WEBVTT - Rerun: Start Ups and Shut Downs 0:00:04.400 --> 0:00:07.760 Welcome to Tech Stuff, a production from my Heart Radio. 0:00:12.119 --> 0:00:14.440 Hey there, and welcome to tech Stuff. I'm your host, 0:00:14.560 --> 0:00:17.600 Jonathan Strickland. I'm an executive producer with I Heart Radio. 0:00:17.640 --> 0:00:20.240 And how the tech are you well, y'all. I had 0:00:20.360 --> 0:00:23.479 intended to do a totally new episode today. I was 0:00:23.680 --> 0:00:26.360 working on one. I've actually got a couple of different 0:00:26.360 --> 0:00:29.400 ones that are in the process of development, but some 0:00:29.560 --> 0:00:35.120 extenuating circumstances that I could not sidestep have have come 0:00:35.159 --> 0:00:37.720 in and it's going to delay me and I didn't 0:00:37.760 --> 0:00:40.520 want to go without an episode, so instead we're gonna 0:00:40.520 --> 0:00:43.400 bring you this episode that originally published in two thousand 0:00:43.400 --> 0:00:45.559 twenty one. I almost said last year, but that's not 0:00:45.560 --> 0:00:48.640 true anymore, is it. I kinda remember it now. Yeah, 0:00:48.680 --> 0:00:52.760 let's let's published January two thousand twenty one, and it's 0:00:52.760 --> 0:00:57.600 called Startups and shut Downs because just like me, I 0:00:57.640 --> 0:01:00.720 started up and then I had to shut down. But 0:01:01.440 --> 0:01:03.080 you know, such as the way of things. But we'll 0:01:03.120 --> 0:01:05.119 be back with new episodes for the rest of the week. 0:01:05.520 --> 0:01:09.360 Looks up for Friday, which is classic, and I apologize. 0:01:09.480 --> 0:01:11.720 Hope you're all doing well. Hope your new year is 0:01:11.760 --> 0:01:14.440 off to a great start. Mind's a little rocky, but 0:01:14.560 --> 0:01:17.679 we're gonna make it work, right. We're all in this together. 0:01:18.000 --> 0:01:19.920 I believe in you, I hope you believe in me, 0:01:20.319 --> 0:01:25.320 and I'll chat with you at the end. In a 0:01:25.400 --> 0:01:29.760 recent episode, I talked about funzy schemes and how you 0:01:29.800 --> 0:01:34.200 know that's an old scam that gets refreshed by enterprising 0:01:34.240 --> 0:01:39.600 con artists every so often, with recent examples centering on cryptocurrency, 0:01:40.120 --> 0:01:43.360 and that actually got me to thinking about startup culture 0:01:43.760 --> 0:01:47.600 and how some startups appear to be sincere, but maybe 0:01:47.680 --> 0:01:50.480 they're too ambitious to really work in the real world, 0:01:50.960 --> 0:01:53.720 and some seem like maybe they were just smoking mirrors 0:01:53.720 --> 0:01:56.840 the entire time. So today I thought we'd go through 0:01:57.120 --> 0:02:00.880 some of those types of startups and talk about the 0:02:00.920 --> 0:02:04.680 world of startups in technology and why it can be 0:02:04.760 --> 0:02:07.600 so risky to invest in them. Now. There are a 0:02:07.600 --> 0:02:11.360 lot of common elements among startups in general, not just 0:02:11.440 --> 0:02:14.320 in tech, and a lot of what we see frustrates 0:02:14.360 --> 0:02:17.520 me because you would think that by now people would 0:02:17.560 --> 0:02:20.799 learn their lesson when it comes to hype machines. Right, 0:02:21.200 --> 0:02:23.720 we should all be pretty familiar with the hype cycle, 0:02:24.280 --> 0:02:27.680 and you would think with familiarity we would be more 0:02:27.720 --> 0:02:30.720 resistant to it, and yet we're not, and I include myself, 0:02:30.720 --> 0:02:34.200 and that I get caught up in hype too, even 0:02:34.240 --> 0:02:37.640 as I recognize that there's a pattern here that just 0:02:37.680 --> 0:02:41.400 doesn't hold up. But I guess we have enough long 0:02:41.480 --> 0:02:45.120 shots that do pay off that keep people figuratively and 0:02:45.280 --> 0:02:50.800 literally invested. I mean, what if the next opportunity pays 0:02:50.840 --> 0:02:53.440 off and you didn't get in on the ground floor, 0:02:53.840 --> 0:02:56.760 you just missed a huge payout. So I guess I 0:02:56.800 --> 0:03:01.200 can understand the tendency, but it also enforces the general 0:03:01.240 --> 0:03:05.240 truth that humans as a rule are really bad at 0:03:05.320 --> 0:03:09.560 stuff like risk assessment