow as "trusted" platform
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Broader Industry Impact:
- Loss of trust will affect fundraising
- Web3 founders might be "laughed out of existence"
- Not necessarily due to bad products but loss of credibility
- Fundamental shift in how trust is given in tech industry
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Personal Reflection:
- Acknowledgment of previous naivety
- "To all the people who I said 'you just don't get the disruptors' - I'm sorry, you are right"
- Recognition that trust must be earned, not assumed
Sam Parr
Host of MFM and fitness influencer
Sam Parr is a serial entrepreneur and business media pioneer.
In 2016, he founded The Hustle, a business news media company that started in his kitchen with just $12 and grew to eight figures in revenue.
Sam led the charge in making newsletters popular when few believed in their potential.
After four successful years, he sold The Hustle to HubSpot, a publicly traded company. Now operating as HubSpot Media, The Hustle reaches 3 million readers daily, employs a team of nearly 100, and has been the launchpad for dozens of its staff to found their own media companies and newsletters.
Sam remains the host of the popular business podcast, My First Million, and continues to start and sell companies. He also co-founded Hampton, a highly vetted community for entrepreneurs, founders, and CEOs, and teaches people to write better through his platform, Copy That.