Enter the Charlatan….

Photo: Enter the Charlatan….

I don’t know if you can learn anything from me.

I’ve made some money, but I can’t retire anytime soon. I am an investor, but I don’t write $1 million cheques. I like to write, but I am not a best-selling author.

I host a podcast. I host a conference. I author a newsletter.

I do all of these things for the same reason: I benefit tremendously from doing them.

No one learns more than I do, from hosting my podcast.

No one learns more than I do, from studying before I get on stage at my events.

No one learns more than I do, from converting my thoughts into written sentences.

I published my first newsletter to about 900 people. The first response I received read simply: “I don’t care; F**k Off!”.

No joke.

The first panel I hosted on stage was a clumsy mess with overly scripted questions and robotic language.

Nobody watched my first podcast episode.

These days, every month, we get over 600,000 views, listens or reads, on our content.

The analytics are seductive. I get to see what is hitting vs what isn’t, and it tempts me to create more of what the audience seems to want. Audience capture - creating the content the audience wants instead of the content the author wants.

My best work is when I am making content for myself. Writing about the subjects I want to understand and asking the questions that I want to be answered. This is also the only work I can enjoy sustainably and stand behind with integrity.

But playing to the crowd, and chasing views, is attractive. It fills a human need for significance.

Most of us have a core need to be seen, heard and listened to. To be validated for our contribution - we want recognition - especially the Type A, competitive achievers. Our need for recognition drives much human behaviour.

Many who claim they “don’t care who gets the credit” are the ones who crave the credit the most. But acknowledging this would spotlight their insecurity - we may all be insecure, but heaven forbid we admit it.

What inspired this week's newsletter?

A friend called to caution me about the surge of online personalities over the last 24 months - authors, podcasters and Youtubers.

I have seen - and benefited from this wave of interest in new platforms and commentators. The circumstances of the last few years - the lockdowns of 2020 and 2021, created a perfect environment for online audience building.

These new platforms are necessary. Legacy media is overdue for change, and new independent journalists, authors, and commentators will rise to the opportunity. Whether in politics, finance or healthcare, independent voices are needed.

But with any surge of activity, you will find some good, bad and ugly. This is what my friend was cautioning me about. He claimed this environment was ripe for charlatans - personalities who had risen to fame, gained influence and respect, but despite their claims, were unblemished with success

Charlatans proliferate any time there is an abundance of disorder or societal division. We haven’t been short on division recently. We won’t be any time soon.

On The Mountebank

During the 16th and 17th centuries, Europe underwent a similar transformation. Division was abounding, the Inquisition was reaching its ruthless end, and modern science was challenging the monarchy.

When the core beliefs of a culture are challenged, people tend not to abandon faith, but instead, seek it elsewhere. It was the golden age for charlatanism in Europe.

In Spain in 1650, there was a young man named Francesco Giuseppe Borri. He was known as a degenerate of sorts; he lived a life of drinking, gambling and chasing women.

Whether due to boredom, poverty or genuine interest, Borri developed a spiritual side in his late twenties. He absconded his life of leisure and began a pursuit of mystical experiences. His transformation caught the attention of his friends, and Borri learned that the more he described his transformation as the result of mystical pursuits, the more attention his transformation got.

Leaning hard into this realization, Borri began claiming to have been visited by angels, who had promised him the gift of alchemy - the ability to turn any metal into gold.

His stories travelled, as did his fame. He became a travelling preacher, positioning himself as the path to an enlightened life. He would stare intently into the eyes of his followers, relaying to them their potential for spiritual greatness. Those with great promise were encouraged to donate generously to Borri’s cause. All of their wealth would be returned, ten-fold, of course, when he received the gift of alchemy.

Borri was a textbook charlatan. He died in prison, serving a life sentence for heresy.

But his grip was so captivating that even in prison, his followers remained loyal (including Queen Christina of Sweden) and continued to send him gifts until his death.

Borri mastered the art of charlatanism:

He never promised anything specific to his followers. He kept his language vague but full of promise, capitalizing on people's need to believe over their desire to be rational. “Follow me, and we can all be rich…”

He leveraged the hierarchy of organized religion and qualified his followers based on their “potential for enlightenment,” dangling the carrot of significance.

He became very rich from donations but always hinted that it was his gift of alchemy that produced his wealth.

When pursued by the Inquisition, Borri pointed his followers to the enemy, and leveraged the Us vs Them narrative, “the establishment doesn’t want you to be powerful and free….”

My friend told me that the world was ripe for cases like Francesco Borri. The combination of division and uncertainty, coupled with the reach of independent media, created the perfect storm.

“You need to be very careful who you associate with right now,” he said.

