Transcript 0:00 In 2014, a medical assistant in Mesa, Arizona, named Brittany Gould was pregnant. She had miscarriages before, so her nurse practitioner was watching her hormone levels. She got checked... She checked them closely. 0:12 She had her blood drawn at a little wellness center inside of a drugstore run by a company called Theranos. The result came back and was said that she was miscarrying. She was devastated. 0:24 Her nurse practitioner sent her for another test at a regular lab two days later, and then another two days after that. Both said the same thing, she was still pregnant. The Theranos test was wrong. 0:37 She went on to have a healthy baby, and she never went back. Now, seven years later, she sat in a federal courtroom in California and told that story to a jury in the fraud trial of Elizabeth Holmes. 0:52 And when the jury came back, they found Elizabeth Holmes not guilty on just about every count, including hers, uh, when it came to the patients, every single one. 1:03 They found her guilty of defrauding investors, though, the billionaires. So Elizabeth Holmes went to prison, just not what happened to Brittany. 1:12 People say that Elizabeth Holmes and Martha Stewart were punished, uh, the way they were because they're women, and so I wanted to ask the question, who benefits? But, but that's not really what I wanted to know. 1:27 I wanted to know why some people get punished and some people don't, why some get a second chance and some don't, and who benefits from all the stories that we tell about them. Welcome to Observation Room. 1:38 I am your host, Michelle Vaughn, and hopefully today I give you just a little change in perspective. Now, I'm not here to defend Elizabeth Holmes or Martha Stewart. That's not my goal here. 1:49 Holmes was convicted by a jury, and so was Martha. I, I, I'm not also here to say that they were victims, 'cause I don't believe that. 1:58 What I am curious about is whether or not we draw the line in the same place for everyone, and how, how can we even judge that? And I'll tell you what I thought going in, because I was absolutely wrong about part of it. 2:12 I thought that these women got hit harder because they were women. When I looked at the courtroom, that's not actually what I found at all. 2:20 Women in this country usually get lighter sentences th- than men, their, their counterpart men, but not heavier ones, right? 2:28 So when I looked at everything that happens after the courtroom, who gets hired again, who gets funded again, who gets forgiven by society as a whole? And that's where the story looks a lot different. 2:40 So that's where I think all the d- double standards live. Now, I owned a mortgage company, and currently I work in, in large AI consult contracts. 2:49 And in both of those worlds, I spend a lot of time asking people to believe in something before it is finished. So I don't come at this from, like, an outsider perspective. 2:59 I, I also put my own experience in these worlds in this while I was researching it, and I wanna know where the line is because I've stood very close to both sides. Now, I start with the line itself. 3:11 When does selling a dream turn into selling a lie? I talked about the first iPhone in my first episode, or in one of my episodes, about not laughing at what you don't understand, right? 3:22 Here's part of that story I didn't tell, right? When Steve Jobs introduced it on stage in San Francisco in 2007, it became one of the most famous product launches in history. 3:35 Now, what almost nobody knew is that the phone in his hand barely worked. Now, according to the engineers who built it, it would play part of a song or a video and then crash if you tried to play the whole thing. 3:48 It dropped call, it lost its internet connection, it froze. Jobs rehearsed for five days, and even on the last day of rehearsals, it was still shutting down on him. 3:59 So the team worked on what they called the golden path, a specific set of things in a specific order that he could do on stage with the least chance of the phone actually crashing on him. 4:12 He followed it exactly, and nobody knew. Nobody in the audience knew or nobody watching on screen knew. The phone actually went on sale six months later. Now, nobody calls that fraud. 4:24 We call it one of the greatest presentations ever. He's a genius. It goes back farther than that. 4:30 In 1980, IBM was building one of its first personal computers and needed an operating system, the basic software that makes the machine run. A small company called Microsoft told IBM it could supply one. 4:46 Now, Microsoft didn't have one, so Bill Gates and Paul Allen went across town in Seattle and bought one from a little company called Seattle Computer Products, and it was about $50,000. 