and understanding the odds, which, hey, 0:03:09.639 --> 0:03:11.720 you really you just have to look at the fact 0:03:11.800 --> 0:03:14.600 that you know, lotteries are a thing to know that 0:03:14.600 --> 0:03:19.040 that is true. There's a general philosophy among startups that 0:03:19.320 --> 0:03:23.800 goes something like move quickly and break things, that taking 0:03:23.800 --> 0:03:27.200 big chances is encouraged because you know, while you're more 0:03:27.320 --> 0:03:31.480 likely going to fail, you'll learn a lot in the process, 0:03:31.520 --> 0:03:33.880 and that means you'll actually have a better chance at 0:03:33.880 --> 0:03:37.200 success next time. We learn a lot through failure, or 0:03:37.480 --> 0:03:40.720 you might find that quote unquote breaking what was previously 0:03:40.760 --> 0:03:43.960 considered to be a best practice leads to you finding 0:03:44.000 --> 0:03:47.320 an even better way to do things, but it can 0:03:47.400 --> 0:03:50.760 also create the perfect climate for someone to engage in 0:03:50.800 --> 0:03:53.640 a little snake oil peddling, because in a world where 0:03:53.680 --> 0:03:57.840 seemingly anything is possible, there's no such thing as impossible, 0:03:58.080 --> 0:03:59.840 and that means you can get money for stuff that 0:04:00.120 --> 0:04:03.800 just plane don't work. The current reigning champion of that 0:04:03.920 --> 0:04:08.880 model is Theopos, which I have covered extensively in the past, 0:04:08.960 --> 0:04:13.400 but for a quick overview, Elizabeth Holmes, Stanford dropout and 0:04:13.440 --> 0:04:16.520 a big fan of Silicon Valley leaders like Steve Jobs, 0:04:16.960 --> 0:04:19.440 set out to create a company centered on a new 0:04:19.520 --> 0:04:23.080 kind of blood analysis device, and the idea is alluring. 0:04:23.279 --> 0:04:26.239 Imagine a machine about the size of a desktop printer 0:04:26.760 --> 0:04:30.360 that could analyze the tiniest drop of blood and run 0:04:30.400 --> 0:04:34.000 more than a hundred fifty tests on that sample. The 0:04:34.080 --> 0:04:38.159 machine presents a comprehensive but easy to understand report on 0:04:38.279 --> 0:04:42.600 that sample and thus gives the administrator insight into the 0:04:42.640 --> 0:04:46.000 patient's current state of health and also pointing out any 0:04:46.040 --> 0:04:48.800 indicators that you know might suggest the patient should be 0:04:48.800 --> 0:04:53.040 on the lookout for future complications. It could help patients 0:04:53.080 --> 0:04:56.400 be more proactive and choose new lifestyle routines to live 0:04:56.440 --> 0:04:59.760 their healthiest lives. Heck, once the cost of making the 0:04:59.760 --> 0:05:03.599 divi ice is declined enough, it could potentially be something 0:05:03.640 --> 0:05:06.840 the average consumer purchases for their own home, and thus 0:05:06.880 --> 0:05:10.480 informing the average person about their own health before they 0:05:10.600 --> 0:05:13.560 go to say their annual check up, people would make 0:05:13.640 --> 0:05:16.680 more informed decisions about their health. They would be able 0:05:16.720 --> 0:05:20.040 to have better conversations with healthcare providers. It would really 0:05:20.480 --> 0:05:24.960 democratize healthcare. And that is a heck of a sales pitch, 0:05:25.279 --> 0:05:27.599 and from the business side, it's easy to see how 0:05:27.680 --> 0:05:31.080 it could be a freaking gold mine because the health 0:05:31.080 --> 0:05:36.880 care industry is already a multi trillion dollar market. Holmes 0:05:36.960 --> 0:05:40.119 was confident and she was convincing. And over the past 0:05:40.120 --> 0:05:42.919 two decades, we've seen technology do stuff that, you know, 0:05:43.080 --> 0:05:46.960 three decades ago would seem impossible. The Internet alone was 0:05:47.000 --> 0:05:49.640 a huge revelation, and now we can carry a device 0:05:49.640 --> 0:05:52.120 in our pockets that less access at wherever we are. 0:05:52.560 --> 0:05:55.800 So it's mundane today, it's it's commonplace, But thirty years 0:05:55.800 --> 0:05:59.159 ago it would have seemed bonkers. And so it's not 0:05:59.279 --> 0:06:02.919 really surprised zing that investors rushed in to get in 0:06:02.960 --> 