Fake It Til You Make It

where it shows up. And it's the concept of fake it until you make it, which is a philosophy I personally find particularly distressing because it frequently does not turn out well for everybody involved. And I realized that this episode poses a very real danger of diving into grouchy old man complains about those young people terror worry. But

believe me, that's not what I intend. And I don't even necessarily think it's the fault of young people, because, for one thing, folks like me and older we can fall prey to this type of thinking, and we do all the time. And for another, the very concept has been taking root for decades, so back when I was a young person. We were really starting to see this come to fruition already, So you can't blame it on the millennials, is what I'm really getting at. So what

the heck am I talking about? Well, basically, you probably are familiar with the concept. The fake it until you make it strategy goes something like this. You come up with an idea and it's a really compelling idea. Maybe it's for a product or a service, maybe it's for an event you want to throw, but whatever it is, you think of it as really awesome idea and an idea for him, it is pretty darn cool. People agree

with you, that's a great idea. But then to go beyond an idea, you're gonna need to take some big steps to actually create the product or the service or

to throw the event or whatever it is. It's going to take a lot of effort, and it might require innovation and development in the tech sector, So if you're developing a product, a brand new product, or an underlying infrastructure to support a service or event, you're gonna have to innovate in that space, and it's going to take time, and it's going to take resources, and it might end up being really expensive, and of course we all know there's never a guarantee that an idea will actually work

as you transition from the world of ideas to the world of reality, so that means that ideas also represent risk. There's a real risk that things are not going to work out. So maybe your idea is great on paper, but it turns out it's not practical in reality. Or maybe it turns out it's just a bit too fanciful and there's no real way to pull it off in

the real world. Maybe your idea, you know, it sounds more like wishful thinking than a realistic idea, a realistic concept, or maybe it's possible, but it turns out it's going to take way longer to get to a point where you can actually make it happen, and it takes way longer than you had initially anticipated or projected. Now you won't know any of this for sure until you take

on the challenge of making your idea a reality. But it's really impossible to estimate how big of an investment of your time, talent, and money it's going to require, or how much you might waste if it all goes belly up. It might be that you finally achieve your idea, but by the time you get there, the results you have don't justify the amount of effort it took to

get to that point. We've seen tons of this sort of thing on crowdfunding campaigns where the concept was something that people really identified with, It resonated with the audience, and there was a huge support system thrown in, lots

of money pouring in to make this idea reality. And then in the cases where something actually was made, sometimes it falls far short of where people expected, and in that case you could say, like, well, technically the idea became a reality, but it wasn't worth all the effort and money that went into making it happen in the first place. In worst case scenarios, you don't get anything at all. It all fails before you ever get anything.

So chances are, unless you have direct access to considerable wealth and you don't mind the possibility of losing a good deal of it, you'll want to find other people to help make your idea become a reality. You're gonna need investors, and investors can be great. They can pour money into your project and fund your work to bring

your idea to life. And when your idea is a smashing success, you can pay back your investors, which is totally cool because you'll continue to make money as your idea continues to kick but or maybe the idea doesn't pan out, and that's a bummer. But with investment comes risk. People understand that generally speaking, and so you've kind of mitigated the risk to yourself by spreading it among all

your investors. And maybe you'll have to liquidate everything related to your idea in the worst case scenario, right, maybe you've created a little company to bring your idea to reality and it doesn't work out and you have to liquidate all your assets and give all that to your investors. But even then, really you're probably no worse off than you were before you got started, assuming you haven't done

anything criminal like defraud investors and then got caught. So assuming everything was on the up and up, you're probably you know, back to square one, but you're not set back further than that. Now. Investors do expect results, but at times they can be pretty darn patient about it,

and many might essentially be speculators. Right they're looking for a big payout and that could come in the form of a smashing success an idea that is truly remarkable and innovative and compelling, or it might come to fruition if some bigger fish out there sees you and your project and then offers to buy it up from you. A lot of startups actually operate in this way. They aren't trying to make a successful business so much as

generate a ton of interest. Even if they don't have a means of generating revenue, they'll still try to generate interest, and the goal is to have some bigger entity like an Apple or an Amazon, or a Google or a Facebook, to have them come around and gobble up this smaller company for a princely sum. For a lot of folks, that is the dream. It's it's not necessarily making something that works. It's making an idea that some other company finds really really interesting and they'll pay you for it.

