Silicon Valley’s fake-it-to-you-make-it ethos has bleed into US startup culture right at large
Still, the mixed verdict has unfairly upset some of Silicon Valley’s elite. Billionaire venture capitalist Tim Draper said in a statement to CNBC last week that the decision left him “concerned that the spirit of entrepreneurship in America is at risk.” In a similar statement to Businesshala, he said that if the same level of scrutiny were applied to every entrepreneur trying to make the world a better place, “we would have no automobiles, no smartphones, no antibiotics.” No, and no automation,” noting that she still believes in what Ms. Holmes was trying to do.
That’s not entirely surprising, given that Mr Draper, whose fund was an investor in Theranos, would continue to campaign for a founder backed by his firm. But even some of those who blamed Ms Holmes seem to support her. In an interview with ABC last week, one of the 12 jurors who worked on the Holmes case said it was hard to convict someone “with such a likable, so positive dream.”
The American dream was about giving everyone a chance to roll the dice with ambition. These days, founders feel like it empowers them to do the same with other people’s money and even lives. According to a recent report by CB Insights, there were 936 private companies worth over $1 billion globally as of last year. More than half of these are US-based and 51% achieved unicorn status in 2021. The environment could hardly be more fertile.
For better or worse, regulation has in some ways led to a culture of fake-until-you-make-up. The Jumpstart Our Business Startups Act was signed into law in 2012 to reduce disclosure requirements for companies with less than $1 billion in revenue. It also broadened access to crowdfunding and expanded the number of companies that can go public without Securities and Exchange Commission registration.
And 2021 saw a record 613 IPOs through a blank-check merger, or a special-purpose acquisition company, according to SPACInsider, more than 10 times that in 2019. A company going public through SPAC can bypass the traditional review process. As well as an investor roadshow. It could attract public investors based on the numbers it believes it might one day achieve, not the ones it already has. In many ways, it epitomizes what much American entrepreneurship has become: a blind-belief bet on a team of big-name investors to choose a story that will be widely bought, even if the product never ends. Don’t be
Even companies that have recently followed a more drastic route to public listings have thrived on the narrative. Rivian Automotive now has a fully diluted market value of $85 billion; As of September 30, the electric-vehicle maker had generated approximately $1 million in total revenue. Peloton Interactive sold investors on a fantasy that financing and the Internet could make its multimillion-dollar hardware both accessible and affordable, thus revolutionizing fitness through “democratization”—no matter the run out. And walking has always been available and free for all.
The definition of “entrepreneur” means that the company’s founders take on a disproportionate amount of risk. However, often, it is their believers who bear the final burden. Theranos isn’t the only case in which the damage has been more than economic: formerly known as Facebook,
Meta platforms were once known for going fast and breaking things. Investors prospered, but today many of its consumers are suffering the effects, whether teens harming themselves or older people risking their lives after reading and sharing vaccine misinformation.
The founders seem happy to capitalize on regulatory loopholes. Investors enthusiastically pour money into ideas even before they come to fruition. And today’s consumers are also rushing to bet on meme stocks, non-fungible tokens, and fringe cryptocurrencies that they don’t all think are necessary. Who can blame them? In a recent ad for Crypto.com, actor Matt Damon told viewers that “luck favors the brave,” while the accompanying scenes suggest investing in a cryptocurrency app that can help astronauts or astronauts in space. Similar to the 15th century explorer for America.
A Journal article previously quoted a venture capitalist predicting Holmes’ decision would at least “serve as a reminder”. [for investors] To do the due diligence. Another said it would have a “glimmering effect” on startups.
Silicon Valley is concerned about the future of American entrepreneurship. it must be.
Write Laura Forman at [email protected]