0:06:06.279 on the ground floor of Holmes's enterprise, the return on 0:06:06.400 --> 0:06:09.680 investment would be unbelievable. It could be as if you 0:06:09.720 --> 0:06:12.400 were able to travel back to the mid nineties when 0:06:12.480 --> 0:06:15.960 Apple Stock was trading below five dollars a share, and 0:06:16.040 --> 0:06:18.280 you bought up a ton of it because you know 0:06:18.360 --> 0:06:20.320 how much it's going to grow in the future when 0:06:20.320 --> 0:06:24.400 Steve Jobs comes back. It helped that most investors had little, 0:06:24.640 --> 0:06:28.320 if any understanding about the technology involved in blood analysis. 0:06:29.040 --> 0:06:31.640 That's something that you'll remember is a red flag when 0:06:31.680 --> 0:06:35.080 it comes to stuff like Ponzi schemes. In this case, 0:06:35.279 --> 0:06:38.039 Fariness wasn't so much a Ponzi scheme as it was 0:06:38.080 --> 0:06:40.920 a company centered around an idea that was just not 0:06:41.120 --> 0:06:46.040 really realistic. More knowledgeable experts in the area of blood 0:06:46.040 --> 0:06:50.479 analysis had warned that Holmes's goal was unattainable, that the 0:06:50.520 --> 0:06:53.960 technology just, you know, it's not there to do something 0:06:54.000 --> 0:06:57.080 as comprehensive as what Holmes had in mind. But the 0:06:57.160 --> 0:07:01.560 investments just kept pouring in, and if it had just failed, 0:07:01.680 --> 0:07:04.680 the company had just ultimately had to say, you know what, 0:07:04.760 --> 0:07:07.839 we tried, it didn't work, We're sorry. Our story would 0:07:07.960 --> 0:07:09.800 really just be about how a lot of people got 0:07:09.800 --> 0:07:13.000 excited about an idea but the idea just didn't pan out. 0:07:13.320 --> 0:07:16.440 But of course it gets worse, and that's because over 0:07:16.440 --> 0:07:19.360 at Therapness there were a lot of shady things going on. 0:07:19.800 --> 0:07:23.400 There were teams legitimately trying to get the technology to work, 0:07:23.720 --> 0:07:26.000 but in the meantime, the company was playing a kind 0:07:26.040 --> 0:07:29.840 of a shell game with investors and v i p s. So, 0:07:30.160 --> 0:07:33.680 according to reports, when such a person came in for 0:07:33.800 --> 0:07:36.840 a tour of the facility, they would get their finger 0:07:36.920 --> 0:07:39.600 pricked and submit a tiny blood sample in this little 0:07:39.600 --> 0:07:42.880 bitty capsule and that would be fed into a THEONOS machine. 0:07:43.200 --> 0:07:45.400 But the analysis would take a couple of hours. So 0:07:45.440 --> 0:07:48.080 instead of just you know, waiting around, the v i 0:07:48.080 --> 0:07:50.880 p would go on a tour, maybe they'd grab lunch 0:07:50.960 --> 0:07:55.480 with THEORONESS executives or something. Meanwhile, other staff would rush 0:07:55.560 --> 0:07:59.720 in retrieve the blood sample from the THEONOS device diluted, 0:08:00.120 --> 0:08:03.440 and then submit that diluted sample to a traditional blood 0:08:03.440 --> 0:08:07.520 analysis machine that had been bought from an established company. 0:08:07.560 --> 0:08:10.480 In other words, they were relying on devices that were 0:08:10.560 --> 0:08:14.320 not built by Saronis to do the actual analysis. Then 0:08:14.400 --> 0:08:17.600 they would rush the completed analysis back to the meeting room, 0:08:18.040 --> 0:08:20.320 and then the team would behave as if the Tharonis 0:08:20.320 --> 0:08:23.360 device had done all the work the entire time. It 0:08:23.400 --> 0:08:26.960 was a particularly flashy version of the old Turk automaton 0:08:27.120 --> 0:08:29.920 chess player. You know, the thing you're looking at is 0:08:29.920 --> 0:08:34.320 not the actual thing that's doing the work. Sarais eventually 0:08:34.360 --> 0:08:37.640 crumbled after insiders began leaking what was going on to 0:08:37.720 --> 0:08:42.559 others and journalists began publishing expose s about the company. 