Speaker 1: I'm Bethany McLean. This is making a killing in this show.
Speaker 1: I cut through the hype and handwringing to reframe the
Speaker 1: stories you thought you understood and uncover the ones you
Speaker 1: didn't know were important. Ever since the days of Enron,
Speaker 1: I've been fascinated by this question what separates a visionary
Speaker 1: entrepreneur from a fraudster. Being a visionary requires being able
Speaker 1: to tune out other people's doubts, to say you're right
Speaker 1: and everyone else is wrong. To persist through impossible difficulties
Speaker 1: because you believe your goal is grand and worthy, even
Speaker 1: a noble pursuit. It might even require lying to nonbelievers,
Speaker 1: at least at times. I used to think that the
Speaker 1: characters at the heart of white collar fraud or stories
Speaker 1: of business gone wrong were different. I thought that if
Speaker 1: you did bad things, then it was because you knowingly
Speaker 1: set out to do what you knew were bad things.
Speaker 1: But Enron made me realize that that's not always the case.
Speaker 1: In covering these stories over the last decade or so,
Speaker 1: I've seen this time and time again. These stories are
Speaker 1: a mixture of self delusion, rationalization, ego, and yes, often
Speaker 1: some greed, venality and even corruption, But the mixture is
Speaker 1: the key, and the fraud start, just like the visionary
Speaker 1: usually justifies it all in the name of a noble pursuit.
Speaker 1: Think about Enron. This isn't the story of a company
Speaker 1: that's set out to defraud investors. Rather, CEO Jeff Skelling
Speaker 1: tried to hide the company's weaknesses because both his ego
Speaker 1: and the company survival needed a high stock price, but
Speaker 1: also because he believed eventually could make it all work
Speaker 1: and he might have a business called Enron Broadband was
Speaker 1: really just Netflix ahead of its time. This is true
Speaker 1: in so many cases. A business leader thinks, if he
Speaker 1: or she can just get through this bad quarter and
Speaker 1: not lose investors by telling the truth, it'll all work
Speaker 1: out in the end, And of course that end justifies
Speaker 1: the means, which brings us to Elizabeth Holmes and Tharonos.
Speaker 1: Holmes was supposed to be a visionary. She wanted to
Speaker 1: disrupt reinvent the blood test. She bragged that her company
Speaker 1: was developing a method for running hundreds of lab tests
Speaker 1: from a single drop of blood, employing a machine called
Speaker 1: the Edison that used all sorts of trade secrets to
Speaker 1: run the tests. Should say repeatedly that Tharonos's goal was
Speaker 1: basically a religious calling and that she had one existential purpose.
Speaker 1: But when Thoroness failed to develop a machine that could
Speaker 1: do what she had claimed it could do, the company
Speaker 1: literally hid that fact, performing tests in what was essentially
Speaker 1: a secret lab. Even the biggest cynics don't think she
Speaker 1: set out to commit fraud. So here's my question, when
Speaker 1: did the visionary become the fraudster? At what point, if ever,
Speaker 1: did Elizabeth Holmes admit to herself that she was deceiving
Speaker 1: not only investors but patients about the quality of their
Speaker 1: all important blood work. I'm thrilled to be here now
Speaker 1: with filmmaker Alex Gibney, who I first met around fifteen
Speaker 1: years ago when he decided to make a documentary out
Speaker 1: of the book i'd co authored on Enron. That documentary,
Speaker 1: The Smartest Guise in the Room, was nominated for an
Speaker 1: Academy Award in two thousand and six. We lost to
Speaker 1: the March of the Penguins, a fact that I have
Speaker 1: still not gotten over anyway, Alex has done a ton
Speaker 1: of other films in the intervening years, from Lance Armstrong
Speaker 1: to the Dirty Money series he did for Netflix, all
Speaker 1: of which in some ways address this question of the
Speaker 1: line between the visionary and the fraudster. Of course, none
Speaker 1: more so than his recent film about Holmes, which is
Speaker 1: called The Inventor Out for Blood in Silicon Valley, Elizabeth
Speaker 1: Holmes famously named her machine the Edison, and in the
Speaker 1: movie you make the decision to prominently feature Edison. Let's
Speaker 1: start with the parallels between Elizabeth Holmes and Thomas Edison.
Speaker 1: He was the first sort of self styled business superstar,
Speaker 1: that is to say, businessman as celebrity, and that ended
Speaker 1: up being very useful to him in terms of expanding
Speaker 1: his empire and also getting capital because people were not
Speaker 1: investing in a machine, they were investing in him, and
Speaker 1: so that idea of investing in a person kind of
Speaker 1: starts with Edison really in terms of the whole business paradigm.
Speaker 1: And there's one other element too, which is that Edison
Speaker 1: had a vision of where he wanted to get to,
Speaker 1: but along the way he cut a lot of corners
Speaker 1: and he was pretty deceptive. We can get into the specifics,
Speaker 1: but he lied to people, let's just be honest. He
Speaker 1: lied to people about where he was at figuring it
Speaker 1: all work out in the end when he finally got there.
