9 ms·

Some founders "fake it till you make it", and this news should serve as a cautionary tale.

by petilon 5y ago

r00fus 5y ago
Faking it doesn't work if you are committing fraud?
- Overtonwindow 5y ago
  I think that's the key point here. Was Jucero fraud? I think there's a clear line between a) we have an idea for a product but we have certain limitations that are feasible to overcome, with more time and investment; versus b) we have a product, we're using it in the field, patients are using it, and it works great. In the first scenario, you could fake the dream but you're not promising something that you know to be absolutely false.
- throwawaylinux 5y ago
Waterluvian 5y ago
The sociopaths who are attracted to founder life are immune to this lesson.
- ShamelessC 5y ago
- every 5y ago
  She strikes me as the cute blonde version of Orson Welles in The Third Man...
analog31 5y ago
I could almost see "fake it til you make it" if your idea is based on already proven technology, but success depends on something like brand recognition, network effect, etc. In the case of Theranos, whether her technology worked or not was ultimately going to be decided by Mother Nature, not by a market.
CamperBob2 5y ago
Fake it all you want until your fakery harms innocent parties.
- petilon 5y ago
  What's an example of a fakery that doesn't harm innocent parties? If you pretend a product (or a feature) that doesn't exist exists, then at the very least a competitor is unfairly harmed.
  - manquer 5y ago
    Innocent is perhaps the operative word. If investors expect and/or used to certain amount of fakery they are not "innocent" [1] or if the competitors are doing the same thing they are not necessarily "innocent" either. [1] In this context to take meaning as knowledge, not meaning "not guilty" here.
  - CamperBob2 5y ago
    If a site like Reddit gets started by creating nonexistent or sock-puppet users, for instance, that's hardly on the same level as falsifying medical tests "just until we get the bugs sorted out."
    - richardwhiuk 5y ago
      The conviction here was defrauding investors, not defrauding medical tests. If Reddit included those sock-puppet users in their metrics to investors, then that would be roughly equivalent fraud.
  - streblo 5y ago
    In the legal sense, competition doesn’t qualify as an innocent party.
mertd 5y ago
Maybe don't fake "medical devices" till you make it.
- throwawaylinux 5y ago
  She was not found guilty on any charges of harming or swindling patients. This was about the wealthy investors. They will come after you whether you fake medical devices or bombs.
  - paxys 5y ago
    The Justice Department was only interested in the case because Theranos operated in a highly regulated industry with lots of government oversight. SaaS and consumer tech startup founders lie and cheat and blow up investor money every day and no one really cares. All the wealthy investors gain nothing from Holmes going to jail. In fact the lengthy trial only drags them into the spotlight, which they'd rather stay clear of.
    - throwawaylinux 5y ago
      > The Justice Department was only interested in the case because Theranos operated in a highly regulated industry with lots of government oversight. I don't think so. I think there were very powerful investors and others associated with the company (like board members) who were stung and embarrassed. > SaaS and consumer tech startup founders lie and cheat and blow up investor money every day and no one really cares. Do you have any roughly equivalent examples on the scale of the fraud and the people associated? > All the wealthy investors gain nothing from Holmes going to jail. In fact the lengthy trial only drags them into the spotlight, which they'd rather stay clear of. I disagree with this too. It's a good way to clear their names as it were ("we aren't greedy gullible idiots, she tricked us"), and a great way to send a message not to cross the ruling class.
  - s_dev 5y ago
    They were the only people not guaranteed an outcome -- investment is inherently risky. Medical procedures are not.
PragmaticPulp 5y ago
"Fake it till you make it" originally meant behaving as an established company would, as opposed to presenting yourself as an upstart startup without a lot of customers. Basically: Professional website, formal company structure, normal business sales practices, having people available to answer the phones, and so on. You still had to do the work and deliver the results, but the goal was to overcome hesitancy to use startups instead of established companies. It didn't mean literally lying about your capabilities or accomplishments in order to garner more investment money. That's not "fake it till you make it". That's just fraud. It's not really hard to distinguish between the two, despite the way some people are trying to merge the two definitions.
- stareblinkstare 5y ago
- jgwil2 5y ago
  This is by the way but I love the phrase "upstart startup."
- jiggawatts 5y ago
  It's fairly common to see an element of outright fakery before the hopeful-but-not-guaranteed "till you make it". A coworker was using a mobile app from a startup offering to do "receipt OCR using AI/ML" when in fact they were sending most of the scanned pictures to a call-center in India to be manually entered. They hadn't yet figured out the fancy image recognition algorithm, so they were just throwing AWS Mechanical Turk at it while building up a user base. Realistically, they might never get to that level of AI while staying solvent. That's not so different ethically to what Theranos was doing. The only difference with Theranos is the scale of it all.
  - rocqua 5y ago
    There are two parts to this comparison. The first is, do they outright lie. If they are claiming "we are using AI" to investors, that might be fraud. But that is avoidable with just adding in "we are using AI for some receipts". The second, and more important, question is, are they harming customers. Theranus gave people unreliable blood test results and lied about their reliability. That does actual harm to customers. Whereas for scanning receipts the only thing a customer really cares about is accuracy.
hn_throwaway_99 5y ago
No, no, no. I see this all the time around Theranos ("Hey, there are lots of other fake-it-til-you-make-it companies out there, Theranos just went to extremes"), and I don't think it's accurate, at all. The line around fraud is really not that gray. If you're lying about current facts for personal gain, that's fraud. You can hype all you want about the future, and most VCs are actually fine with you selling them the "yeah, it's hamster wheels in the backend now, but just wait until we build out our tech and scale!" line (just see all the well funded "AI" startups that just have legions of people "training" the AI), but if you say that it's the whizbang tech right now, but it's really just hamster wheels, that's fraud. Fraud is not just an extension of "aggressive selling".

