{"id":513219,"date":"2022-11-21T03:49:12","date_gmt":"2022-11-21T00:49:12","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-to-save-america-from-another-fraudster-like-elizabeth-holmes\/"},"modified":"2022-11-21T03:49:12","modified_gmt":"2022-11-21T00:49:12","slug":"how-to-save-america-from-another-fraudster-like-elizabeth-holmes","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-to-save-america-from-another-fraudster-like-elizabeth-holmes\/","title":{"rendered":"#How to save America from another fraudster like Elizabeth Holmes"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a412c33b4848\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a412c33b4848\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-save-america-from-another-fraudster-like-elizabeth-holmes\/#%E2%80%9CHow_to_save_America_from_another_fraudster_like_Elizabeth_Holmes%E2%80%9D\" >&#8220;How to save America from another fraudster like Elizabeth Holmes&#8221;<\/a><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CHow_to_save_America_from_another_fraudster_like_Elizabeth_Holmes%E2%80%9D\"><\/span>&#8220;How to save America from another fraudster like Elizabeth Holmes&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n<aside class=\"single__inline-module alignleft\">\n        <\/aside>\n<p>The final \u2014 or maybe penultimate \u2014 chapter of one of the most remarkable stories of investigative journalism and corporate fraud in recent memory has closed. Elizabeth Holmes, founder and former CEO of Theranos, was sentenced Friday to just over 11 years in prison for the crimes she committed running her blood-diagnostics startup.<\/p>\n<p>Former Wall Street Journal reporter John Carreyrou first exposed them in 2015, and his reporting saga is worth attention in itself as an example par excellence of how journalists, at their best, provide a valuable public service. But the part of the story investors should be focused on is how much they \u2014 and the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a> \u2014 allowed themselves to be fooled for so long and what they can do to lessen the risk of enabling such fraudsters in the future.<\/p>\n<p>Much has been made of Holmes\u2019 \u201creality distortion field,\u201d her ability to charm the media, investors, politicians \u2014 seemingly everyone around her \u2014 to such an extent that they ignored obvious warning signs about her fraud. I experienced this indirectly while an employee of a nonprofit research organization on whose board she sat. She had been brought on in late 2015 as part of the same small cohort that included such luminaries as former Defense Secretary Leon Panetta, legendary investor Stanley Druckenmiller and veteran journalist Bob Schieffer \u2014 just two weeks before Carreyrou\u2019s first piece came out.<\/p>\n<aside class=\"single__inline-module alignright\">\n    <\/aside>\n<p>I questioned why Holmes had been invited to join our exclusive board, as she had no obviously relevant experience in our field and had not contributed financially to an organization that customarily expected material support from its trustees in the corporate world. Not having been introduced to her myself, I wasn\u2019t affected by her charisma and charm and saw only the fact that she had not contributed, either financially or, in my view, strategically, to the institution. \u201cBut she\u2019s the youngest self-made female billionaire!\u201d a colleague told me when I voiced my skepticism. Reality distortion field indeed.<\/p>\n<p>The answer to why so many were taken in by Holmes can be found, at least in part, in the tendency among venture investors to fetishize eccentricity and charisma. Silicon Valley is largely responsible for the debasing trend of viewing eccentricity as a proxy for genius. (RDF was first used about <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">App<\/a>le\u2019s Steve Jobs.)<\/p>\n<p>It\u2019s true, eccentricity and genius sometimes coincide. Every elementary-school student knows Mozart and van Gogh were a bit nuts. But many investors have <em>over<\/em>-learned this lesson, so much so that would-be entrepreneurs hoping to attract capital often don the trappings of eccentricity to convince their prospects that they\u2019re brilliant and inspired. It clearly is a winning strategy for some, even when both sides of the transaction are in on the con. <\/p>\n<p>Masayoshi Son, SoftBank chairman and CEO, when investing in WeWork founder Adam Neumann reportedly urged him to be \u201cmore crazy.\u201d Sam Bankman-Fried cynically cultivated the image of a misfit slob, too singularly minded to put on work clothes or comb his hair, knowing that investors would recognize the eccentric genius \u201clook.