There Has Never Been A Better Time For Billionaire Schadenfreude (Malicious Enjoyment Derived From Observing Someone Else’s Misfortune)
Welcome to the Great Comeuppance for Elon Musk, Mark Zuckerberg and other titans. Enjoy it while you can. There Has Never Been A Better Time For Billionaire Schadenfreude (Malicious Enjoyment Derived From Observing Someone Else’s Misfortune)
Musk is, somewhat infamously, frequently off-target when it comes to predictions, as anyone waiting for his years-late electric pickup truck or a ride in one of his nonexistent 600-miles-per-hour trains knows well.
He’s also missed on topics such as epidemiology (in March 2020, Musk declared that Covid cases were heading “close to zero”), personal finance (he embraced cryptocurrencies in 2021, just before they crashed) and politics (he predicted a “massive red wave” for the midterm elections ahead of an historic overperformance by Democrats).
But Musk’s forecast for the economy turned out to be pretty solid. While there’s no recession, an economic slowdown has indeed exposed a number of entrepreneurs who, for the past decade, took advantage of low interest rates, bubbles in tech and finance and a self-reinforcing media environment to convince themselves of their own genius and then to profit from their hucksterism.
Now tech stocks have nose-dived, the metaverse is floundering, crypto fortunes are crumbling, and criminal investigations are pending. Call it the Great Comeuppance—a sudden and historic opportunity for billionaire schadenfreude.
The period began in late 2021 and has been defined by persistent inflation, rising interest rates and a return to certain pre-Covid norms—among them, the belief that made-up currencies might be worthless and that there’s more to life than interacting as a digital floating torso.
The problem with Musk’s prediction was his failure to realize that these economic shifts had the potential to make him look like a fool, too.
Musk had, in case you weren’t paying attention, a very bad 2022. Over the course of the year, his net worth fell by 49%, or $133 billion—the biggest loss ever on the Bloomberg Billionaires Index.
At exactly the time that irrational gambling on the stonk market was falling out of fashion and demand for Tesla Inc.’s electric vehicles was fading, he loaded up on debt and doubled down on his own status as the meme-stock master of ceremonies by agreeing to a hastily conceived buyout of Twitter for an inflated price.
It’s been basically downhill ever since, with Twitter appearing to teeter on the verge of collapse and Musk warning of its possible bankruptcy. Tesla’s stock price is down 70% over the past 12 months.
Musk wasn’t the only overreaching titan taken down a few pegs. Mark Zuckerberg saw his net worth drop by 64%, or $80 billion, last year—itself an historic figure that’s substantially more than what had been regarded as the previous record wealth loss, Masayoshi Son’s $70 billion drop in 2000. (Son had a pretty terrible year, too, if not a record-setting one.)
Zuckerberg’s fall, like Musk’s, involved a combination of macroeconomic bad luck and an almost inexplicable flourish of self-destructive hubris. Seeing Facebook’s growth prospects diminished, Zuckerberg fixated on a novel, money-losing communication medium that for some reason involves virtual conference rooms full of cartoon avatars without legs.
Jeff Bezos experienced a similarly epic net worth drop of 43%, or $85 billion, as Amazon’s wild expansion into all manner of businesses—voice assistants, delivery robots, self-driving cars, urgent care, retail stores, etc.— gave way to mass layoffs.
And then there’s crypto, perhaps the flimflammiest investment category in an age of extreme flimflammery. Changpeng Zhao, chief executive officer of Binance, saw his net worth decline by 87%, or $83 billion, even though he’s one of the industry’s grandees and Binance is the largest crypto exchange in the world. That doesn’t mean Zhao couldn’t experience an even greater comeuppance.
The US Department of Justice has been investigating Binance for possible money laundering, and the accounting firm Zhao hired to verify his company’s assets recently suspended its crypto-related work and pulled its report on Binance from its website. Zhao has denied the money laundering allegation and said his exchange is fine. The problem, he’s said, is the accountants.
