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This is great advice for everyone but Theranos.
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Theranos' approach didn't even work at the man-behind-the-curtain step, because it's not currently possible to run the tests required using blood samples that small. The comparison to the article would only be accurate if they had a process that was at least genuinely possible to do manually.
I think they accidentally said the quiet part out loud.

The glaring omission in this post is how the startup could explain that it’s simulated functionality, presumably because the the subtext is to strategically omit that fact knowing the audience will often assume they’re not being defrauded.

If a landscaper quotes you a price to tend to your lawn and you accept the offer, would you feel defrauded to see him using a pair of scissors merely because other landscapers use gas-powered mowers, despite getting a beautiful result? His lack of automation doesn't result in some kind of simulated outcome, it results in a very real outcome.
We’re not talking about a quote, we’re talking about a demonstration of functionality. If a landscaping business showed me an automated machine trimming the most amazing topiary and it turned out to be a guy behind a tree with a remote control then I wouldn’t trust the business.

From the post: >they’ll assume it’s automated

This approach is inherently fraudulent. It is an explicit direction to startups that they should misrepresent their products. How can anyone view this as anything but dishonest? It shouldn’t even be up for debate.

I can’t think of any situation where deliberately doing this is ethical, but I’ll try to keep an open mind if someone has a hypothetical to the contrary. Why, except for deliberate fraud, couldn’t the startup at least say “Implementation of full automation is in-progress.”?

I guess I was thinking that automation wasn't actually stated/implied at all (the recipient is merely assuming, because most business these days happens to be automated), not that anyone would lie. "They'll assume" and "they should misrepresent" are rather distinct concepts.
Who benefits from this "fraud" you are imagining? How does that scenario play out in your head? "Ha! You think this costs us mere pennies of electricity, but actually our highest paid employees are personally spending hours getting it right, muahahaha."

Nobody gives a shit how you deliver the value, they care if their problem is solved and you care if the problem you're solving even exists and people are willing to pay.

I think the answer to “who benefits” is obvious. If there was no benefit, there would be no reason to lie.
This aligns with their "do things that don't scale" message.

Better to discover the widgets your customers actually want rathe than to build the ones that you know how to build, and then hope you can sell them.

I've noticed this for a few of the actually-useful-looking services that have popped up from people hopping on the AI bandwagon, like https://secta.ai (no relation, I just like the concept), that do stuff that you can't automate just by plugging in the OpenAI API and some prompt engineering.
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