Impilo

Poor Folk by Fyodor Dostoyevsky, is part of the HackerNoon Books Series. You can jump to any chapter in this book here . September 11th. September 11th. MY DARLING BARBARA ALEXIEVNA,—I implore you not to leave me now that I am once more happy and contented. Disregard what Thedora says, and I will do anything in the world for you. I will behave myself better, even if only out of respect for his Excellency, and guard my every action. Once more we will exchange cheerful letters with one another, and make mutual confidence of our thoughts and joys and sorrows (if so be that we shall know any more sorrows?). Yes, we will live twice as happily and comfortably as of old. Also, we will exchange books.... Angel of my heart, a great change has taken place in my fortunes—a change very much for the better. My landlady has become more accommodating; Theresa has recovered her senses; even Phaldoni springs to do my bidding. Likewise, I have made my peace with Rataziaev. He came to see me of his own accord, the moment that he heard the glad tidings. There can be no doubt that he is a good fellow, that there is no truth in the slanders that one hears of him. For one thing, I have discovered that he never had any intention of putting me and yourself into a book. This he told me himself, and then read to me his latest work. As for his calling me “Lovelace,” he had intended no rudeness or indecency thereby. The term is merely one of foreign derivation, meaning a clever fellow, or, in more literary and elegant language, a gentleman with whom one must reckon. That is all; it was a mere harmless jest, my beloved. Only ignorance made me lose my temper, and I have expressed to him my regret.... How beautiful is the weather today, my little Barbara! True, there was a slight frost in the early morning, as though scattered through a sieve, but it was nothing, and the breeze soon freshened the air. I went out to buy some shoes, and obtained a splendid pair. Then, after a stroll along the Nevski Prospect, I read “The Daily Bee”. This reminds me that I have forgotten to tell you the most important thing of all. It happened like this: This morning I had a talk with Emelia Ivanovitch and Aksenti Michaelovitch concerning his Excellency. Apparently, I am not the only person to whom he has acted kindly and been charitable, for he is known to the whole world for his goodness of heart. In many quarters his praises are to be heard; in many quarters he has called forth tears of gratitude. Among other things, he undertook the care of an orphaned girl, and married her to an official, the son of a poor widow, and found this man place in a certain chancellory, and in other ways benefited him. Well, dearest, I considered it to be my duty to add my mite by publishing abroad the story of his Excellency’s gracious treatment of myself. Accordingly, I related the whole occurrence to my interlocutors, and concealed not a single detail. In fact, I put my pride into my pocket—though why should I feel ashamed of having been elated by such an occurrence? “Let it only be noised afield,” said I to myself, and it will resound greatly to his Excellency’s credit.—So I expressed myself enthusiastically on the subject and never faltered. On the contrary, I felt proud to have such a story to tell. I referred to every one concerned (except to yourself, of course, dearest)—to my landlady, to Phaldoni, to Rataziaev, to Markov. I even mentioned the matter of my shoes! Some of those standing by laughed—in fact every one present did so, but probably it was my own figure or the incident of my shoes—more particularly the latter—that excited merriment, for I am sure it was not meant ill-naturedly. My hearers may have been young men, or well off; certainly they cannot have been laughing with evil intent at what I had said. Anything against his Excellency CANNOT have been in their thoughts. Eh, Barbara? Even now I cannot wholly collect my faculties, so upset am I by recent events.... Have you any fuel to go on with, Barbara? You must not expose yourself to cold. Also, you have depressed my spirits with your fears for the future. Daily I pray to God on your behalf. Ah, HOW I pray to Him!... Likewise, have you any woollen stockings to wear, and warm clothes generally? Mind you, if there is anything you need, you must not hurt an old man’s feelings by failing to apply to him for what you require. The bad times are gone now, and the future is looking bright and fair. But what bad times they were, Barbara, even though they be gone, and can no longer matter! As the years pass on we shall gradually recover ourselves. How clearly I remember my youth! In those days I never had a kopeck to spare. Yet, cold and hungry though I was, I was always light-hearted. In the morning I would walk the Nevski Prospect, and meet nice-looking people, and be happy all day. Yes, it was a glorious, a glorious time! It was good to be alive, especially in St. Petersburg. Yet it is but yesterday that I was beseeching God with tears to pardon me my sins during the late sorrowful period—to pardon me my murmurings and evil thoughts and gambling and drunkenness. And you I remembered in my prayers, for you alone have encouraged and comforted me, you alone have given me advice and instruction. I shall never forget that, dearest. Today I gave each one of your letters a kiss.... Goodbye, beloved. I have been told that there is going to be a sale of clothing somewhere in this neighbourhood. Once more goodbye, goodbye, my angel—Yours in heart and soul, MAKAR DIEVUSHKIN. About HackerNoon Book Series: We bring you the most important technical, scientific, and insightful public domain books. This book is part of the public domain. Fyodor Dostoyevsky (2000). Poor Folk. Urbana, Illinois: Project Gutenberg. Retrieved October https://www.gutenberg.org/cache/epub/2302/pg2302-images.html This eBook is for the use of anyone anywhere at no cost and with almost no restrictions whatsoever. You may copy it, give it away or re-use it under the terms of the Project Gutenberg License included with this eBook or online at www.gutenberg.org , located at https://www.gutenberg.org/policy/license.html .

