I distinctly remember that my first reaction to the indicting WSJ report on Theranos was to come to its defence. Naysayers standing in the way of progress. Vultures capitalizing on the vicissitudes of a start-up lifecycle. In hindsight, it was a total failure of critical thinking. With no skin in the game, with zero understanding of the Health-Tech industry, I became enamoured with an idea alone, informed by nothing more than media portrayal. Essentially, I fell for fake news.
John Carreyrou’s book recounting his investigation, “Bad Blood: Secrets and Lies in a Silicon Valley Startup” is a gripping breakdown of how the myth came to be (and it is utterly binge worthy). But a more interesting question is how I ended up believing it in the first place. At first glance the error seemed to be that I made a judgement in an unfamiliar area. Had such innovation been asserted in a familiar like education or psychology, I could have at least passed the it through some filter of feasibility.
But that reflection is problematic in two ways.
One, universal literacy in every discipline is delusional. In life we are usually operating in the blind, relying on specialists and ‘expert recommendation’. Assessing the credibility of second hand information is a key skill.
Two, knowing something doesn’t mean we’re that smart at judging its operators. I have in the past misplaced similar faith in EdTech companies working on personalized learning. I remain convinced on the future of adaptive learning, but had I the recourse, I would have made some poor investments.
Faith. That’s a good word to describe it. Reading Careyrou’s book, it’s easy to fall into the providence of hindsight. Theranos was such as dysfunctional organisation; media portrayals were clear fluff, and only idiots could have fallen for it. Yet when I first encountered the company in 2014, through some faulty heuristics, the story bypassed my logical wirings entirely and entered the territory of ‘belief’. That is a mistake I wish to avoid in the future.
When I first learned of Theranos through its Wired Magazine coverage and the subsequent reports here and there, my logical checks failed and several biases surfaced.
Confirmation Bias
We tend to over-value information that confirms our beliefs. I began my career in a tech start-up that set out to disrupt an inefficient, antiquated industry (education) with technology. Theranos, a company transforming healthcare with technology, paralleled that aspiration. I had immediate affinity for it, as I did any time some combination of the words ‘technology’, ‘disrupt’, ‘efficiency’, and ‘personalization’ are used together.
Not to mention that I grew up with the Myth of the Dorm-room Entrepreneur and had idolized drop-out visionaries who said fuck you to the institution and moved fast and broke things. The story of a 19-year-old Stanford drop-out creating the Apple of Healthcare immediately endowed Elizabeth Holmes with a Gates-like/Muskian/Jobbish aura. She was an idol rising.
Social Proof Bias
In situations of ambiguity and uncertainty where we lack information on the most appropriate mode of behaviour, we are likely to adopt a sort logic that goes along these lines: ‘if other people are doing it, it must be correct’.
This is not necessarily bad. I recently crashed a fancy dinner serving food so fancy that I didn’t know how to eat it, so I simply observed and copied everybody else. Years ago, on my first day in school, I spent hours tailing a kid called Spenser in my class who had a head of radiant, curly ginger hair. I didn’t speak a word of English or Spanish and had no idea how to ‘do school’, so I copied the one guy I could recognize.
It becomes a problem when we not only mimic behaviour but also outsource thinking. This is particularly pronounced when our incumbent peers are perceived as knowledgeable about a situation. They don’t even need to be particularly learned about the subject at hand – deference can be transitive.
Being late into the Theranos hype, I had assumed that because others are praising it, it must be praise-worthy. The reputable sources that endorsed the company also reinforced the assumption. With people like former Secretary of State, former Secretary of Defence, Henry Kissinger, with coverage on Wired and WSJ, with a reported valuation of $9 billion, Theranos earned a VIP pass through all my usual mental security.
There is also a sort of mental domain independence at work here. We are often able to grasp ideas in one area but not the same idea in a different idea. In education it refers to the idea of Learning Transfer. Here, I’m not able to transfer decision processes from one aspect of life into another. I consider myself a fairly critical thinker in in areas like science, or marketing data, or religious proselytization and would automatically subject related information to a sequence of mental checks. Yet I was not able to apply the same rigor and scrutiny to news about a transformative start-up.
Excitement counteracts scepticism. That’s why appeals to emotions work and is hard to catch. In my case it overwrote mine, like one circuit replace another, taking over my evaluation process. I suppose the remedy is to be disciplined, and to always ask first order questions.
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