Editor's Letter | The true "Summer of Scam" beckons
A scar adorned one of his cheekbones, framing intense, deep-set eyes. The Secret Service had tracked the man for months and here he was, finally, sitting in front of them.
One of the agents finally spoke. “Count,” he said, “you’re the smoothest con man that ever lived.”
Victor Lustig, the man best known for “selling” the Eiffel Tower twice, had been caught, though it wouldn’t last: he vanished from the “escape proof” Federal Detention Headquarters in New York while awaiting trial. That was just one of Lustig’s many tricks over the course of his career as a huckster, succeeding in selling society’s wealthy and well-educated “Rumanian money boxes” — a device that buyers believed printed endless $100 bills — and swindling gangster Al Capone out of $5K.
Lustig is not alone in his charms. There is something alluring about the confidence man, an appeal in the brazenness and poise and quickness of thought. From Charles Ponzi to Frank Abagnale to Anna Delvey, even the most ostensibly ordinary character can be burnished by a slippery reputation. If someone can be damned with faint praise, so too can they be praised by faint damnation.
It was Delvey of course, the “German Heiress” that bilked thousands from friends and acquaintances while claiming to preside over a €60 million trust fund, that kicked off 2018’s “Summer of Scam.” New York Magazine came up with that honorific for the span of a few months that brought news of an Instagrammer maneuvering dozens of men into competing for a date, lunch ladies absconding with $500K, and “insect thieves” making off with $40K worth of bugs and lizards.
2020 may make these escapades quaint by comparison.
If early signs are to be trusted, the true “Summer of Scam” may be about to unfold, offering none of the guilty pleasure of a lunch-ladies-gone-bad story. Instead, we will be left with the tales of countless tales of financial ruin, much of it perpetrated or provisioned using technology.
As of Friday, the FTC noted that 15K Americans have reported coronavirus-related frauds, totaling $12MM in losses. Research on financial scams among the elderly suggests that only 1 out of 41 actually report these sorts of incidences, as victims are too burdened by shame. If we imagined that ratio was to hold generally, the American public would be closing in on $0.5B lost already.
In the Dust Bowl “rainmakers” scammed beleaguered farmers out of hundreds of dollars in exchange for blasting the sky with dynamite in the hopes of prompting precipitation; in 2008, the desperate fell for texts and emails offering immediate access to Obama’s stimulus package. In the age of Covid-19, the approaches take a slightly different tenor:
If I do not get the payment: I will infect every member of your family with the coronavirus. No matter how smart you are, believe me, if I want to affect [sic], I can. I will also go ahead and reveal your secrets. I will completely ruin your life.
That message, received over email, demanded $4K in Bitcoin to call off the attack. Other abuses are more surreptitious: apps claiming to be Covid-19 trackers have been shown to contain malware that takes over the microphone and camera of Android devices.
There are structural reasons fraud increases during times like these. American criminologist Donald Cressey, famous for studying the Cosa Nostra mob, devised the “fraud triangle” theory noting that three elements tend to be present when an employee scams a business: opportunity, rationalization, and pressure.
Each of these characteristics is heightened right now. With huge hits to savings accounts, pressure is high. As organizations try and adapt to new circumstances, there will be opportunities to capitalize on disorder and low visibility. As for rationalization — there may be few Acts of God as devastating as the one being experienced. Many will, reasonably or not, enter into a mind-frame of “bounded ethicality” in which actions can be justified when viewed through a certain lens; committing fraud to save jobs, for example.
The orthodoxy is that the old, uneducated, and lonely are most susceptible to fraud. That may not be true. Stanford psychologist Laura Carstensen notes that the most common investment fraud victim is “a middle-aged, educated, financially literate white male.” Researchers from Scripps added, “There is no other crime that affects so many people from almost all ages, backgrounds and geographical locations.”
Ken Kesey, author of One Flew Over the Cuckoo’s Nest once said, “The secret of being a topnotch con man is being able to know what the mark wants and how to make him think he is getting it.”
The current crisis has caused our desires to converge: we want health, we want our loved ones to be safe, we want to have enough money to survive. With such universal goals, the scale technology provides, and the uncertain bounty of a $2T stimulus bill, there may never be a better time to be a conman.
We should expect a fallout, and brace ourselves for a “Summer of Scam” far from the hijinks of Lustig, or the nefarious capers of Delvey. Rather, 2020’s rendition will be soulless and furtive and altogether more devastating.
