Chamath is one of the most self-serving-pretending-to-be-altruistic salesmen to ever set foot in SV. If you were still a “follower” after doing even the slightest bit of due diligence into the man, you deserve to lose money.
I still think he's an interesting listen, but you've got to be thoughtful about it. Slippery dude.
Tenev became a scapegoat for the GME fiasco, and, as the facts came out, it seemed he really didn't deserve to. I get that Tenev's "we don't have liquidity problems" answer was a little disingenuous, but it also wasn't totally wrong if you include a bunch of fine print, and I get how it was necessary. In the end, it turned out that the whole T+2 system was stupid, and leaked through the abstractions built on top. He didn't have enough capital to handle a crazy outlier, and he went back to get more money for next time. What else was the guy supposed to do?
So attacking Vlad for "ethics" was low. Remember that, before Robinhood, we all paid a bunch of trading fees. The dude has done some good. Chamath just piled on to an easy target. I don't like people who cast stones so they can look good.
I don't know why I'm here doing Robinhood's PR for them. I guess Chamath's grandstanding just left a really bad taste.
While T+2 is antiquated, that doesn't excuse Robinhood giving margin accounts to unsophisticated participants (who don't understand the consequences of trading on margin), fronting them funds with "instant funding" while their ACH transfers are in flight, all while having limited capital on hand. Vlad could've come out honestly and pointed out their sleight of hand was also a contributor alongside clearinghouse requirements, but instead, smokescreen.
It's ironic because this prevents small brokerages from building their own clearing houses and reducing competition in that space. Robinhood innovated to push the feature development cycle faster and got punished for it due to an archaic rule about settlement time. T+2 is really 99% of the reason this happened -- sure RH could have raised additional funds, but a black swan event isn't usually what a smaller bank plans for.
A customer with a given amount of capital can buy far more stock on margin than on cash. Buying additional stock on the firm's dime puts the firm itself at risk and also increases deposit requirements. DTCC deposit requirements take margin into account but even if that were not the case RH bought more stock on margin than it would have in a cash-only restriction.
When Robinhood clients trade on margin, Robinhood itself takes risk on the position. There is no guarantee that margined trades will be liquidated when they go beyond minimum maintenance. Markets have discontinuous jumps all the time. So you can get situations like what happened with Archegos, where banks lost billions on the margin leverage that they provided to the customer.
T+2 isn't archaic, it was introduced a few years ago and even in T+2 many firms are unable to deliver shares on time. Vlad started to blame T+2 because his firm didn't have enough money to cover deposits, but (A) that could have been resolved by restricting margin to reduce GME buying power, and (B) hundreds of thousands of those shares failed to deliver on T+2 anyway.
We could probably switch to T+1 without significant problems. Real-time settlement would be a whole other kettle of fish.
Even on T+2, hundreds of millions of dollars' worth of GME stock failed to deliver. Thus, I thumb my nose at the suggestion that T+1 (which is what we use in the options market) would have resolved the issue.
In actuality, Vlad is correct that faster settlement would have liberated some of his firm's cash, but it's not a real solution considering that other parts of the settlement process would break. It's easier for him to point fingers than to admit "We were writing checks that our firm couldn't cash."
The discount broker always gets paid. It might be from fees or it might be from PFOF and lending shares in margin accounts and pocketing the proceeds, but either way, they get their money.
Other brokers like IKBR charge fees for all trades, but split the share lending proceeds with you 50/50.
His primary skill appears to be promoting himself as a first mover when he's always a johnny-come-lately.
And on the particular topic of the article: Bloomberg notes that "His three open SPACs are all in the bottom 20th percentile for returns since the market top" compared to other SPACs, and over the course of the past 2 months alone, have all lost at least 20% of their value.
The new era of RobinHood traders has brought an incredible degree of financial populism, youtube is crowded with people giving their opnion.
Some of it is really great, often more insightful and detailed than what a lot of banks dare publish - but a lot of it is rubbish.
I’m a follower of Chamath, but that doesn’t mean I believe he can predict the stock market any better than I can.
What are his self serving/pretending behaviors? Who has he conned, and how?
Edit: I’m genuinely curious and asking to get better informed. Why the downvotes?
Chamath being Mr-Correct-and-influential-Money-Guy is only to be a self serving salesman
Wealthy enough people hear about it and can buy into Social Capital as a limited partner. Or be a SPAC co-sponsor, or part investor in a new SPAC, or be part of the retail investing hoard that also provides liquidity.
There is no other reason for him to talk at all.
Riding and stoking the populist sentiment is only self serving. That doesn't mean he conned anyone (the grandparent post did not use that term), maybe ripped off but this aspect is no different than any other investment that you’re allowed to take risks on. There isnt anything special about Chamath, except that his niche involves pandering to “the little guy”.
The on with that women at Standford comes to mind, he flat out comes out and says he 'wants to be wealthy in order to be influential,' and is what is left when you're a billionaire: so, given his presence within the high profile VC World and now his spots on the 'all in' podcast I'd say he is making his move. He kind of teased that we would run for Governor on the run up to Newson's recall, only to back track on that. I also saw he is a default 'who to follow' on Clubhouse when I was invited.
The truth is I'm a fan of Chamath, mainly because he calls entrenched the SV wealthy on their BS; it doesn't mean he is a saint but you can tell he gets fed up about it as much as any reasonable person does about how much self-serving non-sense it's built on.
But I also like him because he is cognizant of how his position in life as a billionaire has more to do with sheer luck and timing than anything else, including working hard, and fully acknowledges how his position is untenable for most millennials and Gen Z despite all the kool-aid drinking in SV filling every founder's head that they can be Elon 2.0 if he just works hard enough.
I'm not that familiar with his SPAC positions, it all sounds too much like the derivatives of 2008, which is enough to keep me the hell away from it.
I like what Social Capital stands for, but I would never invest in it, but I'm glad it exists.
His position in Bitcoin, 2012 was early despite what another poster says: I was there back then and you seriously could only get drugs or socks with it so I'd say a tech person getting involved was rather early.
Incidentally, that was the year we finally got retail merchant's attention and did a lot of merchant adoption for Black Friday so it was a remarkable and notable year for many. What followed with the 2013 ATH is when we had our first Eternal September moment.