Confidence never trumps competence

A perspective on HBO’s ‘The Inventor: Out for Blood in Silicon Valley’

Richard Feynman said, “The first principle is that you must not fool yourself, and you are the easiest person to fool.”

Everything about the Elizabeth Holmes story is captured in that quote.

Blind faith leads down dark paths, and as you can see in her eyes towards the end of the film, she is in a dark place, with nowhere else to go.

I have two primary issues with the film, its title and its targeted protagonist.

I’ll come to the first issue, its title, at the very end of this article.

Let’s look at our protagonist.

Every good film needs a hero and a villain, and Holmes is painted as the archetypal, megalomaniac villain here.

With cutesy, blue eyed, goody-two-shoes, whistleblower, Tyler Schultz playing the underdog hero.

But here’s my perspective, he is her, and she is him.

Two ambitious young people, full of the hubris of Silicon Valley’s digital gold rush, trying to tie their egos to exponential success. The only difference being Holmes’ spirit of risk taking to ‘start something’ in contrast to Schultz’s lack of spirit and desire to be ‘part of something’.

They are born of the same culture. And in the end, both got what the internet age values the most, fame and notoriety.

True failure in that culture is to be invisible and forgotten.

For both of them, the ambition they had (bred into them I should add) led them to break Feynman’s first principle, they both fooled themselves.

Schultz came clean, not through his internal sense of moral duty, but because a journalist asked him too, and his ego liked the attention, and his envy liked the opportunity to bring down Holmes (who he clearly was jealous of, especially his grandfather’s adoration of her).

Holmes never came clean, and seemingly still hasn’t.

In the first part of the film, her university professor of pharmacology tells her that her patent won’t work, and Elizabeth ignores her.

She fooled herself and that escalated, catastrophically, over the next decade.

Silicon Valley eschews a culture of confidence over competence.

Although I do think they are both the product of a rather disingenuous culture, Shultz is ultimately forgettable, but Elizabeth is a fascinating character psychologically.

And her hero worship of Steve Jobs is partially at the core of her failure.

Steve Jobs was a rather unpleasant and dysfunctional, yet brilliant individual. Probably a narcissist, certainly an egomaniac, he ruled with an iron will and uncompromising focus. Good ingredients in the recipe for huge commercial success.

But he had two other ingredients that were missing from the Holmes recipe, a product that worked, and a genius scientist (a computer scientist in Jobs’ case, Steve Wozniak).

Holmes is alone in her journey, and looks alone throughout the film, despite the team she built around her. Too many yes-men, and not enough no-women (the gender balance of her board should not go unnoticed).

Holmes shows all the signs of narcissistic personality disorder. A sense of grandiosity and entitlement. A lack of empathy with others. The use of charm, pity and rage, in that order, to get her own way. An ability to believe her own pathological lies. No sense of personal responsibility or accountability for failure. The projection of blame towards any available target.

However, as with many narcissists, there’s an insecure, childlike innocence that sits visibly and visually on the surface. A vulnerability that is very attractive to anyone with a modicum of empathy.

Charm, grandiosity, lies she believed in, and vulnerability. It’s no wonder she got what she wanted from her board and her investors (the yes-men!)

But for the foolishness that led to failure, she is actually just like her hero.

Given that type of personality, combined with a culture that celebrated those characteristics, its not hard to see why this narrative developed the way it did.

But let’s look beyond the villain, and beyond the culture that shaped her, into the dark heart of the problem. The billion dollar ambitions of the investment community, the Silicon Valley cult of ‘unicorn entrepreneurialism’ and the ruthless motivations of VC’s.

Two years ago I attended the Summit conference in LA. An exclusive gathering of the world’s entrepreneurial ‘change-makers’, basically, a backslapping opportunity for Millennial entrepreneurs and opportunistic investors. Predominantly from Northern California and related hubs and hotspots of similar culture.

What struck me most was the very polished veneer of success cloaking all in attendance. The organisers, the speakers, the attendees, even the staff, all had an air of Elizabeth Holmes-esque confidence.

Yet as I drilled deeper and interrogated people on their businesses, their success, their ambition, I was stunned by the refusal to consider risks, threats, problems, disruptive forces, or any possibility that failure even existed. I can only describe the atmosphere as negatively tense with positive optimism.