Brief | Here's what you'll learn today
G.K. Chesterton's advice for the gullible and a request for cheese
Dogs deliver booze, cats charm, and a toddler says hello to no one
How we're spending our time online from Boomers to Gen Z
Which streaming service is capitalizing on digital worship
Airbnb takes on debt, dating gets distant, and Žižek's concerns
Quibi's first days and why Al Michaels got traded for a rabbit
Roles at Tencent, Two Sigma, Omidyar, Coinbase and more
An anagram to contemplate
If you're new to The Generalist, you might enjoy our recent piece "The World After the Coronavirus," or our breakdown of the skirmish between two venture capitalists, "Keith Rabois v. Zach Weinberg."
Overheard | Words worth pondering
Do not be so open-minded that your brains fall out.
G.K. Chesterton, author of the equally fantastic observation, “Poets have been mysteriously silent on the subject of cheese.”
Good news | The antidote to the apocalypse
DogDash
Cementing their position as man’s best friend, dogs have been enlisted to work as delivery couriers. Stone House Urban Winery in Maryland has begun offering curbside delivery thanks to “Soda” an 11-year old brindle boxer.
Mountain view
For the first time in decades residents of Punjab can see the Himalayas. India witnessed a sharp improvement in air quality since the pandemic, with Delhi’s pollution levels dropping 44% on just the first day of lockdown.
Hey all you cool cats and kittens
Good news for felinophiles as images of two clouded leopards cubs were shared with the public this week. Born on February 11th, the cubs have been secluded with their mother for the last month and a half. While “Tiger King” star Carole Baskin might rail against cubs born in captivity, the clouded leopard is highly endangered and held by the reputable Zoo Miami.
Short bites
This exceptionally polite toddler has no one to say hello to on his morning walk. So he pretended. More here
An anonymous donor gave $150 gift cards to all 1.4K households in Earlham, Iowa. More here
A 101-year old fought and defeated Covid-19. More here
1000 words | Something to look at
Pandemic dominates attention. Unsurprisingly, the most popular online activity was following the spread of the coronavirus. That was the case across ages and demographics, except with Gen Z who were more likely to be listening to music. Very chill.
High demand for diversion. Listening to music was popular across demographics (58%), as was watching movies (58%), and funny videos (42%). Elsewhere in the GWI report, it’s noted that 87% of Americans say they are consuming more content, fullstop.
Looking for laughs. Comedic material appears to be particularly en vogue. Along with funny videos, memes (32%) were also popular. Again, Gen Z’s activity is notable here: 54% were likely to look at memes on a given day, compared to 41% of Millennials, and just 9% of Boomers. TikTok, one of the primary destinations for funny videos and so ubiquitous that my Italian grandmother has begun sending me clips, saw downloads surge in March, increasing +27%.
Gamers prefer mobile to desktop. Despite having larger screens available, consumers appear to be spending more time on mobile (40%) versus PC games (29%). On the subject, research from the NYT indicated that gaming spend has increased ~70% YoY, the second highest increase behind online grocery.
Podcasts get little love. While mobile games thrived in spite of the lack of an “on-the-go” use-case, podcasts (18%) got little attention. Millennials were most likely to listen (26%) but the oft-herald medium fared worse than reading. The ignominy. Data released by Podtrac last week showed an 8% decline in audience, while podcast player Overcast saw a 20% slide in sessions.
The signal | Breakout trends
Though they may not have felt particularly enlightened, the last seven days were “Holy Week” in the Christian faith. For the uber pious and very literal, stay-at-home orders have served as an impediment to worship, with some devout and misguided clergymen responding by reopening their doors.
For those with rather more grey matter upstairs, a deus digitalis provisioned through live streams provides an alternative. “Online church” has skyrocketed in interest since March, with incumbent platforms benefitting. Church Online, owned by Oklahoma mega-facility Life.Church, saw the number of communities on its platform grow from 27K to 45K last month.
Long tail | The week's best of the rest
Startups turn to debt
Airbnb may have set the tone. The rental platform took on $1B in debt and equity, granting generous terms to Silver Lake and Sixth Street Partners who secured warrants that convert at $18B, ~50% of the company’s last private financing. The interest rate was 10%. Those terms may signal the direction of tech financings in the months ahead as startups, desperate for cash, turn to debt and the deep pockets of private equity. In turn, those investors may accelerate a shift in focus in startup-land towards profitability. Interestingly, banks have already extended $240B in new loans to businesses, 2x typical activity.