Other digital currency promoters have fared even worse. These include Alex Mashinsky (founder of Celsius, the bankrupt crypto lender), Do Kwon (creator of the failed cryptocurrency Luna who’s now an international fugitive) and Sam Bankman-Fried (recently extradited to the US on fraud charges related to the collapse of his cryptocurrency exchange, FTX). Kwon has denied wrongdoing. Bankman-Fried pleaded not guilty on Tuesday.
Even as tech’s elite loses money by the billions, the Great Comeuppance has been much kinder to the average person than 2008’s Great Recession. After the financial crisis, unemployment soared, the stock market tanked and millions of Americans lost their homes to foreclosure.
In 2022, Americans had to cope with rising prices, tech workers were laid off in large numbers and the price of a Dogecoin fell. But most of the rest of the economy has been mostly fine, with gross domestic product continuing to grow and unemployment near historic lows.
Meanwhile, the current federal funds rate, 4.33%, isn’t especially high by historical standards. It’s a testament to the flimsiness of their success that Musk, Zuckerberg and others have responded to interest rates with something close to panic.
“Fed needs to cut rates immediately,” Musk raged on Nov. 30, returning to the topic repeatedly in the days that followed. “At risk of stating obvious, beware of debt in turbulent macroeconomic conditions, especially when Fed keeps raising rates,” he tweeted on Dec. 13, seemingly forgetting his own decision to pile debt onto Twitter’s balance sheet.
The Great Comeuppance has largely, but not exclusively, been a financial phenomenon. The same forces that humbled Musk and his peers have helped erode the cultural and moral authority of the venture capitalists who financed their success.
Marc Andreessen, the innovator behind Netscape and the co-founder of the venture capital firm Andreessen Horowitz, went all in on crypto several years ago, investing in companies that have seen the value of their tokens collapse or that have come under investigation by US authorities.
Andreessen, once admired as one of the industry’s futurists, is now the industry’s get-off-my-lawn guy, raging constantly on social media about all things woke. Sequoia Capital, another leading VC, has become infamous for giving $150 million to Bankman-Fried even though he was playing video games during his pitch.
And Chamath Palihapitiya, once seen as the Valley’s social conscience, is now better known for promoting a collection of controversial and lightly regulated public offerings known as SPACs to retail investors.
His SPAC deals lost more than half their value last year. Like Musk, Palihapitiya has blamed the Fed for his troubles and has said that nobody forced the investors into those dud stocks.
The Great Comeuppance also came for American politics. Bankman-Fried, who was a major donor, has been charged with campaign finance violations in addition to wire fraud and money laundering, which threatens to destabilize candidates and interest groups that benefited from his largesse.
Peter Thiel, who rode high during a frothy investment climate for tech stocks, watched as his protégé, Blake Masters, lost a Senate election and became a punchline for the failures of candidates who’d aligned themselves with former President Donald Trump.
Early polls of the 2024 Republican presidential primary suggest that Trump’s own political future may be yet another casualty of the 2022 comeuppance. His Twitter competitor Truth Social repeatedly had to delay its SPAC merger to shore up investor support.
It’s possible, of course, that the current sense of populist vindication will prove fleeting. Musk is still worth more than $130 billion and may eventually figure out how to extricate himself from Twitter and stabilize Tesla.
Trump looks like he’s fighting for relevance today, but his $99 crypto trading cards—known as NFTs and featuring the former president posing as a hunky cowboy, a hunky astronaut and a hunky superhero, among other hunky characters—shot up in value even as they were mocked by late-night comedians.
There’s also the likelihood that the Great Comeuppance could at some point widen its reach. Most of us haven’t trolled our way into the purchase of a flailing social media company or pivoted a trillion-dollar public company into the metaverse, but many of us did waste too much time on social media, perhaps taking some unnecessary financial risks along the way (by gambling on sports or stocks or real estate).
For now, the Great Comeuppance may feel satisfying. But most of us owe at least some moral debt to reality. At some point, reality will collect.