0:08:42.720 --> 0:08:45.960 Holmes is one of the executives who happens to be 0:08:46.120 --> 0:08:49.800 waiting trial for multiple charges of fraud, and the name 0:08:49.920 --> 0:08:56.160 Sarah nos is forever associated with words like hoax and scam. Now, 0:08:56.200 --> 0:08:59.400 just to be clear, I don't know if it was 0:08:59.480 --> 0:09:02.520 a scam from the beginning. I suspect that. You know, 0:09:02.640 --> 0:09:05.960 in the very earliest days, Holmes was sincere in her 0:09:06.000 --> 0:09:09.040 belief that she can make this work, and her engineers 0:09:09.200 --> 0:09:12.080 certainly tried to get the technology to measure up to 0:09:12.120 --> 0:09:15.920 the vision. But somewhere along the way people started to 0:09:15.960 --> 0:09:18.840 fudge results or rely on alternative methods to make it 0:09:18.880 --> 0:09:21.840 seem like things were working way better than they really were, 0:09:22.280 --> 0:09:26.360 and once they went down that path, they were committed. Now, 0:09:26.559 --> 0:09:30.640 other companies are legit, but the people running them might 0:09:30.679 --> 0:09:34.839 not be, and that also is a big problem. So 0:09:34.880 --> 0:09:36.720 it seemed to be the case with a company that 0:09:36.760 --> 0:09:39.520 once upon a time was called Mozito, but for some 0:09:39.559 --> 0:09:43.640 reasons that will soon become a parent now calls itself definitive. 0:09:44.080 --> 0:09:48.079 So let's talk about what this company's purpose is beyond 0:09:48.360 --> 0:09:51.400 making its founder a whole lot of money. The original 0:09:51.480 --> 0:09:54.960 focus of Mozito was to do something pretty great. I 0:09:55.000 --> 0:09:58.080 think so many of us have used mobile devices to 0:09:58.320 --> 0:10:01.160 pay for stuff. You have some sort of digital wallet 0:10:01.280 --> 0:10:03.320 that's tied to either a credit card or a bank 0:10:03.320 --> 0:10:07.080 account or some other stash of cash. In a transaction, 0:10:07.240 --> 0:10:09.880 the mobile device interacts with the merchant's point of sale 0:10:10.280 --> 0:10:12.400 and the data zings back and forth, and soon the 0:10:12.440 --> 0:10:15.320 appropriate amount of money goes from your stash to the 0:10:15.360 --> 0:10:18.440 merchant stash, which is, you know, pretty simple idea. But 0:10:18.520 --> 0:10:22.679 there's an enormous population of people who don't have bank accounts. 0:10:23.120 --> 0:10:26.600 Mozito estimated that two and a half billion people have 0:10:26.800 --> 0:10:30.640 access to cellular technology, but they do not have an 0:10:30.640 --> 0:10:34.600 account with a bank or a credit union. So mobile payments, 0:10:34.640 --> 0:10:38.199 while incredibly useful, are not within the grasp of everyone. 0:10:38.640 --> 0:10:40.559 And so the company saw a space that it could 0:10:40.600 --> 0:10:44.319 potentially fill creating a technology that would allow people who 0:10:44.320 --> 0:10:48.760 are unbanked or underbanked to use mobile payments, which is 0:10:48.760 --> 0:10:51.800 a pretty noble goal giving people a lot more options 0:10:51.800 --> 0:10:55.240 when it comes to making transactions, and that attracted a 0:10:55.320 --> 0:10:58.800 lot of investors, and that brings us to the company's founder. 0:10:59.360 --> 0:11:02.560 So the found of Mozito was a guy named Michael Liberty, 0:11:02.679 --> 0:11:05.720 whose name is pretty fitting as we're gonna see. He 0:11:05.840 --> 0:11:09.400 first established the company in two thousand seven in Dallas, Texas. 0:11:09.880 --> 0:11:12.280 The fact that Mozito traces its history to two thousand 0:11:12.320 --> 0:11:15.640 seven is already pretty impressive because that's the same year 0:11:15.679 --> 0:11:18.280 that Apple launched the iPhone, So it was a pretty 0:11:18.440 --> 0:11:21.760 visionary move. Liberty was able to get a lot of 0:11:21.800 --> 0:11:25.080 investors for his company, raising money in multiple rounds of 0:11:25.120 --> 0:11:29.560 investment funding. The company relocated from Dallas to Austin, Texas 0:11:29.600 --> 0:11:32.960 in two thousand twelve, and by two thousand seventeen, Liberty 0:11:33.000 --> 0:11:36.800 himself would step down from the company and relocate to Florida. Essentially, 0:11:37.280 --> 0:11:40.400 he had grown the business. He was not leading it. 0:11:40.559 --> 0:11:42.319 He was he had founded it, but he had other 0:11:42.400 --> 0:11:45.839 executives in charge of running the thing, and he kind 0:11:45.840 --> 0:11:48.040 of said, all right, my work year is