Leadership Lessons from Fyre & Theranos

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What we Should Have Learned from Famous Fraudulent CEOs 

We thought 2019 was intense until we saw what 2020 had in store for us. Over the past few weeks, I started reflecting on what lessons we learned, ones we should have – and there’s a big one that we all missed!

In recent years we have seen a culture of scamming become part of the (North) American way of life. As Jia Tolentino shared in The New Yorker,  “At some point between the Great Recession, which began in 2008, and the terrible (US) election of 2016, scamming seems to have become the dominant logic of (North) American life.” There are the front-page success stories and mantras like, “fake it, till you make it” (insert another inspiring Elon Musk quote here). Combine that with a generation brought up by Mr. Rogers (boosting our egos, so we all felt “special”), it creates quite the opportunity for us to fail, and look rather stupid in the process. In the past year, I became obsessed with how the visionaries that lead both Theranos and Fyre Festival into the laughing stock they are. 

These failures were not subtle, and most of us were shocked, but what did we learn? That people are gullible, and other people take advantage (ouch). What did we all miss? These leaders were masters of mobilization.

Now,  “mobilizing others” is something I am working on in my career progression. During my staycation, I turned to Netflix and HBO and started a binge session that would hopefully teach me something I could use and help my professional growth. So, let’s separate the failures from the fact that they were able to mobilize so many people to their vision. 

Leaderships Mobilize others

If you haven’t, take a moment to watch binge Netflix’s FYRE: The Greatest Party That Never Happened highlighting Founder Billy McFarland and HBO’s The Inventor: Out for Blood in Silicon Valley highlighting CEO and Founder Elizabeth Holmes. 

I can move mountains, or so I think, and in the past, I used to tackle projects whole-heartedly with every ounce of my energy to take it from concept to delivery. That means my results have high quality but often at the cost of my sanity and other important work that requires focus to complete. In the past year, I have been focusing on mobilizing others, and these two scammers were able to teach me lessons that I haven’t necessarily seen in textbooks. 

7 Leadership Lessons to Mobilize

1 – Powerful people, breed a powerful image 

Holmes had investors and McFarland had social influencers and celebrity power to create “buzz” and lend credibility to their projects. Walk-the-walk, talk-the-talk, and you’ll attract those who value and put an emphasis on image. Truthfully Holmes dropped out of college, and McFarland was far from being cool, so how was Holmes an expert on science and McFarland an expert on the “it crowd”? They build the right image. Holmes emulated Steve Jobs and acted robot-like (her romantic relationship was with Thernaos). McFarland spent money as publicly as possible until he found himself in the right social circle. Both didn’t earn their position; they sneaked in. 

2 – Fake it till you make it (and even when you don’t) 

Fyre “sold out.” Can you think of a better KPI? What about % of readiness to launch a festival “village”? Attracting the eye to the narrative you know looks best and creates motivation for the team. In the end, the village McFarland promised resulted in a “save yourself mode” – everyone was on their own to get out of the village, to find safety, and even a ‘gourmet’ cheese sandwich. 

Holmes faked reports. She claimed trade secrets when questioning was too close and performed benchwork blood tests, suggesting they were processed by the Edison (machine). Even earlier in her career, when her professor of medicine told her that her idea of a skin patch could test for diseases and simultaneously deliver medication, she wasn’t concerned with the professional opinion and was unfazed. 

Perhaps none of this was even their intention. It seems both Holmes and McFarland wanted to believe the lie and life they were selling people to believe. 

3 – People want to believe that they made the right choice 

Buyer beware. Before Fyre, people knew it was “too good to be true” with a “Fake Fyre” Twitter account and Fyrecay website, and others sharing information. People still boarded the planes because the idea of the party was worth it, plus the costs sunk would have stung too much. Flashforward to the island, they would have paid double (or triple) to stay at home. #FOMO 

The same is true with employers. Why did none of these people leave Fyre or Theranos when they knew were on the fast lane to failure? They wanted the opportunities and the credit that came with what they were “promised.” No one wants to believe they are stupid or make a foolish mistake, so the brain protects us and keeps justifying.

 Look in the mirror and get real – with yourself. Admit it – you made a mistake. 

4 – The best of the best doesn’t always create the “best” 

Both leaders hired the best in their fields, but if collaboration and honesty are not part of the equation, you cannot leverage the skills of these talents. You end up pitting them against each other, and never reaching the finish line. 