Speaker 1: He was the original fake it team, make it guy,
Speaker 1: and he did make it. It did work out for him,
Speaker 1: it did. I mean, particularly with the incandescent light bulb,
Speaker 1: and obviously with a record player and many other inventions
Speaker 1: weren't necessarily but he took full credit for Now we
Speaker 1: think of him as like, Wow, how could have invented
Speaker 1: all those things? He didn't. I neither did Elizabeth. But
Speaker 1: he was the paradigm setter in terms of all of that.
Speaker 1: So not only in taking credit for ideas that weren't
Speaker 1: necessarily his, but also in pretending that things were working
Speaker 1: when they hadn't quite clicked yet in reality, that's absolutely right.
Speaker 1: So there's been some criticism of your Tharonis movie because
Speaker 1: people say you were soft on Elizabeth because you didn't
Speaker 1: call it out an out premeditated fraud. But it was
Speaker 1: interesting Tyler Schultz, the famed whistleblower in this story, he said,
Speaker 1: does she realize she's lying? I don't know. And you've
Speaker 1: said that people who are good at telling a fraudulent
Speaker 1: story are good because they believe it's true. So what's
Speaker 1: the line with Elizabeth? Do you think it's the simplest
Speaker 1: premeditated fraud. No, I don't. But where I find it
Speaker 1: a little odd in terms of the criticism is that
Speaker 1: I think that the fact that she didn't know that
Speaker 1: she was crossing lines is not an excuse. Really, it's
Speaker 1: actually more bad news than good news. I think it's
Speaker 1: worse than if she had been a kind of Bernie
Speaker 1: made Off like character because she was able to lie
Speaker 1: more effectively because she really believed in her mission, and
Speaker 1: that is the scarier thing here. So her belief was
Speaker 1: an explanation but not an excuse. Correct. Does that go
Speaker 1: back to Edison too in a way? I think so.
Speaker 1: I mean I think that Edison believed he was going
Speaker 1: to get there, So what difference did it make if
Speaker 1: he lied along the way. And when I say he lied,
Speaker 1: I mean in the case of the light bulb, he
Speaker 1: faked demonstrations. The lightbulb wouldn't stay on as long as
Speaker 1: he needed it to. The filaments were melting, so he
Speaker 1: faked these demonstrations for people, you know, always shut the
Speaker 1: light off just before it blew up in his face.
Speaker 1: And also he would give reporters stock in his company,
Speaker 1: you know, as if that wasn't enough of an incentive
Speaker 1: in order to get them to write good and glowing
Speaker 1: stories about him. So ultimately he got there, but along
Speaker 1: the way he was he was dishonest. So there's Elizabeth
Speaker 1: Holmes giving the famous lawyer David Boys stock in her company,
Speaker 1: and there's Elizabeth Holmes and thereinos with the room called
Speaker 1: Jurassic Park where they ran the laboratory, the secret room
Speaker 1: where they ran the laboratory tests on old machines because
Speaker 1: they're much hype new machines weren't working yet. So what's
Speaker 1: the difference between her and Thomas Edison? Is it just
Speaker 1: luck at the end of the day that he was
Speaker 1: able to make it after faking it and she didn't.
Speaker 1: Part of it is that, in other words, you could
Speaker 1: say that if she was working on a new kind
Speaker 1: of light bulb, maybe that would be more similar to Edison.
Speaker 1: I think the really problematic part of Elizabeth Holmes is
Speaker 1: that she was working in the area of medical science
Speaker 1: and she was developing lab tests that we're going to
Speaker 1: be used on real people. In fact, we're used on
Speaker 1: real people, and yet the data was notoriously bad, and
Speaker 1: so she had a double problem. On the one hand,
Speaker 1: she was defrauding investors, albeit not the she was defrauding
Speaker 1: patients and that was a bridge too far. Another was
Speaker 1: if she had spent her whole time using investor money
Speaker 1: just to keep practicing and keep devising new prototypes and
Speaker 1: never went to market, I think the judgment on her
Speaker 1: would be far more kind. So maybe the lesson here
Speaker 1: is if you're going to be a visionary, do it
Speaker 1: in a field that doesn't affect people's lives, so that
Speaker 1: if you if you so that if you do have
Speaker 1: to fake it for a while. Maybe that's where the
Speaker 1: line is, right, it's in the field you choose, not
Speaker 1: so much in the personality type. Yeah, I think so.
Speaker 1: Steve Jobs lied. He was a notorious liar in some ways,
Speaker 1: and actually there are a lot of real similarities with
Speaker 1: him and Elizabeth Holmes too. They were both great storytellers,
Speaker 1: and I think Edison also shared that their ability to
Speaker 1: tell a compelling tale about their business was terribly important.
Speaker 1: And does that start with the person themselves? You've described
Speaker 1: it less that she wanted to be a paradigm shifter.
Speaker 1: Does that visionary characteristics start with how you define yourself
Speaker 1: and then lead into how you tell the stories about yourself. Yes,
Speaker 1: it's like you set yourself a goalpost way out here,
Speaker 1: not just for your company, but for yourself. This is
Speaker 1: who I want to be. And Elizabeth wanted to be
Speaker 1: known as a hugely successful and wealthy business person and
Speaker 1: also as an inventor. Both those things were terribly important.