4:59 They cleaned it up, they named it and licensed it to IBM, and that became the MS-DOS. [laughs] And the whole foundation of the company was built on something that didn't exist yet, right? 5:13 They sold something they didn't have yet, and they went, and then they did get it. So that's one of the most celebrated deals in business history. 5:22 In 2018, Elon Musk tweeted that he was thinking about taking Tesla private at $420 a share, and that the funding was already secured. It wasn't secured. The stock jumped. 5:35 The Securities and Exchange Commission went after him, and Tesla paid each $20 million, and he had to step down as his own chairman. Then the shareholders sued him. 5:49 In 2023, a jury in San Francisco took less than two hours to decide that he didn't know Hmm. An appeals court later said his statements were reckless, but that wasn't enough to convict him. 6:02 So then we look at Elizabeth Holmes. She dropped out of Stanford at 19 and started Theranos, the idea that one drop of blood from your finger could run hundreds of tests on a little machine. 6:16 She wore black, black turtlenecks, the same as Steve Jobs, the same as I'm wearing right now. Her former employees said she spoke in a low, deep voice in meetings, deeper than her natural tone. 6:28 Whatever the reason, she was building herself to look and sound like what investors already believed a genius founder looked like, and one that sounded like him. 6:39 In 2013, Theranos was put into wellness centers inside Walgreens. In stores in Arizona is where they started, which is where Brittany Gould got her blood drawn, and the company at that point was valued at $9 billion. 6:53 In 2014, Forbes put Elizabeth on its cover and called her the youngest self-made woman billionaire in America, worth four and a half billion dollars. 7:04 Now, her board was a row of the most famous men in American business, in American government. 7:11 Two former secretaries of state, George Shultz and Henry Kissinger, a former Secretary of Defense, William Perry, a general who would later become the Secretary of Defense himself, James Mattis. 7:24 Now, when Mattis testified at her trial, he admitted that he wasn't a medical person. Hardly anybody on that board was a medical person. 7:35 The sh- the machine never worked the way she claimed it did, and here's the part that actually matters the most, most to me when I was researching this, is the legality of everything. 7:45 She didn't just promise it would work someday. She told investors it was already working, so maybe that's the difference, right? 7:51 She told them it was being used by the military in the field, which was, I think, incorrect from my research. 7:58 Now, reports from the companies were sent out with the logos of the big drug companies on them, as if these com- had checked the technology, and when they hadn't signed off on anything, prosecutors said that the companies, the company was running many of its tests on regular commercial machines. 8:16 Now, it had already bought those from somebody else and, and modified, now, while telling people they were run on its own, which was inaccurate. Of George Shultz, the former Secretary of State, on the board. 8:29 Now, Tyler went into his grandfather and told them that the tests were wrong. His grandfather sided with Elizabeth, and Tyler went to the regulators anyway, and the company, uh, that came after him with lawyers. Hmm. 8:45 He also talked to a reporter at The Wall Street Journal named John Carreyrou, whose story in October of 2015 started this whole thing coming down. 8:56 Now, within a year, Forbes changed its estimate to what Elizabeth Holmes was worth, Holmes from four and a half billion dollars to zero. 9:05 Now, a grandson told the truth, and the famous man at the table believed the confident young founder over his own family. Then there's Trevor, Trevor Milton, who founded an electric truck company called Nikola. 9:20 He told investors that his trucks were further along than they were. Now, that, that things were working that actually weren't. In 2022, a jury did convict him of fraud. 9:30 Prosecutors asked for about seven, no, 11 years, and he got four and, uh, a million dollar fine. I think four years and a million dollar fine. So here's what I see from the first group. 9:42 I said in an earlier episode that you can only judge a decision about how it turned out, and I think that's exactly what is happening here, right? 9:49 Steve Jobs staged a demo with a phone that didn't work, and the phone shipped, so he's a genius. Elon Musk said funding was secured when it wasn't, and Tesla kept going, so it was a tweet. 10:04 Elizabeth Holmes said her machine worked when it didn't, and it never did, so she's a fraud. And I'm not saying those are the same things. Sh- she did lie. 10:12 She lied about what was already happening, but so did those other men, and that's different from promising what's actually coming. 