Fyre did a great job of keeping the marketing team, production team, and investors in the dark about anything outside of their immediate “need-to-knows.” The film team truly believed that the model shoot they took was an accurate representation of what was going to happen. Same with the influencers. There was no malice, but no research or guarantee from them either. The “real” Fyre Festival was for 60 people, the influencers in the shoot, not the thousands who purchased expensive tickets. 

Theranos claimed transparency and then put the most important operations behind closed walls. Engineers and scientists didn’t get the latitude to collaborate. By keeping the cog pieces separate, the team could not have a realistic chance of solving the genuine challenges of creating a machine to perform diagnostic testing on nano-sized blood samples.  

5 – ABC – Always be Closing (or Selling) 

McFarland had a private members club (from a credit card Magnises) to penetrate the NYC upper class and was “always running side hustles.” Even the event staff was promised a 5-year contract – based on nothing. So they worked even when they were not being properly remunerated, just for the chance to have the opportunity to work in the future. Run out of money? Ask all attendees to add money to a bracelet for wireless payment, even though the infrastructure could not support wireless payments. 

For Holmes, it was similar. The diagnostic machine isn’t working? Sell them to Walgreens anyways. Create health centers and then train pharmacists to take blood samples so that they could perform the diagnostic testing – without ever using the machine they sold in the first place. 

6 – Drink your own Kool-Aid 

And make sure to catch it ALL on camera. This dupe is the one that shakes me to the core. You are lying, you are cheating, and then you decide to film yourself – all the time. It reminds us that these leaders genuinely were drinking their own Kool-Aid and did not understand the level of their fraud. 

People hate you or are calling you out? Just delete any comments you don’t like on social media because that looks and feels legitimate. Employees complaining it’s not possible? Fire them! 

In reality, there is a balance between believing your vision, ignoring complainers, and understanding reality. Put your ego aside. Drinking your Kool-Aid is terrific, as long as it has no poison in it. 

7 – Remove ANY Barriers to Success

Both McFarland and Holmes were willing to spend anything, fire anyone, and bend morality to get the job done. McFarland was known to share that “We are not a problems organization group; we are a solutions organization.”

Do costs outweigh the revenue? Are you paying twice the value of the talent? Oversold your tent village? (Of a village that does not exist?) Not allowed to say “Pablo Escobar” in your commercial, do it anyways and restart the process on a new island without changing any part of the plan. No festival insurance that you promised your investors? Everyone working lethargically? Maybe it’s not working. Perhaps it’s you. 

Holmes would tell scientists to figure it out, or they would hire someone who would – essentially forcing them to go beyond and put their health at risk. I would have walked away from the job if random bloody needles could be stabbing me inside a broken Edison. She would show off Edison and take blood samples before giving a tour so that the samples would be processed the old way, while the guest assumed the machine worked. Very sneaky. 

Final Thoughts 

Both Holmes and McFarland were strong visionaries who could talk-the-talk and walk-the-walk, what they were missing was a natural #2 who would keep their egos in check and be realistic with what was possible vs. what was imaginable – who was tracking the budget? Because ultimately, all it took was adding more oil to their fires to create an explosion. 

Imagine if Fyre stuck to their core business of being a talent agent or if Theranos’ single focus was to make diagnostic testing more affordable – both would be glowing successes. At the core, they had the right idea, but not the groundedness to live out the reality of their plan. They should have fired their “Yes-men” (i.e., Ja-Rule and Ramesh “Sunny” Balwani) and replaced them with pragmatic operators who knew how to drive success, not steer them off a cliff.

 

I am not suggesting you emulate McFarland or Holmes in any way. I am suggesting that by uncovering their true mobilization skills ( minus the drama), there is something impressive and worth examining. I urge my peers: forget the scams! Get to work creating tangible value, and you will never be without the opportunity to work, grow your career, and find fulfillment in your job. Leverage the tips and tricks from anyone who was able to create a vision and mobilize others to join you on your (honest) adventure. 

 

Kimberly Marx

Director of Alliances and Marketing
Kimberly has an honours Bachelor’s in Commerce and is a Certified Health Coach. She has a decade of experience in the field of Marketing in Montreal, New York and Toronto. Kimberly worked at several marketing agencies with a focus on wellness and luxury brands. She is the recipient of the Notable Award for Best Marketers in Montreal. However, limiting her role to Marketing would be an understatement – she is much more than that. Kimberly handles all internal and external…

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