And that means that you don't even necessarily have to make a thing that works. You just have to convince people that you know it's something they want to work. It's tricky, and this gets down to what I want to talk about today. A lot of people operate in a sort of holding pattern. They have come up with their idea, and it's possible that they sincerely believe they can bring it into reality if they have the right resources at their disposal. Maybe they realize right away that

their idea is untenable. That can happen to You can have people who say, you know what, I don't think I can do this, but if I can convince other people that I can do it, that's good enough. Or you sometimes get people who from the very beginning they intended to fleece investors out of money. But whether their intentions are pure or otherwise, they tend to engage in

the fake it until you make it strategy. And if it sounds like you are passionate and smart, people will give you way more slack and credit, then you'll have more opportunities to keep all the plates spinning at least a little while longer. So in the best case scenario, with sincere people, they can keep this process alive long enough to actually achieve their goal of bringing whatever their

idea was to life. In a worst case scenario, people get caught in a disastrous situation in which they hurriedly seek out a way to get out of one catastrophe, typically by jumping into a different catastrophe um sort of the robbing Peter to pay Paul principle, This idea of you're constantly trying to hustle to get money to cover your last round of expenses, and that's what you're doing over and over again, rinse and repeat. You're never actually

establishing a reliable way to generate revenue. You're just constantly trying to stay ahead of the creditors. Now, a big problem is that we've sort of mythologized the concept of a genius entrepreneur. In fact, this is something, especially in

the United States, that has become iconic. Right Like, the United States has a history full of these mythological tales of various entrepreneurs and inventors, people like Thomas Edison or Tesla or Westinghouse, you know, people who who genuinely were very intelligent and very uh innovative and in the case of Westinghouse and Edison, particularly good at business. But we have since kind of elevated them to iconic status beyond

what we would typically think of for a regular human being. Right. Well, that's a problem because we have created this sort of mythological ideal to aspire to that maybe doesn't really exist. But the whole concept is that we have an innovative, disruptive mind who comes into some existing industry and shakes everything up with a great idea that is in some way superior over the existing models. A lot of these thinkers tend to target specific industries with which we have

a lot of for stration. So I'm going to give you an example with Uber. All right, So let's let's flash back a couple of decades. Let's say that you're visiting a place like New York City and you need to get around, and you're not familiar with the city. You're not familiar with the subway system, and that looks pretty intimidating to you. You don't know, like going down one says stairs, if you're going to be heading in

the right direction or not. You definitely don't want to drive in the city because that looks like a heart attack on four wheels. So you take taxis to get around. But that experience might be less than ideal in some situations. So maybe you're dealing with rude drivers, or maybe you're left wondering if the driver was taking a long roundabout way to your destination in an effort to drive up

the fair a few bucks. Maybe the driver spends a lot of time trying to discourage you from using a credit card and instead that you should pay with cash. That has happened to me on numerous occasions in taxi cabs in New York City. Maybe you just didn't feel safe with the person for whatever reason. But on the other hand, the taxis are pretty much the only game in town at that point. You definitely wouldn't want to jump into the car of some random driver who's offering rides.

A cab at least provides you with a feeling that someone out there is managing all this stuff. There's some overriding authority that has authorized this person to drive a cab, and therefore things probably won't go too wrong. You know, there's some comfort that there's a body that is regulating this kind of stuff. Right. It's not necessarily a great experience,

but that's what you have to work with. But then someone comes up with the idea of using a mobile app on phones to connect riders with drivers, and the app can search for all available drivers who are registered with the service within a certain area. It can calculate which of those drivers would be most likely to get to the passenger. First, it could contact a small group of them with the prospect of a ride. The drivers could accept that job request and then header on over

your way to pick you up. The premise is that this cuts down on wait times, particularly for people who otherwise would just be standing on the side of the street waiting for the next cab to pass by and try to hail that cab with no guarantee that the cab is actually gonna stop. Like you're you're limited to which cabs you can see in the traditional cab hailing situation. That has since changed, by the way, but we're comparing the app version to the traditional taxi cabs situation or experience.

