Category: Entreprise

Entreprise

In Silicon Valley, Criminal Prosecutors See No Evil

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“Silicon Valley is a lot cleaner today than when I started, during the 1990s dot-com bubble,” said Reed Kathrein, a San Francisco lawyer who successfully sued Ms. Holmes and Theranos in 2016 on behalf of investors. “Everyone is throwing money at these start-ups. Everyone thinks they’re going to win the lottery. It’s easier to be honest.”

Reforms prompted by the collapse of WorldCom, a long-distance telephone company, and Enron, an energy company, in the early 2000s have also had an impact.

“Some of the changes in laws, like the Sarbanes-Oxley Act, put the screws on the accountants,” Mr. Kathrein said. “They have to do their jobs now.”

Thirty years ago, the tech industry was known as much for physical products as for software. Indeed, software used to be a physical product. If sales were not going well, that offered possibilities for subterfuge.

MiniScribe, a Colorado disk storage company that had fallen on hard times, was taken over in 1984 by Hambrecht & Quist, prominent Silicon Valley financiers. The investment firm pumped in money and installed its own management. In 1988, to keep its numbers up, MiniScribe managers packed 26,000 bricks into MiniScribe boxes and shipped them to Singapore. When the scheme was revealed, the company went bankrupt and the chief executive went to jail.

In this sense, Mr. Kathrein noted, Ms. Holmes’s case was a throwback. She was charged with making false and misleading statements to investors that Theranos’s proprietary analyzer, named Edison, was a medical marvel that could perform a full range of clinical tests. It could not.

“She was shipping bricks,” he said. A lawyer for Ms. Holmes declined to comment.

Mr. Kathrein’s conclusions are not widely accepted. Asked if tech people had become more honest over the decades, Margaret O’Mara, a historian of Silicon Valley, burst into laughter.

2021-09-07 20:06:39

Entreprise

A T-Shirt Shop for the Semi-Ironic ‘Twilight’ Fan

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Before 2020, Madison Sinclair hadn’t seen any of the “Twilight” movies. But after watching all five during quarantine, she grew completely enamored — and inspired to express her new fandom.

“I wanted to make something that was like, ‘Is this satire or is this real?’” Ms. Sinclair, 21, said on a video call from her home in Houston. The result was a T-shirt, created using a clothing customization website, with the sentences “Bite me, big boy!” and “I love my vampire boyfriend” flanking a photograph of Robert Pattinson, the films’ male lead. On the back, it said “Edward Cullen’s biggest fan!” in bright pink letters.

When Ms. Sinclair wore the shirt in a TikTok video, the comments soon filled with questions about where to buy it.

“I was like, ‘They have to be kidding. This is the most random, specific T-shirt ever. Why are so many people into this?’” Ms. Sinclair said.

She started selling them on Depop — a site often used to list “pre-loved” items — but realized, after receiving nearly 80 requests in her first day, that she’d need to scale up. So, she bought a web domain, BUGGIRL200.com (after her TikTok user name), and built her own online store. She has since sold more than 15,000 shirts, each of them reflecting tongue-in-cheek nostalgia for cultural touchstones from the last two decades. (Other designs feature Adam Sandler, Michael Cera, One Direction and Pitbull.)

She learned the sublimation printing process to make the shirts herself; dropped out of the University of Houston where she was a marketing student; and turned the business into her full-time job.

“I owe my whole current life to that TikTok,” Ms. Sinclair said.

Her work has not gone unnoticed by the celebrity class: Olivia Rodrigo, for instance, tagged her friend Iris Apatow — daughter of Judd — in a photo on Instagram of a BUGGIRL200 original that reads as follows: “I think the Twilight movies are AWESOME!!!!! If you don’t think that makes me SEXY and COOL, DON’T FREAKING TALK TO ME!!!!! I am not even kidding.”

The image caught the eye of Dulce Clara, 21, a student in San Marcos, Calif. “‘Twilight’ will forever have a special place in my heart because not only did I grow up watching the movies, but it was actually my first teen romance film,” she said. When she saw Ms. Rodrigo’s post, she said, “I instantly fell in love with the shirt and bought it.”

Cece Gude, 25, a musician from Miami, owns the Adam Sandler and Michael Cera shirts; she wears one almost every week. “He’s my favorite actor,” she said of Mr. Sandler, “and he’s genuinely one of the funniest people in Hollywood, in my opinion.”

Maya Avalos, 22, a student from Chicago, first heard about the brand through TikTok and bought a Pitbull-themed shirt, which she wore, aptly, to a Pitbull concert. “I love Pitbull, so a shirt with Pitbull surrounded by flames was a must,” she said, adding that she’d “never seen a shirt with such a cool sense of humor before.”

Ms. Sinclair’s site is run through Shopify, where some 1.7 million merchants sell all kinds of goods. The company saw usage grow during the pandemic, when most brick-and-mortar retailers shifted sales online. And it has made it much easier for upstarts to get small businesses up and running.

