WEBVTT - Alex Gibney on Theranos, Fraudsters and Visionaries 0:00:05.640 --> 0:00:10.520 I'm Bethany McLean. This is making a killing in this show. 0:00:10.600 --> 0:00:13.280 I cut through the hype and handwringing to reframe the 0:00:13.320 --> 0:00:16.599 stories you thought you understood and uncover the ones you 0:00:16.680 --> 0:00:25.439 didn't know were important. Ever since the days of Enron, 0:00:25.560 --> 0:00:29.560 I've been fascinated by this question what separates a visionary 0:00:29.720 --> 0:00:34.200 entrepreneur from a fraudster. Being a visionary requires being able 0:00:34.240 --> 0:00:36.879 to tune out other people's doubts, to say you're right 0:00:36.920 --> 0:00:40.800 and everyone else is wrong. To persist through impossible difficulties 0:00:41.040 --> 0:00:44.800 because you believe your goal is grand and worthy, even 0:00:44.840 --> 0:00:49.320 a noble pursuit. It might even require lying to nonbelievers, 0:00:49.600 --> 0:00:52.519 at least at times. I used to think that the 0:00:52.600 --> 0:00:55.440 characters at the heart of white collar fraud or stories 0:00:55.440 --> 0:00:58.360 of business gone wrong were different. I thought that if 0:00:58.360 --> 0:01:00.920 you did bad things, then it was because you knowingly 0:01:00.960 --> 0:01:02.800 set out to do what you knew were bad things. 0:01:03.560 --> 0:01:05.960 But Enron made me realize that that's not always the case. 0:01:06.600 --> 0:01:09.160 In covering these stories over the last decade or so, 0:01:09.600 --> 0:01:12.560 I've seen this time and time again. These stories are 0:01:12.600 --> 0:01:18.280 a mixture of self delusion, rationalization, ego, and yes, often 0:01:18.319 --> 0:01:22.720 some greed, venality and even corruption, But the mixture is 0:01:22.720 --> 0:01:25.880 the key, and the fraud start, just like the visionary 0:01:26.240 --> 0:01:29.680 usually justifies it all in the name of a noble pursuit. 0:01:30.440 --> 0:01:33.040 Think about Enron. This isn't the story of a company 0:01:33.040 --> 0:01:37.160 that's set out to defraud investors. Rather, CEO Jeff Skelling 0:01:37.200 --> 0:01:40.320 tried to hide the company's weaknesses because both his ego 0:01:40.400 --> 0:01:43.520 and the company survival needed a high stock price, but 0:01:43.600 --> 0:01:46.480 also because he believed eventually could make it all work 0:01:46.920 --> 0:01:50.120 and he might have a business called Enron Broadband was 0:01:50.160 --> 0:01:53.360 really just Netflix ahead of its time. This is true 0:01:53.400 --> 0:01:56.840 in so many cases. A business leader thinks, if he 0:01:57.000 --> 0:01:59.520 or she can just get through this bad quarter and 0:01:59.680 --> 0:02:02.880 not lose investors by telling the truth, it'll all work 0:02:02.920 --> 0:02:06.600 out in the end, And of course that end justifies 0:02:06.640 --> 0:02:10.840 the means, which brings us to Elizabeth Holmes and Tharonos. 0:02:10.840 --> 0:02:13.800 Holmes was supposed to be a visionary. She wanted to 0:02:13.840 --> 0:02:17.600 disrupt reinvent the blood test. She bragged that her company 0:02:17.760 --> 0:02:20.960 was developing a method for running hundreds of lab tests 0:02:21.120 --> 0:02:24.240 from a single drop of blood, employing a machine called 0:02:24.240 --> 0:02:27.720 the Edison that used all sorts of trade secrets to 0:02:27.800 --> 0:02:32.040 run the tests. Should say repeatedly that Tharonos's goal was 0:02:32.120 --> 0:02:36.200 basically a religious calling and that she had one existential purpose. 