done, and 0:11:48.120 --> 0:11:52.440 stepped away and went to Florida. However, investigators with the 0:11:52.520 --> 0:11:57.120 Securities and Exchange Commission or SEC were interested in some 0:11:57.280 --> 0:11:59.560 of those investments that were supposed to be going to 0:11:59.640 --> 0:12:03.120 moz Do because the numbers didn't seem to add up, 0:12:03.400 --> 0:12:06.880 and the investigation indicated that Mr Liberty had taken the 0:12:07.000 --> 0:12:10.600 liberty of moving some of that cash around so that 0:12:10.600 --> 0:12:13.880 would ultimately fill his own pockets rather than go to 0:12:14.000 --> 0:12:17.200 funding the company. With most of the shenanigans taking place 0:12:17.240 --> 0:12:22.080 between and there were signs of the shell companies all 0:12:22.120 --> 0:12:25.160 designed to obvius skate where the money was going. There 0:12:25.320 --> 0:12:28.160 was a practice of money laundering, which is when you 0:12:28.280 --> 0:12:32.480 mix illegally obtained cash with cash from legitimate businesses in 0:12:32.480 --> 0:12:34.880 an effort to hide the fact that you've got filthy 0:12:34.960 --> 0:12:39.040 lucre on your hands. Ultimately, Liberty was charged with fraud, 0:12:39.440 --> 0:12:42.280 with prosecutors saying he had stolen more than fifty million 0:12:42.320 --> 0:12:46.719 dollars to fund his own millionaire lifestyle, complete with mansions 0:12:46.760 --> 0:12:49.960 and private jets. He also served a prison sentence for 0:12:50.040 --> 0:12:53.520 a different infraction. He pled guilty to charges that he 0:12:53.559 --> 0:12:56.640 had violated campaign finance law in two thousand and eleven 0:12:57.120 --> 0:12:58.959 and was sentenced to four months in prison and a 0:12:59.000 --> 0:13:02.680 fine for one thousand dollars in and there were other 0:13:02.800 --> 0:13:08.120 SEC investigations into his activities beyond the ones I just described. Now, 0:13:08.240 --> 0:13:13.400 the company Mozito wasn't included in these charges. It appeared 0:13:13.440 --> 0:13:17.040 as though everything at the company was pretty legit, but 0:13:17.120 --> 0:13:19.760 there was a lot of turnover in the executive suite 0:13:19.760 --> 0:13:23.439 of leadership, which probably didn't look too good to investors. 0:13:23.880 --> 0:13:28.120 In Scott Sandlin stepped down as the CEO, and for 0:13:28.200 --> 0:13:32.560 more than a year, Mike Love served as interim CEO, So, 0:13:32.600 --> 0:13:35.280 in other words, this company went for more than a 0:13:35.360 --> 0:13:38.559 year without a permanent CEO. In fact, it was thirteen 0:13:38.600 --> 0:13:41.320 months before the company had a new official CEO with 0:13:41.400 --> 0:13:45.600 Todd Bradley, but then Bradley quit in seventeen along with 0:13:45.720 --> 0:13:50.160 chief financial officer Scott Ellison. The Forbes reported that Mozito's 0:13:50.160 --> 0:13:53.760 website kept both of those men listed on their executive 0:13:53.840 --> 0:13:56.880 leadership websit page, you know, for a few months afterward, 0:13:57.520 --> 0:14:00.840 which seems more than a bit suss. So that probably 0:14:01.200 --> 0:14:03.880 didn't look too good from the outside, and that might 0:14:03.960 --> 0:14:07.320 explain why the leaders of Mozito decided to reincorporate and 0:14:07.400 --> 0:14:10.400 change the name of the company to definitive. You don't 0:14:10.480 --> 0:14:13.440 want to be another therapist after all. While the company 0:14:13.480 --> 0:14:15.400 may not be a scam, that doesn't mean it's a 0:14:15.480 --> 0:14:18.680 viable business either. There have been numerous articles written about 0:14:18.679 --> 0:14:22.000 how the company, throughout its history had found itself scrabbling 0:14:22.040 --> 0:14:27.000 to keep things going, mostly through additional rounds of investment. Now, personally, 0:14:27.320 --> 0:14:29.160 I hope that the company is able to get its 0:14:29.160 --> 0:14:31.480 feet on the ground because I think the service is 0:14:31.600 --> 0:14:34.440 valuable for all those populations who don't have access to 0:14:34.480 --> 0:14:38.280 bank accounts. It's just unfortunate that this appears to be 0:14:38.320 --> 0:14:41.480 a very difficult service that can be done