So this app also goes a step further. It facilitates payment from the rider to the service, and then the service pays a percentage of the fair out to the driver. The service access is sort of dispatch and a cashier all at once. Money need never needs to change hands directly between the passenger and the driver. What's more, the app can display a map for both the driver and the passenger, so the person riding in the car can be certain that the driver isn't going on some sort

of wild goose chase that can actually allow along. Moreover, the service allows people to become drivers without having to overcome the hurdles that taxi cab drivers must manage in order to operate a cab legally. So in New York City, there are a limited number of taxi licenses, so there's always a cap on how many people can actually operate

a taxi cab legally in the city. These licenses are called medallions, and medallions can be bought and sold, and new ones can be issued by the city and then auctioned off by regional authorities to potential taxi cab operators. But the limited number means there's a hard cap on the number of cars that are licensed to operate as taxi cabs. This is a model that a lot of other cities have followed. This makes it easier to regulate the taxi industry and to try and affect other connected

issues like traffic congestion or pollution and more. Means that if you limit the number of cars that can be taxis, then you don't have to worry as much about taxis fluttering up city streets and generating a lot of pollution. But it also means people who might be fully qualified and who might be genuinely awesome. Taxi cab drivers, if they got the chance, can't break into the system because

they can't get a medallion. Now, there are other requirements that some cities have that make it even harder to become a driver. So, for instance, to drive a black cab in London, a driver must first show that they possess the knowledge. That's an actual term. The knowledge means that they know the layout of all the city streets in London and essentially that they can get anywhere from anywhere without the use of a GPS. So that's impressive and it usually takes a couple of years and it's

another big barrier to entry. But see here the app version side steps all that right because you have a GPS with the app, And in addition, passengers can assign a rating to their driver, which can let future passengers know if that driver is someone they want to ride with. You can also tell the service if a driver is being a problem and that person can be removed from the loop entirely. Drivers can also rate passengers, which has

a similar effect, but behind the scenes. So in other words, the promise of the service is to eliminate many of the frustrations and concerns associated with the entrenched taxi industry. It disrupts it. The company positions the app to be disruptive. It's taking aim and an antiquated system by the argument of the app that a lot of people find inconvenient or irritating or maybe even predatory. It democratizes the service across a wide range of drivers. So what's not to love. Well,

the taxi drivers don't love it. They've gone through the processes and overcome the hurdles to operate a cab legally, and to get undercut by a quote unquote disruptive service

is a pretty big blow. On the positive side for customers, it is meant that a lot of taxi companies have adopted many of the features found in apps like Uber, such as using an app to hail a ride and seeing where a driver is in relation to where you are on the app, and tracking your trip in real time in the vehicle, things that make people feel better

about taking a taxi. You could argue a lot of those things only exist because the competition from services like Uber forced the hands of taxi companies to adopt them, and we should also remember that some of the regulations in place, they aren't just red tape. That's not just bureaucracy for bureaucracy's sake. Some are genuinely intended to ensure passenger safety and to act as a control mechanism for

traffic congestion and pollution and stuff. The entry of an unregulated fleet of drivers behaving like taxi cab operators throws all of that into the garbage. But more germaine to this discussion is that the revenue model just isn't working. Uber loses money, a lot of money. In the second quarter of two thousand nineteen, Uber reported revenues of three point one seven billion dollars. That's billion with a B. Now, that's most assuredly a princely sum. Heck might bump that

up to an imperial sum. However, it's not as much money as the company lost in that same quarter. So while they made three billion bucks, the company posted losses to the tune of five point two four billion dollars. Yawsa. So they are losing money way faster than they are

making money now. To be fair, according to Uber, part of what made the losses so big that quarter was that the company was buying backstocks from employees as part of a compensation plan after Uber went public with an I p O. But analysts said, even if you took that out of consideration, the company still lost one point three billion dollars that quarter, and that it was a thirty percent increase in losses from the quarter before. That's