How Elon Musk, Mark Zuckerberg And The World’s 500 Richest Billionaires Lost $1.4 Trillion In A Year
Ultra-wealthy tech founders led a wipeout in fortunes that spanned the globe, though secretive families and pro sports owners emerged relatively unscathed.
For the vast majority of the world’s wealthiest people, 2022 was a year to forget.
It’s not just the money that was lost, though it was staggering — almost $1.4 trillion was wiped from the fortunes of the richest 500 alone, according to the Bloomberg Billionaires Index. Plenty of the pain, it turns out, was self-inflicted:
The alleged fraud by onetime crypto wunderkind Sam Bankman-Fried; the devastating war waged by Russia on Ukraine that spurred crippling sanctions on its business titans; and, of course, the antics of Elon Musk, the new owner of Twitter who’s worth $138 billion less than he was on Jan. 1.
Combined with a backdrop of widespread inflation and aggressive central bank tightening, the year was a dramatic comedown for a group of billionaires whose fortunes swelled to unfathomable heights in the Covid era of easy money.
In most cases, the bigger the rise, the more dramatic the fall: Musk, Jeff Bezos, Changpeng Zhao and Mark Zuckerberg alone saw some $392 billion erased from their cumulative net worth.
It wasn’t all bad news for the billionaire class, though. India’s Gautam Adani surpassed Bill Gates and Warren Buffett on the wealth index, while some of the world’s richest families, like the Kochs and the Mars clan, also added to their fortunes. Sports franchises only became more valuable, growing increasingly unobtainable for anyone outside the top 0.0001%.
Here’s A Month-By-Month Review Of The Data And Stories That Defined A Tumultuous Year For Billionaires:
January: Warning Shots
Musk, the world’s richest person at the time, loses $25.8 billion on Jan. 27 after Tesla Inc. warns about supply challenges. It’s the fourth-steepest one-day fall in the history of the Bloomberg wealth index and foreshadows a rocky year ahead for Musk, both personally and financially.
February: Oligarch Wealth Obliterated
Russia’s richest people collectively lose $46.6 billion on Feb. 24, the day Vladimir Putin orders his army to invade Ukraine. In short order, authorities in the European Union, UK and US target Russia’s “oligarchs” and their companies with sanctions that make it next-to-impossible for the business tycoons to keep control of their assets in the West.
Superyachts are grounded, London’s ultra-luxury property market braces for a slowdown and Roman Abramovich announces he’s selling Chelsea FC of the Premier League. The wealthiest Russians go on to lose another $47 billion over the course of 2022 as the war grinds on.
March: China’s Fortunes Crushed
China’s markets go from bad to worse, erasing $64.6 billion from the fortunes of the country’s wealthiest people on March 14. They lose another $164 billion in 2022 as strenuous Covid-containment efforts, a buckling property market, heightened scrutiny of the tech industry and trade tensions with the US drag on the world’s second-largest economy. That, combined with President Xi Jinping’s populist rhetoric, has more affluent Chinese plotting to get themselves — and their money — out of the country.
April: Musk’s Twitter Gambit
Soon after revealing a 9.1% stake in Twitter, Musk offers to buy the company outright on April 14 at a $44 billion valuation. It’s a steep price, even for him. To finance the deal, he initially plans to borrow billions, leverage more of his Tesla shares and pony up $21 billion in cash, which analysts correctly predict will require offloading Tesla stock. Markets deteriorate in the coming months and Musk tries to devise an escape route, kicking off a months-long legal wrangle with Twitter. By the time the deal is completed in October, Musk’s net worth is $39 billion lower than when he made his initial offer.
May: Boehly Buys Chelsea
A group helmed by finance billionaire Todd Boehly and Clearlake Capital clinches the £4.25 billion ($5.25 billion) winning bid for Chelsea. It’s the highest price ever paid for a sports team, and it caps a frenzied two-month process that attracted more than 100 bidders from all over the world, including British billionaire Jim Ratcliffe, Apollo Global Management co-founder Josh Harris, Bain Capital co-Chairman Steve Pagliuca and Citadel’s Ken Griffin with the Ricketts family. The net proceeds from the sale, including £1.6 billion in waived debt owed to Abramovich by the team, is earmarked for charity benefiting Ukraine.
