Street 17

Ongoing

Street 17

Back in the M&A department, I immediately opened a search window.

I typed the keyword into Google, and the first result was an article from the *Wall Street Times*, published just three days ago.

"Our medical system is broken. Often, by the time we detect a disease, it's too late to do anything. The system needs fixing."

Elizabeth Holmes, 29, who studied chemical and electrical engineering at Stanford University, founded the biotech venture "Theranos" with this vision: to fundamentally improve the way diseases are diagnosed…

This person is, in fact, the infamous fraudster.

Currently, she is the CEO of a venture company in Silicon Valley. The company's name is Theranos, a firm providing medical diagnostics services. The business model is simple:

[Just a few drops of blood from your finger, and we'll tell you if you're sick! All via email!]

Early detection is key to battling diseases. Yet, few people go to hospitals for blood tests — they're expensive, they take hours, people fear needles… If you don't have symptoms, why go through all the hassle? So, they keep putting it off until the golden window for treatment is missed.

Theranos presented a solution to this.

[Blood tests? Not a hassle anymore! Available at local pharmacies, or even supermarkets!]

They claimed to have groundbreaking technology — an innovative method to diagnose hundreds of diseases with just a small amount of blood.

Theranos announced plans to set up "health centers" in supermarkets and pharmacies. Get a health check-up while shopping!

At the health center, they'd draw a small amount of blood, place it in a "nanocontainer," and send it to Theranos's cutting-edge lab. This lab, equipped with state-of-the-art devices, would conduct ultra-fast tests and send results to customers via email. Fast, convenient, and even affordable. Plus, once people started using it, they would come back regularly — health check-ups should be frequent, after all.

Innovative technology. A market with high growth potential. A vision to prevent diseases. With these three elements, Theranos won over billionaires and flourished, once reaching a corporate valuation of $9 billion (about 11 trillion won). CEO Holmes was showered with accolades: "The next Steve Jobs," "the first female CEO of a unicorn company," "a revolutionary innovator," "a pioneer in medical diagnostic technology," and more.

The problem was… the technology was fake.

There was no such technology. Diagnosing diseases with just a few drops of blood is impossible. A certain amount of blood is required for an accurate diagnosis. Hospitals don't draw large amounts of blood just to trouble patients.

But real-world limitations didn't matter to Holmes. She admired Steve Jobs. What was Jobs' trademark? Making the impossible possible! By declaring "It will work!" she created a "reality distortion field," expecting her employees to somehow make it happen.

So Holmes went around saying, "It will work!!!" while pushing her employees and focusing on gathering investors. When investors requested evidence of the technology, she refused to provide documentation.

"That's proprietary company data. What if our competitors steal it if we show it to you? Just trust us and invest some money."

Of course, not everyone would fall for such nonsense. Most investors wisely passed.

However, there is a social class particularly vulnerable to this kind of fraud:

The elderly with heads of silver hair. Holmes was even able to persuade some diamond-status names among the elderly. This included former Secretary of State Schultz and legendary diplomat Kissinger. All of them were once sharp-minded, but by this time, they were nearly 90 years old—a time when the brain tends to loosen up.

Holmes was a young woman in her twenties with blonde hair and blue eyes, quite pretty. She had the right look. Blonde—people might think she's not too bright? But she was a Stanford dropout, no less! Just like Jobs, Gates, and Zuckerberg! She even wore a black turtleneck every day, declaring her desire to become "the Steve Jobs of healthcare." Admirable, isn't it?

She succeeded in winning over a few elderly gentlemen, who reportedly treated her like a granddaughter. And when this granddaughter figure shouted, "I need more investment money!" the old men would call their lawyers, who would then reach out to wealthy clients on their lists.

There's a young woman, the next female Steve Jobs, whom Kissinger and Schultz are investing in, but they're only accepting investors until the end of the week! Interested?

The investments piled up, reaching close to $11 billion, and Theranos signed contracts with well-known corporations. The large supermarket chain Safeway even invested $400 million to remodel 969 of its locations to include Theranos health centers.

But… to repeat, there was no such technology. The "reality distortion field" hadn't actually kicked in yet. Customers' blood samples kept arriving, but there was no way to test them. Eventually, Holmes decided to use diagnostic equipment from a competitor. She installed another company's devices in her so-called "state-of-the-art lab" and ran them.

If found out, this would be a disaster. So, the state-of-the-art lab became a restricted area. Except for a couple of operators directly handling the equipment, even employees of the same company were not allowed entry. When investors requested tours, Holmes flatly refused.

"No, no! I told you, this is proprietary technology. We can't reveal it!"

Does it sound absurd? It's all true. This case became so famous that, by the time I died, it had been adapted into both a drama and a movie. The scam would be exposed two years later. Right now, Theranos is just beginning to attract media attention. Articles are appearing in quick succession:

<29-Year-Old Woman Reshapes the Medical Diagnostics System>

Soon, everyone will be hailing her as the next Steve Jobs. And in two years, a whistleblower will report this to *The Wall Street Times*. Despite countless threats, a journalist from the *Wall Street Times* will expose the story, and the world will learn the truth about her.

Wait a minute! What if I expose this scam myself? Will it lead to the outcome I desire?

"Hmmm…"

The outcome I want is obvious. The first stage of my survival plan goes like this:

= Within two years, establish a hedge fund valued at $10 billion. =

What if I redirect the money that rich white investors poured into a fraudster into my fund instead?

I could reach my target amount in one go.

The victims were already swayed by the selling point of "early disease detection." They'd have no reason to resist switching over to my fund. Plus, I actually plan to pour that money into finding cures for incurable diseases. So, this would be beneficial for all humanity.

But… something doesn't sit right.

"Why did these people fall for it?" Even if they're older, there must be a reason why such intelligent people fell for such an obvious charade.

