Desperate to believe in whatever’s new

In 2003, Elizabeth Holmes dropped out of Harvard to start a company called Theranos.

She was only 19 but she was smart, driven and charismatic.

Everyone was desperate to believe in something new and she was it.

She was young, female, had piercing blue eyes, dressed like Steve Jobs – she was the future.

Everyone who met her said she convinced them she was going to change the world.

She knew she would need an impressive board who shared her vision. So that’s what she assembled: former secretary of state Henry Kissinger, former secretary of state George Shultz, former senator Sam Nunn, former senator Bill First, former secretary of defence William Perry, and seven more on that level.

She became a Fellow of the Harvard Medical School Board and was featured on the cover of

and magazines. By 2014, her company was valued at $10bn. In 2015, she was one of “100 Most Influential People”.

But the next year her company, Theranos, was exposed as a fake, worthless. Rupert Murdoch lost $121m and Betsy DeVos lost $100m.

In 2018, she was found guilty on four counts of criminal fraud.

So how did these heavyweight businesspeople and world leaders fall for it?

They desperately wanted to believe in something, so she made herself become that thing.

In 2010, Adam Neumann opened a new company called WeWork. Like Holmes, he was young, smart, driven and charismatic. Like her, he knew what everyone wanted to believe in, so he made himself that thing. He made his main focus “start-ups”, and his main message was “community”.

Everyone who met him said he convinced them he was going to change the world.

Like Holmes, he knew he needed to borrow a lot of money.

And he knew that, like a Ponzi scheme, you need to keep borrowing more than you spend.

At the time, a journalist said: “Millennials aren’t interested in work, they just want a cause, something to follow.” So Neumann gave them a cause, changing the world of start-ups into a community. All his buildings would have bright colours, cappuccino machines, vegan food, soft furniture, group games, free beer, everything that was more fun than work.

And it was easy to sell this vision to people looking for a cause: in 2011, a real-estate developer invested $15m; in 2016, a venture capitalist invested $430m, another one invested $1.7bn; in 2018, a private equity company invested $400m; in 2018, a bank invested $3bn; in 2019, another bank invested $2bn. WeWork was valued at $47bn – investors included JP Morgan Chase, Goldman Sachs and Harvard Corporation.

But it all unravelled when Neumann tried to do an IPO with WeWork. After inspecting its books, one analyst reported: “We cannot even fathom the contortions that would be necessary to articulate a path to profitability here.”

The reported: “WeWork lost $219,000 each hour of each day from March 2018 to March 2019.” The IPO obviously failed and WeWork’s value fell by 75 per cent, from £47bn to just $8bn – the workforce was cut by nearly two thirds, from 14,500 to 5,600.

So again, that’s what happens when people are desperately looking for something new, and desperate to believe anyone who can provide the appearance of that.

We should be used to it in advertising, we see it all around us, all the time. We are desperate to believe in the new thing, whatever it is. We don’t question it so long as it is new.

The key word is ‘new’ – words like logic, common sense and credibility are unimportant.