This Week In Blunders – July 26 - Aug. 1
“Being too far ahead of your time is indistinguishable from being wrong.” – Howard Marks
More than once upon a time, Silicon Valley handed billions of dollars to children who convinced adults that they were geniuses.
This week it’s Leopold Aschenbrenner, a 24-year-old former OpenAI researcher whose AI hedge fund just booked tens of billions in losses.
In 2024, Aschenbrenner wrote a 165-page essay titled “Situational Awareness: The Decade Ahead,” predicting the rapid arrival of super intelligence. It was so influential, it enabled him to launch an AI-focused hedge fund by the same name.
Never mind the early red flag: OpenAI fired him for what it considered leaking sensitive information, according to published reports.
He attracted about $20 billion from Silicon Valley heavyweights, including Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, AI investor Daniel Gross and Jane Street, a quantitative trading firm.
He lined up Goldman Sachs, JPMorgan, Citigroup and Bank of America to finance and execute his trades.
He also hired seasoned executives from Goldman Sachs, Sequoia Capital’s hedge-fund affiliate and Ken Griffin’s Citadel, moves that may have calmed critics who pointed out that he had zero investment experience.
The fund reportedly soared 1,000% and ballooned to $45 billion in assets.
Prominent podcaster Dwarkesh Patel called him the “Nostradamus of AI.” In a 2024 episode, he asked Aschenbrenner if he thought about potential downsides.
“There’s a lot of interesting business history books about people who got the thesis right but timed it wrong,” Patel said.
“Obviously,” Aschenbrenner responded, “not blowing up is task No. 1 and 2.”
But it turns out that Nostradamus Jr. here did not foresee the billions his fund borrowed to place its bets would have to be repaid in a pinch.
