I am reading John Carreyrou’s book about Theranos — as everyone knows by now, Theranos spent ~12 years trying to build a series of biotech products — they claimed to revolutionize lab testing, but as it turns out, all that was a load of horseshit. In the process, Theranos raised $1.4B, employed many hundreds of people, and made the founder, Elizabeth Holmes the world’s youngest self-made billionaire.
Did Theranos burn through a shitload of money with nothing to show for it? Absolutely. But I would argue that that is among the less bad outcomes from this enterprise. Venture investors that poured money into Theranos should, and usually do have a rigorous due diligence process, to ensure they’re investing in a sound business. It’s their job. And if investors and business partners (like Walgreens) fell for the Theranos pitch, believing the company’s wild claims and falling prey to FOMO, they have no one but themselves to blame — they had access to privileged information such as the company’s order book, they could have asked for product demos, could have vetted the management team, etc. They didn’t do a good enough job at it, and bled as a result.
What struck me as odd throughout Carreyrou’s book is that highly qualified, trained and obviously smart people continued to join Theranos — we’re talking Stanford and MIT PhDs, veterans at Valley giants like Apple, and experienced, seasoned executives. A group of people who didn’t need the paycheck / options that Theranos was offering, because they had plenty of options elsewhere. Many employees quickly realized they might not have made the best decision after joining, when it was too late. That is when they saw colleagues being fired on the spot for trivial offenses, stupidly petty behavior from Holmes and her deputy (Ramesh “Sunny” Balwani), and a complete lack of any information about their own revolutionary technology (Only Holmes knew just how fucked Theranos was, and she wanted to keep it that way).
I’d argue that barring the untested live deployment of a life-or-death product, the worst thing of the Thernos experiment was knowingly making hundreds of people pour their sweat and blood to build a house of cards.
Why did they join? Simply put, Elizabeth Holmes. She was able to paint a compelling “make the world better” picture — appealing to the side of scientists and engineers that wants to see their work eradicating diseases, keeping loved ones alive, and saving lives in distant places. She was able to exert something akin to the Steve Jobs reality distortion field — possibly by faking a deep voice — convincing friends from her personal network, family, and their networks to come work for her.
And people repeatedly believed her, enough to work for her and dedicate a non-trivial part of their lives to building her vision. Their stint at the company left many people fully disillusioned, living in fear of getting fired at the drop of a hat — and drove one of Holmes’ earliest colleagues, an industry veteran named Ian Gibbons — to take his life.
Unfortunately, as a society we tend to celebrate this reality-distortion-fielding ability, we like it when a founder is able to charm us into believing them — “(S)he’s just so gosh darn confident!” — we should stop deifying this sort of behavior — not all roads to the iPhone involve cheating your friend and colleague out of their due. A house of cards looks very stable, until it doesn’t.
So if you’re ever being wooed by a founder, or are considering joining a startup — do your diligence! Read up everything you can find about the company online (not just Glassdoor reviews — Tracxn / Crunchbase, news stories, founder’s blog, etc.), snoop through their social media profiles (trust me, they’re doing it to you), ask your interviewers questions (duh), heck, even ask to speak to a board member (for senior roles, obviously). Try to speak with current employees to gauge how well they like working there. Try to ask about funding commitments / cash in the bank. Even if the founder declines to tell you, how they do it will be a good signal. Speak to 2 or more interviewers about the same subject — see how well their “stories” are matching up. Do different execs feel differently about the health of the business? I might expand on this in a separate post at some point.
Steve Jobs has a glorified position among startups, for the wrong reasons — he has popularized this notion of exerting a “reality distortion field” over his audience. It worked for Apple — does not mean it will work for anyone else who’s got boatloads of confidence but little else. Founders who subscribe to the reality distortion field theory of getting things done are deadly, because it is a thin line between “reality distortion field” to “pants on fire lying”. If you suspect a founder trying to emulate Jobs — run. If you don’t run, definitely amp up your spidey senses — do more research , vet the startup harder before you make a decision.
Every startup claims it is doing something great, and needs to hire good people to make it happen — and the more desperate it is the more you should expect exaggeration, fibs, and unrealistic ambitions. The harsh reality is that a startup is by definition risky , and the founder knows this — the point is to overcome the poor odds, not make up fantastic odds in your favour.
If you want to, absolutely go work for the startup that’s changing the world. It’s challenging, could be rewarding, and who knows, maybe you will change the world. Just don’t fall for a snake oil salesman in the process.
If you’re not spooked about working with a startup ever again and are passionate about changing how teams collaborate, I’m hiring founding engineers for Jifi. If you think this is worth doing, drop me a mail at email@example.com. I promise to not exert a reality distortion field 😅