10:19 Now, I don't, I, I don't think we've looked at half as hard as the other ones if their products has failed, right? 10:25 A- and that's, I think, what bothers me about all this because a lot of founders are just one bad decision or one bad product launch or one bad year from being Elizabeth Holmes themselves. 10:35 Now, part of the reason is how the money works. So we have to follow the money, and that gets us to why this happened the way it did. 10:44 Venture capital is built on the idea that most of the companies a firm invest in will fail, and one giant winner will pay for all of them. 10:52 So the system doesn't reward the founder who promises something modest and delivers it, right? 10:57 It rewards the founder who promises to change the world, and everybody at that table knows most of those promises will never come true. That's the deal. 11:07 And when one of them doesn't come true in a very big way, although we a- shocked, I don't believe they were shocked 'cause it just wasn't a big enough turnaround for them. And I see it in AI right now. 11:18 People are raising an enormous amounts of money on what this technology is going to be able to do. So some of it will come true, and those people will be geniuses, and some of it won't. 11:28 And I bet we'll be watching documentaries of a few of them in 10 years, maybe some of them behind bars. Now, here's how that shows up in a ordinary job. 11:39 So anybody who sells anything is selling a little bit of the future. A contractor tells you the kitchen will be done in six weeks, right? A sales rep tells you the future is coming next quarter. 11:51 I've done this plenty of times myself, right? You tell someone what you're building, and then when you think it'll be ready, the line I can... I try to hold is simple. I can tell you what we're building. 12:03 I can tell you it's working, uh, when it actually works. I can't tell you that it's working when it isn't working. 12:09 Now, the first one is a vision, the second one is a straight lie, and the law, the law draws it pretty much in the same s- same place. 12:18 Now, a second thing I found is that, and this one surprised me the most, it matters a lot more who lost money than who got hurt. Hmm. So we go back to Brittany Gold. 12:28 She wasn't the only one her nurse practitioner testified to. She said she'd started sending patients to Theranos. S- they saw results, uh, that didn't match, and they filed a complaint, and then they stopped. 12:40 Now, other patients had stories similar, just like that. Theranos ended up throwing out but years of its own test results 'cause of that. And the state of Arizona settled with the company for several million dollars. 12:52 The... It was basically, they settled because over the test it sold there, specifically. And when the jury got the case, they couldn't find Holmes guilty of defrauding those patients. 13:02 Now, part of that is just how the law works. 13:05 To convict her of defrauding patients, prosecutors had to prove that she was, like, personally meant to deceive those people walking into that drugstore and, and that's really hard to prove about a CEO who's never met any of these people. 13:20 Now, proving she deceived the investors was a much easier case, 'cause she sat across from a table from them and showed them the slides, the presentation. So who were the actual investors? 13:33 And I think this is really important in her case, because if it was just normal, regular people, we probably wouldn't be sitting here today. So it was the Walton family, the Walmart heirs. They put about $150 million. 13:44 Rupert Murdoch, about $125 million. Betsy DeVos and her family, about $100 million. The Cox family, another $100 million. Carlos Slim, one of the richest men in the world, about $30 million. 14:00 All investors lost just about 100... just about a billion dollars, and even the losing had a bonus for some of them. Rupert Murdoch sold his shares back to the company for $1 so he could take the loss on his taxes. 14:15 Now, those are some of the most sophisticated, best-advised people on planet Earth. 14:22 They have teams and teams of people whose whole job is just to check that and make the tax laws work for them, and a lot of them, they didn't. 14:31 Now, what I want you to notice is that the people who could have checked are the ones the law ended up protecting. The people who would... They, they, they didn't... They could have checked on it. 14:41 The woman who was told she was losing her baby couldn't. She was just t- tested at the drugstore. Then there's a newer one. 14:49 Charlie Javice started a company ca- called Frank that helped college students fill out their financial aid forms. In 2021, she sold it to JPMorgan Chase, the biggest bank in the whole country. 