Speaker 1: But because her dad had some experience with NGOs in
Speaker 1: addition to a brief career at Enron, she also wanted
Speaker 1: to do good or to be seen as doing good,
Speaker 1: So all those things were very important to her. So
Speaker 1: I think that was who she imagined herself to be.
Speaker 1: And if things along the way contradicted that, so long
Speaker 1: as she fixed her gaze on the dream rather than
Speaker 1: the more grubby reality, everything was fine. Isn't that interesting
Speaker 1: because both the visionary and the fraud star, in that
Speaker 1: way of thinking about it, half to st it off
Speaker 1: with this larger than life sort of vision of themselves, right,
Speaker 1: which isn't a sense of fraud until you've proven it.
Speaker 1: But the visionary manages to get there and the fraud
Speaker 1: stare fails along the way. That's right. And as Danna Really,
Speaker 1: the behavioral economist, says in the film, we wouldn't want
Speaker 1: to live in a world where people didn't overpromise. Right.
Speaker 1: I've thought about that a lot, and even for those
Speaker 1: of us on the other side of it, that being
Speaker 1: reflexively cynical is actually as bad as blind belief, right,
Speaker 1: And you need romantics on both sides. You need the
Speaker 1: romantics are who want to be visionaries, and you need
Speaker 1: the romantics who are willing to believe in them, because
Speaker 1: sometimes you imagine a possibility and you don't quite know
Speaker 1: how you're going to get there when you imagine that possibility,
Speaker 1: but you're determined to get there and convinced that you can.
Speaker 1: My stepfather, who was a minister, used to say, I
Speaker 1: love the recklessness of faith. First you drump and then
Speaker 1: you grow wings. That is wonderful. So I want to
Speaker 1: try to explore this idea of when it might be
Speaker 1: that Elizabeth crossed the line and in her own mind
Speaker 1: by which did her belief in herself ever, ever, ever fall?
Speaker 1: And so you start off with this original idea that
Speaker 1: getting poked with a needle was just so horrible that
Speaker 1: it required a hold new machine where you wouldn't have
Speaker 1: to do that. She believed in that, right, for sure,
Speaker 1: I think she did. I mean, but I think that's
Speaker 1: kind of like projecting her own fears on everybody else.
Speaker 1: But I do think that she really did have a
Speaker 1: fear of needles, and she thought, Okay, if I have it,
Speaker 1: a lot of people do, and this will be part
Speaker 1: of my mission. And she definitely believed initially. But then
Speaker 1: you think about some of the specifics and the Farnos story,
Speaker 1: as we touched upon earlier, this idea that there was
Speaker 1: this room called Jurassic Park where the real testing was
Speaker 1: going on because the new machines. The edisons werenaurs right
Speaker 1: testing on the dinosaurs because the new machines weren't working,
Speaker 1: so they had to do these tests manually. And there
Speaker 1: was this, you know, Tyler Saltz's famous great quote about
Speaker 1: the tiled world and the carpeted world. In the carpeted
Speaker 1: world where executives were and then the tiled world where
Speaker 1: all the messy reality was happening. Can you have those
Speaker 1: juxtapositions and be Elizabeth and still not know that you're lying?
Speaker 1: I think what must happen is that you're able to
Speaker 1: lie to yourself in the moment, even though if you
Speaker 1: were to sit down late at night, you would know
Speaker 1: and recognize that what you had done is just told
Speaker 1: a lie, but you convince yourself that it's okay because
Speaker 1: you're doing it for a good cause. But in the moment,
Speaker 1: you have to believe that you're not telling a lie,
Speaker 1: because otherwise you can't be an effective liar. I mean,
Speaker 1: that's where the really strange experiment that dan Arielli does
Speaker 1: comes into play, because he does this experiment with the dice,
Speaker 1: and the idea being that people bet on the roll
Speaker 1: of the dice, and they're allowed to hold back a
Speaker 1: certain amount of information so that they roll the dice
Speaker 1: and they get paid. If it's a one, they get
Speaker 1: one dollar six dollars. But they're told you can bet
Speaker 1: or get paid on either the bottom or the top,
Speaker 1: but don't tell me. I don't tell the experiment or
Speaker 1: which one it is, so that's a secret, right, and
Speaker 1: then they just write it down. Well, over time, statistically
Speaker 1: it comes out that when the people report their results,
Speaker 1: they're cheating. And when they put them on a light
Speaker 1: detector test and they're getting the money, they almost always
Speaker 1: fail the light detector tests. But here's the most interesting part.
Speaker 1: When they do it for a charity i e. A
Speaker 1: higher purpose, they not only cheat more. See that's where
Speaker 1: the bad news comes in, but even more bad news.
Speaker 1: The light detector can't detect the lie, so they must
Speaker 1: believe that it's okay for them to lie, and therefore
Speaker 1: convince themselves in the moment that they're not lying, even
Speaker 1: though strictly speaking, they know that they are. So the
Speaker 1: human capacity for rationalization and self delusion is almost endless,
Speaker 1: and it really is endless if the human being also
Speaker 1: believes in that their goal is this noble pursuit. Yeah,
Speaker 1: I think that's true. And I think also if you
Speaker 1: believe that you are right in some fundamental way, then
Speaker 1: no amount of facts are going to get in your way.
