Fools Need Not Apply
The Cautionary Tales of Theranos, Titan, and More
The shocking thing about the truth is that so few of us wish to hear it. We would much rather believe a “beautiful lie” that makes us feel good than face an uncomfortable reality. This aversion to truth, however, stifles innovation, as it makes us susceptible to master manipulators and frauds. And when those frauds are exposed, it damages entire industries as well as consumer trust.
Ask yourself, what do Bernie Madoff, Elizabeth Holmes, Sunny Balwani, Sam Bankman-Fried, and Stockton Rush have in common? Yes, they all destroyed lives, created cultures of fear and control, and charmed the media (if not the public) with their visions for the future; but they also share very similar traits and a pattern of behavior that’s difficult to ignore.
We’d love to believe that these individuals were merely bad apples, or people pleasers who were swept up by circumstance, or even brilliant thinkers who regrettably broke the rules for a noble cause. But that’s not the truth. Unfortunately, this particular type of fraud isn’t a fluke or an accident—it’s a personality.
And it is this insidious personality that can charm and manipulate the most straight laced among us. Madoff “managed” the money of everyone from poor Jewish widows to half the nobility of Europe. Holmes charmed former U.S. Secretary of State George Shultz into such fervent loyalty, he pushed out his own grandson in favor of the blonde “inventor.” Stockton Rush convinced billionaires and explorers to enter a dangerous submersible and disregard the ominous popping of carbon fiber—in some cases, repeatedly.
Yet ask someone who worked in those industries at the time, and they’ll say “everyone knew.” There were suspicious about Bernie Madoff’s secret hedge fund that never made a single trade, Elizabeth Holmes’ Edison that never worked, and Stockton Rush’s carbon fiber hull. But, unfortunately, it takes two to tango—and instead of someone preventing disaster, most enabled it to continue.
For every Stockton Rush, there is a Tony Nissen—OceanGate’s Director of Engineering who prevented people on his team from speaking up about the dangers of Titan. Elizabeth Holmes found her psychological twin in Sunny Balwani, making them two little peas in a fraudulent pod supported by powerful investors in creating a culture of censorship and silence. Bernie Madoff had his entire team on the 17th floor of the Lipstick Building, along with Jeffry Picower, who was the largest beneficiary of Madoff’s infamous Ponzi scheme.
But you’ll also notice that in all of these situations, employees tend to get younger and younger as the fraud continues—while older experts who push back against the founder, like David Lochridge or Ian Gibbons, are conveniently removed. Why? Because younger employees are more gullible, less likely to speak up, and often too afraid to say no. This creates not only a culture of fear, but also a cult-like environment in which the manipulator is king.
For example, Stockton Rush said that he wasn’t going to “force people to join [his] religion,” but willing disciples were not allowed to question his brilliance. Elizabeth Holmes told Theranos employees that “you all are part of something that is a revolution, and you’re part of something that is going to change our world. What higher purpose is there in life?” Her side kick, Sunny, similarly encouraged devotion to the company, telling employees that they should “carry this sense of mission in [their] hearts every single day.” As for Madoff, if you didn’t believe, you could leave.
And whether it was because of greed, ignorance, ego, or fear, there were lots of people within these fraudulent enterprises who enabled the fraud to continue, ultimately putting lives at risk for fear of rocking the boat or putting themselves at a disadvantage. All the while, the supposed innovation behind these missions simply didn’t exist. But that, of course, was never the point with these manipulative personalities.
Whether it’s Madoff, Holmes, Rush, or others, the appearance of genius is far more important than its actual existence. The persona trumps everything—even if it means looking like a slob, like Sam Bankman-Fried, to suggest you’re so smart that appearance doesn’t matter. Each of these manipulators understood that how they were perceived was far more important than what they actually created or produced. And this is all the more concerning when you realize that the average investor or consumer lacks the necessary discernment to tell the difference.
But if these cautionary tales have taught us anything, it’s that we can’t trust what we’ve previously believed to be trustworthy. Bernie Madoff was the Chairman of NASDAQ, served on the SEC's Market Regulation Advisory Committee, held multiple leadership roles in the National Association of Securities Dealers (NASD), had ties to the Securities Investor Protection Corporation (SIPC), and held a prominent position in very affluent communities. He was well-respected, considered trustworthy, and his clients included people from Hollywood, European royalty, and old-money families, all of whom vouched for him. However, his public profile was shockingly modest, using exclusivity to scam those who believed he was doing them a favor, rather than being part of a trend.
