We were just reading a really interesting LinkedIn post by Dr. Jeffrey Funk. It considers the question of why Silicon Valley has so frequently been fooled by frauds like Elizabeth Holmes and Sam Bankman-Fried. Funk thinks it has a lot to do with the mindset of entrepreneurs who gravitate to that environment:
How could so many have been fooled? Silicon Valley is in the business of reality distortion. “Fundraising for #startups can be as much about narrative as about economic fundamentals.” “Everyone is in search of the one thing that will reach escape velocity. Everyone is looking for an epochal success—a Steve Jobs, a Jeff Bezos. That creates a degree of hunger—even desperation—that can be exploited by someone who arrives with a great story at the right moment,” like Elizabeth Holmes did in the 2000s.
SBF’s “image—playing video games on investor calls, awkwardly talking to hyperactive YouTubers, dressing in slacker-chic without the chic—helped build the sense that he was an archetypal tech genius. “His wearing cargo shorts on stage with Tony Blair and Bill Clinton, the kind of really performative sloppiness that he had was, I think, part of the story. It was irresistible to everyone who was watching it,” says one professor.
One of the things Funk notes in his post is that fraudsters like Holmes and Bankman-Fried often manage to present a veneer of credibility by attracting well-known names to their organizations or their boards. We remember very distinctly that former Secretary of State George Shultz joined the board of Holmes’s scam company Theranos, and that helped her get an audience with a lot of investors.
That begs a question: Why would someone of that status sign on to such a company without doing his homework? In the case of Bankman-Fried and FTX, Funk says: “There is a pattern in major financial deceptions, according to another professor who studies #frauds. ‘What happens is that they manage to get over some sort of threshold. And then they’re able to recruit a few big names,’ many of whom didn’t ‘necessarily understand the crypto markets but crowded in because they assumed that others had done the due diligence.'”
We wonder: How often does this happen in the day-to-day world of business? Someone comes along with the latest Greatest Thing Ever and people just assume it’s going to do everything they’re told it will do – even if they don’t really understand it all that well – because they figure someone else must have done the homework.
Oops.
A lot of our clients are innovators bringing new technologies to industry. They’re involved in things like data analytics, decision science and route optimization. When we take on a client that’s offering a platform like this, we ask a lot of questions about how it works and, more importantly, why it works. That makes sense for us in our role as content marketers, because we can’t write substantively about something if we don’t have a deep understanding of it.
(We suppose some content marketers might be content to just write talking points and marketing slogans. We’re not.)
It’s astonishing to think that such accomplished people would sign on to ventures they don’t really understand because they figure, “Eh! Someone must have made sure it’s OK.”
No! No one did.
Silicon Valley loves world-changing ideas. And when people like Holmes and Bankman-Fried come along claiming to have figured out something everyone else had missed, perhaps that resonates with tech tycoons because they think of themselves as being able to do that sort of thing.
We learned to ask tough questions by working as journalists. The fact that we still ask those same kinds of questions to our clients is good for the clients, good for us, and good for anyone else who wants to separate the frauds from the real thing.
We’re the real thing! And you can learn more about us here.