Speaker 1: I mean, you know better than I. On the Enron story,
Speaker 1: you know, I used to imagine, like, what was it
Speaker 1: the Jeff Skilling thought in the middle of the night
Speaker 1: when they were so hopelessly in debt there was no
Speaker 1: way they were ever going to get out of it.
Speaker 1: But I think he rationalized that, like a ball team
Speaker 1: down by twenty runs in the bottom of the ninth,
Speaker 1: it was theoretically possible they could score twenty one runs
Speaker 1: in the bottom of the ninth and win. Right. What
Speaker 1: I find so fascinating about this is that if you're
Speaker 1: trying to figure out a roadmap for detecting the difference
Speaker 1: between the visionary and the fraudster. This is leading us
Speaker 1: in a direction that says, actually they're even more alike
Speaker 1: than that you'd think, because this idea of having this
Speaker 1: big world changing goal is what you want a visionary
Speaker 1: to have, but it's also the hallmark of the fraudster
Speaker 1: who can get other people to believe. So instead of differentiation,
Speaker 1: they're sounding more and more similar to me and think
Speaker 1: they're very similar. And I think that it's really the
Speaker 1: whole idea of the end justifies the means, which is
Speaker 1: not only their own rationalization, but also what we forgive
Speaker 1: as as a society or don't forgive, depending on whether
Speaker 1: they get to the end zone. So John carry Row,
Speaker 1: who collaborated with you on the film and obviously wrote
Speaker 1: the great book Bad Blood, argues that there was this
Speaker 1: moment of knowing fraud when Paranus rolls out these blood
Speaker 1: tests through Walgreens and suddenly then this is live and
Speaker 1: people's health as at stake. Do you think that that's
Speaker 1: a moment of knowing fraud or do you think even
Speaker 1: then she could have still been deceiving herself. I think
Speaker 1: she was deceiving herself. But I also think she knew
Speaker 1: that they were administering bad tests. She had heard it
Speaker 1: from enough people that if she wasn't checking, then there's
Speaker 1: something so much criminal negligence, right, or willful blindness. I
Speaker 1: think she probably practiced willful blindness. But at the end
Speaker 1: of the day, you know, the responsible thing would have
Speaker 1: been to have said, Okay, well let's shut down then, right,
Speaker 1: But you couldn't shut down because she needed Walgreens on
Speaker 1: board in order to get more investment in order to
Speaker 1: keep the company alive. So she rationalized the behavior. But
Speaker 1: she certainly knew that the tests were no good. But
Speaker 1: even in the face of that knowledge, can you still
Speaker 1: have not knowledge too? In other words, can you know
Speaker 1: but still convince yourself somehow it's it's okay, I'm just guessing.
Speaker 1: But based on what I know in terms of the
Speaker 1: experience of the subjects I've treated and also some of
Speaker 1: the scientists I've spoken to, I would say, yes, you
Speaker 1: can both know that you're lying and also deceive yourself
Speaker 1: that actually you're not. One of the things I thought
Speaker 1: about when I was doing this was the example of
Speaker 1: Lance Armstrong. Yes, and Lance Armstrong from a practical perspective,
Speaker 1: would tell you, and certainly did tell his cohorts and
Speaker 1: ultimately told me that yes, he doped, but it was
Speaker 1: terribly important to cancer survivors that he say things like,
Speaker 1: how dare you say that I's a cancer survivor would
Speaker 1: ever use performance enhancing drugs. But he would say that
Speaker 1: with a great deal of conviction, as if he wasn't
Speaker 1: lying because he was telling them something so important that
Speaker 1: was helping him to raise lots of money to cater
Speaker 1: to their concerns, that it was okay, even though he
Speaker 1: would get down off whatever kind of pr platform he
Speaker 1: was speaking on at that time and maybe go do
Speaker 1: a bag of blood. So again, it was the noble
Speaker 1: pursuit he wasn't He was able to say to himself
Speaker 1: he wasn't doping on behalf of himself and his own performance.
Speaker 1: He was doping or not telling the truth about doping
Speaker 1: in order to do this greater good. In the case
Speaker 1: of Lance Armstrong, I think he figured, look, being a realist,
Speaker 1: if I want to win, I'm going to have to
Speaker 1: dope because everybody else is doping. But I can't just
Speaker 1: say I'm doping because then I won't win. And it's
Speaker 1: really important to all these cancer survivors that I win
Speaker 1: because it gives them hope and the way I'm raising
Speaker 1: hundreds of millions of dollars for them, So isn't that
Speaker 1: more important? What do you think about the role of
Speaker 1: charisma and all of this, because when we think about
Speaker 1: Elizabeth Holmes or Jeff Scaling or Lance Armstrong, all extraordinarily
Speaker 1: charismatic people, what role do you think that plays a
Speaker 1: play a role in convincing others? Do they also turn
Speaker 1: their charisma on themselves? Well? I think so, and I
Speaker 1: think they end up believing their own bullshit. That's a
Speaker 1: critical component. But this goes back to the whole storyteller idea.
