[smt88]

This wouldn't be that big of a story if Theranos just failed. The story here is that they lied repeatedly to the press and possibly to investors.

Elizabeth Holmes' ability to raise money also seemed to be based entirely on nepotism, rather than the meritocracy that people want to believe SV has accomplished.

[kami8845]

>Elizabeth Holmes' ability to raise money also seemed to be based entirely on nepotism.

Right, she should've rejected that money, it would only be fair if it was as hard for her as it is for us.

Why is it important that she has connections? Does being upset about that help you in any way?

Sorry, I'm really jaded about this kind of victim mentality. Ignore what advantages others have and build your tower as high as you can.

[mikeash]

It's important because it means that capital is not being allocated optimally.

From an individual point of view, sure, you really can't control stuff like that, and you're better off concentrating on making your own stuff better.

But that's not the conversation here. This discussion is about the whole system, and particularly the statement that "this is how innovation works."

[kami8845]

Who would you personally feel more comfortable lending money to, a complete stranger (who might very well need it more -- aka optimal distribution of resources) or someone within your family or close circle of friends, where you have some level of confidence that they will simply run off with your money or squander it?

[mikeash]

Virtually everyone finds the stranger more comfortable. They may not say so, but a quick look at their finances will reveal most of their assets in bank accounts, stocks, bonds, etc., and almost none in the form of loans to family members.

[kami8845]

Quite a perverse strawman from someone who just a second ago asserted what "this discussion is about".

[mikeash]

Uh, you're the one who asked who I'd be more comfortable lending money to. If it's not relevant then why did you bring it up?

[smt88]

That's a big (and incorrect) assumption about my mentality. This isn't about trying to claim someone is a victim, least of all myself!

It is, however, a cautionary tale about how inefficient and risky nepotism is. It didn't hurt me at all, but it hurt the investors who failed to examine Theranos' merit.

It's also separately interesting because SV's meritocracy is a fairly prevalent myth, and it's what people believe (or believed) was special about SV in the first place.