0:02:36.960 --> 0:02:39.679 But when Thoroness failed to develop a machine that could 0:02:39.720 --> 0:02:42.360 do what she had claimed it could do, the company 0:02:42.480 --> 0:02:46.480 literally hid that fact, performing tests in what was essentially 0:02:46.480 --> 0:02:50.440 a secret lab. Even the biggest cynics don't think she 0:02:50.520 --> 0:02:54.079 set out to commit fraud. So here's my question, when 0:02:54.080 --> 0:02:57.880 did the visionary become the fraudster? At what point, if ever, 0:02:58.360 --> 0:03:01.200 did Elizabeth Holmes admit to herself that she was deceiving 0:03:01.280 --> 0:03:04.840 not only investors but patients about the quality of their 0:03:04.880 --> 0:03:08.079 all important blood work. I'm thrilled to be here now 0:03:08.120 --> 0:03:11.280 with filmmaker Alex Gibney, who I first met around fifteen 0:03:11.360 --> 0:03:14.160 years ago when he decided to make a documentary out 0:03:14.160 --> 0:03:17.480 of the book i'd co authored on Enron. That documentary, 0:03:17.560 --> 0:03:20.080 The Smartest Guise in the Room, was nominated for an 0:03:20.120 --> 0:03:23.120 Academy Award in two thousand and six. We lost to 0:03:23.160 --> 0:03:24.920 the March of the Penguins, a fact that I have 0:03:24.960 --> 0:03:28.079 still not gotten over anyway, Alex has done a ton 0:03:28.120 --> 0:03:31.399 of other films in the intervening years, from Lance Armstrong 0:03:31.480 --> 0:03:34.320 to the Dirty Money series he did for Netflix, all 0:03:34.360 --> 0:03:37.400 of which in some ways address this question of the 0:03:37.480 --> 0:03:41.280 line between the visionary and the fraudster. Of course, none 0:03:41.280 --> 0:03:44.080 more so than his recent film about Holmes, which is 0:03:44.120 --> 0:03:49.240 called The Inventor Out for Blood in Silicon Valley, Elizabeth 0:03:49.240 --> 0:03:51.960 Holmes famously named her machine the Edison, and in the 0:03:52.000 --> 0:03:55.400 movie you make the decision to prominently feature Edison. Let's 0:03:55.440 --> 0:03:58.360 start with the parallels between Elizabeth Holmes and Thomas Edison. 0:03:58.680 --> 0:04:04.280 He was the first sort of self styled business superstar, 0:04:04.480 --> 0:04:08.000 that is to say, businessman as celebrity, and that ended 0:04:08.080 --> 0:04:11.760 up being very useful to him in terms of expanding 0:04:11.760 --> 0:04:15.520 his empire and also getting capital because people were not 0:04:15.640 --> 0:04:19.120 investing in a machine, they were investing in him, and 0:04:19.200 --> 0:04:22.080 so that idea of investing in a person kind of 0:04:22.120 --> 0:04:26.159 starts with Edison really in terms of the whole business paradigm. 0:04:26.760 --> 0:04:31.359 And there's one other element too, which is that Edison 0:04:31.720 --> 0:04:33.640 had a vision of where he wanted to get to, 0:04:34.360 --> 0:04:37.480 but along the way he cut a lot of corners 0:04:37.760 --> 0:04:40.680 and he was pretty deceptive. We can get into the specifics, 0:04:40.680 --> 0:04:43.000 but he lied to people, let's just be honest. He 0:04:43.080 --> 0:04:45.440 lied to people about where he was at figuring it 0:04:45.800 --> 0:04:48.080 all work out in the end when he finally got there. 0:04:48.320 --> 0:04:50.640 He was the original fake it team, make it guy, 0:04:50.880 --> 0:04:53.000 and he did make it. It did work out for him, 0:04:53.080 --> 0:04:55.919 it did. I mean, particularly with the incandescent light bulb, 0:04:55.960 --> 0:04:58.680 and obviously with a record player and many other inventions 0:04:58.680 --> 0:05:03.200 weren't necessarily but he took full credit for Now we 0:05:03.240 --> 0:05:05.520 think of him as like, Wow, how could have invented 0:05:05.560 --> 0:05:08.359 all those things? He didn't. I neither did Elizabeth. But 0:05:08.680 --> 0:05:11.760 he was the paradigm setter in terms of all of that. 0:05:12.040 --> 0:05:14.799 So not only in taking credit for ideas that weren't 0:05:14.839 --> 0:05:19.679 necessarily his, but also in pretending that things were working 0:05:19.800 --> 0:05:23.400 when they hadn't quite clicked yet in reality, that's absolutely right. 