not a great story. It's a downding amount of money. Now, speaking of money, we need to earn a little ourselves. So we're going to take a quick break. When I come back, I'll talk more about uber strategy and the challenges the company faces. Right, I'm back. So, how the heck can Uber stay in business if it costs more to operate then the company can generate in revenue. Well, I'm glad you asked, because this is where we get into some really messed up stuff about fake it until

you make it. So Uber has managed to keep going mainly through getting investments into the company. More money gets poured into Uber by people who are hoping to receive a big payout in the future, or there are people who hope to guide the company by essentially purchasing enough voting shares to make a big impact. A question that naturally arises with this revelation is how long can at keep going on? How long will it be before investors worry that the money they're putting into the company is

never going to come back to them. Because if that day should come and Uber still can't operate as a profitable business, the company is doomed because it will eventually burn through all the money it has and it will have to fold. And by the way, while I'm talking specifically about Uber, no right hailing service out there has proven to be profitable yet it's just Uber has been

spectacularly unprofitable. So one path Uber might try and take is to dominate the market right swoop into a region, undercut competitors, gain customers, build customer loyalty, and then when competition has been starved out because Uber is undercutting everybody else, then you can hike up prices so that the company is making money on a per ride basis instead of

losing money. That might be what has guided some pretty darn cutthroat maneuvers on Uber's part in the past, but really it's a race against the threat of bankruptcy, whether or not you can do enough to defeat your competition and become the only game in town before you run out of money. Another path is for Uber to get involved in a lot more segments of the transportation sector, which is stuff we've been seeing recently, and stuff with

like a food delivery. But there are a ton of competing companies in those spaces too, which makes it really hard for any one company to dominate the market, let alone and industry. So while we're left with is a company that's trying to stay ahead of existential threats while establishing a profitable business model. And the technology side works. The apps function as they are meant to, They match up drivers and writers, they facilitate payments, but the business

model underneath it is flawed. I don't think anyone is questioning how services like Uber can be useful to the end customer, but the other issues stuff like underpaid drivers who struggled to be wreck ignized as employees at all, traffic pollution, safety concerns, or there was a recent story about Uber in London about how customers had been matched up with a driver only to have a totally different driver be the one to pick them up fourteen thousand times.

That ain't great if you're hoping to be sure that the person who's picking you up has a good rating. Anyway, these things raise a lot of red flags. Meanwhile, Uber and other ride hailing companies keep making aggressive moves in an effort to build a sturdy foundation, and no one's totally sure if they can actually do it, so they're faking it until they make it or until it breaks them. So how about we transition over to a quick rundown of a different event, a true event in that it

was eventful. I'm talking about the Fire Festival, which made headlines in two thousand seventeen. So again, depending upon the account you believe, the Fire Festival was they're a sincere attempt to throw a really luxurious music festival on an island in the Bahamas, or it was a total money

making scam from the beginning. Now, the pitch was that attendees would get a truly first rate experience with astounding accommodations like the stuff you would see in travel magazines, and the festival would feature top notch talent and enough Instagram were the experiences to propel even the most modest social media socialite into total influencer status, or again, it

was just a scam from the very beginning. Now, personally, I'm more inclined to think that it was something that a few folks were convinced they would be able to do because they had no appreciation of their own limitations nor of the magnitude of the task they had set out for themselves. So they overestimated their own abilities and they underestimated how much work it would take to pull

something like this off. Now, there are a couple of documentaries about the whole fiasco, and they're well worth watching. And I'm not going to go through all of it here, because they did a great job of it. You should go see those documentaries. But basically, a guy named Billy McFarland and some of his associates came up with this concept and they identified things that young, affluent people would find really appealing. They really knew which buttons to push

to get people excited. Uh. Namely, they aimed at stuff that millennials tend to value. And yes, these are gross generalizations, and I do not mean to suggest that everyone who falls into the age range of millennial feels the same way. And to be more precise, these guys were specifically targeting wealthy millennials in particular, So here are some of the

things they identified as being important. These young people really value experiences, so crafting and experience would tap into this millennial desire to be part of something unique or special. So not only did it have to be an experience, but exclusivity was an important concept. Millennials that they were targeting really like to feel that they're part of an exclusive group that get to experience something that not everyone else gets to do. And on top of that, these

millennials valued the appearance of having an amazing experience. In fact, you could argue the appearance of having an amazing experience is the most important part of it, not the experience itself. And here's where we get on a Jonathan rant. So what I mean by the appearance of an experience is that there's a lot of value placed in the perception of a person as framed by their social media presence. And hey, I'm subject to this too, I'm not immune.