profitably. When 0:14:41.520 --> 0:14:44.120 you think about it, it kind of makes sense. Most 0:14:44.160 --> 0:14:47.040 of the transactions you would imagine would be pretty small, 0:14:47.640 --> 0:14:51.200 and so any transaction fee you would take would be 0:14:51.440 --> 0:14:54.320 pennies on the dollar, so you would need a lot 0:14:54.600 --> 0:14:57.120 of them in order to make a profit. You would 0:14:57.120 --> 0:15:00.360 have to really be operating at our huge scale, and 0:15:00.440 --> 0:15:04.560 getting that huge scale is tough. As for Liberty, he 0:15:04.720 --> 0:15:07.680 was awaiting trial for those charges I mentioned when on 0:15:07.840 --> 0:15:11.640 January nineteen one, we learned that he was one of 0:15:11.640 --> 0:15:15.640 those lucky individuals to receive a presidential pardon from outgoing 0:15:15.720 --> 0:15:20.840 President Donald Trump. Interestingly, reporters have sometimes referred to Liberty 0:15:21.000 --> 0:15:24.880 as Trump but with a main accent. That's main as 0:15:24.880 --> 0:15:28.560 in the state in the northeastern United States. Now, it's 0:15:28.600 --> 0:15:32.480 possible we could put Mozito infinitive in the same general 0:15:32.520 --> 0:15:35.640 category as theories, in the sense that it may be 0:15:35.760 --> 0:15:39.920 that the actual central idea for the business could be untenable. 0:15:40.240 --> 0:15:43.560 Now I don't know if that's true. I'm no financial expert. 0:15:43.680 --> 0:15:46.320 Perhaps if you could get the operations up to scale, 0:15:46.360 --> 0:15:51.520 maybe it would all work fine. I don't know. I mean, granted, pennies, 0:15:51.720 --> 0:15:54.880 if you've got enough of them, do amount to dollars. 0:15:55.000 --> 0:15:58.760 So there is that. Well, we're gonna take a quick break, 0:15:59.040 --> 0:16:01.160 and when we come back, we'll talk about some more 0:16:01.200 --> 0:16:05.200 startups that have had big problems. But first let's take 0:16:05.240 --> 0:16:17.240 that break. Similar in some ways to the Mozito story 0:16:17.280 --> 0:16:19.640 we listened to just before the break is that of 0:16:19.760 --> 0:16:23.320 bow tie, which is actually spelled b O u x 0:16:23.400 --> 0:16:26.720 t i E. And just to be clear, this is 0:16:26.760 --> 0:16:31.160 not the current bow tie by that spelling, which based 0:16:31.160 --> 0:16:33.960 on what I'm looking at at my screen right now, 0:16:34.400 --> 0:16:37.200 that's some sort of company that sells TikTok views and 0:16:37.320 --> 0:16:40.880 video shares in order to artificially boost the performance of 0:16:40.880 --> 0:16:44.440 TikTok videos, which is just plain lame. It's straight up 0:16:44.480 --> 0:16:47.600 there with companies that used to sell Twitter Twitter followers, right, Like, 0:16:48.320 --> 0:16:50.480 that's something that's fallen out of favor over at Twitter 0:16:50.800 --> 0:16:54.120 because Twitter has done multiple cullings of bought accounts, so 0:16:54.960 --> 0:16:58.080 those have largely been white clear of the platform. But 0:16:58.400 --> 0:17:01.320 we're seeing that same sort of practice spread to platforms 0:17:01.360 --> 0:17:04.199 like TikTok. If you're an influencer and you're trying to 0:17:04.400 --> 0:17:11.000 sell your you know, big following to various sponsors, maybe 0:17:11.040 --> 0:17:15.199 you're engaging in some of these uh, unethical activities in 0:17:15.320 --> 0:17:17.960 order to convince those sponsors. Hey, a lot of people 0:17:18.000 --> 0:17:20.880 watch my stuff. But no, no, no, I'm talking about 0:17:20.960 --> 0:17:23.800 a different bow Tie It was a company founded by 0:17:23.840 --> 0:17:28.080 an entrepreneur named Renato Libric. The idea was to create 0:17:28.080 --> 0:17:32.720 a digital platform for gift cards and loyalty cards. Librics 0:17:32.800 --> 0:17:36.159 bow Tie company offered users the ability to purchase digital 0:17:36.200 --> 0:17:39.120 gift cards to all sorts of major merchants and then 0:17:39.160 --> 0:17:42.600 customize them with graphics and messages before sending them off 0:17:42.600 --> 0:17:45.480 to family and friends, So it was a neat way 0:17:45.800 --> 0:17:48.520 to create a sort of personalized experience, which I think 0:17:48.560 --> 0:17:51.000 