0:05:23.640 --> 0:05:26.720 So there's been some criticism of your Tharonis movie because 0:05:26.760 --> 0:05:29.039 people say you were soft on Elizabeth because you didn't 0:05:29.080 --> 0:05:32.120 call it out an out premeditated fraud. But it was 0:05:32.160 --> 0:05:35.560 interesting Tyler Schultz, the famed whistleblower in this story, he said, 0:05:35.720 --> 0:05:39.159 does she realize she's lying? I don't know. And you've 0:05:39.200 --> 0:05:41.280 said that people who are good at telling a fraudulent 0:05:41.360 --> 0:05:43.960 story are good because they believe it's true. So what's 0:05:43.960 --> 0:05:45.919 the line with Elizabeth? Do you think it's the simplest 0:05:45.920 --> 0:05:49.719 premeditated fraud. No, I don't. But where I find it 0:05:49.760 --> 0:05:52.120 a little odd in terms of the criticism is that 0:05:53.000 --> 0:05:55.919 I think that the fact that she didn't know that 0:05:56.040 --> 0:06:02.080 she was crossing lines is not an excuse. Really, it's 0:06:02.080 --> 0:06:04.640 actually more bad news than good news. I think it's 0:06:04.680 --> 0:06:07.359 worse than if she had been a kind of Bernie 0:06:07.360 --> 0:06:10.919 made Off like character because she was able to lie 0:06:11.000 --> 0:06:15.040 more effectively because she really believed in her mission, and 0:06:15.120 --> 0:06:17.880 that is the scarier thing here. So her belief was 0:06:17.920 --> 0:06:21.359 an explanation but not an excuse. Correct. Does that go 0:06:21.440 --> 0:06:24.360 back to Edison too in a way? I think so. 0:06:24.560 --> 0:06:26.760 I mean I think that Edison believed he was going 0:06:26.800 --> 0:06:29.480 to get there, So what difference did it make if 0:06:29.480 --> 0:06:31.440 he lied along the way. And when I say he lied, 0:06:31.520 --> 0:06:33.800 I mean in the case of the light bulb, he 0:06:33.920 --> 0:06:38.160 faked demonstrations. The lightbulb wouldn't stay on as long as 0:06:38.160 --> 0:06:40.359 he needed it to. The filaments were melting, so he 0:06:40.480 --> 0:06:43.320 faked these demonstrations for people, you know, always shut the 0:06:43.400 --> 0:06:46.680 light off just before it blew up in his face. 0:06:46.920 --> 0:06:50.880 And also he would give reporters stock in his company, 0:06:51.080 --> 0:06:53.480 you know, as if that wasn't enough of an incentive 0:06:53.520 --> 0:06:55.640 in order to get them to write good and glowing 0:06:55.680 --> 0:06:58.719 stories about him. So ultimately he got there, but along 0:06:58.760 --> 0:07:02.720 the way he was he was dishonest. So there's Elizabeth 0:07:02.760 --> 0:07:06.920 Holmes giving the famous lawyer David Boys stock in her company, 0:07:07.279 --> 0:07:11.280 and there's Elizabeth Holmes and thereinos with the room called 0:07:11.360 --> 0:07:14.840 Jurassic Park where they ran the laboratory, the secret room 0:07:14.880 --> 0:07:17.560 where they ran the laboratory tests on old machines because 0:07:17.600 --> 0:07:20.760 they're much hype new machines weren't working yet. So what's 0:07:20.800 --> 0:07:23.400 the difference between her and Thomas Edison? Is it just 0:07:23.520 --> 0:07:25.920 luck at the end of the day that he was 0:07:26.000 --> 0:07:28.600 able to make it after faking it and she didn't. 0:07:28.880 --> 0:07:31.160 Part of it is that, in other words, you could 0:07:31.200 --> 0:07:33.480 say that if she was working on a new kind 0:07:33.520 --> 0:07:37.800 of light bulb, maybe that would be more similar to Edison. 0:07:37.880 --> 0:07:42.400 I think the really problematic part of Elizabeth Holmes is 0:07:42.440 --> 0:07:45.600 that she was working in the area of medical science 0:07:46.200 --> 0:07:48.560 and she was developing lab tests that we're going to 0:07:48.640 --> 0:07:51.160 be used on real people. In fact, we're used on 0:07:51.240 --> 0:07:55.280 real people, and yet the data was notoriously bad, and 0:07:55.360 --> 0:07:57.440 so she had a double problem. On the one hand, 0:07:57.520 --> 0:08:01.920 she was defrauding investors, albeit not the she was defrauding 0:08:02.320 --> 0:08:05.280 patients and that was a bridge too far. Another was 0:08:05.320 --> 0:08:09.000 if she had spent her whole time using investor money 0:08:09.080 --> 0:08:12.800 just to keep practicing and keep devising new prototypes and 0:08:12.880 --> 0:08:16.360 never went to market, I think the judgment on her 0:08:16.440 --> 0:08:19.920 would be far more kind. So maybe the lesson here 0:08:20.000 --> 0:08:22.040 is if you're going to be a visionary, do it 0:08:22.160 --> 0:08:24.920 in a field that doesn't affect people's lives, so that 0:08:24.960 --> 0:08:26.440 if you if you so that if you do have 0:08:26.520 --> 0:08:28.520 to fake it for a while. Maybe that's where the 0:08:28.560 --> 0:08:30.480 line is, right, it's in the field you choose, not 0:08:30.560 --> 0:08:33.760 so much in the personality type. Yeah, I think so. 0:08:34.040 --> 0:08:37.560 Steve Jobs lied. He was a notorious liar in some ways, 0:08:38.000 --> 0:08:41.680 and actually there are a lot of real similarities with 0:08:41.800 --> 0:08:45.160 him and Elizabeth Holmes too. They were both great storytellers, 0:08:45.200 --> 0:08:50.880 and I think Edison also shared that their ability to 0:08:50.920 --> 0:08:55.319 tell a compelling tale about their business was terribly important. 