In Defense of Hype

March 15, 2018, 8:46 PM UTC
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Yesterday, the Securities and Exchange Commission reached a settlement with Elizabeth Holmes, the turtleneck-togged founder of the once-darling of the startup set, Theranos, after alleging that she and another Theranos executive had engaged in an “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.” (Holmes, who agreed to pay a $500,000 fine, forfeit shares, and give up voting control of Theranos, did not admit or deny the allegations; there is also an ongoing federal criminal probe into the company.)

Theranos, one of the most celebrated “unicorns” in Silicon Valley—which Fortune put on the cover of the magazine in June of 2014—turned out to be just that: a mythical creature. The author of that cover story, Roger Parloff, who without question is one of the best reporters I’ve ever met, wrote a powerful mea culpa after it became clear—thanks to dogged reporting by the Wall Street Journal’s John Carreyrou—that the company wasn’t what it purported to be.

(I urge all of you to read not just Carreyrou’s reporting series, but also Roger’s candid and reflective essay, from December 2015, which laid out how the company had misled him—and, more importantly, how he had misled himself. Roger’s essay, in my view, is a testament to his great character; it’s also a glimpse into how difficult it can be to report on companies and new technologies, especially in an age when advances are coming so swiftly.)

Carreyrou, to his great credit, managed to pierce the wall of secrecy that Holmes had constructed around her startup—a secrecy that is particularly common in health, science, and medtech startups, in my experience. [My colleague Polina Marinova has an excellent essay on the subject in Fortune’s Term Sheet today (“The Big Lesson Silicon Valley Can Learn From the Theranos Scandal”), which you can also read here.]

And to be sure, the sad Theranos saga is a sobering reminder of how essential a healthy skepticism and due diligence are when it comes to evaluating companies—particularly those that are secretive or excessively cryptic about the technologies they’re hawking.

But that said, skepticism is not the same thing as cynicism. And this may sound odd, admittedly, given yesterday’s Theranos news, but I would argue that we need a little hype now and again in the startup world—just as the human body sometimes needs a rush of adrenaline. Maybe not “hype” in the sense that many think of it (and as Merriam-Webster defines it): a “deception” or “put-on”—but rather as the technology research firm Gartner uses the term in its annual and widely read “Hype Cycle for Emerging Technologies.”

Each year, Gartner’s Hype Cycle, highlights “a set of technologies that will have broad-ranging impact across the business…It features technologies that are the focus of attention because of particularly high levels of hype, or those that may not be broadly acknowledged but that Gartner believes have the potential for significant impact.”

Read through old Hype Cycle reports—like this one from 2011—and you’ll see that many of the technologies then considered at “the Peak of Inflated Expectations” seven years ago, according to Gartner, are technologies that are actually coming of age today, including:

… wireless power, Internet TV, NFC payment and private cloud computing. Other newly featured high-impact trends include “big data,” the Internet of Things and natural language question answering.

Invention—as brilliant as it may be—dies without adoption. Adoption often fails without continued investment. Investment often follows vision. And vision needs to be shared and promoted…and, yes, sometimes hyped in order to find an audience amid all of the other competing visions, investments, and inventions.

Be skeptical—absolutely—when someone is telling you they’re changing the world. But don’t dismiss everyone out of hand who claims they are. Otherwise, the world will miss out on some pretty outlandish world-changing ideas—from autonomous vehicles to cancer-fighting checkpoint inhibitors to smartphones that can warn of an impending stroke to deep-learning machines that may solve some of the biggest mysteries in human disease. All of these were far-fetched, and thankfully, promoted by true believers.

To paraphrase Gordon Gekko, a little hype is good.

This essay appears in today’s edition of the Fortune Brainstorm Health Daily. Get it delivered straight to your inbox.

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