By Bretton L - November 27, 2024
The interview has been edited for length and clarity.
The Bear Cave is a widely-read newsletter and business created by Edwin Dorsey, dedicated to uncovering unethical practices within major companies. By shining a light on corporate misconduct, it not only informs the public but also creates opportunities for short sellers.
So, what exactly is short selling? It’s when an investor borrows shares of a stock and sells the shares, betting that its value will decrease. If the price falls, the investor buys back the shares at a lower cost, profiting the difference.
I had the privilege of interviewing Edwin Dorsey—a trailblazer whose investigations can shift market trends. His work not only challenges powerful corporations but also holds them accountable for unethical practices, establishing himself as a powerful voice in the world of finance.
Background
Prior to founding the Bear Cave, Dorsey attended college in Stanford. During that time, he interned for various hedge funds. His main internship that gave him a lot of experience doing investigative work in companies was in a short selling company, Sophos Capital Management, interning on and off all 4 years of college.
Q: What was your motivation for starting the Bear Cave?
A: “My plan was when I graduated I was going to work for them [Sophos] but they were in the process of shutting down when I was graduating so I needed to find a job. So the main reason I started the Bear Cave in February of 2020 my senior year of college was to get attention and hopefully get hired. The thing is the newsletter became really big really fast during the pandemic. Looking back at it, February 2020 was literally the best time in history to launch an email newsletter so I got very lucky with the timing.”
Q: What is the Bear Cave’s mission?
A: “The Bear Cave is focused on exposing corporate misconduct and actively going and trying to figure out what is going on in the world. The mission today is exposing bad companies and showing people how they can do the same type of research themselves.”
Q: How do you find companies to research and how do you research them?
A: “Anywhere and everywhere. I’ll find companies that interest me; my friends will come with stories of bad experiences with companies. I also track a lot of litigations, press releases, and lawsuits. I’m addicted to Twitter, so oftentimes I'll see somebody tweet something and I’ll want to start poking around. I track a lot of board members that I think have bad histories where if they have been involved in a lot of failed projects, I think future projects are more likely to fail. Sometimes readers will reach out to me and recommend companies that I should look at. Sometimes I’ll try to find themes like winners and losers because of AI. Once a company gets on my radar, the thing I’m uniquely good at is I use the Freedom of Information Act to go to state regulators to get consumer complaints people file against businesses."
The Freedom of Information Act is a set of laws that allows any citizen to go to government agencies and request records from the agencies, specifically for Dorsey, consumer complaints about businesses.
Success and Growth
Dorsey states, “When I started the Bear Cave, I thought it would be a niche publication.” Today, over 70,000 people including students, investors, and law firms read the Bear Cave. Dorsey never marketed out the newsletter. Its growth entirely stemmed from word of mouth and the newsletter being spread online. However, his journey was not always the easiest. As someone who is constantly criticizing people in power, Dorsey is surprised he still has not been sued. Nonetheless, he has received cease and desist letters from companies and a private investigator has even showed up at his parents house before. Sticking to the facts and showing the evidence of what he reports on, Edwin Dorsey helps maintain the integrity of what he is reporting on. Although many of his readers are short sellers and Dorsey has a proven track record of successfully exposing companies with bad practices, he never shorts the companies he reports on. This helps him add a level of integrity to what he does.
Q: What is the most successful breakthrough you have reported on?
A: “When I was a college student, I started criticizing this babysitting company called Care.com, a platform where parents could find safe and trusted babysitters for their children. By signing up as Harvey Weinstein, I was able to prove they aren’t doing background checks they claim to be doing. I reached out to dozens of journalists and the Wall Street Journal ultimately had a front page story about how Care.com babysitters with criminal histories were hired through the platform and led to the killing of 8 children. My work caused the Care.com stock to collapse, the company was acquired by another company, and the management was replaced. That was the first major breakthrough that I think really changed the trajectory of my career. Along with the larger following I received, it gave me the credibility where people trusted what I reported.”
Q: How do you envision the Bear Cave growing in the future?
A: “The thing about newsletters is scale. It's the same amount of work whether 10 people or 10 million people read it. By consistently reporting quality content, It will naturally grow. Once I have a big audience, the main way for the Bear Cave to grow is for me to continue going on podcasts so more people can learn what I do and what the Bear Cave is.”
Advice
Q: Do you have any general advice for other young people who are looking to become entrepreneurs or looking to start their own business?
A: ”You could always start small. Once you start taking the first step, everything becomes easier. Being willing to not just go to seminars but to send a cold email to a person you admire, to reach out and introduce yourself, just go one step further than expected, that will make all the difference in life.”
Edwin Dorsey took the first step that transformed his journey from searching for a job after college to founding his own newsletter business that is read by tens of thousands of people. Through determination and perseverance, he turned his passion into a powerful platform exposing companies with bad practices.
Love Ed’s work even though I am not a paid sub. He doesn’t take positions in the stocks he writes about so he can be a check on activist shorts