MY DARLING BARBARA ALEXIEVNA,—I implore you not to leave me now 

The stunning collapse of crypto giant FTX has left investors of all sizes scratching their heads and pondering: “Should I keep my funds on centralized exchanges, or look elsewhere?” This reasonable question has led to a truly stunning uptick among DeFi protocols and decentralized exchanges (DEXs), data compiled by suggests. Dune analytics Some protocols offering fully decentralized options have reported a near 75% increase in users following the FTX collapse, but why? As a centralized exchange, FTX was able to mitigate business losses by secretly using customer-deposited crypto assets to cover its ever-expanding hole. While investors believed their assets were safe, they were in reality slowly evaporating behind closed doors. Consequently, DeFi-centric platforms cannot operate in this way as they are run by auditable smart contracts rather than individuals susceptible to greed. Corruption or mismanagement are unable to enter the equation and security is paramount. Learning their lessons, investors are realizing transparency is paramount and only DEXs are capable of delivering. DeFi’s largest protocol saw a notable uptick in total value locked (TVL) following the aftermath of the FTX debacle. A week on from the collapse, MakerDAO’s TVL increased by at least a third. MakerDAO MakerDAO is an Ethereum-based protocol that issues the Dai algorithmic stablecoin, which is soft-pegged to the value of the US dollar. The Maker Protocol enables users to redeem Dai in return for depositing Ethereum-based tokens as collateral. Other top-10 protocols also attracted huge jumps in users. According to analytics compiled by Dune, the DEX seven days total volume touched over $3 billion on November 29 and was over $14 billion the week earlier. Those figures signal consistent growth following the initial influx of investors to decentralized exchanges. The team at is also reporting that its service has “had a 75% increase in the number of weekly new users for the week of, and after, the FTX fallout, compared with the 10 weeks prior.” Oasis.app The Oasis.app interface integrates protocols such as MakerDAO and Aave as it can be used to borrow Dai against users’ favorite cryptocurrencies, increase exposure against them using Multiply or Earn a competitive yield — all in one place. Oasis.app has seen a trade volume increase of over half for the month of November, skyrocketing from around $20 million in traded volume on November 6 to over $40 million just over two weeks later. is a decentralized exchange that allows users to instantly trade any digital asset on any chain by simply connecting their wallet. It enables users to seamlessly swap assets across chains in minutes without the need for external bridges. Hashflow The platform ensures that all quotes are executed at the price shown and that all trades are fully protected from slippage and MEV exploits, whether they happen locally or across multiple chains. Its total monthly volume for the month of November was well over $1 billion, with over $100 million deposited on November 9 alone. Following FTX’s spectacular collapse, the DEX market appears prime to solidify itself as a mainstream competitor to traditional centralized exchanges. It appears that investors are sick to death of the behind-closed-doors approach to investing and are looking for an alternative option that values transparency more than anything else. For what individuals lose in purported “user-friendliness”, they make up for in security, mitigating some of the risks associated with a situation like FTX. That platform’s implosion has clearly been devastating for the industry and many individuals in it, however, its destruction has one clear silver lining –  the whole concept of the industry is returning to its original principle of decentralization.

CEX-odus: Decentralized Exchanges Going Mainstream Following FTX’s Epic Implosion

CEX-odus: los intercambios descentralizados se generalizan tras la épica implosión de FTX

CEX-odus : les échanges décentralisés se généralisent après l'implosion épique de FTX

सीईएक्स-ओडस: विकेंद्रीकृत एक्सचेंज एफटीएक्स के महाकाव्य विस्फोट के बाद मुख्यधारा में जा रहे हैं

CEX-odus: FTX の壮大な内破に続いて主流になる分散型取引所

CEX-odus: exchanges descentralizadas se tornando populares após a implosão épica da FTX

CEX-odus: Các sàn giao dịch phi tập trung trở thành xu hướng chính sau sự bùng nổ hoành tráng của FTX

