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Great point, andreessen did support her but never invested money. Regardless, it's strange to raise 100s of millions without a working prototype for a single valuable feature for a firm that existed for close to a decade.
Wework, broadcast.com, ftx are some high profile blow ups but mostly VCs don't invest like dumbasses. Even if I were to believe that openai or something has obvious shady ties and origins and or founders of their backstories etc, they still made a ton of money. Not alleging that but I mean to say that even in such conditions, most people make money at least via valuations or exits and that most founders aren't scheming people, just that the probability of top top dogs doing this stuff seems high to me.
Oh, I’m sure the backstage can be pretty grim, I’ve heard bad things about VCs.
They had a prototype that seemed to work (with faked results) and legitimately did work for a few tests. Holmes’ genius was getting stuffy septuagenarians into such a bidding war that they overruled their own analysts who said the prototypes were insufficient and urged caution.
Were there shenanigans behind that? I don’t know. Possibly. But I think it would have come up in the investigation along with all the other criminal stuff that was going on. Did you read Bad Blood? It’s a fantastic book.
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I think it's worth pointing out that the companies you named aren't exactly comparable. Taking them one by one:
Theranos was a fraudulent company that made an ineffective product, lied about its effectiveness, faked demonstrations and test results, and not only parlayed that into a ton of VC funding. The weird thing about it is that they nonetheless plowed forward by entering into contracts with large retailers that they couldn't possibly deliver on, and the whole operation was soon revealed as a sham.
FTX was a legitimate investment firm that fraudulently mishandled client funds. Years ago, my grandparents were victims of a similar fraud when their investment manager was telling them he was investing their money in the market but was really using it to make loans to his son's woodworking business. When the woodworking business couldn't cover the loans, he didn't have the money for investors withdrawing funds, eventually someone called the DA's office, and the guy was convicted and died in prison. This guy was a legitimate locally trusted investment manager that normal people used, not some obvious fraudster. When rumors started circulating that he was crooked, a lot of people, including my parents, pulled their money out, but my grandparents had been investing with him for years and said they trusted the guy.
WeWork was a legitimate company that was able to hype itself into a valuation so high it defied common sense. It was effectively a commercial real estate company that marketed itself as a tech company. The estimated valuation was so high leading up to the IPO that investors realized there was no real room for growth, not to mention that they were losing more money than could be reasonably explained. There were some questionable valuation processes (e.g. counting every desk job in a city where they were operating as a potential customer rather than a more reasoned analysis of the market for ad hoc office space), but none of this was exactly secret.
Broadcast.com was a successful company that Yahoo ran into the ground after acquiring it for a lot of money. I don't even know why it's included here because it was well past the VC stage at the time of purchase and it's just another failed acquisition.
So of the four companies, Theranos was the only one that engaged in fraud to attract VC money. FTX engaged in fraud to prop up another business. WeWork used non-fruadulent puffery to attract investment, and Broadcast was badly managed by a corporate giant.
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