We like to think our frauds teach us a lot. The falls of WorldCom and Enron signaled a return to more sober times after they took the greed of the dot-com boom too far. The demise of Bernard Madoff reminded everyone that returns that seem too good to be true are usually not. The fraud conviction of Theranos founder ElizabethHolmes highlights the end of the story.
Silicon Valley investors won't change their ways because of Holmes. The members of the venture capital class have made it clear that they never bought into the story that she told about her blood-testing startup. Every venture capital firm that had a chance to invest in Theranos passed. The rich suckers with old family money fell for her charms and scientific boasting, allowing Theranos to raise more than $1 billion. Because venture capitalists don't see a connection between the companies they've backed and the ones that are problematic, they want to be geniuses and leave the rubes to be rubes.
The couple were outside of a San Jose courthouse after she was convicted of fraud.
It wasn't just the investors who were deceived. The company started getting a lot of attention from the tech and business press around the year of 2004. The era in which reporters began each story with the assumption that technology was a force for good, rather than the source of all our modern ills was simpler. The tech press doesn't plan to change their ways because they've already absorbed the lessons of that era. We are no longer fooled by good stories and charismatic leaders.
The board of prominent names from the political and military spheres gave the company credibility. I think that the types of distinguished older White men who fell forHolmes may still be attracted to the charms of younger women.
It would be a curb on Silicon Valley's "fake it until you make it" culture ifHolmes's conviction leads to something positive. David Streitfeld wrote in the New York Times that the verdict signaled the end of an era. There is a limit to faking it in Silicon Valley, where the line between talk and achievement is often vague. There is a chance that you will get in real trouble if you fake it, so maybe you should limit yourself to at least faking it a little less than he did.
You have to ignore a lot of what is happening with technology and finance if you buy into this theory. The current incarnation of special purpose acquisition companies was designed to get companies into the public markets in their earlier, riskier days so they could take investment from everyone with the app on their phones. There are wild promises about glorious futures. New flavors of finance like altcoins, meme stocks, nonfungible token, and all the rest take the situation to the next level. There is a school of thought that if you admit it out loud, it is okay to run a pump-and-dump scheme. One doesn't think that the limits have been discovered.
This situation is so frothy that it almost makes you want someone likeHolmes. She put a lot of effort into the fraud. If someone is selling you a coin based on a dog meme, they should have the decency to wear a costume, adopt an accent, and vacuum you into their eyes instead of just writing a post about how you can be rich.
The downfall of Theranos may make life harder for some of the people who would have benefited the most from the company's success: female entrepreneurs and chief executive officers. The founder and CEO of Cellular Longevity Inc., a company looking to extend the lives of dogs and one day possibly humans, is a woman named Celine Halioua. Halioua says that every female founder working on something technically challenging gets compared to Holmes. I have gotten it many times. It is not actually a joke.
Halioua turned down the money because she heard so many references from one potential investor. She thought his barbs were a sign of his sexism and that he was not good at understanding Loyal's technology.
It is up to people like Halioua to make it clear that there is a difference between the industry and the one they are in. Halioua feels that it is motivation to set a good example. It shows how important role models are to having a successful billionaire female founder CEO.
It may be hard to draw lessons from the fall ofHolmes because her story was exceptional. Even in an industry full of hucksters and greed, it is the rare person who can spin such a fantastic yarn for 15 years and lean into the lie with such gusto. The moral of the story is not that of the technology industry or where the world is going. Someone who pulls off a ridiculous con gets caught.
A quant investor uses an A.I. to track down corporate greenwashing.
