Review: Inside the House of Lies at Theranos

Youth. Charm. Fearlessness. Ruthless focus. These can be positive attributes in an entrepreneur, but in a more rational world, technology investors wouldn’t overvalue them. Risk capital would be allocated based mostly on evidence, data, progress towards milestones—in short, on proof.

In the real world, of course, proof is hard to come by. Hope, avarice, or fear of missing out often drive investors to plunge ahead. That’s when trust, gut instinct, and blind faith become the proxies for ground truth.

That works, at least some of the time. Venture investors know they’ll lose many of their bets—that’s why it’s risk capital. The system is built to absorb the small failures. All you need is one good roll—like Andy Bechtolsheim’s $100,000 check to Google, written in 1998, years before the company stumbled upon a viable business model; in 2010 Forbes estimated the value of Bechtolsheim’s investment at $1.7 billion.

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