If you type in Google “Technology is indis…”, you will immediately be redirected to a web page, which discusses the third law of Arthur C. Clarke: “Any sufficiently advanced technology is indistinguishable from magic.” Aphorism writer of science fiction was published in 1962, when the demonstration autocomplete Google search engine really looks like magic. Modern technology is often perceived as magic, and even investors do not bother to go into details. Born as a result of if not dummy projects with limited value. Such incompetence is costing the investors money, but their users security, privacy and even health.

Rapid advances in technology really made people believe in the magic of technology: television took 22 years to reach 50 million users, the mobile phone 12 and the Internet only 7 years. 50 million people were playing Pokémon Go a few weeks after its launch. Technology has also contributed to the growth and dissemination of human knowledge. It is believed that now they grow exponentially. Such dynamics of knowledge strengthened the belief in the virtually unlimited possibilities of technology, but a technology company or company posing as such, sometimes wrong, and sometimes go into outright fraud.

Gold rush

In 1993, the explorers named Michael De Guzman walked out of the jungles of Borneo with exciting news: he found gold. Over the next three years, De Guzman has learned thousands of core samples containing gold. During this period, the market value of De Guzman’s employer, Bre-X Minerals rose from zero to $6 billion Best analysts on wall street were highly optimistic about their shares. Large funds were in a hurry to invest, a well-known miners of the world struggled for participation in the production. But this story was just one problem: gold was not there. When the story opened, records mysteriously burned and people died suddenly, taking the investors ‘ money.

These events made the film “Gold” in which business partner Michael de Guzman, David Walsh, played by Matthew McConaughey, but brilliant Hollywood film version learned nothing nor gullible investors or analysts.

Almost at the same time another fever broke out on the field gold of the new age — technology. Steve jobs was known in the Valley as its “distorted perception of reality” — the ability to make investors, customers and employees to leave distrust and to see the future the way he saw it, even if the technology was not yet ready.

Silicon valley have absorbed this approach as a postulate for the next generation of entrepreneurs and investors. If during the time jobs was adopted “trust the art, not the artist”, by today’s standards, the artist is not necessarily to create something and just stay in his way.

Bad blood

In 2015 Vice-President Joe Biden visited the laboratory of medical equipment for the manufacture of new products Theranos in Newark (California). He saw the impressive looking equipment, allegedly has revolutionised the market of blood and praised the “laboratory of the future”. He was shown a fake. The device was unworkable, they were in decent form especially for the visit. The Vice President was not the only one deceived. A list of prominent people Theranos founder Elizabeth Holmes managed to cheat almost as stunning as her plan. It includes economist and politician, former General and former Secretary of state George Shultz, Secretary of defense James Mattis, the legendary diplomat and winner of Nobel peace prize to Henry Kissinger and even the boss of Oracle, Larry Ellison.

Theranos has promised a revolution in multi-billion dollar market blood tests due to the unique technology, allowing to perform dozens of tests from one drop of blood for a couple of hours. Customers would get rid of the painful treatments and anxious waiting. Theranos founder Elizabeth Holmes argued that the cost of such test will be approximately half of current rates of reimbursement for Medicare and Medicaid. In the end, the startup has raised more than $700 million in venture investment from Fortress Investment Group, strategic investors, such online pharmacies Walgreens, and individuals, such as Wal-Mart Walton family, media Mogul Rupert Murdoch, and from the Minister of education Betsy DeVos and her family. But in the end, for the most part produced by the analyses was the use of traditional technology companies like Siemens, instead of its own “patented” technology Edison.

When Elizabeth Holmes went on to revolutionize the multi-billion dollar market of equipment for testing of blood, she did not build a startup in the field of health science. She built a religious cult, far from medicine. Whenever anyone raised questions about the potential of its technology to conduct hundreds of tests a small drop of blood, she dismissed them, tried to besiege the legal threats or accused of sexism.

In 2014, the peak value of Theranos, was valued at $9 billion, and the staff consisted of 800 people. In March 2018, Holmes was charged with fraud and deception of investors, doctors and patients almost from the beginning of the project in 2003, and also fraudulently raising $750 million In September initiated the liquidation of the company, and over its founder faced the threat of imprisonment.

The story is revealed largely through a series of publications John Carrero in the Wall Street Journal (which was subsequently published in the book “Bad blood: secrets and lies in a startup in Silicon valley”), which found that Theranos not really made a breakthrough, and the results of blood tests of more than one million real patients was absolutely false.

Elizabeth Holmes is trying to build a biomedical version of the story of Steve jobs — a College dropout Prodigy who probably would have done a blood test as convenient as iPhone. Like jobs, she was dressed in a black turtleneck and preached that the device Theranos was “the most important thing ever created by mankind”. Holmes moved into a black car without license plates, as in his time did Steve jobs hired veterans and even Apple’s advertising Agency who had once worked with the “Apple” company.

Holmes imitated those things which are learned about Steve Jobs from his biography, compiled by Walter Isaacson. But, unfortunately for Holmes and Theranos gullible investors, it did not take into account the main thing: the main Steve was not the behavior, and brilliant innovation, embodied in actual Apple products.

Retouched reality

When it comes to augmented reality, doesn’t even have to try on the turtleneck of Steve jobs, just good special effects. Did start-up Magic Leap, releasing in the first days of its existence, the YouTube video that seemed to demonstrate the visual effects created by its revolutionary technology. One of them even scored over 4 million views in 2015.

Only two years later, the company admitted that this video was created by the special effects and not a real demonstration of its technology. By the time the startup has managed to raise $2.3 billion from investors, inspired by the possibilities shown in the video. In the list of investors was the Fund of state welfare in Saudi Arabia, Google, Alibaba and even JPMorgan.

