Three high-profile trials ended recently, with two convictions and an acquittal. Trials are great theatre, with their adversarial format, along with lies, detective work, dramatic speeches, tangled moral issues, and of course the suspense while the jury consider their verdict, and the climactic moment when they announce it.
The two convicts are both women of wealth and power. One of them, Elizabeth Holmes, founder of Theranos, was found guilty of fraud, having misrepresented the company to investors, customers and regulators. Holmes dropped out of Stanford in 2003, aged 19, to set up this company, claiming to have invented a way to carry out blood tests cheaply and quickly through lab-on-a-chip technology using only a few drops of blood – pinprick amounts. This idea played well and she raised over $700m from investors. It took until 2015 for serious questions to be raised about these claims, as no peer-reviewed papers on the science behind them had been published, and whistle-blowers were coming forward, calling bullshit on the whole thing.
The story Holmes told played to one of the most popular brands of mythology in our current culture. She presented herself as the brilliant university drop-out with a great idea (like Bill Gates). Too smart for Stanford, she couldn’t wait for graduation day (or those pesky exams), and just had to go into business straight away. She was a young person in a hurry, with a ground-breaking, game-changing, disruptive idea. Just like the young Steve Jobs! There’s nothing investors want more than to back a disruptive concept. All those fuddy-duddy old blood lab methods which take a week to report – replaced by nano-technology working on just one drop of blood! A business led by a charismatic CEO who was hailed as the youngest self-made billionaire! A company backed by Henry Kissinger and Rupert Murdoch! It must be OK if people like that have invested!
The myth of the young entrepreneur is deeply rooted in modern economic and cultural ideas. We no longer respect the long-standing traditions of experience and history; everything good has to be mould-breaking and innovative, with charismatic leaders who move fast and break things. The existing way of doing things is no longer time-tested and proven, but a legacy industry which must be replaced as fast as possible in a process of creative destruction. The early-stage investors stand to get rich quick, and to claim the kudos of having recognised and backed the big new thing.
It certainly helped that Holmes was an attractive young woman who was cover material for magazines and a favourite of the speaker circuit. Like a hot version of Elon Musk! Perhaps the lack of hard questions until 2015 followed partly from the sexist idea that a woman is trustworthy – an idea also exploited by the other high-profile convict of the week, Ghislaine Maxwell. Maxwell’s defence actually asked the jury why “an Oxford-educated, proper English woman would facilitate sexual abuse of minors”, as if only poor men without college degrees could do such a thing. They were trying to play on the myth of the “poor little rich girl”. Fortunately that less powerful myth was ineffective.
Holmes was an extreme practitioner of the “fake it until you make it” principle on which many Silicon Valley fortunes were built; you talk as if your invention already worked and as if all your claims had already been borne out. Holmes doctored several documents by adding the logos of big companies, giving the impression that those companies were partners, lending their credibility to the claims being made, and this was at the heart of the fraud charges. But, it’s common for business promoters to exaggerate their relationships with big companies by describing a low-level dialog as a partnership. “We’re working with Microsoft and Google on platform-independence” might sound as if Microsoft and Google were somehow involved in your software company, when in fact you have merely licensed their APIs.
Another common technique is to set a short deadline. You might invite private investors to buy into a round of finance for your company, but the round closes before there’s time for really thorough due diligence. It adds to the impression of being a young person in a hurry, fashionably intolerant of old-school timescales. Anyone who complains is told that Rupert Murdoch and Henry Kissinger were satisfied, so why do you need so much time to kick the tyres? Fear of missing out does the rest.
A really convincing liar, someone with charisma, good looks, and a terrific vision to sell, is not that different to a genuine business leader in the mould of Steve Jobs or Bill Gates, which is why someone like Holmes can occasionally get away with it (the looks may be optional but do appear to help). But it’s a con, and like other cons, it relies on the mark being a willing participant. The sucker has to tempt himself with dreams of huge gains. They look at the company, but they see what they want to see. So, my point in writing about this is not to join in the scorn being heaped on Holmes. She’s another liar and con-artist; just better than most. No, my scorn is for those like Murdoch and Kissinger who backed her. Couldn’t have happened to nicer guys.
The myth of the entrepreneur is far too powerful. The word actually translates literally as middleman (French entre = between; and prendre = to take, so someone who stands in the middle and takes a cut). But it has come to mean a business-founder who achieves rapid success, especially in a technology business founded on an invention. We idolise such people. In some cases, it may be true, and the adulation deserved. But we should keep our sceptical approach in mind, and not so easily fall for the idea that someone, maybe just a college dropout, has had a fantastic idea, and all it needs is a little bit of development work and a few lousy bucks and it will be the best thing since the wheel. In fact, innovation hardly ever works that way.
The third of the trials which ended this week, resulted in the acquittal of the Colston Four, who pulled down a statue of the slave-trader Edward Colston in Bristol last year. The verdict has infuriated the culture warriors of the right, who are even suggesting there is something wrong with the principle of jury trials. But, juries have always had the right to look at the big picture and the context, and decide that the destructive act was not criminal because it was not wrong. The fury of the Tories is just the icing on the cake for those of us who would love to have helped to pull down that wretched statue. Legally speaking, the Four were charged with criminal damage. Both aspects are open to question; if it was right, and morally justified, it wasn’t criminal; and if the result was an improvement in the street furniture of Bristol, I would argue that it wasn’t even damage. Clearly, the jury agreed.
Boris Johnson commented that “people should not go around seeking retrospectively to change our history”, adding: “It’s like trying to edit your Wikipedia entry – it’s wrong.” As usual, he is missing the point by a mile. The re-writing of history was done when the statue was put up, and a plaque stating that Colston was a virtuous man, without mentioning how he made his money. This was a grotesque whitewashing of the past which the Colston Four have corrected. I take my hat off to them and to the jury members in all three trials.
Notes from Interesting Times 