Clearbanc launched “Runway” a product that provides non-dilutive funding in exchange for a share of revenue. More here
Many unicorn founders may be stuck under a mountain preference stock, a problem in a bear market. More here
“Cloud relief” — allowing startups to defer their payments to companies like AWS and Azure — may help them weather the storm. More here
Pandemic proof
Video game streamers may have the job most suited to the age of coronavirus. One player, Ben Lupo, has seen his audience grow 25-30% over the past few weeks as viewers look for distraction. Per Arsenal.gg, viewership on Twitch rose 31% between March 8-22. “I’ve been preparing for this moment my whole life,” Lupo said.
A would-be “MTV of gaming” is rushing to launch 3 months early to capitalize. More here
Last year between March 20-26, the domestic box office took in $204MM; this year it took in $5,179. More here
Distance be damned
Lockdown has given a reason for new love stories to be written, as many look for partners beyond their immediate vicinity. Bumble saw a 93% increase in voice and video calls between March 13-27, while Tinder and Hinge also saw greater activity. A new app, Quarantine Together sends matches only once you have confirmed you’ve washed your hands.
Audio erotica and other sextech companies are booming. More here
Olivia and Raul De Freitas went on their honeymoon in Maldives; they have been unable to return. More here
Mass layoffs have disproportionately affected those 18-34. More here
The world will not be remade
Richard Haass, the president of the Council on Foreign Relations argues that little will change in response to the pandemic. Rather, what has already been happening will accelerate, with society moving towards a post-American, increasingly anarchic world.
Tension between the US and China is likely to increase after Covid-19. More here
Philosopher Slavoj Žižek fears China’s successful handling of the virus will inspire a global authoritarian movement. More here
Millions of Ethiopians were without internet from January through March, hamstringing essential services. More here
The detour | An intriguing digression
With Quibi off to a middling start, securing +830K downloads after launching this week, it’s time to turn to the early days of different entertainment behemoth: Disney. While the Magic-Kingdom-Makers are best known for a certain affable mouse, it was another character that spawned Walt’s empire: Oswald the Lucky Rabbit.
Before there was Mickey, there was Oswald. The first cartoon mascot produced by Disney studios in 1927, Oswald was made for Universal in response to the observation that with characters like Felix the Cat and Krazy Cat dominating attention, there were “too many cats on the market.”
The rabbit, christened “Oswald” by Universal execs that pulled the name from a hat, had a rather different personality from characters of the time with the director of the Disney Archives referring to him as a “rogue” and “lothario.” Weird. Disney himself described Oswald as “peppy, alert, saucy and venturesome.”
As questionable as that concoction sounds, Oswald was a hit, the first of Disney’s nascent career though he didn’t have much time to enjoy it. He was soon forced out of the Universal contract by his distributor, leaving the rights to Oswald behind. But having found a formula that worked, Walt set about recreating the trick, drawing Oswald’s “half-brother” Mickey. In both personality and form, Mickey took significant inspiration from the slightly less polished Oswald.
Nearly 80 years later, Oswald would finally return home. In a bizarre turn of events, Disney under Bob Iger’s leadership secured the rights to the rabbit from NBC Universal, in exchange for NFL broadcaster Al Michaels going in the other direction. Comparing the trade to a recent deal between the Kansas City Chiefs and New York Jets, Michaels said, “Oswald is definitely worth more than a fourth-round draft choice. I'm going to be a trivia answer someday.”
More here
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Puzzler | Riddles and conundrums
Angels roar, so moonlights nest.
Given this is a rather tricky one, a hint will be available should you wish for it. Just respond to this email to ask.
There was more new blood among this week’s winners with Greg L taking first spot on the podium. He was joined in short order by Paulina M and NKL with a strong guess from Violette Z. In case you missed it, the previous puzzler is below:
I like indigo but not blue, onions but not turnips, forms but not shapes. Using the same logic, do I like tomatoes or avocados?
The answer? Tomatoes, as the speaker in question prefers words that begin with prepositions as is the case with indigo, onions, and forms.
Thank you for reading. Sending you warm wishes on a blustery Sunday in New York. 💙