If I take five selfies of me standing in front of like a statue or something, I'm gonna pick the one that I think is the best to share with social I'll probably skip the ones where I'm in the middle of a sneeze. Or something. Though honestly, that sounds like it's way more on brand for me, So maybe I would, and I'll why I hate using the phrase on brand for me. It's terrible anyway. In this sense, an experience becomes more like a backdrop for an amazing

video or an amazing selfie. The goal is to convey that the millennial is in the middle of something truly special and incredible. It doesn't necessarily have to be incredible, it just has to look incredible. And there have been a ton of folks who have created installations like pop up experiences just for this purpose. This is stuff that's

all meant to be a backdrop for selfies. These installations aren't necessarily an experience in of themselves, as in, there'd be little point in going through them if you weren't taking a camera with yourself and taking photos every three feet. They offer nothing more than that. And so really, what is happening is that the millennials are creating a visual record of them going through an overall empty and meaningless experience in order to give off the appearance of something more.

I don't know, more and more, you know, I see these pop up museums that cater to this all the time, and hey, I'm not saying there's anything wrong with taking a pretty photograph or an amazing selfie. I think that's pretty awesome. But there's no real differentiation in these pop up things between artificial photography backdrops and actual real experiences. They're equating the two, so that kind of cheapens the

value of a real experience. To me, at least, most of these pop up museums would be entirely forgettable if not for the images and video captured in the place. So in other words, if you were to walk through one without a camera, you would walk out having felt no real impact of that, and within a couple of

days you probably wouldn't even think about it ever. Again, compare that to an experience where you develop a deep emotional or intellectual connection with something and experience that you might talk about for years to come because the way it affected you. That's a big difference. But in the

world of social media, they end up being treated the same. Okay, So, knowing that these rich kids are super image conscious and experience oriented and really eager to be part of exclusive clubs and groups, McFarland and his partners began to make some grandiose promises. Now my guess is they figured they'd make enough money to actually pull off the event. They were describing that if you just wanted it badly enough right,

things would just fall into place. It was kind of like the secret you put it on the universe, it's going to come back to you. Well, that's sort of wishful thinking can really set you up for massive problems, and McFarland found that out the hard way. McFarland starts getting massive interest in his festival and that he says he's going to throw and orders start pouring in, people

start buying up tickets and booking up flights. But it seems as though no one had actually done a real honest assessment of what would take to actually put this event together. Heck, even something as important as selecting the site didn't really happen until after the pitch had already gone out. The initial site that McFarland had selected didn't work out. The story about why varies from person to person,

but it didn't work out. So for a while, the festival was being promoted, but there wasn't actually a place for it to happen yet. So they were scrambling to find a suitable location for it. This is like saying, wouldn't it be cool to have a big music festival with huge stars performing in front of crystal blue ocean water on white sand beaches, and you've got a luxury villa to go back to after you're done partying for the night. Well, the answer to that would be heck, yeah,

I'd be amazing. But just because something would be amazing doesn't make mean that it's a possibility. That's the important part. So where's the tech angle in this story? Why am I even bringing up Well, part of the reason for the Fire Festival was to serve as a big advertising camp pain for an app that McFarland's company was working on. It was also called Fire. The app was meant to help people book entertainment for events, like big name entertainers.