CEX-odus：FTX 史诗般的内爆后去中心化交易所成为主流

You're probably reading this because the FTX implosion cascade sent every crypto-influencer into an engagement farming overdrive - "Get Your Crypto Out of Exchanges." and that's given you a niggling worry. "Don't Trust, Verify." rings in your ears, and you're one with crypto-twitter glued to your screen and wasting the weekend away doomscrolling. Let's get you up to speed in the next few minutes and get you to go out and touch the grass. What Brought us here? The FTX/Alameda Crash Simplified FTX a crypto-exchange (registered in the Bahamas) that enabled people to trade cryptocurrencies as you do on stock market exchanges. They allowed you to buy/sell bitcoins and shitcoins (every other crypto except BTC..lol), trade on margin, futures, and the whole nine yards. was Pretty nifty actually. The 24-hr trading volume (sum of all buy and sell trades over a given period) was in the billions of dollars and were the third largest crypto-exchange. They were backed by some of the biggest crypto-VCs and whales. They got Tom Brady and Gisele Bundchen to bat and walk for them. They were buying naming rights to sporting stadiums and sponsoring gaming events. The Founders were vegans, effective altruists, and according to Nas Daily, the most generous billionaires in the world. The marketing was on point, but shenanigans were going on behind the facade. Shenanigans after shenanigans - in broad daylight. Shenanigans that the VCs pouring in billions of dollars would have noticed in 5 minutes (apparently) but crypto gotta move fast and ain't nobody got time for due diligence. It all began with the FTT token (short for FTX token) - the exchange token created (allegedly out of thin air) by FTX to power the actions on their FTX exchange. The idea was that as FTX grows, the demand for FTT tokens would increase (users need FTT tokens to buy and sell stuff at cheaper rates on FTX). This worked in all bull markets and went up to over $77. However, with the bear markets returning, it was trading at around $25 - down 67% from its ATH, but that's also okay! BTC is down by a similar percentage. Some tech stocks like Meta are down even more. The problem is that FTX's sister entity, the trading house Alameda Research's balance sheet was largely (like really largely) . This meant that Alameda Research could lose money infinitely as long as FTX could keep creating new FTT tokens (or keep the price up of the FTT token propped up). People jumped on the 'let's short this shit and find out' bandwagon effectively plummeting the price of FTT tokens even more. made up of FTT tokens This could have been fine too. Crypto is antifragile in that sense. Let's unpack. Traditional banks follow the fractional reserve banking method where they only keep only about 10% of their customers' funds. So, if I deposit $100 in a Chase bank, Chase can lend out $90 immediately to a borrower. They charge interest from the borrower and share that with me. This keeps the lights on at the banks. So, if all depositors go to their banks and start withdrawing like 11% of their funds, that bank is dead. Cryptocurrencies were invented as an alternative to this banking system: No fractional reserve No interest No intermediaries For this story, all that FTX needed to do was, wait for it, not gamble with the funds deposited by their customers. Maintain a 1:1 ratio (essentially meaning that all customers could withdraw 100% of their funds at any time, and it should not be a problem. In fact, OG bitcoiners celebrated__ __. On this day, they'd remove 100% of their bitcoins out of exchanges and non-custodial wallets. The ones playing roulette with customers' funds would get decimated, and the good ones would be reminded to keep being good. Jan 3rd as Proof of Keys day FTX was not being good. A day after the bank run on FTX, the CEO was looking to raise $10 Billion to fill the hole in their balance sheet caused by their own (Alameda's) reckless trading strategies. FTX was insolvent and everybody could see that. That was the end of it. But no. This is crypto and far-flung rumors have curiously been understatements of the year. People started asking whether other exchanges were 'Chancellor(s) on the brink of collapse.' You're as good as your reputation on Twitter and exchanges started publishing their Proof-of-Reserves' to quell their respective rumors of insolvency. Many bought into the 'Proof of Reserves' narratives via hopium while the copium crowd was back to clamoring - 'Get your crypto off exchanges and into cold wallets.' As always, the truth is neither here nor there and this brings us finally to the topic at hand. What Exactly Makes you Solvent? If the sum total of all your liabilities (reds on your balance sheet) is lesser than your assets (greens on your balance sheet), congrats, you're solvent. FTX is NOT! Crypto exchanges from the big daddy Binance to Bybit are all publishing their proofs-of-reserves - essentially signaling that they're not gambling with customer funds! Check out all of the reports at DeFi Llama__ __ or at Nansen . here here What is A Proof of Reserves? Strictly speaking, proof of reserves is a 3rd party audit of your balance sheet (assets and liabilities) with published results. No exchange outside of Kraken (which has been publishing it like forever) does this. Take the for an illustrative example: case of crypto.com (Source: ) Nansen It states that the crypto.com