Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to Axios Closer for insights into the day’s business news and trends and why they matter

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Illustration: Annelise Capossela/Axios

Katerra, a Silicon Valley construction tech startup that had raised around $2 billion from firms like SoftBank, has filed for Chapter 11 bankruptcy protection.

Why it matters: This was ultimately about the folly of pattern-matching, a pervasive VC technique whereby the same sorts of founders get both funded and forgiven.

  • Katerra was co-founded and led by Michael Marks, the former Flextronics CEO who had sat on the boards of such companies as Schlumberger and SanDisk. He also co-founded private equity firm Riverwood Capital and was a partner with KKR.
  • The basic idea was to make building components off-site, with Katerra eventually booking billions of dollars in project orders.

What went wrong: The best breakdown I've seen came from Cory Weinberg at The Information, who was first to report that the board was presented with "intentionally misstated" financial reports, after Katerra had fallen short of projected performance.

  • Per Weinberg: "According to interviews with 30 former employees and investors, Marks presided over a company that repeatedly stumbled on construction projects and failed to address warning signs that the business was failing."
  • A Katerra investor tells me that Marks kept getting the benefit of the doubt because of his track record. "This is a guy who's run giant companies and sat on major corporate boards. He can't be hiding the ball, or not able to find it. Right?"
  • Another investor added: "The vision was solid. The execution was not, and the execution was the part I was less worried about because of Marks and his experience with big, complex businesses like Flextronics."
  • The music eventually ended for Marks, who was fired last year as the SEC opened an investigation into Katerra's financials.

Contributing factors: SoftBank's largesse didn't help matters, particularly as it encouraged Marks to engage in a WeWork-style expansion that would lead to dozens of office leases and three corporate jets.

  • SoftBank also decided not to step up this year with new cash once its primary lender, SoftBank-backed Greensill, filed for its own bankruptcy.
  • That meant Katerra couldn't get its construction projects bonded, which proved to be the proverbial straw.

The bottom line: It's understandable that investors pattern-match, just as it's reasonable for prospective employers to lean on résumés. But there's also a certain amount of intellectual laziness to it, and VCs get paid handsomely to spot the next revolution — as opposed to just replays of the last one.

  • This issue came up in the past few days when Snowflake CEO Frank Slootman said, and then apologized for saying, that while employee diversity is important, it shouldn't "override" merit.
  • Not only was the either/or framing a false choice, but it failed to recognize that pattern-matching (for investing and hiring) has often resulted in homogeneity overriding merit.
  • Katerra's failure should be a warning signal and a wake-up call.

Go deeper

Miriam Kramer, author of Space
34 mins ago - Science

All-civilian Inspiration4 is back on Earth after flight to space

A side-by-side of the Inspiration4 crew and a shot of their capsule on the way back to Earth. Photo: SpaceX

The all-civilian Inspiration4 crew is back on Earth after their three-day mission in orbit.

The big picture: The launch and landing of this fully amateur, private space crew marks a changing of the guard from spaceflight being a largely government-led venture to being under the purview of private companies.

28 U.S. citizens depart Afghanistan on Qatar Airways flight

Passengers board a Qatar Airways aircraft bound to Qatar at the airport in Kabul on September 10, 2021. Photo: Aamir Qureshi/AFP via Getty Images

The State Department on Saturday confirmed that a Qatar Airways charter flight left Kabul on Friday with 28 U.S. citizens and seven lawful permanent residents on board.

The big picture: Friday's flight is the third such airlift by Qatar Airways since the Taliban takeover of Afghanistan, AP reports.

Updated 5 hours ago - Politics & Policy

Smaller than expected "Justice for J6" rally met with large police presence

Police officers watch as demonstrators gather for the "Justice for J6" rally in Washington, D.C., on Sept. 18, 2021. Photo: Andrew Caballero-Reynolds/AFP via Getty Images

A few hundred demonstrators were met by a heavy law enforcement presence on Saturday at the "Justice for J6" rally outside the fenced-off U.S. Capitol, AP reports.

The latest: Four people were arrested at the rally, including one person with a gun, one with a knife and two with outstanding warrants, per the U.S. Capitol Police.