0:08:55.600 --> 0:08:59.679 And does that start with the person themselves? You've described 0:08:59.679 --> 0:09:02.320 it less that she wanted to be a paradigm shifter. 0:09:02.800 --> 0:09:06.560 Does that visionary characteristics start with how you define yourself 0:09:06.640 --> 0:09:09.880 and then lead into how you tell the stories about yourself. Yes, 0:09:10.080 --> 0:09:12.520 it's like you set yourself a goalpost way out here, 0:09:12.760 --> 0:09:15.200 not just for your company, but for yourself. This is 0:09:15.240 --> 0:09:18.360 who I want to be. And Elizabeth wanted to be 0:09:18.840 --> 0:09:25.000 known as a hugely successful and wealthy business person and 0:09:25.120 --> 0:09:28.360 also as an inventor. Both those things were terribly important. 0:09:28.360 --> 0:09:31.320 But because her dad had some experience with NGOs in 0:09:31.360 --> 0:09:34.160 addition to a brief career at Enron, she also wanted 0:09:34.200 --> 0:09:36.240 to do good or to be seen as doing good, 0:09:36.360 --> 0:09:38.679 So all those things were very important to her. So 0:09:38.720 --> 0:09:42.240 I think that was who she imagined herself to be. 0:09:43.080 --> 0:09:47.080 And if things along the way contradicted that, so long 0:09:47.120 --> 0:09:51.400 as she fixed her gaze on the dream rather than 0:09:51.920 --> 0:09:55.680 the more grubby reality, everything was fine. Isn't that interesting 0:09:55.760 --> 0:09:58.280 because both the visionary and the fraud star, in that 0:09:58.320 --> 0:10:00.400 way of thinking about it, half to st it off 0:10:00.440 --> 0:10:03.520 with this larger than life sort of vision of themselves, right, 0:10:03.640 --> 0:10:05.840 which isn't a sense of fraud until you've proven it. 0:10:05.920 --> 0:10:08.360 But the visionary manages to get there and the fraud 0:10:08.360 --> 0:10:11.400 stare fails along the way. That's right. And as Danna Really, 0:10:11.600 --> 0:10:14.640 the behavioral economist, says in the film, we wouldn't want 0:10:14.640 --> 0:10:18.000 to live in a world where people didn't overpromise. Right. 0:10:18.040 --> 0:10:20.040 I've thought about that a lot, and even for those 0:10:20.040 --> 0:10:21.680 of us on the other side of it, that being 0:10:21.720 --> 0:10:24.960 reflexively cynical is actually as bad as blind belief, right, 0:10:25.200 --> 0:10:27.839 And you need romantics on both sides. You need the 0:10:27.960 --> 0:10:30.840 romantics are who want to be visionaries, and you need 0:10:30.880 --> 0:10:33.160 the romantics who are willing to believe in them, because 0:10:33.160 --> 0:10:36.120 sometimes you imagine a possibility and you don't quite know 0:10:36.160 --> 0:10:38.680 how you're going to get there when you imagine that possibility, 0:10:38.679 --> 0:10:41.360 but you're determined to get there and convinced that you can. 0:10:41.920 --> 0:10:44.880 My stepfather, who was a minister, used to say, I 0:10:45.000 --> 0:10:48.240 love the recklessness of faith. First you drump and then 0:10:48.240 --> 0:10:51.800 you grow wings. That is wonderful. So I want to 0:10:51.800 --> 0:10:53.640 try to explore this idea of when it might be 0:10:53.800 --> 0:10:56.640 that Elizabeth crossed the line and in her own mind 0:10:56.679 --> 0:10:59.920 by which did her belief in herself ever, ever, ever fall? 0:11:00.440 --> 0:11:02.520 And so you start off with this original idea that 0:11:02.600 --> 0:11:04.880 getting poked with a needle was just so horrible that 0:11:04.920 --> 0:11:07.480 it required a hold new machine