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The Wall Street Journal's Misleading Portrayal of Crowdfunding: Setting the Record Straight

Distinguishing Between Crowdfunding Structures and Debunking the Myth of Unsophisticated Retail Investors

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Trey Layton
June 20, 2024

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Debunking the Wall Street Journal's Misconceptions About Crowdfunding

Defending Crowdfunding: Setting the Record Straight

A bit ironic considering the piece I wrote on the merits of crowdfunding just a couple of weeks ago, but the Wall Street Journal published a scathing article on the industry, claiming it enables fraud and false promotion, making it easy for con artists to prey on unsuspecting everyday investors. However, this article perpetuates several crowdfunding misconceptions that need to be addressed.

The author, one ever-tech-critical Dave Michaels, claims that companies like Aptera and Boxabl leveraged crowdfunding to promote their companies on social media, generating hype to bring in tens of millions of dollars with no intention of building an actual product.

Addressing Misconceptions

Not only does this fail to distinguish the types of crowdfunding available, but it also falsely categorizes the reality of building a company and implies that only retail investors would be unsophisticated enough to invest in a disingenuous founder.

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  • Nvidia is now the world’s most valuable company

    • After an incredible >300% run up in 2023, the stock is already up close to 200% in 2024, making everyone who happened to invest in them after finding out they were partially responsible for ChatGPT convinced that they can quit their job and day trade

    • Unlike AMC, though (not including GameStop because I like the stock), there is some validity to Jensen Huang’s ascension

    • The company’s GPUs are used in like… literally everything; think of them as the mitochondria for the tech industry

    • Dating even further back, the company realized the potential of these devices beyond graphics, placing a bet on a CUDA software platform which opens up general-purpose computing to these GPUs

    • Then, when the LLM craze hit (and crypto mining before that…), this massive workload had a Red Bull to serve it, and many ML libraries are built specifically for this software platform

    • How much further does it have to run? Your guess is as good as mine, but given how tightly dependent the AI space is on these GPUs (call me bearish on other companies’ attempts to design and manufacture their own), the answer may depend on how much further you believe the AI market can expand

  • The SEC permanently suspended its investigation into Ethereum’s status as a commodity, according to crypto company Consensys

    • The agency (led by clown Gary Gensler) had launched an investigation, attempting to overturn the consensus (ba dum tss) view that Ethereum was not a security, a legal differentiation carrying a ton of weight around who would regulate it, how it would be taxed, how it could be traded, etc

    • This one is a win for the good guys (the degens), as the CFTC (regulated commodities) has proven much more supportive of crypto

    • The recent Bitcoin Spot ETF decision proved positive for the space, but it hasn’t had the exponential leap many had hoped for

    • Still… wen Ethereum Spot?

  • Dell announced a new AI factory with Nvidia specifically to power Grok

    • Michael Dell put out an eloquent, poetic tweet announcing the company’s new joint venture to support Elon and xAI, though in all seriousness, this is pretty promising for Grok

    • I’ve been vocal about my opinion that Elon’s purchase of Twitter was a steal… not because the platform itself is so valuable, necessarily, but rather because the treasure trove of user data and content to train LLMs with makes Grok one of the few viable LLM competitors

    • Now, they will have the technical power to do so

  • Russia signed a “strategic agreement” with North Korea on Putin’s latest visit to recreate The Interview speak with Kim Jong Un

    • The two autocratic countries have been holding hands for a while, so this isn’t necessarily big news on its own, but it does highlight the growing anti-Western trend, something to keep an eye on as the BRICS and de-dollarization movement continue to pick up steam

    • Also:

  • In case you weren’t aware, you can actually bet on sports in prediction markets… for those watching the Euros, here’s what the markets are saying after more than $1 million have been bet 👀

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