Here’s an insightful interview with John Carreyrou, the reporter who thoroughly investigated – and ultimately laid bare – the massive scandal at healthcare lab testing startup Theranos.
Carreyrou, whose book on the scandal was just published (and is being adapted into a major motion picture), brought up the possibility of fraudulent startup activity as an indirect consequence of central backing activity:
Should we be surprised that Theranos happened, or surprised that it doesn’t happen more?
I don’t think we should be surprised given what’s gone on in Silicon Valley in the past 10 years with this gigantic flow of money into the Valley in large part triggered by the fact that the Fed kept interest rates so low and investors looked for new places to get returns. With that amount of money flowing in and founders being able to pick and choose who funds them and to turn down investors who do too much due diligence, you have the ingredients for excess and for wrongdoing.