June: Waltons Win Broncos
Rob Walton, heir to the Walmart fortune, agrees to buy the Denver Broncos for $4.65 billion, setting a record for a US sports team, and underscoring the enduring appeal of owning an NFL franchise. The Walton consortium includes Rob’s daughter Carrie, her husband Greg Penner, Ariel Investments President Mellody Hobson, racecar driver Lewis Hamilton and Condoleezza Rice. The deal made Hobson and Rice the first Black women to hold an ownership stake in an NFL team. The Walton-led offer trumped those from Clearlake Capital founder Jose Feliciano, United Wholesale Mortgage CEO Mat Ishbia and, again, Harris. (Ishbia and his brother would agree to buy a majority stake in the NBA’s Phoenix Suns in December.)
July: China’s Homebuilders Crumble
Yang Huiyan loses the title of Asia’s wealthiest woman after her fortune more than halves over seven months amid China’s unfolding property crisis. Country Garden Holdings, the developer that Yang inherited from her father in 2005, benefited from a dizzying homebuilding spree in recent years. But the country’s efforts to curb real estate prices and Xi’s crackdown on consumption put a stranglehold on the sector, stalling projects and leading frustrated homeowners to quit paying mortgages on halted developments. Country Garden’s stock price — and Yang’s wealth — has yet to recover.
August: Adani Ascends
Coal tycoons sound like a relic of another era. But with the world roiled by the war in Ukraine, Adani, an Indian coal miner with a fast-expanding empire, surges past Gates and France’s Bernard Arnault to become the world’s third-richest person at the end of August. It marks the highest ranking ever for an Asian billionaire. Aligning himself with Indian Prime Minister Narendra Modi, Adani has used debt to rapidly diversify his relatively opaque conglomerate, Adani Group, into ports, data centers, highways and controversially, green energy. In September, he briefly passed Bezos to become the world’s second-richest person.
September: Zuckerberg’s Wipeout
Even in a rough year for US tech titans, Zuckerberg’s losses stand out. By mid-September his net worth has plunged by $71 billion since Jan. 1 — a 57% loss — on account of a costly pivot to the metaverse and the industry-wide downturn that’s dragged down the stock price of Meta Platforms Inc. Over the course of the year he’ll fall 19 ranks on the Bloomberg wealth index, finishing 2022 at 25th, his lowest position since 2014.
October: Covid Billionaires Collapse
The bubble of the Covid economy is deflating fast and with it, the fortunes of the so-called Covid billionaires — those moguls who minted enormous fortunes from vaccines (Moderna’s Stephane Bancel), used cars (Carvana’s Ernie Garcia II and Ernie Garcia III), online shopping (Coupang’s Bom Kim) and, of course, Zoom (Eric Yuan). The 58 billionaires whose fortunes multiplied at a blistering pace from such pandemic industries saw an average decline in the value of their assets of 58% from their peak, a far sharper fall than the other constituents of the Bloomberg wealth index.
November: $16 Billion to Zero
Bankman-Fried’s crypto exchange FTX collapses after a liquidity crunch reveals gaping holes in his empire’s balance sheet and an absence of risk controls. The 30-year-old’s $16 billion fortune is erased in less than a week. At its peak, his net worth was valued at $26 billion. The debacle taints numerous Washington politicians who took his donations, stiffs many charities, humiliates investors in Silicon Valley and beyond, and leaves some 1 million clients in limbo and wondering if they’ll get their money back. Binance CEO Zhao, known in the crypto world as CZ, has seen his net worth tumble by about $84 billion this year, while other crypto billionaires like Cameron and Tyler Winklevoss, Michael Novogratz and Brian Armstrong look to distance themselves from FTX’s collapse.
Musk is unseated as the world’s richest person by Arnault, the French luxury tycoon behind LVMH. While Arnault hasn’t been immune to the tough 2022, down about $16 billion for the year, it pales next to Musk’s losses of more than $138 billion.