15:01 It basically funds the US government. Now, for a... Or not funds it, sorry. It basically, uh, transports all the funds for the US government. 15:09 Now, for $175 million, she told them that Frank had more than four million users. It had a few hundred thousand at the time. 15:17 Now, when the bank asked for the customer list, prosecutors said she asked one of her engineers to make up the missing millions. Now, he said no and asked her whether or not it was even legal. 15:26 So she even found an outside data scientist who would do it, and he built a list of millions of fake students for the bank to look at. 15:33 Now, at her sentencing last year, the judge said something I found really interesting. He said JPMorgan had a lot to answer for because its own due diligence was simply weak. 15:43 Now, the biggest bank in America bought a company without actually checking who its customers were. Now, then he said that he was punishing her contact, her, her conduct. 15:53 Then he said he was punishing her conduct, not the bank's poor judgment. The bank's own CEO later called it, buying it a, was a huge mistake. Of course. 16:02 Her lawyers asked for 18 months, her prosecutors had asked for 12, and she, she got about 7. She owes JPMorgan almost $300 million. Now, I'm a free market person. I've said that plenty of times here before. 16:14 If you're a billionaire, and you put $100 million into something without checking, I think a big part of that is on you, right? That's what you... That's the risk you signed up for when you invested. 16:28 Now, I'm not saying that Holmes or Javice didn't lie. They did, and a jury said so. 16:35 But I said in, in my vitamin episode that the market can't punish what the customer can't see, and here, the law protected the people who could see and didn't look. It seems backwards to me. 16:46 Now, it couldn't find a way to protect the people who had no way to check it all, right? And if you bring home... 16:54 If you take all that and we bring that back home, I think the question is, who in any deals is actually able to check? Now, when I owned my own company, the borrower trusted me. 17:04 They trusted us, and we trusted the appraiser and the investors who bought the loan trusted the paperwork, and the person with the least ability to check was almost always the one with the most to lose. 17:16 I think that's really worth noticing anywhere, anytime you're signing anything. Now, the third thing is the courtroom itself. And this is where I, I think my idea really first... 17:28 or my first guess at this before I started researching it fell apart. 17:32 Now, a law professor at the University of Michigan named Sonia Starr went through federal criminal cases and compared men to women who were arrested for the same thing with the same record. Now, on average, these men 17:46 ended up with sentences about 63% longer The women were more likely to never be charged at all, and about twice as likely to avoid prison if they were convicted. 17:58 She found that most of the gap happens early, and that prosecutors decided to charge and, and what plea deals they would actually offer. Now, her explanations were that things that the... 18:09 Like, women being seen as caregivers or as an accessory to men were part of that problem and, or that women were more likely to cooperate or spill the beans. So on average, in a courtroom, it's better to be a woman. 18:23 Elizabeth Holmes fits that, right? Her business partner at Theranos was Sunny Balwani. Might be mispronouncing that. 18:30 Uh, he was the company's president, and he was also her boyfriend for years, even though I believe he was married. 18:36 Um, he was tried separately, and at her trial, Holmes testified that he had been controlling her and abusive towards her for years, and that it shaped how she ran the company. Now, he denied all of that. 18:50 Uh, the jury still convicted her, but notice how that fits what the sentencing research, uh, from Michigan actually says about women, being seen as the accessory to a man. 19:02 Even though her own defense leaned on it, uh, his jury found him guilty on all 12 counts, including patients counts she was actually cleared on. So she got 11 years and three months, and he got 12 years and 11 months. 19:17 Now, the man got more time, not much more time, but more time, and Martha Stewart actually fits this story, too, if we look at it. Her story is the one people most remember wrong, including myself. 19:27 In December of 2021, she sold her shares to a company. 19:31 The company was called ImClone, and one day before the government announced it was approving the company's big cancer drug, by selling when she did, she avoided losing about $50,000. 19:43 Now, Martha Stewart was worth, I don't know, hundreds of million dollars at the time, and when her company went public in 1999, she had been called the first self-made billionaire woman in America. 