“Back in the dot-com days, one had to buy computer servers, write code and spend three months to a year” before a virtual store could go live, said Gary Dushnitsky, an associate professor of strategy and entrepreneurship at London Business School. “Only large companies, or those who had both foresight and the ability to raise large upfront investment, could launch and grow a virtual presence.”

Today that’s no longer the case because of low-code platforms like Shopify, Wix and Magento. “A creative person no longer has to spend weeks looking for a technical co-founder. Rather, they can leverage any one of these platforms to launch and grow a successful presence,” Mr. Dushnitsky said. This can lead to more innovation and experimentation, as well as increased diversity in terms of who sets up shops, he added, “including those who traditionally did not have technical knowledge or initial capital.”

For Ms. Sinclair, the accessibility that Shopify provided was key to getting BUGGIRL200 off the ground. Once it was up and running, she moved out of her parents’ home into her own apartment and turned her full attention to the clothing company.

“It’s still so scary because, at the end of the day, this is a ‘Twilight’ T-shirt business,” she said. That mild absurdity is also the point.

“I like it when people come to my page and have no idea if I’m a 14-year-old Taylor Swift fan or an adult woman who’s making T-shirts for a living,” Ms. Sinclair said.

2021-09-07 19:03:59

Entreprise

In Silicon Valley, Criminal Prosecutors See No Evil

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“Silicon Valley is a lot cleaner today than when I started, during the 1990s dot-com bubble,” said Reed Kathrein, a San Francisco lawyer who successfully sued Ms. Holmes and Theranos in 2016 on behalf of investors. “Everyone is throwing money at these start-ups. Everyone thinks they’re going to win the lottery. It’s easier to be honest.”

Reforms prompted by the collapse of WorldCom, a long-distance telephone company, and Enron, an energy company, in the early 2000s have also had an impact.

“Some of the changes in laws, like the Sarbanes-Oxley Act, put the screws on the accountants,” Mr. Kathrein said. “They have to do their jobs now.”

Thirty years ago, the tech industry was known as much for physical products as software. Indeed, software used to be a physical product. If sales were not going well, that offered possibilities for subterfuge.

MiniScribe, a Colorado disk storage company that had fallen on hard times, was taken over in 1984 by Hambrecht & Quist, prominent Silicon Valley financiers. The investment firm pumped in money and installed its own management. In 1988, to keep its numbers up, MiniScribe managers packed 26,000 bricks into MiniScribe boxes and shipped them to Singapore. When the scheme was revealed, the company went bankrupt and the chief executive went to jail.

In this sense, Mr. Kathrein noted, Ms. Holmes’s case was a throwback. She was charged with making false and misleading statements to investors that Theranos’s proprietary analyzer, named Edison, was a medical marvel that could perform a full range of clinical tests. It could not.

“She was shipping bricks,” he said. A lawyer for Ms. Holmes declined to comment.

Mr. Kathrein’s conclusions are not widely accepted. Asked if tech people had become more honest over the decades, Margaret O’Mara, a historian of Silicon Valley, burst into laughter.

2021-09-07 09:00:13

Entreprise

She’s the Investor Guru for Online Creators

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Cody Ko, a YouTube star with 5.7 million subscribers, found himself in a pickle in May. Two different start-ups wanted to give him stock, and he was concerned that they were potentially competitive deals.

So Mr. Ko called someone he trusted for advice: Li Jin.

Ms. Jin, a venture capitalist, suggested that Mr. Ko, 30, be honest and upfront with the founders of both start-ups about the potential conflict of interest. He agreed and ended up pursuing just one of the deals.

“I’d never hesitate to reach out to her if I needed something,” he said of Ms. Jin.

If there is such a thing as an It Girl in venture capital these days, Ms. Jin, 31, would fill the bill. She sits at the intersection of start-up investing and the fast-growing ecosystem of online creators, both of which are red hot. And while she formed her own venture firm, Atelier Ventures, just last year and has raised a relatively small $13 million for a fund, Ms. Jin was among the first investors in Silicon Valley to take influencers seriously and has written about and backed creators for years.

A Harvard graduate who was inspired by the ideas of Friedrich Engels and Karl Marx, Ms. Jin is also aggressively pro-worker. She has made it clear in podcasts and her Substack newsletter that creators should get the same rights as other workers. Among the ideas she has championed is a “universal creative income,” which would guarantee creators a base amount of money to live on.

Now as large venture capital firms flock to influencer start-ups, and as Facebook, YouTube and others introduce $1 billion creator funds, Ms. Jin’s track record has made her a go-to business guru for many digital stars who are trying to navigate the fast-changing landscape.

Hank Green, 41, a top creator on YouTube and TikTok, said he often tossed ideas back and forth with her by phone. Markian Benhamou, 23, a YouTuber with over 1.4 million subscribers, credited her with understanding what creators go through. Marina Mogilko, 31, a YouTube creator in Los Altos, Calif., said Ms. Jin “started the whole creator economy movement in Silicon Valley.”