Speaker 1: I think part of being charismatic is putting yourself at
Speaker 1: the center, just like Edison did, of a drama in
Speaker 1: which you are the main character, and telling that story
Speaker 1: in a compelling way is what gives you that charisma
Speaker 1: so that people want to follow you. You know, if
Speaker 1: you put lines of code on a piece of paper,
Speaker 1: you know you can believe that some people are going
Speaker 1: to sign up for that, but no, what they're really
Speaker 1: going to sign up for is a vision. A vision
Speaker 1: as expressed by a visionary, and Steve Jobs was also
Speaker 1: one of those characters. So, yeah, is hugely important because
Speaker 1: it turns out that even high octane, sophisticated investors end
Speaker 1: up putting down hundreds of millions of dollars for people
Speaker 1: who tell compelling stories rather than really demonstrate the value
Speaker 1: of their product. In a kind of it's actually refreshing
Speaker 1: in a way that in this increasingly technological world, the
Speaker 1: power of narrative remains. Thus it has ever been good
Speaker 1: for us storytellers. Yeah, right, there's something encouraging about that.
Speaker 1: So I was thinking about the role of the believers, right,
Speaker 1: because there's the role of the visionary or the fraud star.
Speaker 1: But then there's also they wouldn't get anywhere if it
Speaker 1: weren't for the role those of us who are willing
Speaker 1: to believe play in this. And I love this from
Speaker 1: Maria Konikova's book The Confidence Game. She wrote, when we
Speaker 1: step into a magic show, we come in actively wanting
Speaker 1: to be fooled. We want deception to cover our eyes
Speaker 1: and make our world a tiny bit more fantastical, more
Speaker 1: awesome than it was before. And the magician in many
Speaker 1: ways uses the exact same approaches as the confidence man
Speaker 1: only without the destruction of the Conen's game. And so
Speaker 1: what makes people believe? Do you think Elizabeth Holmes famously
Speaker 1: raised billion dollars from really wealthy investors. What makes people
Speaker 1: like that who should know better? What makes them marks?
Speaker 1: I think it's hardwired in our psychology. I mean, the
Speaker 1: fact is that we are not really supremely rational beings.
Speaker 1: We're guided by snap judgments that we like to make
Speaker 1: based on our revolutionary history. But it doesn't always service
Speaker 1: well when it comes to analyzing complex problems like whether
Speaker 1: or not to invest one hundred million dollars in a company.
Speaker 1: But the believers, you know, there's another phrase, it's weird
Speaker 1: the way you know. You do projects, and I'm sure
Speaker 1: you find the same thing, but you do stories and
Speaker 1: then they add up in ways that you don't expect.
Speaker 1: I did a film about the Church of Scientology, and
Speaker 1: one of the subheads of the book on which the
Speaker 1: film was based, Lawrence Wright's book Going Clear, was the
Speaker 1: Prison of Belief. And the idea of the prison of
Speaker 1: belief is a really interesting one. It's a prison really
Speaker 1: with no bars and locke. But you're in prison because
Speaker 1: you need to believe. And I think for people who
Speaker 1: are believing in Enron for a long time, you know,
Speaker 1: because nobody could really figure out how they made their money,
Speaker 1: or the people who believe in Lance Armswer or the
Speaker 1: people who believed in Elizabeth Holmes. Once you believe, it
Speaker 1: becomes very hard to undo that belief, and so much
Speaker 1: so in the poignantly in the Paramo's story, you know,
Speaker 1: Tyler Schultz is going to his grandfather and saying, you know, Grandpa,
Speaker 1: it's fraud there. And he had become a prisoner of
Speaker 1: his own belief, so he wouldn't even believe now his
Speaker 1: own grandson. That's such a compelling example. And do you think,
Speaker 1: just as it is for the visionary, turn fraud start
Speaker 1: for the believers too. The answer is way more complicated
Speaker 1: than greed, right as the prison of belief would demonstrate.
Speaker 1: I think so, because sometimes you see people hanging on
Speaker 1: even as the company is going down. You know it's
Speaker 1: it's going to turn around. And it's the classic if
Speaker 1: you think about investment, particularly for the average sucker like
Speaker 1: say me, you know, I can recall investing in a
Speaker 1: company and it would do really well initially, and that
Speaker 1: would give me a taste, and then it would start
Speaker 1: to sink below the original purchase price and sink further
Speaker 1: and further and further, and thinking, yeah, but it was
Speaker 1: so high once. Surely it's going to go back there
Speaker 1: against all reason. The prison of belief, Yes, the prison
Speaker 1: of belief. I love that phrase. And do you think
Speaker 1: too that the big lie is more likely to make
Speaker 1: us suckers than the little lie? In other words, maybe
Speaker 1: because the romanticism it's associated with the big lie, or
Speaker 1: just the fact that once you have the big lie,
Speaker 1: it's just so unconceivable that that could be a lie.
Speaker 1: And Elizabeth Holmes, I feel like it is the ultimate
Speaker 1: example of that. I think that's right. And she was
Speaker 1: going to do it big, and that was part of
Speaker 1: the vision that I think everybody else invested in. So
Speaker 1: rather than an incremental change, she had to be a
Speaker 1: shape shifter, she had to be a paradigm shifter. So
Speaker 1: that's what all those people were investing in. They were
Speaker 1: going to hit the grand slam home run. It was
Speaker 1: so much more compelling than making six percent on your
Speaker 1: money in a ball bearing factory. It's fascinating when you
Speaker 1: think about all the things that have fooled us in
Speaker 1: the business world. Bernie Madoff, Enron, even the global financial crisis.