where you wouldn't have 0:11:07.520 --> 0:11:10.120 to do that. She believed in that, right, for sure, 0:11:10.400 --> 0:11:12.480 I think she did. I mean, but I think that's 0:11:12.600 --> 0:11:17.000 kind of like projecting her own fears on everybody else. 0:11:17.040 --> 0:11:19.320 But I do think that she really did have a 0:11:19.440 --> 0:11:21.720 fear of needles, and she thought, Okay, if I have it, 0:11:21.920 --> 0:11:23.800 a lot of people do, and this will be part 0:11:23.840 --> 0:11:26.520 of my mission. And she definitely believed initially. But then 0:11:26.600 --> 0:11:29.320 you think about some of the specifics and the Farnos story, 0:11:29.760 --> 0:11:32.280 as we touched upon earlier, this idea that there was 0:11:32.360 --> 0:11:35.520 this room called Jurassic Park where the real testing was 0:11:35.559 --> 0:11:39.080 going on because the new machines. The edisons werenaurs right 0:11:39.240 --> 0:11:42.000 testing on the dinosaurs because the new machines weren't working, 0:11:42.040 --> 0:11:44.360 so they had to do these tests manually. And there 0:11:44.400 --> 0:11:46.880 was this, you know, Tyler Saltz's famous great quote about 0:11:46.880 --> 0:11:49.560 the tiled world and the carpeted world. In the carpeted 0:11:49.559 --> 0:11:51.880 world where executives were and then the tiled world where 0:11:51.920 --> 0:11:55.240 all the messy reality was happening. Can you have those 0:11:55.360 --> 0:11:58.720 juxtapositions and be Elizabeth and still not know that you're lying? 0:11:59.440 --> 0:12:04.040 I think what must happen is that you're able to 0:12:04.800 --> 0:12:08.160 lie to yourself in the moment, even though if you 0:12:08.200 --> 0:12:10.480 were to sit down late at night, you would know 0:12:10.840 --> 0:12:13.680 and recognize that what you had done is just told 0:12:13.679 --> 0:12:18.040 a lie, but you convince yourself that it's okay because 0:12:18.040 --> 0:12:20.320 you're doing it for a good cause. But in the moment, 0:12:20.640 --> 0:12:22.640 you have to believe that you're not telling a lie, 0:12:22.679 --> 0:12:25.839 because otherwise you can't be an effective liar. I mean, 0:12:25.960 --> 0:12:30.760 that's where the really strange experiment that dan Arielli does 0:12:30.760 --> 0:12:33.680 comes into play, because he does this experiment with the dice, 0:12:34.360 --> 0:12:38.360 and the idea being that people bet on the roll 0:12:38.400 --> 0:12:40.760 of the dice, and they're allowed to hold back a 0:12:40.760 --> 0:12:43.560 certain amount of information so that they roll the dice 0:12:43.679 --> 0:12:45.520 and they get paid. If it's a one, they get 0:12:45.559 --> 0:12:50.040 one dollar six dollars. But they're told you can bet 0:12:50.200 --> 0:12:52.959 or get paid on either the bottom or the top, 0:12:53.679 --> 0:12:56.760 but don't tell me. I don't tell the experiment or 0:12:56.760 --> 0:12:59.200 which one it is, so that's a secret, right, and 0:12:59.200 --> 0:13:02.800 then they just write it down. Well, over time, statistically 0:13:02.800 --> 0:13:05.520 it comes out that when the people report their results, 0:13:05.520 --> 0:13:07.360 they're cheating. And when they put them on a light 0:13:07.400 --> 0:13:11.080 detector test and they're getting the money, they almost always 0:13:11.080 --> 0:13:13.880 fail the light detector tests. But here's the most interesting part. 0:13:14.440 --> 0:13:17.320 When they do it for a charity i e. A 0:13:17.400 --> 0:13:22.280 higher purpose, they not only cheat more. See that's where 0:13:22.320 --> 0:13:25.480 the bad news comes in, but even more bad news. 0:13:25.840 --> 0:13:30.600 The light detector can't detect the lie, so they must 0:13:30.679 --> 0:13:34.160 believe that it's okay for them to lie, and therefore 0:13:34.760 --> 0:13:37.960 convince themselves in the moment that they're not lying, even 0:13:38.040 --> 0:13:41.760 though strictly speaking, they know that they are. So the 0:13:41.840 --> 0:13:46.480 human capacity for rationalization and self delusion is almost endless, 0:13:46.679 --> 0:13:49.760 and it really is endless if the human being also 0:13:49.800 --> 0:13:53.720 believes in that their goal is this noble pursuit. Yeah, 0:13:53.760 --> 0:13:56.440 I think that's true. And I think also if you 0:13:56.559 --> 0:13:59.400 believe that you are right in some fundamental way, then 0:13:59.720 --> 0:14:03.360 no amount of facts are going to get in your way. 0:14:03.360 --> 0:14:05.920 I mean, you know better than I. On the Enron story, 0:14:06.280 --> 0:14:08.960 you know, I used to imagine, like, what was it 0:14:09.000 --> 0:14:11.320 the Jeff Skilling thought in the middle of the night 0:14:11.400 --> 0:14:13.920 when they were so hopelessly in debt there was no 0:14:13.960 --> 0:14:15.719 way they were ever going to get out of it. 0:14:16.080 --> 0:14:19.360 But I think he rationalized that, like a ball team 0:14:19.520 --> 0:14:21.920 down by twenty runs in the bottom of the ninth, 0:14:21.920 --> 0:14:26.160 it was theoretically possible they could score twenty one runs 0:14:26.160 --> 0:14:29.040 in the bottom of the ninth and win. Right. What 0:14:29.120 --> 0:14:31.360 I find so fascinating about this is that if you're 0:14:31.400 --> 0:14:34.000 trying to figure out a roadmap for detecting the difference 0:14:34.080 --> 0:14:37.080 between the visionary and the fraudster. This is leading us 0:14:37.080 --> 0:14:40.920 in a direction that says, actually they're even more alike 0:14:41.000 --> 0:14:43.240 than that you'd think, because this idea of having this 0:14:43.360 --> 0:14:47.040 big world changing goal is what you want a visionary 0:14:47.080 --> 0:14:49.480 to have, but it's also the hallmark of the fraudster 0:14:49.520 --> 0:14:52.920 who can get other people to believe. So instead of differentiation, 0:14:53.000 --> 0:14:55.600 they're sounding more and more similar to me and think 0:14:55.720 --> 0:15:01.720 they're very similar. And I think that it's really the 0:15:01.720 --> 0:15:04.160 whole idea of the end justifies the means, which is 0:15:04.200 --> 0:15:07.160 not only their own rationalization, but also what we forgive 0:15:07.280 --> 0:15:09.800 as as a society or don't forgive, depending on whether 0:15:09.800 --> 0:15:12.000 they get to the end zone. So John carry Row, 0:15:12.160 --> 0:15:14.680 who collaborated with you on the film and obviously wrote 0:15:14.720 --> 0:15:17.080 the great book Bad Blood, argues that there was this 0:15:17.160 --> 0:15:20.320 moment of knowing fraud when Paranus rolls out these blood 0:15:20.320 --> 0:15:24.160 tests through Walgreens and suddenly then this is live and 0:15:24.240 --> 0:15:26.720 people's health as at stake. Do you think that that's 0:15:26.720 --> 0:15:28.640 a moment of knowing fraud or do you think even 0:15:28.680 --> 0:15:31.440 then she could have still been deceiving herself. I think 0:15:31.480 --> 0:15:34.360 she was deceiving herself. But I also think she knew 0:15:34.920 --> 0:15:40.400 that they were administering bad tests. She had heard it 0:15:40.480 --> 0:15:44.720 from enough people that if she wasn't checking, then there's 0:15:44.760 --> 0:15:49.320 something so much criminal negligence, right, or willful blindness. I 0:15:49.360 --> 0:15:52.760 think she probably practiced willful blindness. But at the end 0:15:52.760 --> 0:15:55.080 of the day, you know, the responsible thing would have 0:15:55.080 --> 0:15:58.800 been to have said, Okay, well let's shut down then, right, 0:15:59.280 --> 0:16:03.080 But you couldn't shut down because she needed Walgreens on 0:16:03.160 --> 0:16:05.480 board in order to get more investment in order to 0:16:05.560 --> 0:16:09.920 keep the company alive. So she rationalized the behavior. But 0:16:10.440 --> 0:16:15.440 she certainly knew that the tests were no good. But 0:16:15.560 --> 0:16:17.880 even in the face of that knowledge, can you still 0:16:18.000 --> 0:16:20.720 have not knowledge too? In other words, can you know 0:16:20.840 --> 0:16:25.160 but still convince yourself somehow it's it's okay, I'm just guessing. 