Back in the M&A departnt, I imdiately opened a search window.
I typed the keyword into Google, and the first result was an article from the *Wall Street Tis*, published just three days ago.
"Our dical system is broken. Often, by the ti we detect a disease, it’s too late to do anything. The system needs fixing."
Elizabeth Hols, 29, who studied chemical and electrical engineering at Stanford University, founded the biotech venture "Theranos" with this vision: to fundantally improve the way diseases are diagnosed…
This person is, in fact, the infamous fraudster.
Currently, she is the CEO of a venture company in Silicon Valley. The company’s na is Theranos, a firm providing dical diagnostics services. The business model is simple:
[Just a few drops of blood from your finger, and we’ll tell you if you’re sick! All via email!]
Early detection is key to battling diseases. Yet, few people go to hospitals for blood tests — they’re expensive, they take hours, people fear needles… If you don’t have symptoms, why go through all the hassle? So, they keep putting it off until the golden window for treatnt is missed.
Theranos presented a solution to this.
[Blood tests? Not a hassle anymore! Available at local pharmacies, or even supermarkets!]
They claid to have groundbreaking technology — an innovative thod to diagnose hundreds of diseases with just a small amount of blood.
Theranos announced plans to set up "health centers" in supermarkets and pharmacies. Get a health check-up while shopping!
At the health center, they’d draw a small amount of blood, place it in a "nanocontainer," and send it to Theranos's cutting-edge lab. This lab, equipped with state-of-the-art devices, would conduct ultra-fast tests and send results to custors via email. Fast, convenient, and even affordable. Plus, once people started using it, they would co back regularly — health check-ups should be frequent, after all.
Innovative technology. A market with high growth potential. A vision to prevent diseases. With these three elents, Theranos won over billionaires and flourished, once reaching a corporate valuation of $9 billion (about 11 trillion won). CEO Hols was showered with accolades: "The next Steve Jobs," "the first female CEO of a unicorn company," "a revolutionary innovator," "a pioneer in dical diagnostic technology," and more.
The problem was… the technology was fake.
There was no such technology. Diagnosing diseases with just a few drops of blood is impossible. A certain amount of blood is required for an accurate diagnosis. Hospitals don’t draw large amounts of blood just to trouble patients.
But real-world limitations didn’t matter to Hols. She admired Steve Jobs. What was Jobs' trademark? Making the impossible possible! By declaring "It will work!" she created a "reality distortion field," expecting her employees to sohow make it happen.
So Hols went around saying, "It will work!!!" while pushing her employees and focusing on gathering investors. When investors requested evidence of the technology, she refused to provide docuntation.
"That’s proprietary company data. What if our competitors steal it if we show it to you? Just trust us and invest so money."
Of course, not everyone would fall for such nonsense. Most investors wisely passed.
However, there is a social class particularly vulnerable to this kind of fraud:
The elderly with heads of silver hair. Hols was even able to persuade so diamond-status nas among the elderly. This included forr Secretary of State Schultz and legendary diplomat Kissinger. All of them were once sharp-minded, but by this ti, they were nearly 90 years old—a ti when the brain tends to loosen up.
Hols was a young woman in her twenties with blonde hair and blue eyes, quite pretty. She had the right look. Blonde—people might think she’s not too bright? But she was a Stanford dropout, no less! Just like Jobs, Gates, and Zuckerberg! She even wore a black turtleneck every day, declaring her desire to beco "the Steve Jobs of healthcare." Admirable, isn’t it?
She succeeded in winning over a few elderly gentlen, who reportedly treated her like a granddaughter. And when this granddaughter figure shouted, "I need more investnt money!" the old n would call their lawyers, who would then reach out to wealthy clients on their lists.
There’s a young woman, the next female Steve Jobs, whom Kissinger and Schultz are investing in, but they’re only accepting investors until the end of the week! Interested?
