There’s a growing insistence that the Theranos fraud is evidence that Silicon Valley didn’t work – that’s not quite true, in fact it’s not true at all. The Silicon Valley ecosystem, rather than the place, worked just fine here. For the point about the company is that its funding came from well outside that carefully crafted ecosystem:
Silicon Valley should heed warnings from Theranos scandal
No, that’s not right at all:
Silicon Valley has always been less interested in what the world is like today than what it could be like one day. Reality is messy: there are regulations, disgruntled customers and the annoying distraction of having to make a profit. Most entrepreneurs prefer to live in the gleaming tomorrow,
where there are no caveats, only limitless opportunities. But spend too long in futureland, and one’s grasp on the real world can slip.
A cautionary example of this emerged last week when America’s Securities and Exchange Commission charged the biotech company Theranos with, in its own words, “massive fraud”.
Sure, as I’ve pointed out before, it was a massive fraud.
Aficionados of business scams and frauds will be savouring this from Elizabeth Holmes at Theranos for decades yet. The point being that she was, for a time at least, listed as a multi-billionaire, raised vast sums of venture capital and managed to do both while lying entirely about a product that simply didn’t work – or even exist.
Pretty good going if you remember to cash in and Louis Vuitton yourself out of there to somewhere without an extradition treaty.
But this isn’t a failure of Silicon Valley at all.
For the finance, the board, all came from outside that ecosystem set up precisely to evaluate and manage such potentially interesting companies.
The point being that there’s not just the one “Silicon Valley.” It has all become a great deal more specialised than that. Sure, there’re funds that invest in computing. But under that they specialise in hardware, or consumer facing, or apps, or……and no one invests in “tech.” There’s a very definite subset of investors which deal with “biotech.” And the notable thing about Theranos is that it was a biotech company but none of the board, the money, the managers, came from that subsector. Which was exactly why the fraud worked of course.
Theranos was funded by those who thought they could do without the specialists in the VC sector. As it happens they couldn’t, could they? The whole thing is a story of people using the glitz and hype of Silicon Valley to raise funds while not subjecting themselves to the management strictures and examinations of Silicon Valley. It’s evidence of what happens in the absence of Silicon Valley, not its presence.
O/T
For anyone who’s interested, the Torygraph is running a series of articles about tech in London & UK. And, just for once, they’re not hiding behind its paywall. (As I write)
And worth reading the second section on education. Where it’s pretty clear the state education system is comprehensibly failing to educate for tech.
It may be a failure in the capitalist system – but it is not a failure on the scale of Lysenko. She had an idea. She found some fools with a lot of money. They lost their money. The point is *I* did not lose *my* money. Unlike, say, Concorde. I am not even sure it is fraud. I am sure she convinced herself first. After all how hard can STEM be? You put on a white lab coat, you wear sensible glasses and when you want lots of money, you wear a polo neck like Steve Jobs. Everyone knows… Read more »
“I am not even sure it is fraud.” Yes; as I commented in the last article on this theme, despite significant doubt whether the personnel she assembled could ever assemble the product she touted, it is little different from the Vaporware we demo’ed in the months before we got Version 1.0 to work. Investors wanted to side with a dashing lady in a black turtleneck and maybe even meet the famous pols on the Board of Directors, running a venture that wanted nothing to do with venture capitalists, and they got what they paid for.
Purely by accident I found a hidden hyperlink in the article. Hover the cursor over the words “outside that ecosystem” and e voila. Is this a problem with my browser, is it because I’m on a desktop, is it because Tim ticked the wrong checkbox when setting up the blogging software, or is it (frisson) a secret gateway to another dimension? I will now have to revisit every damn article in the ConTel since Day One looking for more cryptic links.
Southerner – there was a fairly recent post by someone more technical than I (maybe last week or so?) describing how to make links visible on the Con-Tel site. I didn’t bother to implement it, but it suggests that this is a design decision (either deliberate or inadvertent) by the publisher.