In 2003, Elizabeth Holmes dropped out of Harvard to start a company called Theranos.
She was only 19 but she was smart, driven, and charismatic.
Everyone was desperate to believe in something new and she was it.
She was young, female, had piercing blue eyes, dressed like Steve Jobs, she was the future.
Everyone who met her said she convinced them she was going to change the world.
She knew she would need an impressive board who shared her vision.
So that’s what she assembled: former Sec of State Henry Kissinger, former Sec of State George Schultz, former Senator Sam Nun, former Senator Bill First, Former Sec of DefenceWilliam Perry, and 7 more on that level.
She became a Fellow of the Harvard Medical School Board and was featured on the cover of Fortune magazine, Forbes magazine, and the New York Times magazines.
By 2014, her company was valued at $10 billion.
In 2015, she was one of Times magazine’s ‘100 Most Influential People’.
But the next year her company, Theranos, was exposed as a fake, worthless.
Rupert Murdoch lost $121 million, and Betsy DeVos lost $100 million.
In 2018 she was found guilty on 4 counts of criminal fraud.
So how did these heavyweight business-people and world leaders fall for it?
They desperately wanted to believe in something, so she made herself become that thing.
In 2010, Adam Neumann opened a new company called WeWork.
Like Elizabeth Holmes, he was young, smart, driven, and charismatic.
Like her, he knew what everyone wanted to believe in, so he made himself that thing.
He made his main focus ‘start-ups’, and his main message was ‘community’.
Everyone who met him said he convinced them he was going to change the world.
Like Elizabeth, he knew he needed to borrow a lot of money.
And he knew that, like a Ponzi-scheme, you need to keep borrowing more than you spend.
At the time a journalist said “Millennials aren’t interested in work, they just want a cause, something to follow.”
So Neumann gave them a cause, changing the world of start-ups into a community.
All his buildings would have bright colours, cappuccino machines, vegan food, soft furniture, group games, free beer, everything that was more fun than work.
And it was easy to sell this vision to people looking for a cause: in 2011 a real-estate developer invested $15 million; in 2016 a venture capitalist invested $430 million, anotherone invested $1.7 billion; in 2018 a private equity company invested $400 million; in 2018 a bank invested $3 billion; in 2019 another bank invested $2 billion.
WeWork was valued at $47 billion, investors included J P Morgan Chase, Goldman Sachs, and Harvard Corporation.
But it all unravelled when Adam Neumann tried to do an IPO with WeWork.
After inspecting their books, one analyst reported, “We cannot even fathom the contortions that would be necessary to articulate a path to profitability here”.
The Financial Times reported, “WeWork lost $219,000 each hour of each day from March 2018 to March 2019”.
The IPO obviously failed and WeWork’s value fell by 75%, from £47 billion to just $8 billion, the work-force was cut by nearly two thirds, from 14,500 to 5,600.
So again, that’s what happens when people are desperately looking for something new, and desperate to believe anyone who can provide the appearance of that.
We should be used to it in advertising, we see it all around us, all the time.
We are desperate to believe in the new thing, whatever it is.
We don’t question it so long as it is new.
The key word is NEW, words like logic, common-sense, and credibility are unimportant.
Keep em comin’