Hucksters, Fraudsters, Hypesters and Fake it 'till you Make It

I am prompted to write this after reading an article that a friend gave me about the aftermath from the collapse of Vashi, a bespoke jeweler that had stores in the US and London. They sent me the article because Vashi Dominguez himself and his CFO, Charles Leach, pitched the business to me just one month before they were forced into liquidation by a winding up petition brought by a group of its creditors. A winding up petition takes time, so it means that Vashi and Charles knew that they were facing this existential crisis when they met with me but, of course, none of this was disclosed in their pitch. Instead, I was given a very confident, upbeat, credible and rosy vision for the company - what it had (supposedly) achieved to date and what the future looked like going forward from the raise.

It’s interesting to think back and watch YouTube videos with the benefit of hindsight. It might not be so apparent from the online version of Vashi in the video but he was formidable in person; charismatic, passionate, and convincing. Note how often Vashi mentions the world ‘ethical’ and that Charles mentions ‘trust and credibility’ (twice) as critical to their success.

The best hucksters are generally charismatic. This doesn’t mean that they charm everyone they come in contact with. Elizabeth Holmes fooled a lot of people but not everyone. Even so, the detractors are often sidelined or silenced by the believers. Many of her investors were very sophisticated business people. Where was the due diligence?

The same can be said about SBF. He created a persona that drew in a lot of sophisticated investors. In the aftermath of FTX, we learnt that the accounting was very free-wheeling, chaotic and fraudulent. Did the due diligence of the investors go out the window?

I would love to inoculate myself against the reality distortion field of hucksters but it’s very difficult to do. They come in different shapes and sizes - and they are good at it. Sometimes, they are so good that they even fool themselves.

I watched hours of Elizabeth Holmes deposition and found myself conflicted because there isn’t an ‘aha’ moment. She is preternaturally attentive to the people in the room, tracking them closely with her luminous and unblinking eyes like a faithful border collie, yet blissfully unaware over the course of several years in regards to what her closest advisors and colleagues were up to in her business. There are times when she made terrible ethical decisions that she felt were in the best interest of the company. Is she a villain or a victim? Is she both?

SBF spent hours and hours before his trial on social media channels and interviews trying to convince everyone of his conscientiousness and the persona of altruism that he had cultivated up to that time - as if his reputation mattered more to him than anything else that had happened. The same was true of the trial except that the evidence undermined his performance.

Zuckerberg now faces a lawsuit from the attorney generals of most of the States in the US for knowingly harming teenagers. His now famous quote of, “move fast and break things”, seems like enormous hubris. We shall see.

Startup founders, especially in the early stages, are in the business of making dreams come true. And sometimes those dreams are big. They can set themselves impossible goals with impossible deadlines; they might even feel pressured to do so by their investors. But these are all decisions that they have (ultimately) made. They are performance artists that sell the dream and then have to make good on it.

I was lucky when it came to Vashi because I was in London at the time and it was easy to pop over to the Covent Garden store shortly after their pitch. In the pitch, they spoke of having fantastic foot traffic and sales density. When I visited, there were no customers, only a lot of sales people with time on their hands. They kindly showed me around and took me through the process. I spent about an hour there talking to them. What they said contradicted what I’d heard in the pitch. Small things - not major in and of themselves - but they piled up. Something didn’t tally; something didn’t add up with the pitch. It was a red flag in my gut. I passed. Lucky me.

The other investors weren’t so lucky and according to this recent article Vashi did a lot to conceal the financial reality of his company which included filing false financials with Companies House.

Due diligence is difficult.

I’d love to get people’s thoughts on how to perform better due diligence. Identifying hucksters is something that we are generally really bad at. This is the subject of Malcolm Gladwell’s latest book, “Talking to Strangers”. One simple method is to show the pitch to someone you trust who is likely to be one of the detractors who is not easily taken in by the charismatic founder. Listen to what they say. They’ll often pick up on different things than you do.


Trusting your instincts and not making an impulsive decision + taking time to meditate and think about it. If you are forced to hurry and make a decision right away its most likely a red flag.

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from our conversation, unbeknownst to each other, we BOTH wound up dodging a bullet with Vashi! careful diligence is essential – to the best of your ability, comparing notes with others (who as you said, may see things through different lenses or pick up nuances you may have overlooked), and as we’ve discussed listening to your gut and paying attention to your intuition vs hitting ‘override’. That saved my life on 9-11! I may wind up doing a write-up on this topic of how to do better diligence myself.