Post-mortemLessonFraud and forensicsFounders and companies
Secrecy presented as protecting the technology is the warning sign
The idea
Carreyrou's account of Theranos shows how the evidence was assembled: former employees, a pathologist who tested the claims, a regulatory inspection. It also shows the pattern that should have prompted the questions years earlier. The company refused to let anyone see the device work, cited trade secrets, threatened those who asked, and rotated out people who got close to the truth. Secrecy has honest uses, and the honest version does not need to stop a prospective investor watching a demonstration. When the explanation for not showing the technology is the technology itself, that is the signal.
Protecting a secret and refusing to demonstrate a result are different things; a company that cannot tell them apart may have no result.
When it works
Technology diligence, and any situation where access to evidence is being refused on grounds of confidentiality.
When it may fail
Genuinely novel technology is sometimes shown only under strict conditions, and a refusal can be lawyers rather than fraud. One refusal is a question; a pattern of them with staff turnover is the signal.
How to use it
Offer to sign whatever confidentiality agreement is needed and then ask to see the thing work on your own sample. The response to that offer is itself diligence.
Where it came from
Book Bad Blood · John Carreyrou
What the source says. The Theranos investigation by the reporter who broke it, showing how the evidence was actually assembled.
Connected ideas
Supports
A board that accepts a narrative has stopped doing diligenceA compelling story is a claim to test, and the test for a technology is watching it work.
Concepts
Put it to work on L3VLUP
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