Ballmer Admits He Got Duped: Venture's Greatest Hits

In what venture capitalists are calling "an unprecedented display of emotional vulnerability," Steve Ballmer—the man who spent two decades acquiring companies and people for Microsoft—wrote a fiery sentencing letter admitting he felt "duped" and "silly" about backing Joseph Sanberg, a founder who pleaded guilty to fraud. The irony is so thick you could cut it with the Zune stylus Ballmer also backed.

Ballmer's public meltdown documents "all the harm" befalling him as an investor. Presumably this includes the sting of admitting that even with his legendary acumen, acquisition history, and presumably entire teams of lawyers and advisors, he somehow missed that his founder was committing crimes. If only there were some systematic way to investigate companies before investing in them. Alas, no such framework exists in venture capital.

The letter is a masterclass in what venture folk call "founder diligence," which is apparently synonymous with "hoping really hard that rich people are honest." Ballmer's willingness to share his feelings with the sentencing court is touching. It's also the clearest admission yet that even the smartest money in the room can be reliably dumb when opportunity and ego align.

At least he's honest about feeling silly. That's more self-awareness than most of venture capital manages in a lifetime.