How did we get here? Take a market downturn, add an impulse purchase of an unprofitable, lightning rod social-media company, mix in a heap of leverage, more supply-chain woes and an insatiable desire for attention. Easy come, easy go.
Crypto Billionaires’ Back-To-Back Deaths Spark Wild Theories Among The Community
Many blamed the deaths on the billionaires’ past, while others suspected some form of foul play and even execution.
The death of four crypto billionaires within a month has caught the crypto community’s attention. The deaths occurred under suspicious circumstances, and some of these billionaires had even raised alarms about being in danger.
4 crypto billionaires dead in the span of a month. Just before, and during the FTX collapse.
sound … pic.twitter.com/ubtpweiJcw
— Wall Street Silver (@WallStreetSilv) January 9, 2023
The spiral started toward the end of October 2022 when Nikolai Mushegian, co-founder of MakerDAO, was found dead on a Puerto Rican beach just hours after tweeting that intelligence agencies were after him.
The next billionaire to perish was broker Javier Biosca, who was found dead on Nov. 22 in Estepona, Spain. At the time, Biosca was being investigated for the biggest cryptocurrency fraud in Spain.
On Nov. 23, Amber Group co-founder Tiantian Kullander died mysteriously in his sleep. Just two days later, Russian crypto billionaire Vyacheslav Taran died in a helicopter crash.
Apart from these four suspicious deaths, another death made headlines on Dec. 30 when Park Mo, vice president of Vidente — the largest shareholder of South Korean cryptocurrency exchange Bithumb — was found dead in front of his house in the early morning.
The four crypto billionaire deaths within a month gave fuel to several conspiracy theories among the crypto community. One user associated the string of deaths with a mafia-style hit job and said that the “crypto world is taking a page from the mafia handbook.”
Another user associated the death spiral with the “central banking hierarchy,” sarcastically saying, “I would definitely not put money on it being connected to the central banking hierarchy. There is no way. They are very trustworthy. 100% no chance.”
One user questioned the information sources but acknowledged that seeing four deaths in less than a month is suspicious. On the other hand, several Redditors speculated that they may not have actually died at all, with one writing, “I wonder how many of these are people faking their own deaths.” Another speculated that the billionaires might be living under fake names and are using their “deaths” to start a new chapter of their life.
The deaths may be a cause of concern, but the crypto ecosystem is also known for its fascination with conspiracy theories. A similar saga erupted in May 2020 when the CEO of defunct crypto exchange QuadrigaCX mysteriously died during a visit to India.
Billionaire Blow-outs Prove There’s Absolutely Zero Correlation Between Wealth And Intelligence😹😂🤣
Brady, Gisele, Patriots’ Bob Kraft Among FTX Shareholders Facing Wipeout
* FTX Implosion Could Cost Billions For Customers And Investors
* Dan Och, Peter Thiel And Paul Tudor Jones Ensnared In Collapse
Billionaire New England Patriots owner Robert Kraft and star NFL quarterback Tom Brady are among those sharing in the pain of FTX Group’s sudden implosion.
Brady, formerly a prominent FTX booster, owns more than 1.1 million common shares of FTX Trading, bankruptcy court documents show. His ex-wife, supermodel Gisele Bündchen, has more than 680,000 shares in the same entity.
Meanwhile, KPC Venture Capital LLC, an entity linked to the Kraft Group, holds more than 110,000 Series B preferred shares in FTX Trading, the entity that owns its main crypto exchange, according to the court papers. The firm also owns 479,000 Class A common shares and 43,545 Series A preferred shares in West Realm Shires, the unit that owns the company’s US-based exchange.
The value of the investments couldn’t immediately be learned, but are assumed to be practically worthless. Stockholders of bankrupt companies rarely recover any of their money because US law requires creditors be repaid in order of priority, and stockholders are last in line, below those with direct claims on a company’s assets, customers and suppliers.