And behind the majority of bright-young-things with Jobsian ambition, was a layer of dull-old-things with millions of dollars waiting to be turned into billions. And almost all of them reminded me of the venture capitalist interviewed in the film who first backed Holmes and Theranos, Tim Draper (the guy with the bitcoin tie!!!)

The first red flag for me, was his claim that he ‘primarily buys into people rather than ideas’!

The bright-young-things hear this, and in their own naïveté, think that confidence is what they need, not competence. The very thing that lead to Holmes’ failure.

Statements like this, and all investors say it, leads to graduates trying to emulate the characteristics of narcissism. Their ambition is to have a personality disorder!

It’s no wonder that less than one in ten of these businesses fail.

Interestingly, there’s a willingness to offer financial support towards success, but there doesn’t seem to be much emotional support upon failure.

Although it may claim to be about people, investment is mainly a numbers game. And numbers people get excited about big numbers. It just sounds more attractive to say that people and great ideas are their focus.

This is where the investment world is fooling themselves, and the entrepreneurs they invest in.

This is one film, about one person, and one company that has succumbed to this culture. Perpetuated by this investment community, very few of whom have actually had significant losses as a result. In fact, their investment strategies, which are based on logic and probability, allow for many failures so long as one success is stratospheric. The VC’s may not have the ideas, but they do have experience, and that gives them competence and confidence.

I’m sure the producers could make a hundred similar films about similar characters and similar businesses that no longer exist.

As you can probably tell, I’m painting Elizabeth Holmes as a victim here, but only partially.

She is very complicit in this failure, but to attribute it solely to her would be low resolution thinking.

I am always keen to say that I am an inventor, not an entrepreneur.

The difference, for me, is that ‘better way’ beats ‘better off’.

The Theranos affair is born of this financially warped view of what success looks like.

Kevin Starr of the Mulago Foundation has a simple but effective criteria, based on four questions, to evaluate investment viability in an invention:

1. Is it needed?

2. Does it work?

3. Will it be used?

4. Will it reach those who need it most?

Each question requires an unequivocal ‘yes’ to ensure success.

For Theranos, question two was an unequivocal ‘no’.

Noticeable by its absence is the question, ‘will it make money?’

My own development model has five, sequential steps in the invention process;

Information, understanding, hypothesis, validation, execution.

By removing validation and skipping into execution, Holmes was never going to deliver value.

And that brings me to my second issue. The name of the film.

The title ‘The Inventor’ has an offensive double meaning.

The first, that being such a thing is in itself a foolish and laughable pursuit.

And secondly, that everything about Holmes is a pretence.

Her idea is a good idea, however, no hypothesis can be validated before its inception. She couldn’t have known if it would or wouldn’t work when the idea came to her.

This is the innate risk that all ‘creative’ people take. It is stepping out of the known, into the unknown. And progress is only made when that act is undertaken. That takes bravery.

George Bernard Shaw once said “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

But beyond literary quotes, this willingness to take a risk, a leap of faith, is at the foundation of human progress. It can be seen throughout history in the myths and legends of our heroes. We are wrong to see success and failure as different, they are both the product of intent.

Intent should be our measure.

And this is the question that remains unanswered about Elizabeth Holmes, what was her intent?

Was it to change the world with a disruptive invention?

Or was it to achieve success, wealth and fame, like her hero, at any cost?

The answer is not, and never is, black and white.

Personally, I think there’s a duality to all things.

There is selfishness in selflessness, and vice versa.

There is failure in success and vice versa.

There’s a good guy in every bad guy, and vice versa.

Whatever you may think of Theranos, and Elizabeth, it, and she, challenged the healthcare establishment, and presented a horizon that phlebotomy, and many other industries will inevitably steer towards.

Clay Christensen of Harvard defines the characteristics of a disruptive innovation as ‘typically cheaper, simpler, smaller, and, frequently, more convenient to use’.

The Edison certainly promised to be all of those things, it just didn’t work (I’m sure Elizabeth would add a ‘yet’ to that sentence).

Someone will realise Elizabeth’s dream in the near future. Simply because the idea now exists in the world. She put it there. That’s what inventors do.

Inventors hypothesise.

Inventors take risks.

Inventors fail.

Inventors succeed.

Inventors try.

Inventors change the world.

The world needs inventors.