\u201d<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"682\" src=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/11\/elizabeth-holmes-1-1.jpg?w=1024\" alt=\"Investors and celebrities bought into Holmes' eccentric style as proof of her genius.\" class=\"wp-image-24728277\" srcset=\"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/11\/elizabeth-holmes-1-1.jpg?quality=75&amp;strip=all&amp;w=1535 1536w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/11\/elizabeth-holmes-1-1.jpg?quality=75&amp;strip=all 1024w, https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/11\/elizabeth-holmes-1-1.jpg?quality=75&amp;strip=all&amp;w=512 512w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\"\/><figcaption>Investors and celebrities bought into Holmes\u2019 eccentric style as proof of her genius.<\/figcaption><figcaption><span class=\"credit\">REUTERS\/Mike Blake\/File Photo<\/span><\/figcaption><\/figure>\n<p>Elizabeth Holmes cosplayed these same roles \u2014 the black-turtleneck uniform, her \u201ccrazy\u201d diet of green goop she loved to tell people about, her preposterously fake voice. And it worked! Investors saw her as an eccentric visionary, and journalists and editors put her on magazine covers. Presidents Clinton, Obama and Biden all seemed starstruck around her.<\/p>\n<p>Venture investors can avoid being taken in by future charlatans by borrowing some lessons from their quantitative brethren. There\u2019s a tendency in venture-capital circles to downplay quantitative analysis and instead emphasize the more ethereal aspects of an investment or entrepreneur. <\/p>\n<p>Sometimes this is out of necessity when there just isn\u2019t much to analyze quantifiably in a young entrepreneur or company. But often it\u2019s just a shortcut. \u201cIf I like them, I write a check,\u201d I\u2019ve heard VCs say. This temptation to rely on shibboleths to mark someone as an investable prospect is a slippery mental model that leads many VCs to take unwarranted risks.<\/p>\n<p>When evaluating investments \u2014 whether backing startups or trading complex derivatives \u2014 cold, unemotional, quantitative analysis should form as much of the basis for decision making as is possible. This can\u2019t be performed on the basis of a slick pitch deck or a quick interview. Investors should emphasize to the entrepreneurs who look up to them that vision without hard substance is useless \u2014 and media stars can fall fast. Show them that charisma and salesmanship are not substitutes for reproducible results. Eccentricity is just eccentricity. It isn\u2019t genius, it\u2019s a risk that investors have to be compensated for.<\/p>\n<p>Venture-capital investors are responsible for fueling some of America\u2019s greatest success stories, and they\u2019re an integral part of capital markets. But in conducting more careful and rigorous due diligence \u2014 by investing in startups the way quants trade derivatives \u2014 they may be able to more effectively deploy their capital and save America from a future Elizabeth Holmes in the process.<\/p>\n<p><em>Caleb Johnson works with venture-capital-backed tech companies through his advisory firm Harbor Policy LLC and is the founder of Harbor Macro Strategies LLC, a mostly quantitative hedge fund.<\/em>\n                        <\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/nypost.com\/2022\/11\/20\/how-to-save-america-from-another-fraudster-like-elizabeth-holmes\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;How to save America from another fraudster like Elizabeth Holmes&#8221; The final \u2014 or maybe penultimate \u2014 chapter of one of the most remarkable stories of investigative journalism and corporate fraud in recent memory has closed. Elizabeth Holmes, founder and former CEO of Theranos, was sentenced Friday to just over 11 years in prison for&#8230;<\/p>\n","protected":false},"author":1,"featured_media":513220,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2022\/11\/elizabeth-holmes-2.jpg?quality=75&strip=all&w=1024","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[135891,81161,71070,72667,81162,71745],"class_list":["post-513219","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-11-20-22","tag-elizabeth-holmes","tag-hedge-funds","tag-investors","tag-theranos","tag-venture-capital"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/513219","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=513219"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/513219\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/513220"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=513219"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=513219"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=513219"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}