Frictionless Investments for Sophisticated Investors

Yesterday I asked a Silicon Valley angel investor what he thought of BitBox*.

According to AngelList, you are an investor in BitBox. is what I said.

Oh, he said. I’m sorry, I don’t remember what BitBox does. I must have thought they had a good team. AngelList makes it way too easy to invest in companies.

Apparently AngelList is the new Tinder, where you can flip around and make noncommittal investments from the comfort of your toilet seat.

AngelList’s frictionless investment experience reminds me of Robinhood, whose founders have been criticized for making trading *too* frictionless. After all, active trading generally leads to underperformance. But Robinhood’s founder says, Young people can afford to lose a few hundred dollars, that’s the equivalent of “Oh crap, I dropped my iPhone in the toilet.”

Robinhood’s progressive premise: If you are rich enough to afford an iPhone (and their app is iPhone-only), you can afford to lose all your money in the stock market.


It’s the same rationale behind the SEC’s requirements for accredited investors: You must be rich enough to be able to lose a small fortune before you can be an angel investor.

If trading stocks on Robinhood is the equivalent of dropping your phone in the toilet, then I guess writing off an angel investment is the equivalent of, Oh crap, I dropped my Tesla Model S in the toilet.


The proud new owner of this vehicle is an accredited investor
The owner of this vehicle is an accredited investor

*Company names have been changed.

Crowdsourcing the Race to the Bottom

postmates flowers

I just received this email from Postmates advertising flower delivery in San Francisco. Within the hour. For $19.95. Delivery and tip included. That’s pretty darn cheap.

Yesterday, Warren told me about another startup, BloomThat, that also delivers flowers. Ridiculously fast.

You should really be wearing a helmet, sir.
You should really be wearing a helmet, sir.

Why are they doing this? What problem are they trying to solve? Did your wife come home from work in the middle of the day and catch you in bed with the housekeeper, and now you need to send flowers, Ridiculously Fast, before she storms back to the office?

Exactly how big is this market, anyway?

As for the $19.95 flower delivery, they can’t possibly be turning a profit, or even breaking even. Operating at a loss to build hype is the same strategy employed by every failed business that ever patronized Groupon.

As of Monday, startups can publicly solicit funds from investors. You can gauge the quality of these crowdsourced startups for yourself on sites like AngelList. Yes, investors are actually putting money into these things.

You see, this is what half a decade of Zero Interest-Rate Policy does to the country. Thanks to Bernanke, we now have USB-powered sex-toy startups closing multimillion-dollar rounds.


These are all real listings on AngelList. BillMeLater for subprime credit? That’s a winner!