Investors sued the company claims, but the startup is far from the performance of their promises. For many years CEO of Magic Leap, Rony Abovitz told the world about a device that will change the idea of augmented reality without actually showing it in action and not explaining how it works. The fantastic video makes the average viewer to believe that Magic Leap blurs the line between the digital world and reality: the user would check my email and shot robots using laser weapons — all of it was convincingly finished in the real world.

Now Magic Leap One Creator Edition is already on the shelves and sold at least six U.S. cities for the price of $2295. Now users can see, that the line between the virtual and real worlds is quite clear and has a horizontal field of view 40° and vertically 30°. 45% more than the HoloLens from Microsoft, but you still see the same tiny transparent screen overlay digital images onto the real world, and are surrounded by mixed-reality, as it was shown on Youtube. Unlike video that is being displayed, a digital image that puts Magic Leap in real-world environments, not look like an opaque, solid objects that you can touch. Motion sensors, like all currently available detection technology movement, far from perfect.

Magic Leap represents a solid headset with some very real advantages over competitors, but not even close to provide the promised level of immersion. Moreover, the device has several shortcomings that do not allow it to become a common useful tool for developing applications of augmented reality. After weighing all the “pros” and “cons”, the Pentagon chose analogue from Microsoft.

The result? Several years of hype and over-funding was not crowned the next technological revolution. However, competitors in the field of augmented reality is also not averse to special effects, introducing investors misleading demonstration videos showing “features” their systems. Promotional video for Microsoft HoloLens do not convey the actual experience of their use, and the video CastAR and all were mounted.

Mechanical Turk in our days
Fraud in the it does not always mean that the technology is not working or the reality turns out to be worse than the promises. But sometimes it seems to be successfully working mechanism is hidden manual human labor.

The first Scam of this kind happened in XVIII century, when the Hungarian mechanic Farkas Wolfgang Kempelen constructed a chess playing machine, which is a large oblong box in the form of a table, behind which sat a doll, representing the Turk with a long tube and a turban. The top was embedded a chess Board, on which were the figures of marble and bone. Glory ran ahead of the inventor, and Kempelen toured with his gun across Europe: in St. Petersburg, he showed it to Catherine the great, in Potsdam, Frederick II, and in 1804, already in the sunset of life, has presented the miracle of Cybernetics of the eighteenth century to Napoleon Bonaparte. In fact, mechanical Turk was nothing more than a very clever hoax: the inside was always the person who managed the moves of the machine.

In our time, the situation almost repeated itself, albeit with adjusted for modern realities. Startup Ring said that “smart home” of the XXI century should be not just comfortable, but also protected from prying with the help of networked sensors that continuously monitor the situation inside and outside. But, it seems, for the owners security cameras Amazon Ring observed not only algorithms — at least this is reported by sources of the news site The Intercept. Immediately after this article the category of “neighbors” stopped working, but thanks to a solid network of planned observations to ensure safety on the streets and in homes.

Amazon paid for the Ring more than $1 billion in 2018. However, after he released the material, The Intercept on the fact that the various teams had access to unencrypted video files customers on company servers and employee access to the live footage of customers were not sufficiently protected.

According to the newspaper, disregard for safety began in 2016, when project founder Jamie Siminoff moved part of the team from San Francisco to Ukraine with the purpose of optimization of expenses. Officially Ring hired “Operators” data for viewing and marking objects in the video streams of the clients. This group has watched the footage from interior and exterior cameras, showing them to other employees and commented on actions such as “kissing, shooting guns and stealing.” One of the vacancies for such candidates was available on the website of the branch in mid-January.

The Intercept reported that within a few months after was opened the Ukrainian office, video is often transmitted without any encryption. In addition, the company has provided to the team on research and development in Ukraine virtually unlimited access to a folder in Amazon S3 cloud storage that contains each video client Ring. These videos were not encrypted, they can be easily uploaded and published. The team was also provided with a database that linked each video with a client Ring to which it belonged.

The second mistake Amazon

After the acquisition of the project Ring Amazon has taken a number of measures to ensure security and prevent access to confidential information about clients. One of these measures was disable Neighbors, which allowed to get alerts about violations and safety concerns from neighbors in real time. It received rave reviews from the guards that could positively influence the rating of a startup.

Although it seems that nothing bad happened, neglect Ring to the privacy of its clients is with the best hand as a Ring and the very Amazon. The latter has already been seen to use human labor to perform jobs that meant working with private data.

We are talking about launched in 2005, Amazon Mechanical Turk, crowdsourcing the marketplace to allow individuals and businesses to coordinate the use of human intelligence to perform tasks that currently can’t run. At the end of 2017, it became known that the company Expensify involved in the development of software for expense management, has used this technology for recognition and labeling submitted by the customers receipts, forgetting to notify end users.

22 November 2017 user Rochelle wrote on Twitter that she could see “someone’s Uber receipt with full name and data about the routes,” through his work in Mechanical Turk. Sensing a possible PR disaster, the company reacted quickly, releasing a blog post (currently unavailable), which describes in detail when and how the MT workers involved to recognize the uploaded receipts. It was promised that such will never happen again.

Your expectations — your problem

The demands of society in certain patterns of behavior the founders of successful startups is bad for the entire industry. Venture investors are not robots and can give in to public spirit. As a result, out of focus can be a good start, which is chaired by entrepreneur, not a specific way. The flip side is the possibility to simulate the ideal startup.

On the other hand, the ending of these stories is instructive for startups. You can give the animator in a suit for the robot, but not always it will be able to sell before, you will know which “technology” is used by the company really is.

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