We Will Fall For It Again.
Many had spent nearly all of their life savings. The opportunity to experience something entirely unique. A paradise undiscovered and untouched by the modern world — far from the worries and concerns of the day-to-day. Anyone worth knowing was getting in on it and missing out was not an option. After all, there might never be an opportunity like this again.
Barely able to contain their excitement, they were aboard and ready to take off. The whole journey there, they dreamed about all they would do when they finally arrived; the interesting and beautiful people, the beaches and the opportunity to revel in mutual discovery.
But when they arrived on shore, there was nothing. It was all a lie. They had all been scammed.
No, I am not writing about the infamous Fyre Festival recently revived in two competing documentaries by Netflix and Hulu. Instead, this is about the fictitious nation of “Poyais” concocted by Gregor MacGregor in 1821. MacGregor scammed thousands by claiming that he was anointed Cazique (Prince) of the land of Poyais, which was supposedly located in what is modern-day Honduras.
According to MacGregor, the water of Poyais was so pure it could quench any thirst and the river beds were lined with chunks of gold. It was an investment opportunity few back home in England and Wales could turn down. He conned people out of millions of their hard-earned money and continued to run other scams throughout the rest of his life.
I have been thinking about con artists and scammers a lot lately. Not only because of the Fyre Festival documentaries but also because of the many similar stories that we hear in Silicon Valley today.
Researching Gregor MacGregor and Poyais reminded me of another infamous story from the past year: the epic collapse of Theranos and Elizabeth Holmes.
Reading Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou, I was enthralled by how long Holmes was able to maintain her fictitious narrative. Perhaps the most dumbfounding aspect of this “achievement” centers on the individuals Holmes surrounded herself with. In general, we assume individuals involved in schemes of this nature must not be very smart or lack some basic critical-thinking skills. However, Theranos had been endorsed and promoted by some of the most intelligent and experienced leaders in the world. From the highest leaders in Government to the CEOs of large Fortune 500 companies, somehow all these individuals failed to recognize that behind a polished and curated image of innovation was nothing more than an elaborate placebo of a technology.
Of course, hindsight is 20/20. How likely would I have been to recognize these scams from the get-go? Not very. How can we explain why we fall for these scams over and over again?
Truth be told, I generally try to see the better angel in our nature. It may be easy to categorize all this as greed. Greed on the part of the English investors who poured their life savings into Poyais bonds and property because they were unsatisfied with the 3% annual rate of return at their local banks. Greed on the part of the seemingly “spoiled” millennials trying to maximize their social currency — likes, hearts, and shares — and induce FOMO in their audience. Greed on the part of the investors and board members of Theranos who wanted to bet on the next Steve Jobs.
But it’s too easy to label it as just greed and blind stupidity. You see, I believe that most people are optimistic. There is a reason why we get up every day and chase our dreams. There is a reason why we hashtag #mondayMotivation. There is a reason why we set goals for ourselves. We believe that we can improve, accomplish more, be better, get there faster.
Optimism pushes us to believe that the impossible might be possible. It gives us the hope that we might have a shot at being a part of that impossible narrative. We are compelled to take wild risks in pursuit of a better life for ourselves and even a better world. You do not take risks if you are not at least a little optimistic about the outcomes. It’s the subtle difference between “What if this doesn’t work?” and “What if this works spectacularly well?”
But it’s a double-edged sword. It leaves us susceptible to individuals that will prey on that optimism. That’s unfortunate. But does that mean we give up? If we are constantly skeptical of everything, we limit the surface area of our opportunities. We cannot pursue the gains that come from our optimism without occasionally exposing ourselves to the pitfalls. We may fall for it again but it does not mean it has to stop us. Keep going.
(P.S. also it should go without saying but the mini-lesson in all of this is do not bet your life savings on any one thing. The individuals who bet it all on Poyais or Fyre Festival were clearly foolish. The story that really stuck with me was Rupert Murdoch, the media mogul who founded News Corp, invested $125 million in Theranos. He was certainly optimistic about their chances. But he was also smart. Firstly, it wasn’t all his money. Secondly, he sold his stake back to Theranos for $1 to write off losses in his taxes.)