helps take some of the stigma out of, you know, 0:17:51.040 --> 0:17:55.040 the whole gift card thing. And being digital, it should 0:17:55.080 --> 0:17:59.080 be relatively easy to redeem those gift cards with online accounts, 0:17:59.280 --> 0:18:02.120 making it less likely that they would go unused. I mean, 0:18:02.200 --> 0:18:05.719 just a year ago, c NBC reported that Americans possessed 0:18:05.760 --> 0:18:09.280 more than twenty one billion with a b dollars worth 0:18:09.320 --> 0:18:12.560 of unused gift cards in store credit. By the way, 0:18:12.640 --> 0:18:15.440 that's kind of why merchants love gift cards. There's a 0:18:15.440 --> 0:18:17.760 good chance they'll never have to redeem them, and the 0:18:17.800 --> 0:18:22.159 profit margin is ridiculous. Now, with bow Tie, it doesn't 0:18:22.160 --> 0:18:25.200 sound like Librick was trying to funnel cash to himself, 0:18:25.480 --> 0:18:28.879 which sets him apart from folks like Michael Liberty. But 0:18:28.960 --> 0:18:32.840 he did forge signatures and produce false documents to make 0:18:32.880 --> 0:18:35.880 it seem as though bow Tie was worth far more 0:18:36.040 --> 0:18:38.720 than its true value in an effort to convince more 0:18:38.720 --> 0:18:42.560 investors to pour money into the venture. So in that respect, 0:18:42.920 --> 0:18:45.639 I guess that bow Tie is kind of similar to 0:18:45.680 --> 0:18:48.320 the bow tie of today. So the bow tie of 0:18:48.400 --> 0:18:52.199 today is all about inflating TikTok numbers, and libric was 0:18:52.240 --> 0:18:55.719 all about inflating the apparent value of bow tie. So 0:18:56.400 --> 0:18:59.560 there's more going on there than I originally thought. Well, 0:18:59.560 --> 0:19:01.919 perhaps a Brick was just desperately trying to get some 0:19:02.000 --> 0:19:06.120 momentum going with the hope that once things were really moving, 0:19:06.280 --> 0:19:08.399 he'd be able to stick to the straight and narrow. 0:19:09.040 --> 0:19:12.240 But he was caught out. Towards the end of ten 0:19:12.400 --> 0:19:15.119 Librick was found guilty of wire fraud and sentenced to 0:19:15.200 --> 0:19:17.880 thirty six months in prison in order to pay out 0:19:17.880 --> 0:19:20.560 more than one and a half million dollars in restitution. 0:19:21.200 --> 0:19:23.320 Based on what I've read, I would say that this 0:19:23.400 --> 0:19:26.160 is another case where someone had an idea that sounded 0:19:26.200 --> 0:19:29.360 pretty good, proved to be harder to pull off profitably 0:19:29.520 --> 0:19:32.640 than was first anticipated, found it difficult to get enough 0:19:32.680 --> 0:19:36.320 investments to stay afloat, and then resorted to illegal means 0:19:36.359 --> 0:19:39.720 to cover the bills. Now, one person whose name has 0:19:39.800 --> 0:19:43.240 to come up when you're talking about grandiose startup ideas 0:19:43.480 --> 0:19:47.000 is Elon Musk. One of the numerous ideas Musku has 0:19:47.119 --> 0:19:50.399 championed is that of the hyper loop. So, in short, 0:19:50.440 --> 0:19:53.400 a hyper loop system, at least on the original design, 0:19:53.800 --> 0:19:58.240 would involve trains traveling inside tubes, and inside those tubes 0:19:58.240 --> 0:20:00.560 you would pump out most of the air to be 0:20:00.680 --> 0:20:03.960 very low air pressure, almost a vacuum, and that cuts 0:20:04.000 --> 0:20:07.800 way down on wind resistance. In addition, the trains would 0:20:07.800 --> 0:20:11.520 not travel with wheels on a track. Instead, they would 0:20:11.520 --> 0:20:15.160 travel atop air bearings. Essentially, a cushion of air would 0:20:15.200 --> 0:20:18.840 keep the trains afloat above the inner surface of the tunnel. 