0:16:25.200 --> 0:16:27.280 But based on what I know in terms of the 0:16:27.320 --> 0:16:29.640 experience of the subjects I've treated and also some of 0:16:29.640 --> 0:16:33.560 the scientists I've spoken to, I would say, yes, you 0:16:33.600 --> 0:16:40.080 can both know that you're lying and also deceive yourself 0:16:40.560 --> 0:16:43.120 that actually you're not. One of the things I thought 0:16:43.120 --> 0:16:45.200 about when I was doing this was the example of 0:16:45.560 --> 0:16:50.960 Lance Armstrong. Yes, and Lance Armstrong from a practical perspective, 0:16:51.480 --> 0:16:53.920 would tell you, and certainly did tell his cohorts and 0:16:54.000 --> 0:16:56.920 ultimately told me that yes, he doped, but it was 0:16:57.000 --> 0:17:01.800 terribly important to cancer survivors that he say things like, 0:17:01.880 --> 0:17:04.520 how dare you say that I's a cancer survivor would 0:17:04.520 --> 0:17:08.240 ever use performance enhancing drugs. But he would say that 0:17:08.359 --> 0:17:11.800 with a great deal of conviction, as if he wasn't 0:17:11.880 --> 0:17:14.800 lying because he was telling them something so important that 0:17:14.920 --> 0:17:18.280 was helping him to raise lots of money to cater 0:17:18.400 --> 0:17:22.480 to their concerns, that it was okay, even though he 0:17:22.520 --> 0:17:25.719 would get down off whatever kind of pr platform he 0:17:25.760 --> 0:17:27.639 was speaking on at that time and maybe go do 0:17:27.680 --> 0:17:29.600 a bag of blood. So again, it was the noble 0:17:29.760 --> 0:17:32.199 pursuit he wasn't He was able to say to himself 0:17:32.200 --> 0:17:35.920 he wasn't doping on behalf of himself and his own performance. 0:17:36.240 --> 0:17:38.959 He was doping or not telling the truth about doping 0:17:39.000 --> 0:17:41.080 in order to do this greater good. In the case 0:17:41.080 --> 0:17:44.240 of Lance Armstrong, I think he figured, look, being a realist, 0:17:45.160 --> 0:17:47.399 if I want to win, I'm going to have to 0:17:47.440 --> 0:17:50.600 dope because everybody else is doping. But I can't just 0:17:50.640 --> 0:17:54.000 say I'm doping because then I won't win. And it's 0:17:54.080 --> 0:17:57.120 really important to all these cancer survivors that I win 0:17:57.400 --> 0:18:00.640 because it gives them hope and the way I'm raising 0:18:00.680 --> 0:18:03.080 hundreds of millions of dollars for them, So isn't that 0:18:03.119 --> 0:18:05.080 more important? What do you think about the role of 0:18:05.160 --> 0:18:07.600 charisma and all of this, because when we think about 0:18:07.720 --> 0:18:11.960 Elizabeth Holmes or Jeff Scaling or Lance Armstrong, all extraordinarily 0:18:12.040 --> 0:18:15.159 charismatic people, what role do you think that plays a 0:18:15.200 --> 0:18:17.840 play a role in convincing others? Do they also turn 0:18:17.880 --> 0:18:20.399 their charisma on themselves? Well? I think so, and I 0:18:20.920 --> 0:18:23.679 think they end up believing their own bullshit. That's a 0:18:23.680 --> 0:18:27.200 critical component. But this goes back to the whole storyteller idea. 0:18:27.240 --> 0:18:31.040 I think part of being charismatic is putting yourself at 0:18:31.040 --> 0:18:33.919 the center, just like Edison did, of a drama in 0:18:33.960 --> 0:18:37.479 which you are the main character, and telling that story 0:18:37.520 --> 0:18:40.480 in a compelling way is what gives you that charisma 0:18:40.600 --> 0:18:43.680 so that people want to follow you. You know, if 0:18:43.720 --> 0:18:47.159 you put lines of code on a piece of paper, 0:18:47.520 --> 0:18:49.479 you know you can believe that some people are going 0:18:49.520 --> 0:18:51.640 to sign up for that, but no, what they're really 0:18:51.640 --> 0:18:54.560 going to sign up for is a vision. A vision 0:18:54.640 --> 0:18:58.040 as expressed by a visionary, and Steve Jobs was also 0:18:58.119 --> 0:19:01.560 one of those characters. So, yeah, is hugely important because 0:19:01.600 --> 0:19:09.400 it turns out that even high octane, sophisticated investors end 0:19:09.480 --> 0:19:13.159 up putting down hundreds of millions of dollars for people 0:19:13.359 --> 0:19:19.679 who tell compelling stories rather than really demonstrate the value 0:19:19.720 --> 0:19:23.400 of their product. In a kind of it's actually