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#startup
4 articles
Nikola and the Electric Truck That Rolled Downhill
In June 2020, an electric-and-hydrogen truck company called Nikola went public, and within days its stock-market value briefly soared past that of Ford — the hundred-and-seventeen-year-old maker of millions of actual vehicles. Nikola, by contrast, had never sold a single truck, never produced one for a paying customer, and had essentially no revenue. What it had was a vision — zero-emission semi-trucks powered by batteries and hydrogen fuel cells that would clean up the heavily polluting world of long-haul freight — and a charismatic founder, Trevor Milton, who sold that vision with relentless, theatrical confidence. He named the company after Nikola Tesla (the electric-car company Tesla having taken the inventor's surname), positioned himself as the next Elon Musk, and made a stream of bold claims about trucks that worked, technology that was ready, and orders worth billions. The most famous demonstration of Nikola's prototype showed one of its trucks gliding smoothly along a road, apparently under its own power — proof, it seemed, that the vehicle was real and functional. It was not. The truck had no working powertrain; it had simply been towed to the top of a gentle hill and allowed to roll down under gravity, filmed so as to look as if it were driving. When a short-seller's report revealed this and a litany of other deceptions in September 2020, Nikola's story began to collapse. Trevor Milton was charged with fraud, and in 2023 he was convicted. This article tells the story of the truck that rolled downhill — a case study in how far hype, a green mission, and a confident founder could inflate a company built on claims that were not true.
uBiome and the Gut-Test Startup That Billed Its Way to a Billion
uBiome arrived with one of the most appealing pitches of the health-technology boom: that by sequencing the trillions of microbes living in your gut — your microbiome — it could unlock insights into your health, from digestion to mood to disease, and put the power of cutting-edge genomics into the hands of ordinary consumers. Founded in San Francisco in 2012, it rode a genuine wave of scientific excitement about the microbiome, raised tens of millions of dollars from prominent venture capitalists, was hailed as a rising star of the gut-health revolution, and reached a valuation approaching a billion dollars. But beneath the science-forward image was a business model that, federal prosecutors would allege, was substantially a fraud — not in the technology so much as in the billing. To turn its consumer curiosity-kit into real revenue, uBiome had pushed its tests into the medical system and billed health insurers aggressively and improperly for them: ordering tests that were not medically necessary, billing for the same samples more than once, and using doctors who were not genuinely independent to authorise the orders. The company's revenue, the case suggested, came less from a breakthrough in health than from a scheme to extract money from insurers. In April 2019 the FBI raided uBiome's offices; the founders were placed on leave and then departed; the company filed for bankruptcy within months; and the two co-founders were ultimately charged with fraud. This article tells the story of uBiome — a quieter, more technical cautionary tale than its famous cousins, but in some ways a more revealing one, because its fraud was hidden not in a fake machine or a missing billion but in the mundane, lucrative mechanics of medical billing.
WeWork and the $47 Billion Office Company That Wasn't a Tech Company
Adam Neumann walked barefoot through New York, flew on a private jet stocked with tequila and marijuana, and told people he intended to become the world's first trillionaire, to live forever, to solve the problem of homelessness, and to 'elevate the world's consciousness.' His company, WeWork, was — when you stripped away the mysticism — a business that signed long-term leases on office buildings, fitted them out with exposed brick, free beer, and communal sofas, and rented the space back to startups and freelancers on short-term, flexible terms. It was, in plain terms, a commercial real-estate company. But Neumann did not sell it as one. He sold WeWork as a technology company, a community, a movement, a 'physical social network' that would transform how people worked and lived; and Silicon Valley, awash in cheap money and hungry for the next world-changing platform, believed him. Backed above all by the Japanese conglomerate SoftBank, WeWork reached a private valuation of about $47 billion by early 2019, making it one of the most valuable startups in the world. Then, in the late summer of 2019, the company filed the paperwork to go public — and the spell broke. Investors and journalists read the prospectus and found enormous losses, an unsustainable business model, bizarre self-dealing by the founder, and governance so lopsided it bordered on absurd. In about six weeks, WeWork's valuation cratered from $47 billion toward single-digit billions, the public offering was abandoned, and Neumann was pushed out. Unlike some of its fellow cautionary tales, WeWork was not a criminal fraud — no one went to prison. It was something subtler and, in its way, more revealing: a legal, dazzling demonstration of how cheap money and a magnetic founder can inflate a fairly ordinary business into a fantasy, and how fast the fantasy can pop. This is the story of how that happened.
Theranos and the Drop of Blood That Wasn't There
Elizabeth Holmes dropped out of Stanford at nineteen to build a company around an idea that sounded like the future: a small machine that could run a comprehensive battery of medical tests — hundreds of them — from a single drop of blood drawn painlessly from a finger-prick, cheaply and instantly, in any pharmacy or home. She called the company Theranos, dressed in a black turtleneck in conscious imitation of Steve Jobs, and spoke in a deep voice about democratising health care and saving lives. Silicon Valley believed her. So did some of the most powerful men in America, who joined her board: former secretaries of state Henry Kissinger and George Shultz, former defense secretary James Mattis, and others. So did the pharmacy giant Walgreens, which put Theranos blood-testing centres in its stores. By 2014 the company was valued at around nine billion dollars and Holmes, on paper, was the youngest self-made female billionaire in the world, hailed on magazine covers as the next Jobs. There was only one problem, and it was the whole problem: the machine did not work. It could not do what she claimed, it never had, and inside the company the tests on real patients were secretly being run, badly, on ordinary commercial analysers — producing results so unreliable that people received dangerously wrong information about their own blood. Theranos was not a brilliant idea that failed; it was, a court would eventually find, a fraud. This article tells the story of how a company built on a drop of blood that wasn't there fooled so many for so long, who finally exposed it, and what it revealed about the culture that made it possible.
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