Fake it till you make it has been the credo of the tech industry since the very earliest days of the industry. Make big promises and bold statements and no matter that the product may end up as shovelware of vaporware, founders were inventing the future and no matter that investors who bought into the hype were expecting big payoffs that often didn’t happen. You pay your money, you take your chances. So it goes.

Erin Griffin wrote an excellent piece in The New York Times recently entitled The End of Faking It in Silicon Valley and it’s must-read. “Faking it is over. That’s the feeling in Silicon Valley…Not only has funding dried up for cash-burning startups over the past year, but now, fraud is also in the air, as investors scrutinize startup claims more closely and a tech downturn reveals who has been taking the industry’s “fake it till you make it” ethos too far… the chorus of charges, convictions and sentences have created a feeling that the startup world’s fast and loose fakery actually has consequences.”

Gee, who’d have thought? Considering that California was basically founded on the Gold Rush, and the tech space was essentially the state’s second Gold Rush, didn’t investors realize that during that first Gold Rush, many were taken in by Fool’s Gold? History does have a way of repeating itself, and if it worked the first time…

And the arrests and lawsuits just keep on coming. They’re almost a daily read.

Whatever happened to due diligence? We took a look at Sam Bankman-Fried’s background early on. He had very little work experience before founding Alameda Research. Isn’t that a red flag, especially in the financial vertical? Yet a lot of notables came in when he founded FXT, but as Shakespeare, what’s in a name? Theranos had a board that was a who’s who – yet not one member of that board came from medical research or the medical community. And no one’s red flag went up?

Sometimes why is more important than who.

“Startups have many of the conditions most associated with fraud, The NYT’s noted. “They tend to employ novel business models, their founders often have significant control and their backers do not always enforce strict oversight. It is a situation that’s ripe for bending the rules when a downturn hits.”

Speaking of which, remember when WeWork was a unicorn, and Adam Neumann a high-flying media darling running the show? In case you missed it, With its stock down 65% this year, WeWork is now at risk of being delisted from the NYSE.

“Bankman-Fried told colleagues at one point that FTX’s sister hedge fund, Alameda Research, was “unauditable” and that the team sometimes found $50 million in assets lying around that they had lost track of. “Such is life,” he wrote.”

Who would have thought that misplacing a billion here and there – or 50 – might add up to real money? Or problems, at some point.

“The startup world has long celebrated failures”, the piece continued. Which never made sense to us. “It was a sign that you were taking chances.”

Or, more likely, that you didn’t have the experience or ability to make it work. Think this may herald in an era when investors consider a founder/teams experience first, meaning older founders? Don’t hold your breath. That concept has never been in the tech investor DNA. How will an older founder possibly become a tech media star? And with all due respect, wouldn’t that mean someone like Theranos founder Elizabeth Holmes, before and after the allegations of fraud?

Speaking of the glorification of youthful founders, as Chris Bakke tweeted: “Forbes 30 Under 30 have collectively raised $5.3B in funding. The Forbes 30 Under 30 have also been arrested for frauds and scams worth over $18.5B. Incredible track record.”

“Alfred Lin (an investor at Sequoia Capital – which for the record, invested in FTX) noted that the venture capital industry was ultimately a business based on trust. “Because if you don’t trust the founders that you work with,” he said, “why would you ever invest in them?””

We would agree. Trust is important, as is that adage,  ‘trust, but verify.’ It seems that all too many founders were happy to fake it till they made it, whatever it took, and maybe it took them being charged with fraud for the industry to consider changing that mantra. But investors had their part in this as well. Yesterday’s king-making investors are not suddenly today’s victims, as the Times pointed out.  All well and good when everything was all well and good, but it was only really ever a matter of time before faking it would get one just so far, and that at some point, this sh*t would get real. Onward and forward.