So in theory, if you were organizing an event, you could choose a few different entertainers that who had registered with this app, and you would pitch it to them and see if they had any interest in being part of it. Then the entertainers could use the app and look at the various pitches coming in and decide whether or not they wanted to go any further. Presumably Fire would make money once the two parties came together in

some form of agreement. Now, I guess you could think of it as tender, but for booking bands to play bar Mitzvah's or whatever. More importantly, the story illustrates that fake it until you make it can be truly destructive. McFarland and his associates were playing a shell game. They were moving money around like crazy in an effort to

just stay ahead of total disaster. But unlike a company like Uber, McFarland had an actual deadline where stuff either had to come together or the whole thing was gonna go bust. Uber's deadline is undefined. It's just whenever the money runs out. If it ever does run out, McFarland had a date associated with the festival and things did not come together. This was I fake it until you break it situation. So in case you didn't know, the entire festival was a total disaster. Musical artists who were

announced for the festival canceled. At least one act claimed that there never was an agreement to actually appear at the festival in the first place, that nothing was ever signed and that they were being promoted as being part of this festival without an actual signed agreement in place. The site wasn't prepared for the arrival of hundreds of attendees.

There were inadequate toilet facilities, the food situation was dire, and a lot of folks tried to head right back to the airport to get a flight out as soon as they learned about the conditions. It was beyond a huge mess. Now, I think that actually ties back into my rant about real experiences versus the appearance of experiences. There's a strong impulse that we have to present a particular vision of ourselves to the world through our social media right because in real life, people can see us

for both our virtues and our flaws. They can see us at our best, they can see us at our worst. It's a raw feed, that's what real life is. But with social media, we can craft that experience, we can cultivate it. We can present to the world an image of ourselves that reflects part of who we are, but leaves out all the stuff we'd rather folks not notice. We can be the person we want to be as opposed to the person we actually are, so it allows us to create a fantasy and present it as reality.

Fake it until you make it follows a similar line of thought. You present the fantasy, in this case, your idea, as if it were a reality. And sure, there may be some hurdles between you and your goal, but those aren't insurmountable. You'll you'll be able to get over them right without too much trouble. Then you'll be sitting pretty and more importantly, to your investors, they all get filthy rich because man, it's such a good idea. Now, personally, I find that to be a pretty toxic way of

looking at the world. It definitely doesn't set you up for success. It creates an incredibly stressful environment, assuming you're at all sincere with your wish to create something real. I mean, I guess if you're on the prowl for a mark, the only stress you have is that you want to avoid getting caught out for as long as you can. So if you're the dishonest type, you might not sweat the pressure too much because you're never intended

to deliver upon your promise in the first place. But if you are on the verge of getting into serious legal trouble, you know, like McFarland did. You might start feeling the pressure then, but wait, it gets worse. I'll explain more after we take a quick break. All right, So I talked about fake it until you make it strategies with stuff like ride hailing companies and social events, but it also applies to stuff like the dot com

bubble of two thousand and two thousand one. This is what I was saying earlier about how this fake it until you make it philosophy. It's not new, and it's certainly not new in tech. We've seen it for a long time, and I've covered the bubble in previous episodes. But here's the really quick version. As more people became aware that the Internet was a thing like the general public that started to happen in the early to mid nineties. People also recognize that there could be some legitimate use

cases for business online. The Internet would enable an unprecedented explosion and goods and services. Online shopping was poised to become the new norm, replacing old brick and mortar experiences entirely, and tons of people wanted in on what appeared to be a cash cow. The Internet was essentially the gold Rush for the nineties. Everyone felt they needed to stake

acclaim there. Companies that were directly tied to the Internet, like Netscape Communications Corporation would go public and they would see their share prices skyrocket, and that made early investors a ton of money. That just encouraged a lot of people to take big risks and invest in various Internet related companies because the payolts were so potentially huge that it seemed like you would be missing out if you didn't get in on the ground floor and invest in

some of these startups. And looking at some companies, you could see how there was a very compelling motivation behind that. I mean, if you had bought Apple stock when it was at its lowest, you'd be a you know you you'd see a truly massive return on that investment if you had held onto it till today. And greed is a very powerful motivator. So you had a ton of entrepreneurs starting up dot com businesses, You had a bunch of investors eager to back the horse that would pull

in those law shot odds. That set the ground for rampant speculation as people just poured way too much money into these startup companies. Many of these companies had not yet formulated a business plan that could lead to profitable operation. In fact, I suspect more than a few of them didn't have any real business plan to speak of. They just had an idea of how to use the Internet, which may or may not have had any merit. Some were geared towards a compelling idea, but had no real

