Silicon Valley: Fraud or Fake Is an Incorrect Characterization

September 10, 2021

I read “Elizabeth Holmes: Has the Theranos Scandal Changed Silicon Valley?” The write up contains a passage I found interesting; to wit:

In Silicon Valley, hyping up your product – over-promising – isn’t unusual…

Marketing is more important than the technology sold by the cash hype artists. Notice that I don’t use the word “entrepreneur,” “innovator,” “programmer,” or the new moniker “AIOps” (that’s artificial intelligence operations).

The Theranos story went wrong because there was not a “good enough” method provided. The fact that Theranos could not cook up a marginally better way of testing blood is less interesting than the fact about the money. She had plenty of money, and her failure is what I call the transition from PowerPoint to “good enough.”

Why not pull a me-too and change the packaging? Why not license a method from Eastern Europe or Thailand and rebrand it? Why not white label a system known to work, offer a discount, and convince the almost clueless Walgreen’s-type operation that the  Zirconia was dug out of a hole in a far-off country.

Each of these methods has been used to allow an exit strategy with honor and not a career-ending Tesla-like electric battery fire which burns for days.

The write up explains:

Particularly at an early stage, when a start-up is in its infancy, investors are often looking at people and ideas rather than substantive technology anyway. General wisdom holds that the technology will come with the right concept – and the right people to make it work. Ms Holmes was brilliant at selling that dream, exercising a very Silicon Valley practice: ‘fake it until you make it’. Her problem was she couldn’t make it work.

The transgression, in my opinion, was a failure to use a me-too model. That points to what I call a denial of reality.

Here are some examples of how a not-so-good solution has delivered to users a disappointing product or service yet flourished. How many of these have entered your personal ionosphere?

  1. Proprietary app stores which offer mobile software which is malware? The purpose of the proprietary app store is to prevent malfeasance, right?
  2. Operating systems which cannot provide security? My newsfeed is stuffed full of breaches, intrusions, phishing scams, and cloud vulnerabilities. How about that Microsoft Exchange and Azure security or the booming business of NSO Group-types of surveillance functionality?
  3. Self-driving vehicles anyone? Sorry, not for me.
  4. Smart software which is tuned to deliver irrelevant advertising despite a service’s access to browser history, user location, and email mail? If I see one more ad for Grammarly or Ke Chava when I watch a Thomas Gast French Foreign Legion video in German, I may have a stroke. (Smart software is great, isn’t it? Just like ad-supported Web search results!)
  5. Palantir-type systems are the business intelligence solutions for everyone with a question and deep pockets.

The article is interesting, but it sidesteps the principal reason why Theranos has become a touchstone for some people. The primum movens from my vantage point is:

There are no meaningful consequences: For the funders. For the educational institutions. For the “innovators.”

The people who get hurt are not part of the technology club. Maybe Ms. Holmes, the “face” of Theranos will go to jail, be slapped with a digital scarlet A, and end up begging in Berkeley?

I can’t predict the future, but I can visualize a Michael Milkin-type or Kevin Mitnick-type of phoenixing after walking out of jail.

Theranos is a consequence of the have and have not technology social construct. Technology is a tool. Ms. Holmes cut off her finger in woodworking class. That’s sort of embarrassing. Repurposing is so darned obvious and easy.

More adept pioneers have done the marketing thing and made a me-too approach to innovation work. But it does not matter. This year has been a good one for start ups. Get your digital currency. Embrace AIOps. Lease a self driving vehicle. Use TikTok. No problem.

Stephen E Arnold, September 10. 2021

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