Lifestyles of the Rich and Gullible: Theranos and Ozy Edition

It wasn’t that long ago that we lived vicariously through the 1% watching “Lifestyles of the Rich and Famous” or “Cribs”. Now we are obs...

It wasn’t that long ago that we lived vicariously through the 1% watching “Lifestyles of the Rich and Famous” or “Cribs”. Now we are obsessed with the details of how they were duped. In San Jose, California, where Ms. Holmes ‘trial has been taking place for the past month, several book clubs that read “Bad Blood,” which tells of Theranos’ fall, have made pilgrimages to see her in the hall. hearing. An enthusiastic participant told me that she was “a fan of white collar crime”.

The bubbling zeal for the scam reflects the rise of “murderers, ”Or fans of real murder stories. We are relieved that we are not the victim. Few of us are likely to lose millions – or hundreds of millions – on a shady start-up bet.

“Psychological distance allows us to laugh at things that, if they happened to us, would shame, embarrass or hurt us,” said Peter Atwater, an assistant professor at the College of William & Mary who studies confidence in decision-making. “Finally, some of the rich have been as deceived as we, the poor. “

For so-called white-collar crime fans, the startup’s scam cannon offers a growing bounty to feast on. There is the recent revelation that a An Ozy executive masqueraded as a YouTube rep during a call with Goldman Sachs to attempt to secure an investment. There are the forged invoices that Manish Lachwani used to inflate the revenue of HeadSpin, the software company he founded, in order to raise $ 60 million in funding, according to one. recent indictment. (HeadSpin said it returned funds and cooperated with investigators.) There are the fraudulent insurance reimbursement claims at uBiome, the crappy testing start-up whose founders, officials say, tricked investors into. error on their business in order to raise $ 65 million, which led prosecutors to indict them with more than 40 counts of fraud in February. There are the private investigators and the legal intimidation tactics that Theranos used to intimidate whistleblowers, according to recent testimony in court.

They follow a formula as old as “The Music Man”. A charismatic founder presents himself as a visionary disruptor. Ms Holmes said Theranos blood analysis machines could deliver hundreds of medical tests quickly and inexpensively from a single drop of blood. This promise has won over people like General James Mattis, who testified that he saw the potential to save lives on the battlefield, or Steve Burd, the former CEO of Safeway who testified that putting the machines in the stores would open up an exciting new line of business for the grocery chain.

Once a wealthy person joins, the founder can use the credibility of that benefactor to assemble a stable of still strong supporters. In the case of Theranos, George Shultz, the former Secretary of State, introduced Mrs. Holmes to her friends at the Hoover Institution, including Henry Kissinger and Mr. Mattis. Everyone assumes that the first investor has asked all the tough questions. Further investigation is swept aside as a trade secret.

Claims can be fragile. Theranos was forecasting $ 990 million in revenue in 2015. The reality, it was revealed in court, was closer to zero. Ozy Media claimed to have written the first stories about influential people like Trevor Noah and Alexandria Ocasio-Cortez. This did not have. Jessica Richman, co-founder of uBiome, told reporters she qualified for the “under 30” and “under 40” lists. She was over 40, according to the indictment. Mr Neumann promised that by 2018 WeLive, WeWork’s apartment project, would generate $ 600 million in revenue, according to “The worship of us», A book on the company. It never extended beyond two buildings with a few hundred units.

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Newsrust - US Top News: Lifestyles of the Rich and Gullible: Theranos and Ozy Edition
Lifestyles of the Rich and Gullible: Theranos and Ozy Edition
Newsrust - US Top News
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