Sperm Racing Is Everything Wrong With Venture Capital

There's a difference between pushing the boundary and complete stupidity

Sperm Racing hit the ground…swimming? Eric Zhu, the 17-year-old wunderkind founder (and someone I know and like), raised $1M to raise awareness for declining male fertility by seeing which frat bro has the fastest sperm. It’s a clever and fun idea, even if it’s not the first time it’s been done.

But, it’s also an idea that had no business raising any amount of money.

I’m not saying this because I think the science is iffy or that the founders are grifters, and I’m not saying it because I want Sperm Racing to fail. Nobody wants to boost fertility more than me. I’m saying this because only somebody who has literally never watched a sport in their life would think this is going to work.

It is true that people are skeptical of all new sports, as one of the founders gleefully pointed out. In his example, he specifically pointed out mixed martial arts and esports. The first problem with his logic is that those are both very watchable. In esports you get to watch people go HAM at your favorite game, and in MMA, you get to watch literal modern-day gladiators. That’s a bit different than watching an animated version of two swimmers racing down the track.

The second and more important problem with his logic is that sperm racing isn’t more entertaining than its direct competitor, race car driving. That’s a death knell for a sport. People only watch so much of one thing. The WNBA isn’t more entertaining than the NBA, so fewer people watch it. Softball isn’t more entertaining than baseball, so fewer people watch it. Arena football isn’t as entertaining as the NFL, so fewer people watch it. Bellator isn’t as entertaining as the UFC, so fewer people watch it. Even esports is less entertaining than regular live-streamed gaming, so it’s started to lose popularity.

So, I think the apt comparison for sperm racing isn’t MMA, but the WNBA or Bellator. They haven’t really created anything new. They are just producing a less entertaining version of F1.

This is annoying to me because VCs should know this. If you pitched a VC a less effective version of Cursor, they would laugh you out of the room. At least, they used to. Now, it seems like the main factor for whether or not a VC will invest in you isn’t your background or your idea, but how much hype you can drum up.

The Sperm Racing team is very good at generating hype. They are all social media savants. Maybe that’s enough to be successful in these days. It just makes me uneasy that you see so many obviously flawed startups hitting the timeline now with fat raises for no reason other than the founders being good at getting attention. Sperm Racing, Pear, Cluely, Believe, etc.

I can accept that being good at the internet is required to build a successful startup. But that doesn’t mean being great at the internet gives you the right to raise money for obviously bad ideas. It all gives off a very grifty vibe, as this former YC founder and Hacker News commentator eloquently put it.

Finally, I want to call out the phenomenon in the world of VC where the ability to generate hype alone is enough to make you and your investors a lot of money, even if there isn't a lot of substance in your company (and even if things are morally or ethically questionable), through the mechanism of greater fools. Cryptocurrency is a whole exploration of this effect, turning hype into money by building a streamlined mechanism for bringing in greater fools, but we can also look at examples like Theranos. (There's actually a ton of money at the top of society looking for somewhere to go, which ideally would be routed to more worthy ventures than it is, but that's a whole topic in itself.) The point is, the greater fool "strat" works. In a moral vacuum, if you are trying to maximize returns, you lean into it.

Maybe you could argue that the VCs genuinely believe in the founder, so even if they don’t believe in the current idea, they can’t afford to alienate the founder and potentially miss their next idea. But, if that was the case, couldn’t you just give the founder some money and tell them to build something actually good?

The answer is of course, but they don’t, because they either are too stupid themselves to see that the idea is stupid, or they want to dump their bags on a greater fool. I suspect it’s a bit of both, and that’s a major problem. It’s how we end up with FTX and Theranos.

Thankfully, most VCs lose money.