The investnts piled up, reaching close to $11 billion, and Theranos signed contracts with well-known corporations. The large supermarket chain Safeway even invested $400 million to remodel 969 of its locations to include Theranos health centers.
But… to repeat, there was no such technology. The “reality distortion field” hadn’t actually kicked in yet. Custors' blood samples kept arriving, but there was no way to test them. Eventually, Hols decided to use diagnostic equipnt from a competitor. She installed another company’s devices in her so-called “state-of-the-art lab” and ran them.
If found out, this would be a disaster. So, the state-of-the-art lab beca a restricted area. Except for a couple of operators directly handling the equipnt, even employees of the sa company were not allowed entry. When investors requested tours, Hols flatly refused.
"No, no! I told you, this is proprietary technology. We can't reveal it!"
Does it sound absurd? It’s all true. This case beca so famous that, by the ti I died, it had been adapted into both a drama and a movie. The scam would be exposed two years later. Right now, Theranos is just beginning to attract dia attention. Articles are appearing in quick succession:
Soon, everyone will be hailing her as the next Steve Jobs. And in two years, a whistleblower will report this to *The Wall Street Tis*. Despite countless threats, a journalist from the *Wall Street Tis* will expose the story, and the world will learn the truth about her.
Wait a minute! What if I expose this scam myself? Will it lead to the outco I desire?
“Hmmm…”
The outco I want is obvious. The first stage of my survival plan goes like this:
= Within two years, establish a hedge fund valued at $10 billion. =
What if I redirect the money that rich white investors poured into a fraudster into my fund instead?
I could reach my target amount in one go.
The victims were already swayed by the selling point of “early disease detection.” They’d have no reason to resist switching over to my fund. Plus, I actually plan to pour that money into finding cures for incurable diseases. So, this would be beneficial for all humanity.
But… sothing doesn’t sit right.
“Why did these people fall for it?” Even if they’re older, there must be a reason why such intelligent people fell for such an obvious charade.
***
et Rachel’s father in person and learn more about Theranos and Hols.
Rachel and I are just coworkers. It’s not common to introduce a simple colleague to one’s father. But it just so happens that a good event is coming up in two months: Thanksgiving, an Arican holiday spent with family. If, on that day, a poor orphaned friend sheds so tears, Rachel, being kind-hearted, might just invite over.
Beco close enough with Rachel that she invites to Thanksgiving.
As I organized this new plan in my notes, a ssage popped up.
[Rachel Mosley: Are you free right now?]
11th-floor cafe.
It wasn’t hard to find Rachel. Everyone in the cafe was glancing in one direction—Rachel was sitting in a secluded corner with her head down. Deep in thought, she didn’t notice approaching, sipping her coffee while staring at the floor.
‘I want coffee too… but if I walk in holding coffee, it won’t look good. It’d seem like I had nothing better to do.’
“Rachel?”
“Oh, you’re here?”
Her face looked… off.
“Did sothing happen?”
“Oh, no. Uh, would you like so coffee? I’ll buy it for you.”
“I’m fine, I have a eting in 20 minutes.”
“You should have told if you were busy…”
“I ca anyway because I was worried.”
Yes, I’m that reliable friend who cos even when there’s work to do. You wouldn’t leave alone during the holidays, right?
“Well… I’ll still get you so. Just wait a mont.”
Our dear Rachel, so kind. She noticed my greedy gaze toward the coffee and went right to the counter. A mont later, she returned with an iced Aricano.
“Thanks, I’ll enjoy it.”
I gratefully accepted it, getting my caffeine fix. While I waited for Rachel to start talking, she kept hesitating. If I leave her like this, it might take another 10 minutes. And 10 minutes is a long ti for soone on borrowed ti.
“You went to a client eting today, didn’t you?”
“Huh? How did you know?”
“I heard it when I went to get this.”
I dangled Evidence A, a pair of earbuds, and Rachel nodded in understanding.