treasury is: BTC 28.82% SHIB 22.08% ETH 17.32% USDT 6.02% USDC 5.61% Others 20.15% Some of you might be wondering whether having almost a quarter of your portfolio in a meme coin (SHIB) was a good decision. Well, if the crypto.com customers HODL $500M+ worth of meme coins then crypto.com needs to have that $500M+ worth of SHIB tokens. That is an example of the 1:1 reserves claims being currently made on crypto-Twitter. But it is still only half the picture. What you see above are just the on-chain assets. Many exchanges can (and do) have off-chain assets and liabilities. An on-chain asset, like the ones shown above, is simply the sum total of the funds inside the wallet addresses (claimed to be owned by the exchanges). No one disputes that the funds are inside the wallets. But no one really knows who owns these wallets. Off-chain assets and liabilities can be: Naming rights to football stadiums Funding (alleged) sex orgies and Adderall for the team Etc etc So why are we in this Timeline? Occam's razor suggests that this check-my-proof-of-reserves dashboard is just a stopgap solution (and Nansen is helping for the free publicity). All the exchanges have listed $0 as total debts, which doesn't feel right in light of the deep tentacles FTX had in the ecosystem. $10B (possibly more) have been wiped out (even at Mark-to-Market numbers), and more than just retail customers have been left holding the bag. (Source: ) Fortune Some exchanges (like Bybit) are even supporting the 'withdraw all crypto from exchanges' movement. What appears to be going on in the backend is the mad dash to publish the Merkle Proofs of customer holdings. This chicanery (although a step in the right direction) is forcing exchanges to maintain the 1:1 peg not only at the macro level but also at the individual wallet level. Here is how it is supposed to work. Let's say: Alice has 10 BNB and 1 ETH on Binance Bob has 5 BNB and 200 DOGE on Binance Now, each wallet (Alice's and Bob's in this case) would generate a unique hash value based on the funds inside. If the hash changes, it implies that the funds have been altered. Given that there are millions (or thousands, given the current downturn) of users, the hash of each of these wallets would be arranged in a Merkle Tree architecture (a cryptographically secure mechanism) which looks something like this: (Source: ) Ethereum Essentially, the hash of Alice's and Bob's wallets would be used to create a new hash. This hash would be used to create a new hash with the hashes of the other wallets. This process continues until a final hash is generated, which is the result of having hashed every other wallet on that exchange. If even a single satoshi (price at the time of writing - 0.0001685 USD) is moved, the entire hash gets changed. This is the more real proof of reserves than the self-audits currently passing off as 'proof of reserves.' Why Merkle Proof of Reserves is Good Enough When you deposit your funds in an exchange (whether to YOLO x100 or for storage), they essentially stop being your funds. Period. You are just one ' ' away from liquidation. withdrawal suspended But, with Merkle Proof of Funds, there is some light at the end of the tunnel. Your deposited funds go into the cold-storage wallets (hopefully) of that exchange and you get a corresponding balance in their exchange. You might think that you're trading bitcoin when essentially it is just squaring off numbers at the end of the day. The hope is that with Merkle Proofs in place, users would be better aware of an exchange's health and the exchanges would be less likely to gamble with YOUR money. This would assuage minimalists for the time being until the next crash because… Merkle Proof of Reserves is NOT Good Enough Not your keys, not your crypto aside, these proofs are, again, just ledger entries. There is: No third-party audits No self-custody of funds No mention of liabilities No security protocol around the safety of the cold wallets (see Quadriga CX case) And above all, it doesn't solve the problems created by exchange tokens - a la FTT. Be it a Binance with its BNB or a Kucoin with its KCS, all utility considered are still tokens created out of thin air. An argument can be made that utility is being created with their respective chains - BSC and KCC, but even the believers would agree that this does inflate holdings and gives a rosier representation of health. Conclusion An exchange with a 'print free money' glitch, such as the exchange token is no better than the federal reserves' backed FIAT money. Just as the USD is backed by the US Government, BNB is backed by Binance. FTT was backed by FTX. When push comes to shove, do you want to 'trust third parties’ with your money? Is that where we are? Well. Yes. As long as you're craving a yield on your crypto, CEXs will flourish. Give that up, and the remaining $40B TVL in DeFi protocols vanishes overnight. This a curious case of CEXs being important for DeFi. All in all, it would be a whole lot easier if the powers that be are not asleep at the wheel and do proper due diligence before becoming a part of the marketing hype. But, we need to ask ourselves a question too - "Does the industry that pumps DOGE on Elon's tweets even deserve rational-headed VCs?" Would they even survive with us? We're all degens here. Right? Well, the market unpredictabilities are making light-work of many a degenerate, so… Stay safe out there, fren!