In the case of Elizabeth Holmes, she masterfully constructed a myth of genius and credibility in a different way. She was on the cover of Fortune, named the youngest self-made female billionaire by Forbes, featured in the TIME 100 list of most influential people, named “Woman of the Year” by Glamour, celebrated as a visionary founder by Inc., and was a high profile speaker at major events, such as TEDMED & TechCrunch Disrupt. Her board lent her credibility with big names such as Henry Kissinger, James Mattis, William Perry, David Boies, Richard Kovacevich, and Bill Frist. All of these men helped her take on a more powerful persona, escape regulatory scrutiny, and connect with even more powerful investors.
As for Sam Bankman-Fried, he loved to talk to the media, maintaining an open door policy for any and all journalists interested in asking him questions. As a result, major publications like Bloomberg, Vox, Financial Times, New York Times, New Yorker, and New York Magazine portrayed him as a brilliant, ethical crypto visionary. Fortune placed him on the cover as the “next Warren Buffett.” Sequoia Capital invested in FTX, as did SoftBank, Alan Howard, and Paul Tudor Jones. Then Tom Brady, Gisele Bündchen, and Stephen Curry joined a high-profile ad campaign, giving FTX broad consumer appeal.
Similar to the others mentioned here, Bankman-Fried didn’t just rely on buzz within his niche industry—he actively borrowed authority from established institutions: effective altruism, major media outlets, top-tier investors, celebrity influencers, and even government bodies to conceal the instability of his fraudulent enterprise. And instead of preventing fraud from taking place, these big names, institutions, and revered organizations enabled it, offering a false sense of safety for investors and consumers who should have proceeded with far greater caution. In fact, had it not been for alignment with “trustworthy” names and institutions, many, looking back, would have followed their gut or intuition earlier.
Whether it was the fact that Elizabeth Holmes never blinked (or the bizarre change in her voice) or Bernie Madoff’s easy on/off charm switch, people with firsthand experience of these fraudsters consistently suppressed their intuitive alarms—justifying moving forward simply because bigger names had already done so. It was precisely this fear of missing out or looking foolish that led so many people to a harmful end. After all, how many would have climbed aboard the OceanGate submersible had the famed Titanic explorer Paul‑Henri Nargeolet not been on board as well?
Yet it’s that faint warning from your intuition that is meant to protect you from these types of situations. That slight internal pause that makes you question the story you’ve been told, or the sense of fear that tells you no—that’s what you should listen to in these situations, not the clout of the board, the cover story from Fortune, or the credentials that are included on the company’s sales page.
OceanGate linked themselves with Boeing; Sam Bankman-Fried positioned himself as a principled philanthropist and ethical leader—someone trying to do crypto the right way. And even today, there are CEOs positioning themselves as leaders of new and exciting movements for a better world with better technologies and better visions for the future without actually inventing anything, except for the hype of their own persona (often as the savior of humanity).
That’s the danger we help you avoid at Stealth Dog Labs by validating your intuition rather than letting you fall prey to a complex mythology designed to obscure the cold, hard truth. We believe that it is absolutely essential that you protect yourself from these personalities, because the Madoffs of the world—and the media outlets complicit in their rise—never take full accountability for the harms they commit.
In fact, Madoff, up until his death, blamed the greed of his investors. Holmes appears to be using her husband to start another diagnostics company from prison. Sam Bankman-Fried has said the hardest part of prison is that you can’t make an impact on the world—though the “staff,” he says, are nice. And while Stockton Rush is dead, the damage he did to the submersible industry likely mirrors the harm Holmes has done to female founders in tech and healthcare.
But even though it literally took a village to cloud the truth, it also took a willingness to lie to ourselves—an eagerness to believe the “beautiful lie” over the truth. Whether it was saving the world with crypto, preventative diagnostics, democratizing the oceans, or simply reducing risk for stable returns, that self-deception enabled these frauds to continue as well.
As Gavin de Becker wrote, “We are the only animal that will sense danger and still walk right into it because we’re worried about being rude.” But it’s also true that we will justify a lie simply because we want to believe it too, even if our instincts are screaming at us to run in the opposite direction. We want to be part of the future, even if we don’t understand it. And we’re quick to defend a liar because we don’t want to be wrong, twisting our brains like a sponge in an attempt to understand why.
At Stealth Dog Labs, we provide the discernment needed to align yourself with true inventors, leaders, and game changers—and avoid the charlatans in the process. If you think that’s easy to do, just ask the people who trusted Madoff, Holmes, or Rush. A lie can travel halfway around the world while the truth is still putting on its shoes, but at Stealth Dog Labs, we provide the truth early and often—but only for those who actually wish to hear it.
You can learn more at StealthDog.com.