Beware of the Startup Charlatans

I just finished Bad Blood: Secrets and Lies in a Silicon Valley Startup about the Theranos saga. This is a perfect example of the cult-like behavior we sometimes see in Silicon Valley.

One of the peculiarities about starting an unsuccessful company is that you become immune to other people’s “reality distortion fields”. These days, when people say to me “hey, I’ve got this great idea for an app”, I just roll my eyes. When a recruiter tries to reassure me that the low salary they just offered doesn’t matter because the “equity will more than make up for it”, I hang up the phone and walk away.

10 years ago this wouldn’t have been the case, and I probably would have been sucked into something like Theranos. So I have great empathy for the employees who were dragged through the ordeal.

There were many people who had misgivings about the company back in 2005 and 2006, 10 years before the WSJ broke the story about the fraud. Some of those people followed their gut and walked away. Many others stayed on, and wound up with nothing.

So why did so many people get manipulated?

We all have a strong impulse to follow authority figures. When someone is confident and speaks in an authoritative tone, a switch goes off in our brains that makes us automatically subservient. Our subconscious tells us “oh good, a leader is here.” It allows us to relax, and it makes the world seem a little more certain. Given that our lives are full of uncertainty, I think we’re desperate to find someone who gives us security.

In addition, we have a tendency to believe that:

  1. The authorities know what they’re doing.
  2. The authorities have our best interests at heart.
  3. They have a plan.

History has shown that 1 or more of these assumptions is usually false. After all, the people who boarded the Titanic believed that everything was going to be fine. They were just like you and me.

So you should keep things in mind when you’re hunting for a job, or you know, boarding a ship.

I’m not saying you shouldn’t do a startup; maybe you’re about to join the next Google. But if somebody starts preaching to you about how their new iPhone app is going to change the world, your spidey sense should go off. Remember that it’s really hard to change the world, and the person you’re talking to is most likely a charlatan. For every Uber, there are 1 million other apps that do little to nothing.

A similar phenomenon is when people accept a bad deal because they believe so much in another person’s vision.

Don’t stake your life or livelihood on unwritten expectations, especially when they’re insured by a reality which may or may not exist. This applies to any company, not just startups.

Sometimes people will take care of you. When that happens, it’s wonderful. But until it does, you need to assume that they won’t. It’s not usually maliciousness on their part, and you shouldn’t think that other people are out to get you. But you might find yourself used unless you learn to stick up for yourself, and learn to spot a bad deal even when it’s handed to you on a silver platter.