FTX Implosion TL;DR and Why Proof of Reserves is NOT the Solution We Need

FTX Implosion TL;DR y por qué la prueba de reservas NO es la solución que necesitamos

FTX Implosion TL; DR et pourquoi la preuve de réserves n'est PAS la solution dont nous avons besoin

एफटीएक्स इम्प्लोसियन टीएल; डीआर और क्यों रिजर्व का प्रमाण वह समाधान नहीं है जिसकी हमें जरूरत है

FTX Implosion TL;DR と、証拠金の証明が必要なソリューションではない理由

FTX Implosion TL;DR e por que a prova de reservas NÃO é a solução que precisamos

FTX Implosion TL; DR và tại sao Proof of Reserves KHÔNG phải là giải pháp chúng ta cần

FTX 内爆 TL;DR 以及为什么储量证明不是我们需要的解决方案

Life is determined by a few key moments. That was the case when in 2016, Masa Son met Adam Neumann in the WeWork offices. Masa had only twelve minutes to decide whether to place a $4 billion bet on WeWork! With the usual coolness, Adam Neumann - a tall guy that felt ok in walking barefoot without a shirt in the middle of the street - played his cards at best. A few minutes later, Masa Son, among the wealthiest people in Japan, scribbled $4 billion on his iPad. That made Adam's company, WeWork, valued at $47 billion! Masa and Adam would project WeWork to be valued at $10 trillion by 2028! Yet the wind was going to change very quickly. And just two years later, the whole thing was to implode. From the height of a $47 billion valuation, the company risked losing it all! This isn’t a movie by Oliver Stone, who wrote the legendary Wall Street, interpreted by Michael Douglas, in 1987, and which would paradoxically inspire generations of financiers. We’re, at this time, into WeWork’s offices, a real estate company claiming to be among the largest tech players, running what the company called  a Space-As-A-Service Business Model. This story is so exciting that Apple TV+ is making a series about it, interpreted by Jared Leto. https://www.youtube.com/watch?v=VAuhT5241h8 Recapping the WeWork story When , a reporter at Wall Street journal since 2010, he had been following WeWork’s founder rise for a few years. Eventually, the story got so compelling that when WeWork crashed, Eliot wrote a book about it called “The Cult of We.” Founded in 2010, in SoHo, NYC, by Adam Neumann and Miguel McKelvey, WeWork quickly expanded. By 2012, WeWork was a successful and profitable company that was now worth over a hundred million in a very short time. I interviewed Eliot Brown 2016 would be a turning year for WeWork as it managed to get a $4 billion offer after a 12 minutes tour of the offices, Masa Son, founder of SoftBank. Masa Son would later promise to take over the company for $20 billion and make it into a $10 trillion behemoth by 2028! Things didn't turn out as expected. Masa Son pulls back from its promised investment as liquidity drains out. WeWork, therefore, tries to IPO to getting the funding it needs to survive. Yet, as it submits its S-1 form to the SEC, the whole scandal comes out, as a conflict of interests, bad management, and extreme losses become public! WeWork would have to withdraw its IPO. As the company restructured, it went public via a SPAC company BowX, valuing it at $9 billion (instead of the $47 billion of value at its peak). By March 2022, WeWork is valued at less than $4 billion. What happened there? Let’s look at one of the craziest stories of the tech industry, which might well resemble the epitome of what can go wrong when markets are supplied with massive liquidity and private investors are looking for the next big thing! The Early Years As Eliot Brown explained to me, Adam Neumann's entrepreneurial story started when he moved back to Israel with his mother, where he lived most of his life, before adulthood. In Israel, he lived in a Kibbutz, a communal socialist experiment. There, he learned the value of community. He also learned how the place was a mess as it was hard to make the community keep going without the financial resources. After a short stint in the Navy in Israel, he moved to New York. In the city, he found the perfect place for him to bloom. He just wanted to become rich, and with his sister already in New York, working as a supermodel, he was right on introduced to interesting people. Adam was quite energetic, a natural extrovert; he found it very easy to make friends and build communities just for having fun. His first venture as an entrepreneur was a baby clothes company (mainly financed with his sister’s money), which tried to make clothing that had knee pads for babies when they were crawling. It was called “Krawlers.” The idea was that babies’ knees must hurt, so here’s a way to make it, so they don’t and didn’t go very well. Yet Adam was a great salesman. However, his inability to understand the product and his lack of passion about it (he was a man in his 20s) made the business continuously struggle. The real turn