Letter #11: The Fraudtech Industry
The former CEO of Theranos and noted Hillary Clinton/Steve Jobs impersonator Elizabeth Holmes, was found guilty on four charges of defrauding the company's investors and patients. She was also found not guilty on four other counts. The story of her rise to prominence is a classic example of just how little meritocracy there really is in this industry, and an especially damning indictment of the once-praised culture of startup innovation that Silicon Valley branded itself with in the mid-2010s.
Theranos was ostensibly to be a blood testing startup that, as Holmes originally claimed, had developed a new way to test blood rapidly and efficiently, using only a drop or so of blood instead of a full syringe. To be honest, the actual claim was, as far as fraudulent claims go, well-crafted. It was different enough to be interesting to investors, without being so outlandish to stand out as an obvious fraud. Holmes then cultivated this image of herself (complete with gravely, fake deep voice and that creepy Zuckerbergian stare) as this revolutionary tech founder and media figure.
Why did an industry full of accredited venture capitalists with graduate degrees and billions of dollars get hoodwinked and bamboozled into pouring money into a scam? Well, a couple of reasons really. One, being accredited and having degrees doesn’t actually make you smart. Conversely, however, falling for a scam is not a failure of intelligence, but of intuition and process. If you don’t have the proper security and due-diligence measures in place, it doesn’t matter how smart you are. Someone will figure out how to exploit those design flaws. And Silicon Valley is just bursting with process, culture, and especially economic system flaws - most of which are inherited from earlier forms of boom-and-bust capitalism, others which are entirely new.
Most of you probably believe in some version of “If I do the right things, good things will happen to me”. It’s not true, but it’s comforting and keeps us doing things like going to work and contributing to society. Being reminded that this basic idea is totally false is never comfortable. The “tech industry” is actually the most extreme expression of the fallacy inherent in that assumption. Very few of the people who run our society and companies actually deserve to do so. There is no meritocracy and never was. Black people have been intentionally excluded from the industry since its inception, in an effort to reserve jobs for the less-qualified friends of existing White and Asian employees. That’s just how the game works, although it’s changing slowly. But there’s another, larger point worth highlighting here.
Elizabeth Holmes’ story, though hilarious, is not really the exception. Sure, she was particularly egregious, but her real mistake was just not keeping all her own bullshit in order. There are lots of (mostly male) Elizabeth Holmeses out there who get to run amok. We need to correct our understanding of what the words “tech industry” really refer to - organized speculation by elites around social ventures with no regard for pressing collective issues like climate change, systematic poverty, racism, gender oppression, genocides, slavery (yeah that’s still a thing in the world), etc. Their only criteria is whether or not you look and act like this specific white nerd archetype from the 20th century. Sure there are pitch decks and other formalities, but the people and startups who get funded are connected. Not unlike the Mafia. If you want millions for your world-changing idea, you better move to Palo Alto and stock up on Patagonia vests ASAP. Fraud never sleeps.
Haitian Prime Minister Ariel Henry survived an assassination attempt in the northern city of Gonaïves. His predecessor, former President Jovenel Moïse, lost his job the same way in July. Haiti has still not even elected a new President (because how can you have elections when candidates can’t survive being elected?) and the forces within the country which insist on perpetuating chaos and strife are already making moves on the PM.
Dr. Henry has pledged to crack down on the rampant organized crime that has been deteriorating the security situation there. The problem is multifaceted; as we’ve written before, Haiti is a country that has everything going against it. Powerful forces within and outside Haiti have always conspired to keep the Haitian people poor and subjugated as best they can. However, as an independent nation, the buck stops with the country’s political leadership. They can blame US imperialism and foreign multinational meddling, and even be correct about that, but it still doesn’t change who is fundamentally responsible for the country and its people.
It’s good to see Haiti’s PM taking on this responsibility after so much chaos, but clearly it’s a dangerous game. Much like being a Soviet Politburo member in the 1930s, he’s going to have to tread carefully. And maybe get a bigger, better-armed security detail.
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Happy New Year!