19:57 So for her, $50,000 was almost nothing. Her company went public in 1999. She had been called the first self-made woman billionaire in America. For her, $50,000 was nothing. She was never charged with insider trading. 20:10 What she was charged with was what happened afterwards. Prosecutors said she and her broker made about, a story about why she sold. That, I think it was, like, that they had agreed to sell if the stock dropped below $60, 20:26 and that a record was changed to back it up. Now, after she was charged in 2003, she stepped down as chairman and CEO of her own company. She was convicted of conspiracy, obstruction and lying to investigators. 20:41 She went to prison for the cover story, not the trade itself. Now, the person who brought the cover story down was the youngest person in it. 20:49 Her, a broker's assistant, a man in his 20s named Douglas Faneuil, might be butchering that name, uh, was m- the one who actually placed the sale. At first, he went along with the story, which, I don't know. 21:02 Then he told the truth. Pleaded guilty to a minor charge, paid a small fine and testified against them. He never went to prison. 21:09 The prosecutor who announced the charges against Martha was the United States attorney in Manhattan at the time. It was a man named James Comey. 21:21 A lot of people said then that she was being made an example of because she was famous, and it was, like, right after Enron, and the government wanted everybody to know that this was... That nobody was too big to fail. 21:35 Now, maybe that's true. It's also true she didn't have to lie. You do pay for your own mistakes. She asked s- to start her sentence early so she could get it over with, like, rock on, Martha. 21:46 In October of 2004, she actually reported to a federal prison camp in Alderson, West Virginia, that people called Camp Cupcake. [laughs] She did five months, and then five more months at home with a monitor on her ankle. 21:58 Now, if we look at the man in the same story, Sam Waksal was the founder and CEO of ImClone. 22:04 He was the one who actually knew about the drug decision ahead of time, and he tried to dump his own shares, and then he tipped off his family. He pleaded guilty to insider trading. He got seven years. 22:18 Martha got five months. So most people know that Elizabeth Holmes and her name and her story. I haven't watched the documentaries or anything like that. Um, I don't really watch stuff too much. 22:30 But I did do s- research because it is in the news. Most people couldn't tell you Sunny B- Balwani's name before that, before those documentaries, and he actually got more time. 22:39 Now, that might be the clearest example in this whole episode of the difference between the sentence and the story. And so the men at the top of these stories haven't been getting off e- easy either. 22:50 It's not what I'm trying to say. Sam Bankman-Fried was the golden boy of crypto, right? He was on magazine covers, and he had a Super Bowl ad. 22:57 People had compared him at the time to Warren Buffett, and he gave millions to politicians in both parties. 23:03 In N- November of 2022, his exchange, FTX, collapsed, and a billions of dollars of customers' money w- went missing. Now, he got 25 years. Bernie Madoff got 150. Billy McFarland, the Fyre Festival guy, got six years. 23:20 And sometimes the man and the woman are in it together. 23:24 So a couple named Jessica Richman and Zachary Act started a company called Biome, or I'm sorry, uBiome, that tested the bacteria in people's stool, and they were charged with defrauding investors. 23:39 Lots of stories like this. They f- they actually defrauded investors and insurance companies, and they left for Germany months after the FBI raided their offices. 23:47 He has a German cit- citizenship, and German, Germany generally doesn't send its own citizens back here to the United States. And as far as anyone has reported, they are still there, unsentenced. 23:58 So here's my read on this, this group of people. 24:00 If you only look at sentences, the idea that women get punished harder for the same crime doesn't really hold up And I, that's the question that actually, uh, made me start researching all of this. 24:10 It mostly goes the other way, right? I had to let go of that. But I also don't think a sentence is the whole punishment, and this is where I believe society actually does punish women harder than, than men. 24:21 Martha did five months in prison and got a lifetime of jokes. Elizabeth Holmes became a Halloween costume, and I don't remember anyone dressing up as those other men or Sam Waksal. 