of events came when he met someone who ran an office space subleasing company, a little incubator-type environment called Sunshine Suites. It was the son of a classmate of his at college. Adam felt impressed by how much money Sunshine Suites was making. In the meantime, Adam had met an architect, which turned into a good friend named named Miguel McKelvey. Adam Neumann pitched the idea to do something similar to Miguel McKelvey, who became the co-founder of something very similar to what would later become WeWork. Back in Brooklyn, they convinced their landlord to give them a floor and put up the money to organize a first co-working space. The landlord put in the money, and real estate, and Adam and McKelvey put in sweat equity. The deal worked pretty well! Soon enough, the company, which they called Green Desk, was a success. We’re in the 2010s. When Adam Neumann saw the idea was working well, he figured to turn it into something way bigger. Yet the landlord didn’t seem to agree. Thus, he liquidated the two co-founders and gave them about $500K each. Adam Neumann recommended McKelvey to keep his money as he would have spent it, so that they could use it for their next venture. A Real Estate or Tech Company? Finally, as the vision was shaping into Neumann’s mind, he wanted to build something big, a multi-billion dollar business. He also understood that to do so; he had to play the venture capital game. And as it would later turn out, he was very good at it. But before we get to that, Adam Neumann, in the meantime, had  also met what would become later on his wife: Rebekah Paltrow, causing with the actress Gwyneth Paltrow. At the first encounter, Rebekah Paltrow tried to inspire Neumann to think big, but also to do so with vision, and not to only think about money. While this might seem inspiring, as we would see throughout the story, it also turned into one of the paradoxes of the whole WeWork story, in what we can call “fake leadership.” Fast forward, WeWork is indeed a good idea. That’s a sort of real estate arbitrage, where you leverage on a longer-term lease to rent the real estate locations at a much higher price to co-working companies by offering them ancillary services. This model is well known today, yet pretty new in the 2010s. However, while this business model turned out to be profitable at the time (we’re right after one of the greatest real estate bubbles of our times), when commercial real estate was under pressure, it was still a business that was very hard to scale. The primary reason was that WeWork had to anticipate the costs related to long-term leases and pay them out slowly as more members came in. While over time this model would make sense, in the short-term this form of arbitrage also carried negative cash flows. Yet, we’re in a period when private markets were heating up, and venture capital was massively betting on tech companies. Adam Neumann, therefore, realized the importance of reframing WeWork as a tech company rather than a real estate player. Indeed, over the years, WeWork called itself a . This was done to mimic the successful and rising industry of software companies offering their technology for a monthly fee ( ). Space-as-a-Service business model the Software-as-a-Service The move was successful, as WeWork quickly convinced venture capitalists to invest. Among the first, there was Benchmark, a well-known name in Silicon Valley. They were the first big check into Uber. This created an aura of success, it validated WeWork as a tech company, and it made it into a multi-million dollar success. And the road to billions wasn’t that far! Radio on The Internet https://www.youtube.com/watch?v=BzAdXyPYKQo One of the most hilarious scenes of the series Silicon Valley (above) well explains in a hot market what makes a company successful. It’s not the revenues. It’s the hype you can create, but also how much you can shift your narrative around growth rather than profitability. That is what WeWork did. Adam Neumann, at that point (we’re around 2014-2015) had mastered the venture capital game. And he started to secure other financing deals. The real breakthrough came when they managed to pull in a mutual fund, Fidelity. A growth fund part of the Fidelity family gave WeWork an over $200 million cheque, making the company valued over $10 billion for the first time. Fidelity at the time was pulled into WeWork as it was trying to show it could invest in innovative companies, and for the mutual fund, a cheque of over $200 million was a small thing compared to the hundred of billions it had under management. Lack of Skin in the Game While WeWork grew to become what is called a , yet, as WeWork was growing by surfing venture capital investments, Adam Neumann was taking money off the table by selling some of his shares to finance