Speaker 1: It just was inconceivable that that could be a lie, right,
Speaker 1: that the big banks didn't know what they were doing,
Speaker 1: That Enron, the celebrated energy company, could actually be a fraud,
Speaker 1: that Bernie Madoff could be running a Ponzi scheme. And
Speaker 1: so the big lie is so inconceivable. It's what undergirds everything.
Speaker 1: And yet you realize when the big lie is uncovered,
Speaker 1: suddenly what's left is not some sort of elegantly constructed
Speaker 1: superstructure of equations. It's just pure belief. And when the
Speaker 1: belief is gone, the whole thing crashes like tulips, just
Speaker 1: like the Emperor behind the curtain. Right once and once again.
Speaker 1: What role do you think genderrett played in the Elizabeth's
Speaker 1: Home story specifically, but maybe even an Enron in belief,
Speaker 1: and that the skeptic fellas gardener at least one of
Speaker 1: the skeptics prominently female, Erica Chung Tou, although not the
Speaker 1: only one. Then the board all believers, all old white males.
Speaker 1: I think it did play a huge role, I think
Speaker 1: particularly for her board and possibly also for David Boyce.
Speaker 1: I mean, I think that you have these old men
Speaker 1: who were enchanted by a younger woman. And I think
Speaker 1: that in some ways, wouldn't it be great if there
Speaker 1: was of female inventor, an entrepreneur who would be a
Speaker 1: top male dominated silicon valley. So the attraction who was
Speaker 1: married with a rationalization of doing good, Well, then that's
Speaker 1: fascinating because not only did Elizabeth have the rationalization that
Speaker 1: she was doing and good, but the people who believed
Speaker 1: in her also felt good about themselves, and so you
Speaker 1: had the double whammy and effect. Indeed, and I think
Speaker 1: also it was one of the things she's a storyteller.
Speaker 1: It was one of the things that actually enabled her
Speaker 1: to get further with the journalists who are otherwise very
Speaker 1: skeptical journalists Kenneletta and Roger Parloff who put her on
Speaker 1: the cover of Fortune. You know, I think they both
Speaker 1: saw a story that would be a really great story. Yeah,
Speaker 1: because so different do I have to write again about
Speaker 1: how male dominated his silicon valley and how women can't
Speaker 1: cut a break. Now we've got the counterexample. You'd want
Speaker 1: to invest in that story, and I think they were
Speaker 1: invested in that story. It just turned out not to
Speaker 1: be true. Yeah, I've said to Roger that If any
Speaker 1: journalist looks at what happened to him and thinks, oh,
Speaker 1: that would never happen to me, they're fooling them something,
Speaker 1: because any one of us could have fallen for that.
Speaker 1: In reality, I fell for it in the Armstrong line.
Speaker 1: I mean, I came very close to sing a film
Speaker 1: that let's just say, it would not have been good
Speaker 1: for me. Did you really? Yes? That film took five
Speaker 1: years to make, and one of the reasons it did
Speaker 1: was right on the eve of about to releasing a
Speaker 1: film that would have been more of a praise poem,
Speaker 1: shall we say, all of the real story started tumbling out. Wow,
Speaker 1: isn't that interesting that we all have that capacity? And
Speaker 1: I've absolutely been there too. What do you think it is?
Speaker 1: Because now you've covered these stories also from Enron to Therainos,
Speaker 1: where there are whistleblowers. What's the quality of the person
Speaker 1: who doesn't believe when the rest of us do. That's
Speaker 1: a really good question, And it also makes me think
Speaker 1: about the Enron example, because I remember going out on
Speaker 1: the stump for the Enron film and always being asked
Speaker 1: two questions, one about this fraudster loopie who got away
Speaker 1: with it, but also one about the whistleblower, Sharon Watkins,
Speaker 1: and there was a tremendous amount of resentment toward her,
Speaker 1: as if to say, who does she think she is?
Speaker 1: Because whistleblowers show us up, and that means that there's
Speaker 1: something about the whistleblower that doesn't go along, and I
Speaker 1: think that has to be recognized. I think in the
Speaker 1: case of Threnos, you know, two of the whistleblowers were
Speaker 1: very young, and so they weren't as compromised by the
Speaker 1: need for a salary, pension whatever. But also I think
Speaker 1: we're a little bit more shocked at the disparity between
Speaker 1: the bullshit and the reality, whereas if you've been around
Speaker 1: in the workplace for a while, you see it more often.
