It’s depressing to see a rather good magazine trotting out every lazy and factually incorrect VC trope in the book. Theranos didn’t even raise from VC - that’s a straight fuckup by the New Yorker fact-checkers. https://www.newyorker.com/magazine/2020/11/30/how-venture-capitalists-are-deforming-capitalism

There are all sorts of problems with venture capital (plus given I used to work for A16Z I’m supposed to like someone throwing rocks at Benchmark), but this would be bad work from a summer intern. Since when was Rupert a VC? Jesus people, turn up for work.

PSA: venture-backed tech startups have become a vastly bigger business than they were in the 1990s because in 1995 there were 100m PCs on earth and today there are over 4bn people with a smartphone.

I’m feeling slightly guilt about being cross about this. But. Whether Theranos, or Wework, were inflated by ‘VC’ or something else isn’t a pedantic quibble or definition - it’s actually a really important part of the story. 1/

Theranos got some early money from some Valley people. But the huge cheques came from east-coast, old economy money that did not really know anything about bio or startups - the founder sold them 'tech' and 'disruption' and they presumed someone else had done the diligence

People whose actual job is to understand and invest in startups doing what Theranos said it was doing were nowhere in sight. That was a huge red flag. The 'VC angle' is not 'VC's funded Theranos!' - the VC angle is 'they didn't - why not?'

And then there's Wework. This is much broader story of hyper growth companies staying private until they're worth tens of billions of dollars. Yes, Benchmark (boo hiss) funded some of Wework. So did Softbank. But else is funding these companies to $50bn private valuations?

Actually, a lot of it is public markets investors - public fund managers. Fidelity! T Rowe! JP Morgan! And lots of other names in that space. VCs don't normally write cheques that big - they don't have funds that big.

So - part of the story for both Theranos and Wework is that billion dollar hyper-growth private companies are a new thing, with the governance models very unclear, and the funding is coming from all sorts of places (look up who *funded* Softbank!) And...

And if you call all of that 'VC', that label isn't just technically wrong - it's hiding half of the story.

And finally - there are all sorts of smoking holes in the ground that actually WERE funded by venture, and some of those were even a mistake. But that's a different thread.

A footnote - yes, there was *some* VC in Theranos. That's not what took it to s $10bn valuation.