way to monetize that idea. Much of the dot com industry was firmly in the fake it until you make it camp. I think, generally speaking, that most of the entrepreneurs really believed that those initial investments would propel the start up with such momentum that it would overcome any challenges in the way and then establish itself as a legitimate business. Of course, some others were more concerned with spending that sweet venture capital on stuff like swanky offices

and luxuries. Again, it was like it was the appearance of running a business was good enough to you know, run a business like. It didn't matter if you actually knew how to do it. You just had to look like you knew how to do it, and then everything would work itself out. A very naive approach. Now, since many of these companies had big overhead costs and a

limited means of generating revenue. I mean a lot of these companies would end up having warehouse space, which is an ongoing expense you have to pay to stay in business, but would have a very poor revenue model. Well that's not something you can sustain forever. They were burning through money really fast. Now, it wasn't uncommon around this time for employees to get a lot of their compensation in

the form of company shares. The idea was that the company would establish itself and become successful and the people responsible for doing the work would get rewarded, which sounds great, but that premise depends upon the company being successful. If it's not, then you have employees who are left with stock that isn't worth the paper it's printed on, or

the storage space it occupies if it's all digital. A combination of factors led to a failure in confidence among investors, and soon the dot com industry was in free fall as everyone was pulling their money out, Some companies, like Amazon were able to survive through good luck and good timing.

Amazon had managed to secure a very large investment not long before the market tanked, and through that investment they were able to ride it out, but a lot of companies withered away entirely and the economy overall suffered as a result. For a more recent example of fake it until you make it, we can look at Thoranos, the company that Elizabeth Holmes founded, or Thoropness. I guess I

should say, because it's therapy, so it's thoroughness. Her goal was to build a machine of running a battery of more than one hundred different blood tests using a single small blood sample. And you would just use a tiny little drop of blood and this device would run tests and you could screen yourself for potentially hundreds of diseases. Homes stated that it was going to democratize medicine. It would give people more power over their own health information.

It would inform them so they could have better discussions with their doctors about their health. And the blood testing market was essentially dominated by just a pair of companies, just two companies. And that gets back to that narrative that a lot of investors really love the idea of a new player coming into disrupt and otherwise established system.

Combined that with the promise of a device that could in a matter of hours tell you more information than either of those companies could do over the course of weeks and using a much smaller blood sample to boot, you had a really compelling pitch. Of course, you'd want a machine that could do all these things, because who wouldn't It would be an amazing benefit to all of humanity.

You could save lives, you could extend accessibility to people who otherwise would be unserved by the health care industry. It was the biggest pot of gold at the end of the sparkliest rainbow. But of course, to do it first you would have to develop the technology and then prove that it works. And as it turns out, that was a pretty darn big request and much harder than

Holmes seemed to believe it was. By the way, to this day, I am not sure if she was sincere in her beliefs that she could pull this off, or if she was deceiving everyone, perhaps even including herself, or what the situation was now. On the one hand, I can forgive some naivete when it comes to technology, because technology can do some pretty amazing things. When we talk about concepts like Moore's law, and we're essentially saying, hey, every two years, computers are gonna be twice as powerful

as they were two years earlier. Because that's the way it is, and that's the way it always has been. It's the way it's always going to be. Well, we set the stage for us to believe stuff that might be a little further out on the fringes, and there are a lot of people would argue that even Moore's law is coming to its end, but then that's an argument that's been made numerous times. So I'm able to walk around the world right with what amounts to a

computer in my pocket. I can access enormous libraries of information in an instant through a touch interface. If I don't know how to do something, I can pull up a video explaining it to me in a heartbeat. Technology can transform what used to be impossible into a mundane experience. Like the things I'm telling you right now, they aren't special. We can all do them with a smartphone or a computer or a tablet. It's not like I have some magical ability. This is something that we all do every day.

