Startup. Many high-tech enthusiasts at the mention of this word immediately begin to imagine a team of geek enthusiasts with a cool idea that could change the world. Such companies were once Apple, Tesla, HP, and Amazon. And many startups, especially in Silicon Valley, have special attention and trust from investors and ordinary people.
You must agree that the concept of a startup MVP is a great field for easy money. All you need is a cool, revolutionary idea, and the money will come to you, they will literally bring it to you, and investors will still fight with each other to become the main sources of funding for your project. And then – if it doesn’t work out, it doesn’t work out, who could have known – because that is the essence of a startup.
This is very often used by crooks. Or just unscrupulous people in order to make extra money. In this material we will tell you about several such stories of grand fraud in startups and strange projects, failures, and greed.
Juice from $120 million bags – Juicero

But not all crooks are “crooks. Doug Evans isn’t one, and everything he promised, he did. In 2013, in San Francisco, this smiling guy, a bit of a health nutrition freak, founded a startup called Juicero, which was supposed to solve the problem of juicing fruit. After all, juicers need to be cleaned – it’s all very complicated, tedious, and in today’s world you need to save every minute.

So he came up with a machine that largely replicated the concept of a coffee machine, only instead of capsules, bags with sliced pieces of fruit and vegetables were used. Each of these capsules sold for up to $6.99 each and were produced only by Juicero itself.
In addition, before juicing, the machine had to scan the bag’s barcode to verify that it was an official product. The juicer itself cost $799.
Later Bloomberg investigated – it turned out that it was possible to squeeze juice from these bags by hand without having to buy an expensive juicer. Of course, this had a negative impact on the company’s image, and the management did not care at that point.
Users were already starting to sense something was wrong, so sales were dropping. The company even tried to fix this by lowering the price to $399, but that didn’t make things better.
The Juicero was very popular. Many digital fashion investigators had it in their homes, hotels bought the Juicero and put it on the front desk, restaurants bought these fancy juicers.
In its best days, the company attracted $120 million in investments. Even Google decided to contribute capital to the promising company, which ceased to exist in 2017.
Tesla smoker – Nikola Corporation
Trevor Milton, founder of Nikola Corporation
Today, no one is surprised by electric cars powered by lithium-ion batteries – they have become somewhat of a standard, so many companies are trying to find some alternative, but no less environmentally friendly sources of energy for cars.
One such company was Nikola Corporation, which in 2016 introduced the Nikola One truck, which runs on hydrogen fuel. After it is exhausted, the hydrogen leaves behind simple water as an exhaust. However, the production of such hydrogen fuel itself is quite expensive.
This is exactly what the founder Trevor Milton wanted to play on, who has been showing non-existent technologies for the last five years. At one of the company’s presentations, he claimed that his team managed to reduce the cost of hydrogen fuel production by 81%, but then, under pressure from the media, he admitted that they were unable to achieve the necessary result.
Nikola then claimed to develop all the necessary components for its products itself, but users on the Internet cannot be fooled. Particularly attentive viewers of one of the videos published on the manufacturer’s channel noticed an inverter with a piece of masking tape glued to it.
Later, it turned out that the inverter was made by Cascadia. But the biggest scandal occurred when it was revealed that during the filming of the commercial, which was supposed to feature a real car, it turned out to be a non-working prototype. It was lifted to the slope and lowered. Then all this action, of course, was filmed and beautifully cut for promo materials.
Trevor promised to put the trucks into production back in 2019, but not a single commercial model has ever come off the assembly line. But with all his promises, Trevor Milton was able to attract hundreds of millions of dollars in investments.
Nikola Corporation had a market capitalization of $12 billion at the time of its IPO in June 2020. At the time of the IPO, he cashed in $70 million from the company’s dividends. He also signed a deed that entitles him to receive $20 million if he leaves Nikola within two years.
On September 21, 2020 Trevor Milton left the company, against which Nikola’s shares fell by 35% and many investors began to refuse to cooperate with the firm. What will happen to Milton next remains an open question.
Ahead of the Wind – Skully
Yes, this startup left the market headlong after it became clear that the company would not be able to sell its stated products. Well, also, of course, because it ran out of money.
The company Skully, founded in 2014, promised to bring the augmented reality helmets of the same name to the market for motorcyclists. The idea, by the way, was cool – the device could display real-time information on the screen about the weather, traffic, and blind spots.
The company ran a crowdfunding campaign on Indiegogo and investment rounds with Intel Capital and Walden Riverwood Ventures. Together, the founders were able to raise about $15 million in dividends. Former startup employee Isabel Feithauer said that founders Marcus and Mitch Weller spent most of that money on expensive cars, clothes, clubs and limousine rentals in San Francisco. With that money they were able to buy two Dodge Vipers.
And here the situation is just like with Nikola – constant postponements of the helmet’s production and delivery. First they talked about the helmet having design problems and needing to be refined, and then they spun tales of logistical difficulties. The saddest part about this is that the Skully smart helmets were available for pre-order and no money was refunded on them from the company. In 2016, the company declared bankruptcy.
Like two peas in a pod – Theranos
Elizabeth Holmes, founder of the startup Theranos
Two drops – that’s how much would be needed for a complete blood test using the technology of the startup Theranos. Of course, if the technology were real.
In her nineteen years, Elizabeth Holmes, who was studying at Stanford University and then by the laws of the American dream genre, abandoned it in 2003, hitting her own startup. Her original idea was to create a patch that could detect and even cure diseases. But then she went ahead and decided to develop the idea of painless blood sampling with the analysis of several diseases in one procedure.
No such technology existed on the market at the time, and the startup certainly caught the attention of investors. As the years went by, Elisabeth talked on stage and on TV about the revolutionary nature of her development, which only inflated the bubble more and more.
At one point, Theranos began signing multimillion-dollar contracts with U.S. pharmaceutical companies and medical centers that invested their money in the startup. In 2014, Theranos raised $9 billion, a record for our story today. All the other bubble founders were getting tens and hundreds of millions of dollars from their startups, but Holmes outspent everyone with her 50% stake in Theranos.
This allowed her to become a dollar billionaire for a time, until in 2015 the press published materials exposing the fraudulent scheme created by Holmes. For a dozen years, she lied from the stage, lying to investors, making billions of dollars out of thin air on nonexistent technology. In 2016, her assets depreciated.
The trial of Elizabeth herself and her associate Ramesh Balwani was scheduled for 2020 in the United States, but it was postponed until 2021 because of the coronavirus pandemic. After the trial passes, we should expect Holmes to get what he deserves.