Stating the Obvious

The Pink Paper, AKA The Financial Times has noticed that the whole Silicon Valley ecosystem is still lying about the prospects of startups, even after Elizabeth Holmes got convicted for fraud.

Fraud has been their model since at least the late 1990s.

The model has been: over-promise, get lots of VC money, sell out to less sophisticated investors and pocket your profits.

Rinse, lather, repeat:

The world would like to remember the conviction of Theranos founder Elizabeth Holmes as a cautionary tale of Silicon Valley hubris. The collapse of her blood-testing company was hailed as both the end of tech’s “fake it till you make it” culture and of the dubious cultural phenomenon of the girlboss. But here in the San Francisco Bay Area there is no interest in learning lessons from the debacle.

While Holmes awaits sentencing and her business partner waits for his own trial, venture capital money continues to flow into wild start-up ideas. No broader reckoning has been linked to her story. In the weeks since her January conviction, I have had more conversations about the trial with people in London than San Francisco. This is despite the fact that Holmes lives nearby and remains one of the most high-profile female founders the US tech sector has ever produced.

Instead of seeing the case as a spur to toughen up due diligence, the tech sector is choosing to dismiss it as an outlier. Just as imploded co-working company WeWork was described by west coast tech workers as a New York company, Theranos’s non-tech investors tend to be invoked when talking about its failure. The implication is that real tech investors would have been able to spot the lies. The truth is more complicated. Silicon Valley was involved, albeit at an early stage. Although late investors included Walgreens and Rupert Murdoch, one of Theranos’s earliest backers was notable VC firm Draper Fisher Jurvetson. (And, of course, Holmes went to Stanford.)

There is no interest in, "learning lessons from the debacle," because what Holmes did is central to what startups do, and what VC's encourage in Silicon Valley.

The only difference is that she was doing it in healthcare, where you cannot fool reality, and not in, more typical pursuits of tech.  You know, things like cheating cab drivers, extorting delivery fees from restaurants, etc.

Startup and VC culture is basically the bezzle.