So I definitely can understand how some people would say, well, of course, of course, this is a technological challenge we can overcome. We can obviously make some sort of device that can do hundreds of blood tests on a single drop of blood. That's how investors saw it. The promise was so compelling, the benefits would be so enormous to humanity, and the profitability of such a technology would be incalculable. Investors would inject the startup with around seven hundred million

dollars in cash. But as anyone who has followed the story of of uh Paraos knows, it was a challenge that the team could not overcome. Stories broke that the company was actually relying upon the very same testing equipment created by the competitors that Paraos was meant to disrupt. That their team of engineers were working really hard, but they had not yet figured out how they could actually

deliver upon the promise that Holmes had made to her investors. Heck, they weren't even sure if it would ever be possible based on those parameters. The technology they had developed was limited and had issues, and never received FDA approval for the majority of the tests it was supposed to be able to do, which is probably a good thing, since

it reportedly could not do most of them. What may have happened is that Holmes set her goal based on wishful thinking, and that her hope was to use investment money to bootstrap the technology and the company so they could actually deliver upon the promises being made, that the money would give them the security they need to actually

develop the technology they they wanted to make. Unfortunately, for her, and for all the people working for Sarah Nous and for all the patients who are dependent upon the company providing results to them that were reliable, none of it panned out. Now, I've only picked a few examples to kind of talk about this fake it until you make it trend in the tech business, but trust me, there

are countless others. There are cases where the technology works just fine, like with Uber, but the underlying business model doesn't, and in there are cases like Tharohns, where the tech itself falls far short of where it needs to be. The unifying factor is that these entrepreneurs have to keep things moving, or at least appearing to move, in order to keep the money coming in to support the overall organization until it can actually deliver upon its promise, and

sometimes that just never happens. Honestly, what this reminds me most of out of every experience I've ever had in my life is theater. And I don't just mean putting on a performance for an audience. I mean theater in the sense that if you go to a theatrical production, you're looking at a set, and the set looks a very specific way, dependent upon the set designer and their talents and the people they had, you know, at their disposal. So let's say you're going to see a really elaborate set.

It looks amazing, looks incredible to your eyes. Chances are that from the other side, from backstage, that set looks like nothing. It looks like cardboard and wood and nails and screws poking out at odd angles that you've got to watch out for. If you're crossing behind the stage. It doesn't look like anything because it doesn't need to. The audience doesn't see that part. The only part that matters is the part the audience sees. Well, I feel like, fake it till you make it is the same thing.

The only thing that matters is what the investors see. And it can be fine for the backstage stuff to be messy, because as long as you can keep things going long enough so that you can deliver something that looks like the set that all the investors were watching during the whole production. You're good to go. The problem is when you can't do that. Now. I'm all for innovation, I'm even for disruption in many cases, but I'm also

an advocate for critical thinking. Anyone who's listened to this show for a long time knows that far too many big decisions seem to be based upon people wanting a certain idea to be real and practical without any real evidence that those ideas can stand up in the real world.

And while for some people, misplaced trust might mean you lose some money, like you know what, that's a that's an inconvenient it's terrible, but you can always make more money, right, But for other people the consequences can be much more life death oriented. So once again I appeal to you guys, my listeners, to develop critical thinking skills and to exercise

them whenever you can. Now, one other thing I want to mention if you want to go out there and do uh pop up experience to take selfies, go and do it, you know, just do it. If it makes you happy, that's awesome. If you're going with friends and you're all having laughs and you're all enjoying yourselves. That's great and the world can use more joy. So go do that thing. I'm not trying to shame you. If it's something you genuinely have fun doing, you should do it.

I know I've criticized the whole trend in this episode, but that's because I see so many people elevating it beyond what it actually is. I don't think there's anything inherently wrong about wanting to take a good selfie. I just don't think anyone should consider that as an experience in of itself. To do so means you're missing out on some legitimate experiences out there, and some of them are pretty incredible. All right, I'm done. I'm ready to

go outside. Yell at a passing cloud y'all take care. If you have any suggestions for future episodes of tech Stuff, you can send me an email the addresses tech stuff at how stuff works dot com, or drop me a line on Facebook or Twitter. That's text stuff h s W can started off by saying, hey, they're grouchy pants and follow it with your message. Also, don't forget you can go to our website that's tech Stuff podcast dot com. That's where you're gonna find an archive of every episode

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