“At the end of the day, we’re not going to be able to recover all of the losses here,” John J. Ray III, who’s handling FTX’s restructuring, said last month.
Representatives for Brady and the Kraft Group didn’t immediately respond to requests for comment.
Brady is among a group of Wall Street and Silicon Valley elite who were stuck with FTX shares, including Tiger Global Management, the Ontario Teachers’ Pension Plan and Sequoia Capital, according to the document.
Other shareholders include trusts and entities tied to billionaires Paul Tudor Jones, the family office of Dan Och and Dan Loeb of Third Point. A trust tied to tech titan Peter Thiel is also listed.
Around this time last year, FTX Trading raised $400 million, valuing the company at $32 billion and making founder Sam Bankman-Fried one of the world’s richest people. He’s now set to face trial in October.
Evergrande Chairman, Once Worth $42 Billion, Loses 93% of Wealth
Hui Ka Yan has lost wealth and influence, including no longer being part of the Chinese People’s Political Consultative Conference.
Hui Ka Yan was once one of China’s richest and most influential titans, bridging business and high-level politics.
These days, the China Evergrande Group chairman’s fortune is considerably diminished. He’s down to about $3 billion from $42 billion, which once made him the second-richest person in Asia, according to the Bloomberg Billionaires Index.
Hui is also finding himself increasingly isolated politically, with the latest signal coming from the Chinese People’s Political Consultative Conference, an elite group comprising government officials and the biggest names in business.
Hui had been part of the political advisory body since 2008 and of its elite 300-member standing committee since 2013, but he was told not to attend the annual convention last year as his property empire became the biggest casualty of the nation’s credit crunch. Now he’s not even included on the latest list of those who’ll form the CPPCC for the next five years, which was released on Wednesday.
Evergrande didn’t immediately reply to a request for comment.
While his exclusion is striking given the position he once held, Hui has company. Shimao Group Holdings Ltd.’s Hui Wing Mau, Guangzhou R&F Properties Co. co-founder Zhang Li and Hoi Kin Hong of Powerlong Real Estate Holdings Ltd. are among the property magnates no longer part of the CPPCC.
The move reflects China’s shifting attitude toward developers, many of whom have fallen from grace amid a yearslong real estate crisis that threatens the broader economy. The new CPPCC members will head to Beijing in March for the group’s 14th National Committee to discuss everything from political and social issues to new laws and the nation’s growth.
“The CPPCC role is like an honorary reward that China gives to faithful business people to make contributions to the country,” said Willy Lam, an adjunct professor at the Chinese University of Hong Kong who has authored several books about Chinese politics. “It’s not surprising at all that property tycoons like Hui, who created trouble in the property sector with their over-leveraging, are out of the list.”
Still, Hui — a Communist Party member for more than three decades — is the most high-profile developer to feel the squeeze. His valuation on Bloomberg’s wealth list has tumbled with the latest drop a reflection of money Evergrande said its founder injected into the developer and demands from creditors. One group has demanded he put in at least $2 billion of his personal wealth.
Evergrande first defaulted on dollar bonds in 2021 and has more than $16 billion of outstanding dollar notes. After missing several self-imposed deadlines to deliver a preliminary restructuring blueprint, it proposed a restructuring plan this week with two options, people familiar with the matter said.
Its shares have been suspended for almost a year after the company failed to report 2021 results, and PwC resigned as its auditor on Monday.
Shimao, also a defaulter, has had its stock suspended since last March. R&F’s Zhang was arrested in London last month on US bribery charges and is currently confined to his five-bedroom penthouse apartment after posting a record $16 million bail. Powerlong, another casualty of the crisis, has lost more than 80% of its value from a 2021 peak.
President Xi Jinping’s “common prosperity” drive to redistribute wealth has led to crackdowns in several industries. For the real estate sector, the imposition of a strict “three red lines” policy to curb debt has exacerbated a crisis that’s affecting banks, trust firms and millions of homeowners.
China’s five richest property tycoons lost about $65 billion combined in the past two years, Bloomberg’s wealth index shows.