It's not exactly the same, but I'm reminded of Nortel Networks and Lucent Technologies, two makers of networking and telecom equipment that grew very rapidly during the dotcom bubble, in the mid to late 1990s, and subsequently got in financial trouble. Nortel went bankrupt. Lucent was acquired for peanuts.
Before their collapses, both Nortel and Lucent had been aggressively "investing" in and "lending" to a bunch of telecom/internet/dotcom startups that would turn around and use the funds to... buy equipment and services from Nortel and Lucent. In fact, Nortel and Lucent would require companies to turn around and use the funds to buy equiment and services!
For a while, this round-trip of accounting trickery looked like a win-win strategy for everyone involved: The startups got to show the world they were able to raise more funds. Nortel and Lucent got to show rapid revenue growth. The end, of course, wasn't pretty.
It's not exactly the same, but I'm reminded of Nortel Networks and Lucent Technologies, two makers of networking and telecom equipment that grew very rapidly during the dotcom bubble, in the mid to late 1990s, and subsequently got in financial trouble. Nortel went bankrupt. Lucent was acquired for peanuts.
Before their collapses, both Nortel and Lucent had been aggressively "investing" in and "lending" to a bunch of telecom/internet/dotcom startups that would turn around and use the funds to... buy equipment and services from Nortel and Lucent. In fact, Nortel and Lucent would require companies to turn around and use the funds to buy equiment and services!
For a while, this round-trip of accounting trickery looked like a win-win strategy for everyone involved: The startups got to show the world they were able to raise more funds. Nortel and Lucent got to show rapid revenue growth. The end, of course, wasn't pretty.
Discussion (180 points, 2 hours ago, 195 comments) https://news.ycombinator.com/item?id=45335474
https://archive.ph/HjmbZ