refreshing 0:19:23.520 --> 0:19:26.600 in a way that in this increasingly technological world, the 0:19:26.640 --> 0:19:30.720 power of narrative remains. Thus it has ever been good 0:19:30.760 --> 0:19:33.800 for us storytellers. Yeah, right, there's something encouraging about that. 0:19:33.960 --> 0:19:36.960 So I was thinking about the role of the believers, right, 0:19:37.000 --> 0:19:39.600 because there's the role of the visionary or the fraud star. 0:19:39.720 --> 0:19:42.080 But then there's also they wouldn't get anywhere if it 0:19:42.119 --> 0:19:44.399 weren't for the role those of us who are willing 0:19:44.400 --> 0:19:46.680 to believe play in this. And I love this from 0:19:46.720 --> 0:19:49.480 Maria Konikova's book The Confidence Game. She wrote, when we 0:19:49.520 --> 0:19:51.879 step into a magic show, we come in actively wanting 0:19:51.920 --> 0:19:54.359 to be fooled. We want deception to cover our eyes 0:19:54.359 --> 0:19:56.880 and make our world a tiny bit more fantastical, more 0:19:56.880 --> 0:19:59.360 awesome than it was before. And the magician in many 0:19:59.400 --> 0:20:02.359 ways uses the exact same approaches as the confidence man 0:20:02.560 --> 0:20:06.080 only without the destruction of the Conen's game. And so 0:20:06.320 --> 0:20:10.000 what makes people believe? Do you think Elizabeth Holmes famously 0:20:10.080 --> 0:20:14.600 raised billion dollars from really wealthy investors. What makes people 0:20:14.640 --> 0:20:16.879 like that who should know better? What makes them marks? 0:20:17.400 --> 0:20:20.600 I think it's hardwired in our psychology. I mean, the 0:20:20.640 --> 0:20:24.840 fact is that we are not really supremely rational beings. 0:20:24.880 --> 0:20:28.960 We're guided by snap judgments that we like to make 0:20:29.240 --> 0:20:33.480 based on our revolutionary history. But it doesn't always service 0:20:33.560 --> 0:20:37.960 well when it comes to analyzing complex problems like whether 0:20:38.040 --> 0:20:40.320 or not to invest one hundred million dollars in a company. 0:20:40.480 --> 0:20:43.240 But the believers, you know, there's another phrase, it's weird 0:20:43.280 --> 0:20:45.240 the way you know. You do projects, and I'm sure 0:20:45.280 --> 0:20:47.679 you find the same thing, but you do stories and 0:20:47.680 --> 0:20:50.080 then they add up in ways that you don't expect. 0:20:50.200 --> 0:20:53.239 I did a film about the Church of Scientology, and 0:20:53.320 --> 0:20:56.879 one of the subheads of the book on which the 0:20:56.880 --> 0:20:59.760 film was based, Lawrence Wright's book Going Clear, was the 0:21:00.000 --> 0:21:02.840 Prison of Belief. And the idea of the prison of 0:21:02.920 --> 0:21:06.359 belief is a really interesting one. It's a prison really 0:21:06.440 --> 0:21:12.199 with no bars and locke. But you're in prison because 0:21:12.240 --> 0:21:15.199 you need to believe. And I think for people who 0:21:15.240 --> 0:21:17.520 are believing in Enron for a long time, you know, 0:21:17.520 --> 0:21:19.920 because nobody could really figure out how they made their money, 0:21:20.000 --> 0:21:21.840 or the people who believe in Lance Armswer or the 0:21:21.880 --> 0:21:27.200 people who believed in Elizabeth Holmes. Once you believe, it 0:21:27.280 --> 0:21:31.360 becomes very hard to undo that belief, and so much 0:21:31.400 --> 0:21:34.479 so in the poignantly in the Paramo's story, you know, 0:21:34.600 --> 0:21:39.360 Tyler Schultz is going to his grandfather and saying, you know, Grandpa, 0:21:39.760 --> 0:21:43.520 it's fraud there. And he had become a prisoner of 0:21:43.520 --> 0:21:46.800 his own belief, so he wouldn't even believe now his 0:21:46.840 --> 0:21:51.000 own grandson. That's such a compelling example. And do you think, 0:21:51.080 --> 0:21:54.359 just as it is for the visionary, turn fraud start 0:21:54.440 --> 0:21:57.320 for the believers too. The answer is way more complicated 0:21:57.320 --> 0:22:00.560 than greed, right as the prison of belief would demonstrate. 0:22:01.040 --> 0:22:05.440 I think so, because sometimes you see people hanging on 0:22:06.119 --> 0:22:09.960