I don't agree with the premise that some amount of deception is necessary to pitch a company. Founders should say both what they plan to do, and what they actually have working today.<p>I think it's a partly a dysfunction of some investors, that they get excited by the plan and forget to drill into what actually works. Investors who consistently drill into the current situation aren't surprised when things are a little broken, because that's true of every startup.
Canadian engineering culture is a little different from American engineering culture. In Canada, you can't legally call yourself an engineer unless you are certified as such by a professional association. All students graduating from engineering programs are given an "Iron Ring" (stainless steel) to wear on the little finger of the working hand. The steel in the ring symbolizes the steel in a fallen bridge. The message is simple: if you fuck up, people can die. This extends to purely financial matters too; if you waste 2M of capital, you've wasted the productivity of an average person's life (average in Canada and the US).<p>If you lie to people to get your hands on their money and misrepresent your work, you shouldn't be lionized as some kind of entrepreneuring maverick; you're a danger to the public interest. This is worse than making a calculation error that results in harm; it is willful and deliberate harm at the scale of a mass murder.
This is why medtech has the FDA, and why the FDA has actual teeth.<p>"move fast and break stuff" is bad PR if you're facebook. It's a game-over felony if you're making medical devices.
Venture capital is much more of a Ponzi scheme than the community cares to admit. For every spectacular case like Theranos, how many cases are there where early investors at the top of the pyramid are able to take money off the table at the expense of later investors who never make it back? Technically, the company may still be viable, and might be acquired for some fraction of the total invested. But the mechanism that the VCs leveraged for <i>their</i> profit still resembles a classic pyramid scheme, where it is money from later investors ("the greater fool") that lines their pockets, and not profits from a successful business.
"The only problem with an honest buck is they're so hard to make - the margins are too low, too many people are doin' it." -- Yuri Orlov , 'Lord of war' <a href="http://www.imdb.com/title/tt0399295/quotes/qt04033055" rel="nofollow">http://www.imdb.com/title/tt0399295/quotes/qt04033055</a><p>There will always be unethical people willing to exploit the commons for their own profit. Some will do so spectacularly, as a society it's our job to ensure that the EROI of such actions are < 1x so that they will lose out in the long run. Elizabeth Holmes was thoroughly unethical and will spend the next decade paying for that choice, I doubt she profited from it.
Theranos is a ponzi scheme right? I can see that they scammed investors by using Silicon valley techniques, but Zenefits seems like just a poorly run company just like any other one.<p>On that front, why is no one at Theranos jailed and why is that company still operating?
Just because “exuberance and fraud” are bound to happen doesn’t mean they are a good thing. I also don’t buy the skippery slope between pitching your vision and lying about the facts. Theranos clearly crossed the line, demonstrating that the line is sometimes clear. An article arguing that the line is sometimes blurry, or that deception can be a good thing, should draw on different material.<p>If Silicon Valley as a whole is a bit scammy, it doesn’t serve us to defend it on that score or spin it into a positive.
In my understanding, there is a clear issue here with the understanding and separation between the present, which is a fact and the future, which is a theory.<p>It is illegal to misrepresent your financial statements, thus lying about the present.
But you can sell whatever you want about your future, like changing the world and making it a better place and what have you.
The Silicon Valley feature is the unbelievable faith in the potential of an idea/startup. I don't think lying about your current financials or KPIs is a feature.
There are fraudulent / bad actors in all industries the commodities industry has an entire sector whos job it is to prove that that shipment of grain, sugar etc is actually valid.
The article makes a good point. Exaggeration is common when trying to raise money. Read the history of many startups and you'll find outright lies that seem mild after the fact since the startup was able to continue and deliver. We've all heard the stories as well as all the people that invest in startups.
Bad apples are everywhere. It will be poor judgement to prejudice with these limited facts. Business war is everywhere, some entrepreneurs are taking it just too far in pressure to pursue the baseless goals.
This is what you get with no oversight, tons of money, s lot of arrogance, and a focus on “hustle” over anything else. It definitely works for a while, but when it comes crashing down it’s going to take out a lot of innocent players with it.