Speaker 1: And they were coming in from the outside. I mean,
Speaker 1: I think Sharon Watkins. The interesting thing at Enron was
Speaker 1: that she left Andy Fastow's department, the CFO at Enron,
Speaker 1: and then came back. And when she came back, she
Speaker 1: realized how far things had gone because she had got
Speaker 1: outside for long. It's as if you're too immersed in something,
Speaker 1: so it's being taken outside of that prison of belief,
Speaker 1: or not being in that prison for long enough that
Speaker 1: really allows you to be there, but it takes a
Speaker 1: huge amount of strength and inner strength. That's what it
Speaker 1: so impressed me about Eric Ka Chong and Tyler Schultz
Speaker 1: in the Pharaoh's story. They were young, and all these
Speaker 1: experts are telling them, no, you're wrong, senior figures who
Speaker 1: also happen to be there, in one case their grandfather
Speaker 1: who is the former Secretary of State, saying no, you're wrong,
Speaker 1: but they stuck to their guns. I think back to
Speaker 1: Enron and Jeff Skilling and the Emperor's New Clothes, and
Speaker 1: it's the child who sees and is willing to say
Speaker 1: it's And with Jeff Skilling it was intellectual intimidation, right.
Speaker 1: Everybody was so afraid to say I don't get it
Speaker 1: when everybody else clearly did. And here you had younger
Speaker 1: kids who are willing to say, no, actually, I really
Speaker 1: don't get it. And so maybe there's that necessary component
Speaker 1: of being an outside or somehow who doesn't have as
Speaker 1: much to lose, who isn't as invested in the system
Speaker 1: as it is. That is a necessary quality for them
Speaker 1: a blower hugely and sometimes a certain amount of discontent,
Speaker 1: because if you're contented, you're more apt to go along
Speaker 1: and I think we have to understand too, that there's
Speaker 1: a tremendous social and I think probably interior psychological pressure
Speaker 1: for all of us to go along. Absolutely, you know,
Speaker 1: I think that was one of the lessons of the
Speaker 1: Milgram experiment and some of the other psychological experiments done
Speaker 1: Within a certain context, it's very hard to break free,
Speaker 1: whether we call it the prison of belief or a
Speaker 1: sense of going along with others and saying no, no no, no,
Speaker 1: this is not right. I'm telling you it's not right,
Speaker 1: even in the face of people who use that bluff,
Speaker 1: which makes you extremely insecure. Come back to that quality,
Speaker 1: because that's something Jeff Skelling certainly had. I used to
Speaker 1: call it intellectual intimidation, right, the ability to make other
Speaker 1: people feel like their intellect was just smaller than his,
Speaker 1: so you could put your trust in his. Did Elizabeth
Speaker 1: had that too? She did, and Tyler would speak to
Speaker 1: that she had both the carrot and the stick. He
Speaker 1: talked about the difference between the tiled world and the
Speaker 1: carpeted world. And he would be in the tile world,
Speaker 1: convinced that everything was terrible, nothing worked, and then he'd
Speaker 1: go up and speak to Elizabeth. Then, after fifteen minutes
Speaker 1: talking to her. She'd be so compelling and so confident
Speaker 1: that he'd go back down on the stairs down to
Speaker 1: the tile world. They think, Yeah, it's great, I'm part
Speaker 1: of a mission. I'm going to change the world. Until
Speaker 1: he got back to the tile world, he thought, oh
Speaker 1: my god, what happened. So there's that charisma that you
Speaker 1: talked about. But I think in the Thearaonos story, the
Speaker 1: flip side that kind of intimidation is the way that
Speaker 1: Elizabeth used David Boyce. Yes, because if anybody started to
Speaker 1: sound like they were going to go public with things
Speaker 1: that were wrong at tharon Nos, David Boyce was using
Speaker 1: the power of the legal system and the NDA is
Speaker 1: that some of these people had signed to threaten them
Speaker 1: with financial ruin if they breathed the word. You know,
Speaker 1: a lot of companies do that, and they use the
Speaker 1: NDA in a way to run her against the occasional
Speaker 1: ethical qualms that people may have. Is that one way
Speaker 1: do you think that you might be able to tell
Speaker 1: the difference between the visionary and the fraudster, or be
Speaker 1: able to tell when the visionary has tipped over the
Speaker 1: line into fraud. Is the level of retaliation against those
Speaker 1: who differ from the party line. There's an interesting lesson
Speaker 1: here from Steve Jobs, even though he would famously retaliate
Speaker 1: to the end of his days against journalists who wrote
Speaker 1: negative stories. Maybe my distinction isn't so good after all. No,
Speaker 1: but I would say this, there's an aspect of Jobs
Speaker 1: that did learn that lesson inside his company, because after
Speaker 1: the you know, he got tossed out of Apple and
Speaker 1: then the disastrous experience at next he surrounded himself with
Speaker 1: a small group of people at Apple two point zero
Speaker 1: who were not only willing to tell him no to
Speaker 1: his face, but whom he also rewarded for doing just that.
Speaker 1: So I think Steve learned on the job. So maybe
Speaker 1: that's a way to prospectively tell the difference between the
Speaker 1: visionary and the fraudster. Maybe the visionary you can trust
Speaker 1: is someone who has failed before, because maybe they're going
Speaker 1: to be able to recognize the signs and know themselves
Speaker 1: when they need to stop believing. The head of Toyota
Speaker 1: used the same mistakes are precious, And now that's a
Speaker 1: visionary you want to believe in, because he's not pretending
Speaker 1: that mistakes don't exist in his just in time automated system.