Some founders "fake it till you make it", and this news should serve as a cautionary tale.

r00fus 5y ago

Faking it doesn't work if you are committing fraud?

Overtonwindow 5y ago
I think that's the key point here. Was Jucero fraud? I think there's a clear line between a) we have an idea for a product but we have certain limitations that are feasible to overcome, with more time and investment; versus b) we have a product, we're using it in the field, patients are using it, and it works great. In the first scenario, you could fake the dream but you're not promising something that you know to be absolutely false.
throwawaylinux 5y ago

Waterluvian 5y ago

The sociopaths who are attracted to founder life are immune to this lesson.

ShamelessC 5y ago
every 5y ago
She strikes me as the cute blonde version of Orson Welles in The Third Man...

analog31 5y ago

I could almost see "fake it til you make it" if your idea is based on already proven technology, but success depends on something like brand recognition, network effect, etc. In the case of Theranos, whether her technology worked or not was ultimately going to be decided by Mother Nature, not by a market.

CamperBob2 5y ago

Fake it all you want until your fakery harms innocent parties.

petilon 5y ago
What's an example of a fakery that doesn't harm innocent parties? If you pretend a product (or a feature) that doesn't exist exists, then at the very least a competitor is unfairly harmed.
- manquer 5y ago
  Innocent is perhaps the operative word. If investors expect and/or used to certain amount of fakery they are not "innocent" [1] or if the competitors are doing the same thing they are not necessarily "innocent" either. [1] In this context to take meaning as knowledge, not meaning "not guilty" here.
- CamperBob2 5y ago
  If a site like Reddit gets started by creating nonexistent or sock-puppet users, for instance, that's hardly on the same level as falsifying medical tests "just until we get the bugs sorted out."
  - richardwhiuk 5y ago
    The conviction here was defrauding investors, not defrauding medical tests. If Reddit included those sock-puppet users in their metrics to investors, then that would be roughly equivalent fraud.
- streblo 5y ago
  In the legal sense, competition doesn’t qualify as an innocent party.

mertd 5y ago

Maybe don't fake "medical devices" till you make it.

throwawaylinux 5y ago
She was not found guilty on any charges of harming or swindling patients. This was about the wealthy investors. They will come after you whether you fake medical devices or bombs.
- paxys 5y ago
  The Justice Department was only interested in the case because Theranos operated in a highly regulated industry with lots of government oversight. SaaS and consumer tech startup founders lie and cheat and blow up investor money every day and no one really cares. All the wealthy investors gain nothing from Holmes going to jail. In fact the lengthy trial only drags them into the spotlight, which they'd rather stay clear of.
  - throwawaylinux 5y ago
    > The Justice Department was only interested in the case because Theranos operated in a highly regulated industry with lots of government oversight. I don't think so. I think there were very powerful investors and others associated with the company (like board members) who were stung and embarrassed. > SaaS and consumer tech startup founders lie and cheat and blow up investor money every day and no one really cares. Do you have any roughly equivalent examples on the scale of the fraud and the people associated? > All the wealthy investors gain nothing from Holmes going to jail. In fact the lengthy trial only drags them into the spotlight, which they'd rather stay clear of. I disagree with this too. It's a good way to clear their names as it were ("we aren't greedy gullible idiots, she tricked us"), and a great way to send a message not to cross the ruling class.
- s_dev 5y ago
  They were the only people not guaranteed an outcome -- investment is inherently risky. Medical procedures are not.

PragmaticPulp 5y ago

"Fake it till you make it" originally meant behaving as an established company would, as opposed to presenting yourself as an upstart startup without a lot of customers. Basically: Professional website, formal company structure, normal business sales practices, having people available to answer the phones, and so on. You still had to do the work and deliver the results, but the goal was to overcome hesitancy to use startups instead of established companies. It didn't mean literally lying about your capabilities or accomplishments in order to garner more investment money. That's not "fake it till you make it". That's just fraud. It's not really hard to distinguish between the two, despite the way some people are trying to merge the two definitions.

stareblinkstare 5y ago
jgwil2 5y ago
This is by the way but I love the phrase "upstart startup."
jiggawatts 5y ago
It's fairly common to see an element of outright fakery before the hopeful-but-not-guaranteed "till you make it". A coworker was using a mobile app from a startup offering to do "receipt OCR using AI/ML" when in fact they were sending most of the scanned pictures to a call-center in India to be manually entered. They hadn't yet figured out the fancy image recognition algorithm, so they were just throwing AWS Mechanical Turk at it while building up a user base. Realistically, they might never get to that level of AI while staying solvent. That's not so different ethically to what Theranos was doing. The only difference with Theranos is the scale of it all.
- rocqua 5y ago
  There are two parts to this comparison. The first is, do they outright lie. If they are claiming "we are using AI" to investors, that might be fraud. But that is avoidable with just adding in "we are using AI for some receipts". The second, and more important, question is, are they harming customers. Theranus gave people unreliable blood test results and lied about their reliability. That does actual harm to customers. Whereas for scanning receipts the only thing a customer really cares about is accuracy.

hn_throwaway_99 5y ago

No, no, no. I see this all the time around Theranos ("Hey, there are lots of other fake-it-til-you-make-it companies out there, Theranos just went to extremes"), and I don't think it's accurate, at all. The line around fraud is really not that gray. If you're lying about current facts for personal gain, that's fraud. You can hype all you want about the future, and most VCs are actually fine with you selling them the "yeah, it's hamster wheels in the backend now, but just wait until we build out our tech and scale!" line (just see all the well funded "AI" startups that just have legions of people "training" the AI), but if you say that it's the whizbang tech right now, but it's really just hamster wheels, that's fraud. Fraud is not just an extension of "aggressive selling".