“And I know I’m faking it, I’m not really making it.” – Simon and Garfunkel

I waited a few weeks on purpose Elizabeth Holmes Judgment before weighing the collapse of the entire Theranos. Reason: I want to distinguish 3 questions:

1) Outright “fraud”
2) The subculture known as “hustle”fake it until you make it“
3) Venture capital strategy, the idea of ??buying technology that has not yet been proven.

we all know fraud: From Enron to Bernie Madoff to the Global Financial Crisis Fraud close, financial examples abound. If you don’t know what fraud is, you may not be able to pay for internet access to read this because fraudsters have emptied your bank account.

“fake it until you make it“It’s not about crime, it’s more of an attitude. It’s part of old Wall Street (Watch the 1987 movie), and presented as a false bluff designed to mask the lack of expertise of green brokers. There is a clear prioritization among Wall Street traders, brokers, bankers and others in the financial world.show a little andConfidence at least allows you to make a phone call or a meeting to promote your pitch.

But I don’t think showing a little brio is very similar to what’s happening at Theranos.as revealed John Carreyrou In his Wall Street Journal report and his book “bad blood,” The founders had no expertise, no promising technology, and no medical training. Reading this book, the foundation of the entire business seemed to be built on a mix of wishful thinking and self-delusion. (Look red flags everywhere).

Venture capital seeks to invest in future products, i.e. services that often do not yet exist. Skilled VCs may have some idea of ??what the market and needs will be in a few years, and (cliche) they slide to where the puck is. But betting on a possible future that, by design, is more likely to fail than outright fraud. It’s one thing to build an idea that doesn’t find a market, but it’s quite different from falsely claiming a medical product that simply doesn’t do what you claim it can never do without a basis in reality.

There are endless good ideas out there that might not be financially profitable to create: tons of apps, consumer products and software programs, and so on. The entire biotech field is full of companies whose new molecule or technology could potentially — if it gets enough funding to run endless tests — cure or even solve a specific health problem. Whether or not we really don’t know until we do more development and more testing in the lab.

Not so with Holmes. Theranos engages in fraud, misleads investors, and puts people’s actual health at risk by pretending their machines do things they can’t.

It’s no surprise that she was caught.Given all red flag What’s really surprising is that as long as she did, she got away with it. For that, we need to find her enablers. . .

Before:
Bad Blood of Theranos (30 May 2018)

MiB: Author of John Carreyrou’s Bad Blood on Theranos (21 July 2018)

Transcript: John Carreyrou on Theranos (22 July 2018)

red flags everywhere
1. The founder has no medical training, no medical device experience, and no healthcare background; neither does the company’s second-in-command.
2. None of the (former) directors came from the medical device and health care industries.
3. Outside investors are not allowed to scrutinize the company’s machines; no peer-reviewed papers cover the company’s claimed medical breakthroughs.
4. Theranos is overly confidential – much broader than the usual technical nondisclosure agreements.
5. Extremely high turnover; the CFO left early in the company’s history.
6. Venture capitalists with experience in the medical device, healthcare or biotech fields are not comfortable investing in Theranos.
7. Early pilot projects with well-known health and medical companies were either not renewed or terminated outright.
8. Despite the CEO’s repeated promises, the promise report on the performance of the know-how was never delivered.
9. Threats of lawsuits against former employees and staff are aggressive and rampant.
10. The board has no control; Sherlock Holmes holds 99 percent of the voting power; the board is filled with faded stars of yesteryear, many in their 80s and 90s.

–Bad Blood of Theranos