his lifestyle. Decacorn At the same time, he was also opening personal loaning lines to keep the extravagant lifestyle the family was living. On the one hand, he preached to his team to work hard and do it for the mission; on the other hand, he was taking money off the table where he could to finance his lifestyle. To be sure, there is nothing bad about taking money off the table, especially if you’re letting some of your early employees, and the people that made the company successful do the same. Instead, he was taking favorable deals for himself, and that’s it. And there is more to it. The rising conflicts of interests and crazy acquisitions As WeWork was growing, a plethora of conflicts of interest started to build up. In fact, Adam Neumann, on a growing number of deals, would, on the one side, invest in the property behind the commercial building. And on the other hand, manage the company as WeWork’s CEO. For a company that was now worth more than $10 billion this was a matter of concern. And yet, as the company scaled, things only got worse. The money that Neumann would take from the various financing rounds, were also used to do acquisitions that didn’t make any sense. The epitome of it was the acquisition of a company called Wavegarden, which actually made artificial waves for surfing! Two visionaries or two Madmen? The real turning point for Neumann (or, if you wish, the beginning of the end) and WeWork came when he encountered Masa Son, the patron of SoftBank, a Japanese conglomerate, who had billions of dollars at its disposal. Masa Son’s career is quite interesting. In fact, he managed to become among the wealthiest person in the world, during the dot-com bubble, only to see his wealth to evaporate. Even though he failed with the dot-com bubble he still managed to build an aura of success thanks to a huge winner. Indeed, Masa Son had invested $20 million in the early days of Alibaba, turning it into a multi-billion win! The approach he used was gut instinct in spotting a visionary founder. Thus, it was this ability (as he later recalled) to spot a visionary like Jack Ma (founder of Alibaba) that made the investment so successful (according to Masa Son). As , referring to Jack Ma (I edited the text for readability): Masa Son recounted He had no business plan, and zero revenues, but his eyes were strong, strong eyes, shiny eyes, I could tell from the way he talked, he had charisma, leadership. So his business model was wrong, but the way he talked, and he could bring young Chinese people following him. Masa Son, after the dot-com crush, had started to rebuild his business by investing in the communication industry, until he tried to merge Sprint and T-Mobile, and failed. Yet, when Masa Son real mission was to find the next visionary. When he met Neumann he had successfully built one of the largest funds ever created, for tech companies. The Vision fund, in fact, had secured over $45 billion from Prince Salman (King of Saudi Arabia). With that money Masa Son was ready to invest in the next tech messiah, able to change the world. Here we go back to the day Masa Son had scribbled the $4 billion investment on his iPad. That made Adam's company, WeWork, valued at $47 billion! Yet the story wasn’t over yet. All is Falling Apart Masa Son became the main mentor of Adam Neumann, at the point that the two met to discuss the final vision for WeWork, making it into a multi-trillion-dollar success! Indeed, as Son and Neumann met, in 2018 Son had promised Neumann to buy out WeWork, make it a private company, and bring it to become a $10 trillion company by 2028. That was the grandiose/mad vision! Yet, as the deal was about to close, things changed pretty rapidly. As market liquidity started to drain up, pressure mounted on the Vision fund, and Masa Son called the deal was off the table. This made Neumann go in the path of one of the most unsuccessful IPO attempts. As the window of opportunity to IPO was closing, WeWork tried to go public in 2019. Yet, as the WeWork S-1 was released the public was shocked to see a company’s bearing massive losses, and with no plan whatsoever to turn a profit any time soon. And to make things worse, all of Neumann’s conflicts of interests started to be made public, until the situation became unsustainable, and after various theatrical moves, Adam Neumann was ousted, yet he left the company with one of the most generous, severance packages of all time. At the time of this writing, WeWork, which would later IPO through a SPAC, is now worth less than $4 billion. The once envisioned multi-trillion success, turned into a nightmare. The overall company survived all that, showing that overall, WeWork wasn’t a bad idea. But of course, neither a tech company that could be worth more than Apple, Amazon, and Google combined.

