If you were to say to someone, “That guy is really successful,” what would you mean? Is he rich? Does he own a big company? Has he made an impact in the world?
Different cultures measure success in different ways. In a fascinating Business Insider piece from 2014, Richard Lewis pointed out that for Americans, Germans and Swiss, more time spent working equals more success, “[while in] a society such as existed in the Soviet Union, one could postulate that those who achieved substantial remuneration by working little (or not at all) were the most successful of all.”
Silicon Valley has its own measures of success. “How many startups have you done?” “How much have you raised?” “From whom?” “At what valuation?” “How many exits?” “Are you going viral?” And sometimes, just sometimes: “Are you making the world a better place?”
That last question, though, has some caveats. Venture capitalists love a feel-good backstory. But two recent high-profile Valley implosions would make it seem that the feelgood-ness of the story is more important than whether it’s, yaknow, true.
I understand the seduction. I was thrilled when the smart, beautiful, intellectual Elizabeth Holmes became a billionaire through her blood-testing company Theranos. What a role model! What a great story!
It was all a lie, of course. Theranos is now under criminal investigation by federal prosecutors and the SEC. The company’s valuation has plunged from $9 billion to less than $800 million, and is probably closer to zero, as it’s hard to imagine anyone willing to buy it or invest in it.
When Theranos’ wrongdoings came to light, I was disappointed and angry. How dare you? How dare you get our hopes up that we might finally have someone to look up to who doesn’t fit the bro-culture stereotype, and then reinforce that stereotype a million times over by turning out to be a fraud?
I hadn’t known she was a fraud when I celebrated her success, but it hadn’t mattered whether I bought the story. She needed investors to buy the story -- and overlook their profound due diligence responsibilities by failing to assess the quality of the technology and the veracity of the data. And that’s what they did, so dazzled by the myth of the female Steve Jobs that they collectively pumped $400 million into the Theranos coffers before the fall.
And now we have Hampton Creek. Another great story. A young, charismatic founder. A plan to eliminate battery chickens, reduce carbon emissions, and save the world, while giving people delicious egg products with no compromise on taste or texture. Apparently we can have it all!
Except, of course, we can’t. Like Theranos, Hampton Creek is under investigation, this time by the U.S. Securities and Exchange Commission and the Justice Department. Their product may be tasty, but it wasn’t selling at the exponential pace needed to attract Valley investors. So instead of slowing down and growing organically, they got over 100 people -- "Creekers,” according to Bloomberg -- to surreptitiously buy hundreds and hundreds of bottles of the company’s product, artificially inflating sales.
We learn through stories. We evolve through them, communicate through them, connect through them. We’re hard-wired to respond to them. But Theranos and Hampton Creek show that we can’t stop at the story. We need to know the facts.
And if a story seems too good to be true, it probably is.