Speaker 1: He's seeking them out because he knows it makes him
Speaker 1: better and willing to acknowledge when belief isn't enough. Right. So,
Speaker 1: another moment I've thought about it theirness that is fascinating
Speaker 1: is this moment where they all where I guess a
Speaker 1: John carry Rout pieces come out and they all chant
Speaker 1: fuck you, Carrie Root. And so if the character of
Speaker 1: the whistleblower is really interesting, what about all the people
Speaker 1: who are inside who aren't whistleblowers? And I guess it
Speaker 1: goes back to what we are talking about, just the
Speaker 1: prison of belief. But still, I mean that the whistleblower
Speaker 1: is so rare, and so many other people who could
Speaker 1: have seen what they didn't blow the whistle. How do
Speaker 1: you how do you think about that? It is really
Speaker 1: hard to think about. And it also teaches you what
Speaker 1: a powerful force it is, this idea of being on
Speaker 1: a mission, and how that can be so badly abused,
Speaker 1: because on the one hand, you do want to believe
Speaker 1: in a mission. That is what motivates people. But in
Speaker 1: that moment when Carrie Rou's article came out, that's how
Speaker 1: she rallied the troops, or that's how Sonny rallied the
Speaker 1: troops to say fuck you, to scream fuck you in unison,
Speaker 1: not only at Carrirou but also at the other labs.
Speaker 1: But it's hard to reckon with the idea that you
Speaker 1: would see this devastating article in the Wall Street Journal
Speaker 1: and not engage in some doubt. And that I think
Speaker 1: is the larger beginning of a lesson in these stories
Speaker 1: about fraudsters, is that when you believe too much, when
Speaker 1: you want it too much, things can get very dangerous,
Speaker 1: very quickly. And that proves in a way that the
Speaker 1: visionary can also be unwilling to admit to the because
Speaker 1: we all are unwilling to admit to ourselves in the
Speaker 1: face of clear evidence, and so you can see it
Speaker 1: there right. Yes, A really important aspect of these fraud
Speaker 1: stories is I think there is a tendency to want
Speaker 1: to look at the fraudsters and say I am good
Speaker 1: and they are bad, without understanding that we are all
Speaker 1: hardwired to be susceptible, either to tell lies or to
Speaker 1: believe in lies, because it's a human nature, and so
Speaker 1: some people are more extreme in terms of where they
Speaker 1: are on the spectrum, shall we say, of fraud. But
Speaker 1: I think the idea of Exceptionalizing Elizabeth Holmes or Jeff
Speaker 1: Skilling or Steve Jobs makes a terrible mistake because then
Speaker 1: it just means like, well, the way to stop fraud
Speaker 1: is to pick out those few fraudsters and make sure
Speaker 1: that we remove them from the system. But there are
Speaker 1: little bits of fraud that all of us commit every day,
Speaker 1: and that's why, you know, a system of checks and
Speaker 1: balances is more useful because we all know, or we
Speaker 1: should be able to accept, that we all commit fraud.
Speaker 1: And back to your earlier point, if we were to
Speaker 1: ex out the possibility for those fraudsters would also be
Speaker 1: exing out the possibilities for those real visionaries, right, because
Speaker 1: you need that human capacity for belief and the idea
Speaker 1: that's going to transform the world, or the world would
Speaker 1: never go anywhere. That's right. A lot of these things
Speaker 1: that we're talking about that are negatives in terms of
Speaker 1: aspects of our minds which allow us to believe in
Speaker 1: fraud or allow us to commit fraud, there are many
Speaker 1: ways in which those things are hugely useful and powerful.
Speaker 1: So it's all about how we reckon with that. Well,
Speaker 1: thank you so much for being here. This was really fun.
Speaker 1: Thanks Bethany great pleasure. I think a lot about this
Speaker 1: great f Scott Fitzgerald quote. The true mark of genius
Speaker 1: is to be able to hold two competing thoughts in
Speaker 1: your mind at the same time and not go crazy.
Speaker 1: Maybe the difference between the visionary and the fraudster is
Speaker 1: the difference between the person who can do that and
Speaker 1: the person who can't. I can't fail, I might fail.
Speaker 1: There is no try, As Yoda says, you can learn
Speaker 1: from try. Maybe that's the difference for all of us too.
Speaker 1: Maybe we have to be willing to believe in the
Speaker 1: person with a dream who wants to transform the world
Speaker 1: or the world won't move. But we also have to
Speaker 1: be willing to believe that the big dream could become
Speaker 1: the big lie. So maybe the responsibility to be f
Speaker 1: Scott Fitzgerald's genius is actually a responsibility that belongs to
Speaker 1: all of us. Making a Killing is a co production
Speaker 1: of Pushkin Industries and Chalk and Blade. It's produced by
Speaker 1: Ruth Barnes. My executive producers are Alison McLean, my Relation
Speaker 1: and Megan Casey. The executive producer at Pushkin is Mia Loebell.
Speaker 1: Engineering by Jason gambrel Our music is by Jed Flood
Speaker 1: special thanks to j the Weisberg at Pushkin and everyone
Speaker 1: on the show. I'm Bethany McLean, Thanks so much for listening.
Speaker 1: Find me on Twitter at Bethany mac twelve