Were Elizabeth Holmes and Theranos symptomatic of something larger? The BBC’s North America tech reporter writes that in Silicon Valley, many believe that the story, “far from being an aberration — speaks of systemic problems with start-up culture.”
In Silicon Valley, hyping up your product — over-promising — isn’t unusual, and Ms Holmes was clearly very good at it… She projected an unfaltering confidence that the technology would change the world. “It’s baked in to the culture” said Margaret O’Mara, author of The Code: Silicon Valley and the Remaking of America. “If you are a young start-up in development — with a barely existent product — a certain amount of swagger and hustle is expected and encouraged” she said.
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.
Her lawyers have argued that Ms Holmes was merely a businesswoman who failed, but was not a fraudster. The problem in Silicon Valley is that the line between fraud and merely playing into the faking it culture is very thin. “Theranos was an early warning of a cultural shift in Silicon Valley that has allowed promoters and scoundrels to prosper,” said tech venture capitalist Roger McNamee, who is critical of big tech and did not invest in Theranos. He believes that a culture of secrets and lies in Silicon Valley, a culture that allowed Theranos’ tech to go un-analysed, is “absolutely endemic”….
Secrecy is important for these companies to succeed — but that culture of secrecy can also be used as a smoke screen, particularly when even employees and investors don’t understand or aren’t given access to the technology itself.
The reporter points out that like Theranos, “There are many Silicon Valley companies I’ve reported on that will not fully explain how their tech actually works. They claim to have ‘proprietary’ systems that cannot yet be revealed or peer-reviewed.
“The system is based on trust, yet it is fundamentally at odds with a culture of ‘faking it’ and creates the perfect environment for Thernanos-type scandals, where claims that aren’t true are left unchallenged.”