Maybe he is right. Maybe the world is ripe for the cons of the unscrupulous. Or maybe, the time is always right to question the motives and incentives of “experts.”

I work in the financial markets, an intimidating subject for many, where the helping hand of a “guru” is ever-appealing. The perceived complexity provides a veil of protection for an unaccredited expert.

But there is nothing new about this. I have worked in venture capital for 13 years. There are certainly sharks in the water today. There were sharks in the water 13 years ago.

As long as you and I are fighting an inner battle with greed, insecurity, ambition, and temptation, others are fighting it too. It can be hard to win this battle and stay on the right side of integrity.

My friend asked me to write a word of caution to my readers, encouraging people to be vigilant in their diligence and always check the credentials of those they “follow.”

I couldn’t agree more with the importance of this task.

But here is the problem:

You might be a prudent skeptic, who will bust the next Franceso Borri - and for your own sake, it is important that you try.

But maybe, even if you are the CEO of Blackrock, the world's largest asset manager, with over $10 Trillion in AUM, you would still invest millions of dollars with Sam Bankman-Fried, the architect of the colossal FTX fraud, as Larry Fink did. Blackrock has tens of thousands of employees conducting research, diligence and strategy.

The same mistake was made by leading venture capital firms Sequoia Partners and Softbank, with collectively over $450 billion in AUM.

Hundreds of millions of dollars were invested by the biggest wealth managers on the planet.

Poof, gone.

Or maybe you are the Royal Bank of Canada, or HSBC, or the bank of Scotland, or one of eleven different global pension funds, spending millions of dollars each year on risk management, and you still put collectively billions of dollars with Bernie Maddoff…

Or Trafigura, a Titan in the commodities world...

As I am writing this, I saw a notice that Trafigura, one of the world's largest players in the commodity markets ($319B in revenue in 2022), just purchased $577M of fake nickel. The trader selling the alleged nickel forged documentation and shipped over containers with a comparable weighting of worthless material inside. Trafigura had paid upfront.


Given this history of judgment, what are you and I to do?

Can we outcompete CEOs Larry Fink and Masayoshi Son? Or Trafigura?

Or should we concede defeat, throw in the towel and just pray…

Maybe… just don’t pray to Borri ;)

Alternatively - we can accept that there will always be a handful of Maddofs’, Bankman-Freids’ or Borris’ vying for our attention and capital. We can accept that we will likely encounter hundreds along our path and may never catch the majority of them.

Neither Maddoff nor Bankman-Freid was exposed due to the efforts of some vigilante journalists; they each fell as a consequence of random and unpredictable events, without which, they might still be “managing” money today.

I am sure there is an abundance of reasons that the Charter Banks, Pension funds and Wealth Management titans listed above overlooked the apparent scam in front of them. But I would wager that the top reason was as simple as it was for hundreds of Borris’ followers - there was perceived safety in numbers. They were just another participant in a school of peers. Surely, everyone else did their diligence… we can take a shortcut…

What lesson can we learn here?

We can’t eliminate the sharks. We likely can’t even spot the sharks. We can, however, control ourselves:

1. We can limit our exposure to any one counterparty. Sequoia lost $150 million on FTX, but the firm is not in trouble. Relative to their $85 billion in AUM, FTX was a small bet. So have conviction in your thesis, and buy insurance for when you are wrong. It’s okay to follow the Guru, but also follow their critics.

2. We can practice walking against the herd. There is safety in numbers - true for all herd animals. But what kept us alive on the tundra doesn’t always translate. Flexing your contrarian muscle can be fun. I make a habit of leaning into my weirdest and most unique attributes.

3. We can do hard things. No matter how competent the manipulator, how compelling and seductive their pitch, I guarantee there is one competitor that can trump their best efforts.

Our own mind.

Nothing can manipulate like a moment of weakness, a giving into temptation, or the coercive darkness that resides in all of us. I know no critic worse than myself. I know no deceiver more competent than my own mind.

Last year I added an ice bath in my backyard. I committed to a three-minute soak, every morning for a year. So this morning, and every morning, in the dark, in the rain, I sit in a tub of ice water and negotiate with myself. It is completely ridiculous.

But shutting down the compelling voice of my flight response helps me cut through other people's cunning fanfare as well.

4. We can acknowledge that sometimes, we are going to get beat, and that is part of the game. For many people I know - myself included, an error of judgment is worse than financial loss. I lose the money once, but I will replay my decision a thousand times in my mind, putting myself back on trial. Judged. Guilty. Punished. Again and again.

The best in the world, fail the most often. The difference is that they are not slowed down by defeat. It is important to learn from our mistakes - but even more important that we get up and keep swinging.

Enjoy your Sunday,


Jay Martin
CEO, Cambridge House