Then she started explaining. In short, the CEO didn’t even look over our work properly and seed to have noticed so manipulated figures but brushed it off.
“He went to the trouble of requesting a feasibility study, but didn’t even read it? Doesn’t that seem strange? And it’s not like this request was cheap.”
“Right.”
“When I think about it, it’s all strange. A company could easily handle financial modeling on its own… With a Bloomberg terminal and an MBA graduate, they could do it in-house to save costs, right?”
“Right.”
“Not just ‘right’! Didn’t Sean say there was a different real purpose to this eting? What was it?”
Looks like my words from yesterday had been on her mind. Coming straight to when curious is a good sign.
“It’s just a guess, not certain.”
“What’s your guess?”
“Investnt banks are essentially interdiaries, right? So I thought of it like a real estate agent.”
I have to be cautious when explaining. I need to co across as a modern-day Conan. When Rachel introduces at Thanksgiving, “This is my friend, Conan” sounds better than “This is my friend, the orphan.” To be Conan, I need to find answers in a way that seems insightful, not by saying, “The culprit secretly confessed to .”
“Let’s assu the CEO you t today is a landlord. He owns nurous buildings and makes money from the rent they generate. Now, he’s interested in buying a new building but isn’t sure yet. What would he ask the agent?”
“Hmm… Will the land price go up? Is there demand?”
“Exactly. But the CEO can look up land prices on his own; that information is readily available these days.”
What the client wants isn’t property prices. In this information age, price data is easy to co by, so there’s no need to hire Goldman for that.
“But demand is different. He’d be curious if other landlords are eyeing the sa building, if they’d offer the sa price, or if they even have the funds to buy it.”
What the client truly wants is to know the spare cash and purchasing interest of his rivals. The property might still be a bit pricey. He’d prefer to wait for the price to drop but is concerned other companies might snatch it up in the anti.
“Soon, they’ll likely ask us to prepare a competitive pitch. They’ll mix the real property in with other listings and observe the reactions.”
“So… inflating the numbers…”
“Was probably a client request.”
They’ll show inflated listings to competitors on purpose. If competitors show interest, the MD will give a hint, and our client will snatch up the property. If competitors show reluctance, our client will wait for the price to drop further.
“Haha… I hadn’t thought of it that way…”
Rachel looked sowhat defeated. Being raised in a sheltered environnt, she tends to think too much by the book.
“I… I don’t think I’m cut out for this.”
She’s right; Rachel doesn’t fit in with Wall Street at all. But leaving too soon would be a problem.
“You’ve just started; how would you know that?”
“But…”
“Call if you’re facing a tough situation. I’m here to listen and help you think things through.”
Sorry, but I can’t let you go for the next two years. You’re the client who’ll bring in $10 billion in seed money for my fund.
“…Thank you. That’s reassuring.”
Rachel’s gaze was noticeably different from yesterday. It wasn’t the look you give a passing colleague; it was the look you give soone you trust and rely on.
“I’ve been talking too much about myself. How’s it going with you? How’s the new departnt?”
She’s even asking about now. It’s just a polite question, but hearing such polite words from the once-distant princess is a significant step forward.
“Not bad. My seniors seem nice.”
“That’s good to hear.”
“But I’m a little on edge too. This staffing is different from the usual.”
“Oh! You an that project?”
This project isn’t just any project. It’s a competition that started during the welco drinks—a match between associates and newcors.
“I imagine it’s a lot of pressure…”
“More than pressure, I’m curious. What kind of challenge will they set for us…”
I plan to keep Rachel inford about the details of this match. Those details will eventually reach the ears of Rachel’s father, who’s well-connected with wealthy people.
Then—
Ding!
An email arrived. As I read it, I couldn’t help but frown.
[Staffing eting ti change: 2 PM -> 4 PM]
The eting had already been postponed once and was delayed again. Delayed etings are common… but since it’s related to an important match, it bothers . Hopefully, nothing unexpected has happened.
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