You Can’t Handle the Truth
No, you’re not still dreaming: It’s Thursday, November 10th, and America is now living in “The Hunger Games” with Donald Trump as it’s supreme leader. This isn’t a political blog but stay with me and it will make sense in a wee bit.
As the results started trickling in, my mood turned from optimistic to cautiously optimistic to disbelief to plain WTF! Here was a man who basically lied his way to becoming the 45th American president and to put this statement into context, here are a few of his positions that contradicted himself upon (on national television):
1) Immigration laws
2) Gun control
3) Raising minimum wage
4) Pro choice
5) Voting for Iraq war
6) Climate change
7) etc. etc. etc.
This led me to think, the human bias that helped get Trump elected, does that exist in our investment philosophy as well and do savvy investors often fall for stealth startups that just end up creating an allure around their product only for them to fail spectacularly later?
Turns out, they do and there is even a name for it … “Hype Cycle” (told you my Donald trump rant will make sense). The biggest one to date is Theranos, a stealth startup, with humble beginnings from a dorm room, which stayed in stealth mode for 10 years before becoming the darling of the tech circle, attracting $800 million in investment from such marquee investors as Tim Draper (Draper Fisher Jurvetson), Wallgreens and Larry Ellison (Oracle founder) amongst others, before spectacularly going from a $9 billion valuation to $700 million. Their tech was an absolute lie and yet not a single investor or expert questioned how they would accomplish over 150 tests on just two drops of blood when all evidence was to the contrary. These are very savvy investors and yet not one of them deep dived into how the technology actually works. Why?
Another example is that of Scott Thompson who served as C.E.O. of Yahoo before the company hired Marissa Mayer. Months after Thompson was hired to the job, Thompson was replaced at the helm because it turns out that the tech CEO was as good at tech itself as he was at falsifying his academic credentials by incorrectly adding a computer-science degree to his résumé. Why did it take so long for him to be found?
My hypothesis, which may partly explain Trump’s bizarre and against all odds victory, is that people have an inherent need to find their hero, the next Steve Jobs or Elon Musk so to speak. We need that protagonist and we want to be responsible for backing them before anyone else does and once we find this protagonist who seems to fit that narrative, then the story just takes a life of its own, facts be Dammed.
One thing that gives me hope is that sooner or later these false protagonists do get found for who they really are, be it a startup, a founder of even the president elect. Will Donald Trump finish his first four years in the white house? One can dream, can’t they?
I, Ravi Sangtani (@sangtani_ravi) am co-founder of Startup Journey and also Director of Target’s Corporation’s Accelerator program out of India. The views presented above represent my position at Startup Journey and do not represent Target Corporation’s point of view in anyway.