24:32 I think that's the part people feel even if you can't really name it. That's the... 24:36 That there's legal accountability, which the sentence that the judge hands down to the person who was convicted of the crime, but then there's the public scrutiny, the, the public part, the documentaries, the late-night jokes, the story that people become as obsessed with, the way your name turns into a word or a verb. 24:56 One of those has rules, and the other one doesn't. That shows up more in regular life than I think people actually think. Somebody makes a mistake at work, or they get written up, and that's the official part, right? 25:07 Then there's the part where people stop inviting them to the meeting, or their name comes up and somebody rolls their eyes, or the write-up has an end date. Now, the other part doesn't. 25:18 And in my experience, people don't, they don't hand that second part out evenly. It goes harder to the, on the people who were already being watched. Now, the fourth thing is what happens after. 25:30 Now, this is where I think the difference of those things really live, from what I could tell. 25:35 Three economists had studied financial advisors, the people who manage other people's money, it always comes back to the money in my opinion, and looked at what happens to them after they get caught doing something wrong. 25:47 The men had about three times as much misconduct on their records as the women counterparts. But when a woman got caught, she was about 20% more likely to lose her job than a man who did the same exact thing. 26:01 She was about 30% less likely to get hired somewhere else. So it's like you get the scarlet letter of the A when you're a woman. Now, different second chances, obviously. 26:12 There's research on CEOs, too, and it's more complicated, much more complicated than people think. One study found women CEOs were more likely to be pushed out overall. 26:22 Another looked much closer and found that when a company was doing badly, men and women got fired at about the same rate. It was when the company was doing well that the women were more likely to be thrown out the door. 26:36 Weird. The researchers thought it was about scrutiny, that a woman in the seat gets watched more closely. And there is the money part. That's what we have to start over with. 26:46 Last year, companies founded only by women got about 1% of the overall venture capital invested in the whole country. 1%. And it isn't only men who land soft. Now, I wanna be fair. 27:00 In 20- 2005, Hewlett Packard fired its CEO Carly Fiorina, Fiorina, after its merger that went badly, and the stock price had been cut in half. She walked out with a severance package worth around, I think, $21 million. 27:16 Ten years later, she was on a stage running for president. So women do get back out there. This is not... We're looking at the law of averages here, right? 27:25 It just seems that they have to fight harder by society's standards and corporation standards, and there are a lot fewer of them in those seats to begin with. So maybe that's why the numbers stand out. 27:36 Now look at Adam Neumann. He founded WeWork. He co-founded WeWork, sorry, the office sharing company, and in 2019, it was supposed to go public at the value of almost $50 billion. 27:45 The investors actually read the paperwork, and the whole thing fell apart. He was actually pushed out the door. He was never charged with a crime or anything. A- and I wanna be fair about that. He didn't commit fraud. 27:56 But he nearly took the whole company down, and he walked away with a package that was reported, I think, about $1.7 billion. It's a nice settlement. 28:08 Now, Travis Kalanick was actually pushed out of Uber in 2017 after a string of scandals. His... It kept his billions in stock and started a new company there. 28:19 Three years after Neumann's exit, one of the most famous venture firms in Silicon Valley gave Neumann's new company $350 million. Doesn't seem so bad. 28:33 Now, that was the biggest single check that firm had ever written, and his company was valued at a billion dollars before it had started operating. Hmm. So there's an older one. 28:44 In the '80s, the 19s, Michael Milken was the most powerful man on Wall Street and the junk bond king. It, in 1990, he pleaded guilty to, like, six felonies for securities violations and was sentenced to 10 years. 29:00 He served about two of them. He came out, survived prostate cancer, and rebuilt himself into one of the best-known philanthropists in the country. 29:10 Now, there's a think tank with his name on it that holds one of the biggest gatherings of investors in the world. Now, every year, I think, and in 2020, he was pardoned. 29:22 So a man pleaded guilty to six felonies and ended up a respected elder and the statesman of the industry he broke the rules in. Now, Martha, hold that up to Martha. 29:35 We're next to Martha 'cause we, I love Martha a whole lot. She's the woman who got the second chance. She came out of prison. She was back on television that same year. Now, not all of it worked. 