0:20:19.240 --> 0:20:23.480 Electro Magnets would provide the propulsion to accelerate and decelerate 0:20:23.520 --> 0:20:26.960 the trains, which, with such reduced friction, would be able 0:20:27.000 --> 0:20:30.320 to travel at incredible speeds like essentially the speeds that 0:20:30.359 --> 0:20:34.240 you would see aircraft travel. One startup that formed after 0:20:34.359 --> 0:20:40.119 Musk's proposal was Hyperloop Technologies, founded by Shervin Pishavar and 0:20:40.320 --> 0:20:44.800 former SpaceX engineer Brogan Bam Brogan. The story of that 0:20:44.880 --> 0:20:47.439 company is way too long for this episode, and it 0:20:47.520 --> 0:20:53.320 involves tons of scandals and also mergers and name changes 0:20:53.400 --> 0:20:57.000 and some seriously ugly in fighting, and Pischavar would step 0:20:57.040 --> 0:20:59.879 down in the wake of sexual harassment charges, which he 0:21:00.080 --> 0:21:03.640 maintains was all a smear campaign. The company is still 0:21:03.680 --> 0:21:06.399 around today. In fact, it's the one that conducted a 0:21:06.440 --> 0:21:09.840 successful test with people aboard a hyperloop capsule back in 0:21:09.880 --> 0:21:13.080 November of twenty but the company would change its name 0:21:13.080 --> 0:21:17.440 from Hyperloop Technologies to Hyperloop One, to Virgin hyper Loop one, 0:21:17.840 --> 0:21:21.240 and now it's just Virgin Hyperloop. Anyway, the company I 0:21:21.280 --> 0:21:24.159 wanted to cover is the one that Brogan bam Brogan 0:21:24.200 --> 0:21:28.720 would found after leaving Hyperloop one. So bam Brogan and 0:21:28.760 --> 0:21:31.320 a couple of other executives all left hyper Loop one 0:21:31.359 --> 0:21:34.200 at the same time and filed a lawsuit against their 0:21:34.200 --> 0:21:38.080 former employer. They alleged that the company had violated numerous 0:21:38.119 --> 0:21:45.160 agreements and abandoned its fiduciary responsibilities, and worse, they alleged 0:21:45.280 --> 0:21:49.200 abuse and threats, and the company would file a countersuit 0:21:49.440 --> 0:21:53.159 against those former executives, alleging that they had attempted to 0:21:53.240 --> 0:21:56.160 rest control of the company away from the leadership team 0:21:56.400 --> 0:21:59.439 and the board of directors, essentially that they were planning 0:21:59.440 --> 0:22:02.760 a coup. Both parties would settle their lawsuits out of 0:22:02.800 --> 0:22:06.720 court in sixteen, and bam Brogan then founded a competing 0:22:06.800 --> 0:22:10.720 hyper loop company called Arrival. He and a couple of 0:22:10.760 --> 0:22:14.879 other colleagues formed Arrival in two thousand seventeen. One co 0:22:15.040 --> 0:22:19.720 founder Andrew Leeu had previously worked with a construction company 0:22:19.800 --> 0:22:23.199 called a Calm a e c o M. Another co 0:22:23.359 --> 0:22:26.960 founder was Jaden Smith, who, like Bam Brogan, had previously 0:22:27.000 --> 0:22:31.920 worked with SpaceX. He had also previously worked with the CIA. Now, 0:22:31.960 --> 0:22:35.240 the hyper loop design is an interesting and innovative one, 0:22:35.600 --> 0:22:38.879 but it also will require a ton of money to 0:22:38.960 --> 0:22:42.000 make it a reality. Musk was first talking about the 0:22:42.000 --> 0:22:45.640 idea way back in and we're still in the experimental 0:22:45.640 --> 0:22:49.760 and testing stages in one and that's just get to 0:22:49.800 --> 0:22:52.560 a point where we're confident that the technology is a 0:22:52.640 --> 0:22:55.880 viable one for the purposes of transporting people and cargo 0:22:56.080 --> 0:22:59.840 quickly and safely. After that, you've got the daunting to 0:23:00.000 --> 0:23:02.960 ask of actually securing the legal rights to build out 0:23:03.040 --> 0:23:07.879 routes between different destinations. That includes everything from securing permission 0:23:07.920 --> 0:23:12.600 from various local governments and environmental agencies, to the actual 0:23:12.640 --> 0:23:18.640 construction and more. It's time consuming and really expensive. Perhaps 0:23:18.640 --> 0:23:21.760 for that reason, Arrival dumped the idea of going the 0:23:21.840 --> 0:23:25.240 hyperloop throughout entirely, so instead it would go with a 0:23:25.280 --> 0:23:30.280 more established technology, that of magnetic levitation. Maglev trains have 0:23:30.320 --> 0:23:33.520 been around for a while. The technology is well understood, 0:23:33.560 --> 0:23:37.440 it's proven to work. We use it today. And essentially 0:23:37.600 --> 0:23:41.280 you've got magnets of similar polarity in the tracks and 0:23:41.440 --> 0:23:45.240 under the trains, and since similar polarities repel one another, 0:23:45.640 --> 0:23:48.160 like when you try to push the north pole of 0:23:48.200 --> 0:23:52.560