Fyre Festival and Theranos
I recently watched the Netflix documentary on the Fyre Festival fiasco.
I had also recently read the book “Bad Blood” about Theranos.
When I finished the Fyre Festival documentary I couldn’t help but notice how eerily similar the themes felt to me.
A Modern Fable
So there is an entrepreneur — who is a visionary. They are able to persuade people, influential and famous people, to give them money. There’s also a shocking lack of any oversight amidst fantastically growing promises and outright fraud. Then the fraud gets too big to manage but the entrepreneur is in too deep. At this point things fall apart. And people wonder how so many people, including supposedly savvy people, got swindled. Along the way there are a handful of people who know something isn’t right, but they get pushed aside or threatened.
Fyre or Theranos
If you read the paragraph above, it’s a description of both Theranos and the Fyre Festival. I think the eerily similar themes about these, and the ensuing fascination with them sheds light on a real problem with US capitalistic culture.
What went wrong?
There’s a point in the Fyre documentary where it’s clear this can’t go well, and the most reasonable people involved are encouraging Billy to cancel it. He doesn’t do it, presumably since he has too much debt or a sort of financial Ponzi scheme depending on the event happening.
There’s also a point in the Theranos story where it crosses from optimistic futuristic biotech startup to fraud that delivers faulty medical results and can cause real harm.
I think the key moment here that turns an interesting idea into fraud is when it became clear that they could not deliver on the promise, but that promise now had significant real world implications. This is when tests may go out to real people at Theranos, or when people are actually going to fly to Fyre Festival.
Now, these stories are different in many ways. But I think the idea that these qualities that made them supposedly successful entrepreneurs, what amounts to a sort of stubborn tunnel vision or “reality distortion field” also lends itself so easily to outright fraud and damage says much about the system of company building as well as about these two individuals.
The US confuses an economic system and legal system for a moral system
Yes, the individual stories are interesting, and in many ways, insane to read or watch, and the behavior seems sociopathic. But if you view Billy McFarland and Elizabeth Holmes as products of the current hard-charging capitalist moment, I think there is more here.
I think that McFarland and Holmes’ actions in the context of having Trump as a president are interesting. The current president, is, if nothing else, a successful entrepreneurial swindler and liar. He amassed large amounts of money by questionable means, and by weaponizing the legal system, and building a reality distortion story, where many Trump supporters believe the truth is fake news. I mean this stuff is scary. And these things are in the same context.
I think also, looking a counterfactual here that didn’t happen — what if the Theranos device worked? Or what if the Fyre Festival was successful? — help actually understand the situation more. There are lots of other questionable corporate tactics that don’t become hit failure stories.
If they were successful they would have been lauded as visionaries and creative geniuses — which they were, until the house of cards that was both of their operations came tumbling down. And that doesn’t make sense.
Many people in the US believe that as long as something is legal, or they don’t get caught, then it is okay to do. I think this is a dangerous ideology. This is the ideology behind Trump tax avoidance, weaponized legal action, and just scamming people and paying people off. This could be used as a post-hoc justification for Theranos or Fyre Festival if they worked — people saying, that look, you know, you need to cut corners. But actually, I think it’s important to understand that the behavior exemplified by McFarland, Holmes and Trump is not actually discouraged, but actively encouraged.
The thing that keeps most people from doing things like this is a moral system. Not a legal system. And certainly not an economic system.
And a reality distortion field of a certain size can mess with your moral system. Certainly tens of millions or billions of dollars can accelerate that distortion.
McFarland, Trump and Holmes actually are very successful at working the game of the US business system. McFarland and Holmes got caught. But they inflicted a lot of damage along the way. Amazingly, Trump has not been caught. And the damage inflicted, in orders of magnitude, is much larger than the Fyre Festival.
If people are encouraged to just make more and more money and never think about the negative consequences of what could happen along the way, this is what you get.
And the moral of the story is…
So what is the moral of this story? I think it is that using the economic system to game the legal system without a thought of a moral system is hugely destructive. And at the moment — the US has it’s priorities out of whack and needs to rework a few of the levers of each of those. Economic growth leaving destruction and harm along the way, but giving someone a quick profit, isn’t good for anyone.