How technology can move away from ‘scam culture’

Crypto may be the latest technology associated with carpet pulling ($2.8 billion worth in 2021, to be exact), but it’s hardly a new trend in technology. Scams have been around as long as technology, and even the original Apple iPhone demo was completely faked. The mock-up didn’t work at all; Steve Jobs followed a carefully constructed choreography to make his audience think so. Is he lying? Or was he telling the truth too soon?

Considering how many of you are reading this on an iPhone, his big claims are hardly a scam. After all, him did finally keep his promises. However, industrial scandals from the ongoing drama of Elizabeth Holmes and Theranos to Trevor Milton rolling Nikola One trucks downhill (and a fraud conviction for its problems) show how tricky this market can be.

So, how did modeling this kind of behavior become a normal part of tech culture? “Fake it till you make it” is an expression for a reason, but some have taken it too much to heart. This industry has dug itself a hole that it must now climb out of. Founders must find a way to balance idealism and confidence with self-awareness and perseverance.

The rule, not the exception

Sure, visionaries like Jobs and Elon Musk are legends for performing successful Hail Marys, but it’s more common to over-promise, under-deliver or simply drop the ball. This emerging cohort of startup founders and big thinkers has been indoctrinated into a culture that encourages speaking big, but there are very real consequences if you fail to deliver on your promises.

Holmes is the perfect example of that – there’s a reason why she’s a Hulu series about the scandal and that her trial is still in the news. It’s because most of us don’t believe anyone has the moxie it takes to crash into a brick wall like Wile E. Coyote, knowing the thing would never work.

There are examples of school dropouts, ignoring the naysayers, spawning the wildest ideas that became everyday brands. But they are the exception, not the rule. If your pitch relies solely on smoke and mirrors, you miss the point of what separates Jobs from Holmes and Milton.

This kind of fast-talking strategy can be done, but it doesn’t mean that should are. So, how do we stop scam culture?

The ruined reputation of the technology industry

The tech industry is full of the next big disruptors. Recently I saw a company selling Bluetooth salt shakers (with lights! And speakers!), and the only thing that vibrates is my head. It’s not a scam – I just don’t know what problem they are supposed to solve.

But beyond the bargain bin, the tech industry is filled with outrageous successes that cast a halo over the industry. Billion dollar acquirers are so common that we are almost desensitized to them. There is a force multiplier that cannot be matched because normal companies scale linearly, but technology companies scale virtually (and quickly).

Facebook itself grew viral, just as the insurgency that was forming on its platform grew. Political extremists took Mark Zuckerberg’s “act fast and break things” a bit too literally: the spirit of the phrase should be about breaking things to make them better again, not just aimlessly destroying them.

One of the pitfalls startup founders fall into is what I call “visionary complex.” We grow up with the stories of people who defeated all doubters and pushed through to success because only they had the vision and saw the right path. But no one ever tells you about the valid feedback and advice these people gathered from the team around them. Even visionaries need the limits of reality to make the right decisions and chart the best course.

Scam culture is a spectrum as broad as technology culture itself, and it’s hard to tell the difference between genuine innovation and disingenuous scam. In fact, the worst thing Holmes did was harm innovation as a whole; her actions created a chilling effect. No one is going to invest in a suspected “Theranos clone” for at least the next ten years.

Not only is there blood in the water – it’s poisoned.

The road to salvation

The cure for scam culture starts with due diligence. Proper due diligence could have uncovered everything that went wrong with companies like Theranos and Nikola. Investors may have a higher risk profile, but there’s no reason to throw caution to the wind. There’s too much loose and easy money in Silicon Valley, and fads without substance don’t deserve to be funded.

It’s not necessarily the fault of startup founders for having lofty goals. You can’t ask someone not to dream. The only reason something new is made is that people have big dreams and figure out how to realize them.

But scams like Theranos happen when investors seize an opportunity and pour capital into it without bothering to look at the underlying technology. The ethos at VCs, incubators, accelerators and all other investment firms should prioritize authenticity over anything else. It’s fine to have outside ideas, but it’s necessary to validate them early and much more often.

There are serious entrepreneurs – encourage them

Boosting authenticity is the cure for the scam culture. There are plenty of founders who don’t want to be looped with the charlatans in the world. There are serious entrepreneurs who honestly act in the public interest. All they need is the encouragement and support (all too often) given to people who frankly never deserved it.

The problem is this: if you’re going to get spanked by people who don’t play by the rules, you have little incentive to follow the rules yourself. And while founders like Holmes make headlines during tech scams, the truth is that she only did what her investors and board accepted and encouraged.

If we want to stop scam culture before the next big scandal in the industry, we need to encourage good, honest, sincere founders who are an example to everyone else. Otherwise we will remain stuck in this vicious circle. If we don’t do something soon, at least I’ll have something to watch on Hulu.

Chris Cardinal is one of the founders of Synapse Studios.