29:45 A lot of her investments failed. She got her own version of The Apprentice in 2005, and it was canceled after one season. The comeback wasn't instant for her. Now, she did keep at it. 29:56 She just keeps going and going and going. It's one thing I really respect about her. She did a cooking show with Snoop Dogg, and of all people, they've become one of the most unlikely friendships in entertainment. 30:07 Now, in 2023, at 81 years old, she was on the cover of Sports Illustrated It was a swimsuit issue. And I'm gonna say that's a pretty good comeback. So Martha Stewart is not just a cautionary tale. 30:17 She's one of the greatest comebacks in American stories of business. I love her story. So why did she get one? I think it's 'cause her brand. Her brand was never really... It wasn't about what she was invested in. 30:31 People didn't care about that, right? People didn't buy Martha Stewart for her stock picks. 30:36 They bought her because she knew how to make pie crust and fold a fitted sheet, and she was kinda like the grandmother and mother figure that a lot of Americans didn't have, and she could still do that when she got out. 30:46 So her crime didn't touch what people had trusted her for. So Elizabeth Holmes' cri- her crimes were the brand. 30:53 The things that she sold was the things that didn't work, and there's nothing for her to come back from, right? There... A- and look, sh- maybe she comes back. I don't know. I don't like to count people out. 31:03 Now, there's the second kind of chance that comes up from the very top. Trevor Milton, the Nikola founder with the four-year sentence, never served it. 31:10 In March of 2025, the president, the president, uh, President Trump pardoned him. The pardon could wipe out the hundreds of million dollars he had been ordered to pay back. 31:21 Records before that showed, before the election. Now, Milton a- and his wife had given more than, I think, a million 800,000 to funding supporting the president's re-election. 31:34 Now, the president said Milton had been persecuted for supporting him. No comment. 31:38 The same day, the president commuted the sentence of Carlos Wilson, who founded a media company called Ozy, and was about to report for prison for almost 10 years. At least good timing for them, right? 31:50 Those 10 years were for fraud. Now, later, he... And the, the founder of Binance, the biggest crypto exchange in the world, and the presidents of both parties had used for the pardon people close to them. 32:02 Now, before he left office, the last president, Biden, pardoned his own son. So it's nice to have people in power, I guess, when you commit crimes. Now, Elizabeth Holmes had, has already asked for one. 32:12 Last year, she filed a request to have her sentence commuted, and of now, it's just pending. She's been at a federal prison in camp, in a camp, uh, in Bryan, Texas, I believe, since May of 2023. 32:23 Her release date is December 13- December 30th, 2031. Now, the appeals court upheld her conviction and the $452 million she owes in restitution, so she does... Does she deserve a second chance? 32:38 I don't think there's a final answer there. Uh, I believe people can change. I believe in second chances, and I, I've needed a few myself, right? 32:46 [scoffs] But I notice that whether you get one doesn't seem to depend much on whether you've earned it, though, not in American business and government. 32:55 It seems to depend on whether your brand survived, s- or whether somebody powerful likes you or, you know, who you know, whether the people deciding see themselves in you. 33:07 Adam Neumann looked like every investor's idea of a founder. Trevor Milton wrote checks to the right people, and I think those are the reasons. I'm not sure they're really good ones. Think about that. 33:19 Think about how that works where you are. Two people at work make the same mistake. One of them gets a do-over because the boss likes him, or maybe he reminds the boss of himself at that age, or who knows? 33:30 Maybe he's good at golf. The other one becomes the story, the story people tell new hires about what not to do. I've watched it happen. Nobody decided it on purpose, right? 33:39 Like, it's not something people, most people say out loud. Thank you. I will say things out loud. Just happens unless somebody makes a point of noticing it. 33:46 The question I ask myself is whether I'd give this person the same chance if they were somebody I didn't like. That's what I try to ask myself. Now, that's where I come back to in the question that I started this with. 33:59 Would we tell the same story about Elizabeth Holmes and Martha Stewart if they were men? Try it in your head for a second. And I'm not saying I have the answer. Obviously, I don't. But it's a good question to ask. 34:11 A 19-year-old drops out of Stanford, wears a black turtleneck, gets the most famous men in Washington on his board, raises hundreds of million dollars on a machine that doesn't work. The company collapses. 