*** 

Meet Rachel's father in person and learn more about Theranos and Holmes. 

Rachel and I are just coworkers. It's not common to introduce a simple colleague to one's father. But it just so happens that a good event is coming up in two months: Thanksgiving, an American holiday spent with family. If, on that day, a poor orphaned friend sheds some tears, Rachel, being kind-hearted, might just invite me over. 

Become close enough with Rachel that she invites me to Thanksgiving. 

As I organized this new plan in my notes, a message popped up.

[Rachel Mosley: Are you free right now?]

11th-floor cafe. 

It wasn't hard to find Rachel. Everyone in the cafe was glancing in one direction—Rachel was sitting in a secluded corner with her head down. Deep in thought, she didn't notice me approaching, sipping her coffee while staring at the floor.

'I want coffee too… but if I walk in holding coffee, it won't look good. It'd seem like I had nothing better to do.'

"Rachel?"

"Oh, you're here?"

Her face looked… off.

"Did something happen?"

"Oh, no. Uh, would you like some coffee? I'll buy it for you."

"I'm fine, I have a meeting in 20 minutes."

"You should have told me if you were busy…"

"I came anyway because I was worried."

Yes, I'm that reliable friend who comes even when there's work to do. You wouldn't leave me alone during the holidays, right?

"Well… I'll still get you some. Just wait a moment."

Our dear Rachel, so kind. She noticed my greedy gaze toward the coffee and went right to the counter. A moment later, she returned with an iced Americano.

"Thanks, I'll enjoy it."

I gratefully accepted it, getting my caffeine fix. While I waited for Rachel to start talking, she kept hesitating. If I leave her like this, it might take another 10 minutes. And 10 minutes is a long time for someone on borrowed time.

"You went to a client meeting today, didn't you?"

"Huh? How did you know?"

"I heard it when I went to get this."

I dangled Evidence A, a pair of earbuds, and Rachel nodded in understanding.

Then she started explaining. In short, the CEO didn't even look over our work properly and seemed to have noticed some manipulated figures but brushed it off.

"He went to the trouble of requesting a feasibility study, but didn't even read it? Doesn't that seem strange? And it's not like this request was cheap."

"Right."

"When I think about it, it's all strange. A company could easily handle financial modeling on its own… With a Bloomberg terminal and an MBA graduate, they could do it in-house to save costs, right?"

"Right."

"Not just 'right'! Didn't Sean say there was a different real purpose to this meeting? What was it?"

Looks like my words from yesterday had been on her mind. Coming straight to me when curious is a good sign.

"It's just a guess, not certain."

"What's your guess?"

"Investment banks are essentially intermediaries, right? So I thought of it like a real estate agent."

I have to be cautious when explaining. I need to come across as a modern-day Conan. When Rachel introduces me at Thanksgiving, "This is my friend, Conan" sounds better than "This is my friend, the orphan." To be Conan, I need to find answers in a way that seems insightful, not by saying, "The culprit secretly confessed to me."

"Let's assume the CEO you met today is a landlord. He owns numerous buildings and makes money from the rent they generate. Now, he's interested in buying a new building but isn't sure yet. What would he ask the agent?"

"Hmm… Will the land price go up? Is there demand?"

"Exactly. But the CEO can look up land prices on his own; that information is readily available these days."

What the client wants isn't property prices. In this information age, price data is easy to come by, so there's no need to hire Goldman for that.

"But demand is different. He'd be curious if other landlords are eyeing the same building, if they'd offer the same price, or if they even have the funds to buy it."

What the client truly wants is to know the spare cash and purchasing interest of his rivals. The property might still be a bit pricey. He'd prefer to wait for the price to drop but is concerned other companies might snatch it up in the meantime.

"Soon, they'll likely ask us to prepare a competitive pitch. They'll mix the real property in with other listings and observe the reactions."

"So… inflating the numbers…"

"Was probably a client request."

They'll show inflated listings to competitors on purpose. If competitors show interest, the MD will give a hint, and our client will snatch up the property. If competitors show reluctance, our client will wait for the price to drop further.

"Haha… I hadn't thought of it that way…"

Rachel looked somewhat defeated. Being raised in a sheltered environment, she tends to think too much by the book.

"I… I don't think I'm cut out for this."

She's right; Rachel doesn't fit in with Wall Street at all. But leaving too soon would be a problem.

"You've just started; how would you know that?"

"But…"

"Call me if you're facing a tough situation. I'm here to listen and help you think things through."

Sorry, but I can't let you go for the next two years. You're the client who'll bring in $10 billion in seed money for my fund.

"…Thank you. That's reassuring."

Rachel's gaze was noticeably different from yesterday. It wasn't the look you give a passing colleague; it was the look you give someone you trust and rely on.

"I've been talking too much about myself. How's it going with you? How's the new department?"

She's even asking about me now. It's just a polite question, but hearing such polite words from the once-distant princess is a significant step forward.

"Not bad. My seniors seem nice."

"That's good to hear."

"But I'm a little on edge too. This staffing is different from the usual."

"Oh! You mean that project?"

This project isn't just any project. It's a competition that started during the welcome drinks—a match between associates and newcomers.

"I imagine it's a lot of pressure…"

"More than pressure, I'm curious. What kind of challenge will they set for us…"

I plan to keep Rachel informed about the details of this match. Those details will eventually reach the ears of Rachel's father, who's well-connected with wealthy people.

Then—

Ding!

An email arrived. As I read it, I couldn't help but frown.

[Staffing meeting time change: 2 PM -> 4 PM]

The meeting had already been postponed once and was delayed again. Delayed meetings are common… but since it's related to an important match, it bothers me. Hopefully, nothing unexpected has happened.

Prev | TOC I Next