How WeWork's Implosion Turned it into a Shell of its Initial $47 Billion Promise

Scaling Without Imploding

Is it really better to burn out than to fade away? About a month ago, my whole belief system was turned on over its head. I realized that I had never been the wrongest in my entire life and it was a rare incident of reflection that promised to stay with me forever. of gave me this brilliant piece of advice when I had just started Zeading in August of 2016. Alas, because of my tragic influence on myself, I chose to unconsciously ignore it or even worse, gravely misunderstand it. I had already failed spectacularly working on my previous startup 3 years back while I was still in college. I thought I had the awareness and was an expert on the mistakes entrepreneurs generally make. Make the car run before racing it on a race track. Vijay Anand The Startup Centre And that is where I was wrong. Never ever think that you’ve nailed it Z was meant to be a blogging platform that made traditional reading obsolete. With our flagship feature — the Zen Mode, I had invented a clever way of using Javascript to convert articles into animated video-like interface on the client. With HTML5’s we had added support for voiceover as well — so it literally read out the whole thing for you. It was a really immersive way of reading stories. Our demos were jaw-dropping and we were flooded with positive comments about it in our beta run. eading SpeechSynthesis API Our singular ambition with Zeading was to become the Youtube of textual content. It was an ambitious goal that stemmed from my own real life problem. I suffer from , a rare condition in which one eye has dimmer vision than the other eye. It gives me a headache trying to read anything on a screen whether I use my glasses or not. My eyes are very sensitive to strain. To ameliorate this, I imagined our text-to-video interface, which provides an immersive, strain free way of absorbing textual content on a screen. Once it was done, and initial reviews were encouraging, it was time to capitalise on it — or so I thought. amblyopia Zen Mode in Zeading — played stories like video. We had a fairytale startup launch. On the day of the launch itself, we had our first 100 registered users. In the next 30 days, this number had crossed 3000. On the 31st day of our operations, it was already at 4000. My team and I could not have been more amused. People were publishing on Zeading left and right and we had a lot of encouragement from our initial group of early adopters. In some ways, our first version had all the green ticks of a successful MVP. During the first 30 days, we already had our first influencer that we needed to transcend the boundaries of our own social networks. A bunch of very experienced people were also advising us from time to time. Fairytale MVP launch It was more or less like the celebratory champagne scene from The Social Network in my apartment — which was doubling up as the world headquarters of our tiny little venture as well. We astutely believed that at this point absolutely nothing can ever go wrong. And then we jinxed it. Product/Market Fit does not grow on a farm What that means is that there is no way you can harvest a after you’ve sown the seeds. Sorry to burst your bubble on this one, but it is just the way the world works. You have to design the product from customers, not bring customers to a product. product/market fit We learned all of this the hard way: If you’ve not done any customer research or don’t have any qualitative data about the existence of the problem that you’re solving, you will not get any users**.** If the size of your market is too small or you have little idea about the dominance of existing competition, your product/market fit doesn’t have any value**.** If your retention rate is too low and you don’t have a repeatable model for expanding into unchartered markets, you will forever be clueless. If your team members are all doing a full time job and are not instead working full time on your startup, you will have a very hard time moving even an inch forward. If your Plan A of revenue is advertising, you are royally fucked. Product/Market Fit is, in effect, a reciprocal relationship that your product develops with your users. Your product adds value to their lives, users keep returning for more of the good stuff. Looking back now, even the most viral story on our platform garnered just about 60k pageviews. Needless to say, we never made a dime. Not having a north star metric is a recipe for doom We studied all kinds of metrics except the one that really mattered. In our inane stupidity as inexperienced entrepreneurs, we analyzed everything Google Analytics had to offer and whatever we could make out from our database pullouts — daily pageviews, bounce rate, daily active users, signups, posts, number of likes, number of comments, page reach, yada yada, blah and blah. Facebook If we’d just focused on pageview traffic, we could have worked towards our business model and optimized for revenue. If we’d just focused on engagement, we could have advertised ourselves as a community. If we’d just focused on our most used flagship feature, we could’ve focused on growing out of the blogging platform facade into a more efficient container for our value addition. Choosing what metric you are going to chase is the most important business decision you’ll ever take. It will shape your product, business, and culture. In the dark of a moonless night, we were left veering around the woods with nothing to hide our dignity with. Our once enviable crashed and hit x-axis like the drop of a Skrillex song. When the sun finally rose, we had nothing but each other’s faces to look at. growth We didn’t look pretty. Seriously, fuck your gut feeling. Intuition without experience is the mother of all jackshit. Steve Jobs had great intuition because he was an industry expert. You are not yet. Your knowledge is sparse to say the least and your market study is fragmented and filled with biases and secondary data. You are not even allowed to have a gut feeling until you can explain the whole industry and it’s opportunities to someone in less than literally sixty seconds. This may sound a bit controversial, but startups are instruments that run on intuition a lot by design. The only proven ways to build a successful product or a business have been either to follow what someone has already done or perform trial and error until you discover something unique. But how are you going to decide which trials to run? Your intuition is what will guide the way. What if your gut feeling itself is wrong? You’ll waste all your resources running all the inconsequent tests. Worse than that, some tests will have false positives — like when we put Zen Mode on our article view before the article, our bounce rate dropped from 80% to 4%. It was a fuckall metric we never really bothered about because mostly viral content does have a rather high bounce rate, but because of this dramatic reduction we started putting in resources into embedding Zen Mode on other sites. This also did not pay off for us but rather sent us along a stupid tangent that we should’ve known better to avoid. The only way to trust your own gut feeling is to train it to be right most of the time. Experience and expertise make your thought processes aligned so that your intuition is mostly correct. My friend and expert product and growth veteran advised me to get 100 super-fans for my product before doing anything else. With our north star metric unknown and confirmation biases taking their own hormonal form inside our bodies, we began choosing our superfans based on our gut feeling. There was nothing quantifiable in our approach of selection of our most active users. Misbah Ashraf I feel embarrassed even as I write this, but it’s true. That is the extent to which we fucked up. Salt and water does not make the sea Unbeknownst to us, there might been have a better way to build and market what we were trying to achieve. In an alternate universe, in a parallel reality, I like to believe, there is some place where didn’t fall for these now seemingly obvious booby traps laid out by our own prejudices. Sometimes we fail by having too much doubt; sometimes we also fail by having too much confidence. There’s an ancient Indian proverb that says which literally translates to don’t blame the floor if you don’t know how to dance. Seems an odd way to end this story, but however deep I introspect, I feel that that ignorance of our market and uninformed decision making has been the number reason why we fucked up our startup. naach na jaane, aangan tedha — We had worked for about an year on Zeading and it was part of an emotional stasis in my usually uneventful life. Needless to say, all this shutdown was done with an extremely heavy heart. It took me a whole week to make the announcement on Facebook to our users. It was just so hard to tell everyone you know that you’ve failed. Managing a fully bootstrapped startup while also working full time professionally made me more appreciative of any free time that I get. I began reading more to fill up the voids in my mental capacities and became more accepting and corrective of my own flaws as a leader, engineer, and an entrepreneur. Mostly, I believe the setback is temporary and the things that I’ve learned will help me bounce back and get back to doing what I really enjoy — making amazing shit. Thanks for reading! :) If you enjoyed this, please make sure to hit that heart button. It encourages me a lot and would also help other people see this story.

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