34:22 He's convicted. I think we'd still know his name. I think the story would be about arrogance and greed. With her, a lot of the story was about her, about the voice, her eyes, her appearance, her clothes- Mm-hmm... 34:34 and whether or not she was crazy or a con artist. Society judges men and wom- women differently. With him, I think we'd just talk about the money. With her, we talked about her. Big difference. 34:45 I think the courtroom would have told roughly the same story, maybe a harsher one to the man. The research says that, and Sunny Balwani is the proof sitting right next to her in the same story. 34:56 But I don't think everything else would be the same. I don't think a man who did what Holmes did would become a costume. 35:02 I'm pretty sure a man who did what Martha did would have been forgotten in a week, not become a lifetime story or joke. I don't think either of them, as men, would have needed to wear someone else... 35:14 That might be the part that I find most interesting. Elizabeth Holmes didn't invent a new way to be a founder. 35:21 She copied the one that already worked, the black turtleneck, the big mission, the board of famous older men, and let's be honest about who that picture was built around. 35:31 And none of the famous men on her board were ever charged with anything. A month after James Mattis stepped off the Theranos board, he was sworn in as Secretary of Defense. 35:42 She played the game exactly the way she had watched it played before, and she lied inside of it, and when it collapsed, she became the example. So who really benefits from the story we tell about a woman who falls? 35:55 The people who make the documentaries and the TV shows and the podcast. I am aware of what I'm doing right now. The Wall Street Journal, a reporter's book about Theranos was a bestseller. There was a HBO documentary. 36:09 There was a Hulu series called The Dropout. Amanda Sey- Sifrid won an Emmy for playing her. Elizabeth Holmes' collapse has been worth a lot more money to other people than her company ever made. 36:22 The headlines, because of a fallen woman, that sells. The prosecutors too. A famous defendant makes a career. The man who announced the charges against Martha went on to run the FBI. 36:35 The investors, because it's a lot easier to say, "She fooled us," than to say, "We didn't do our homework." 36:42 Honestly, the rest of the industry, every time we point at Elizabeth Holmes and say she was the bad one, the rest of the business of selling the future gets to keep going exactly the way it was. 36:53 If she's the exception, nobody has to look at the rule. And who gets the second chance? Sometimes it's the person who earned it. Sometimes it's the person whose brand survived. 37:03 Sometimes it's whoever knows the right people or cuts the right checks. I'm not going to tell anybody what to think of what Elizabeth Holmes or Martha Stewart. 37:13 I went in with one idea, and I came out with a different philosophy. I'm okay with that. That's the whole point of what I do. I like to question. But here's what I want to ask you to sit with. 37:25 When you hear a founder's story, are you judging what they did or how it turned out? 37:29 When somebody gets burned in a deal, who in that deal actually had the ability to check, to verify, to be held responsible for their own actions and decisions? 37:38 When someone you know makes a big mistake at work, do you give them the same second chance you'd give the person, the next person, or does it depend on who they are? 37:46 And when you're selling, or you're the one that's selling your own future at your job or in your own business, do you know exactly where your line is? 37:56 Brittany Gold got a wrong test result from a drugstore and found out four days later she was still having a baby. She did everything right. She checked. She couldn't have checked any harder, actually. 38:07 The billionaires who had every right to check and all the access, they didn't check at all, and they're the ones the law ended up taking care of. I'd like to live in a world where it's the other way around. 38:20 Just a thought. I am Michelle Vaughn, and this is The Observation Room. 38:24 Now, if you stayed this long, thank you so much for staying, and you wanna learn more, be a part of my community, please join me there at michellevaughn.co. 38:33 You can subscribe for free, join the community, and choose whichever newsletter you would like to get in your email. I have several that you should be interested in. 38:42 We talk about finance and business and life and everything in between, and I would love to have you there. I will see you next week with another topic of who actually benefits