“She was talking about the creator economy years and years and years before anyone else was,” said Jack Conte, a co-founder and the chief executive of Patreon, a crowdfunding site for content creators. “She really sees the future before other people do.”

Ms. Jin, who has invested in Substack and Patreon, said that although her fund was small, she planned to put all the money into companies transforming online work. “Everything I invest in is a creator-focused company,” she said. “I think the impact I have is outsized relative to the dollar amounts.”

Her credibility has been enhanced because she also operates as a creator. Ms. Jin posts frequently on her Substack newsletter, leads an online course teaching creators how to invest in start-ups and has created Side Hustle Stack, a free resource to help influencers find and evaluate platforms to leverage.

Ms. Jin, who was born in Beijing, immigrated at age 6 with her family to the United States, where her father pursued a doctorate in economics at the University of Pittsburgh. Their early years in the country were lean, she said, until her father left school and got a job. Her family eventually moved to Upper St. Clair, a town of about 20,000 outside Pittsburgh, where Ms. Jin attended public school and enjoyed painting and writing.

At Harvard, she studied English and continued her creative pursuits. But at the urging of her family, who she said “wanted financial security for me,” Ms. Jin switched her major to statistics and did banking and corporate marketing internships. After briefly working for Capital One after college, she moved to Silicon Valley at age 23 to work at Shopkick, a shopping rewards app, as a product manager.

In 2016, Ms. Jin landed at the Silicon Valley venture firm Andreessen Horowitz. At the time, the firm was focused heavily on investing in marketplaces like Airbnb and Rappi, the Instacart of Latin America.

Ms. Jin became fascinated with how different marketplaces worked and wrote prolifically about them for the Andreessen Horowitz blog. She also began thinking about how different marketplace systems could evolve to help people build businesses on the internet.

That led Ms. Jin to champion the influencer industry. Watching creators struggle to earn a living online felt personal, she said, while she also saw big potential in online work and creators as a business.

Her affirmation was meaningful, influencers said. “Her being at that big storied firm and saying these things felt like, ahh, finally someone’s saying it,” said Mr. Green, the YouTube star.

When the coronavirus pandemic hit last year and the world was increasingly pushed online, Ms. Jin recognized an opportunity.

“I felt like Covid would be such an accelerant to online-based work and people wanting to be entrepreneurs,” she said. “I realized I had an opportunity to start an entirely new fund that was devoted to this thesis and that would be on the forefront of evolving the nature of labor and work on the internet.”

In May 2020, she quit Andreessen Horowitz and started Atelier Ventures. She has since invested in creator-related start-ups such as PearPop, which lets influencers profit off their social interactions, and Stir, which helps creators manage their finances. She is one of the few investors whom large influencers know by name.

“If you talk to anyone who works in the creator economy, they all say, ‘Oh, you have to talk to Li Jin,’” said a creator who goes by Jasmine Rice, 23, a former OnlyFans influencer who started a platform called Fanhouse, which Ms. Jin invested in last year.

Ms. Jin has also publicly criticized the funds that YouTube, Facebook, TikTok and Snapchat offer influencers to make content for their platforms. She has implored the tech industry to “stop celebrating” the funds, calling them “bread and circuses,” and argued that creators needed ownership over the platforms that made money off them.

“Without ownership, creators are ultimately enriching and empowering *someone else* — platform owners — with their work,” Ms. Jin tweeted in June.

Ms. Jin said the platforms had to take care not “to recreate a ton of the economic disparities that exist in the broader economy rather than truly empowering a new generation of online entrepreneurs.” She has named a podcast that she co-hosts “Means of Creation,” a play on Marx’s means of production.

Her views have made her a subject of fascination in the tech industry and in leftist political spaces. Replies to her social media posts are full of memes insinuating she’s a socialist. Ms. Jin said she was mostly amused by the hubbub.

“I’m very careful to not use that word, the S word,” she said of socialism. “It’s unnecessarily polarizing in the U.S.”

Ms. Jin said she had also become a believer in crypto networks because they are decentralized and “aim to turn over control and ownership to their users.” She has begun investing in crypto-related platforms, recently backing Mirror, a decentralized publishing platform, and Yield Guild Games, which is building a gaming guild for the “metaverse” to help people in developing countries make money by playing video games. She has also teamed up with creators to mint and sell artwork as NFTs, or nonfungible tokens.

“There’s been a simmering awareness for my entire life,” she said, “that the world is unfair and we need to push it in the direction of justice and fairness.”

Since starting Atelier Ventures, Ms. Jin has moved away from Silicon Valley and run her fund out of her childhood bedroom in Pittsburgh. This summer, she was nomadic, traveling around the world surrounded by a changing cast of internet stars, artists, Gen Z tech founders and crypto pioneers.

In July, she co-hosted a packed happy hour on a New York City rooftop attended by a who’s who of internet culture and techies, including the founders of the NFT platform OpenSea, product people from TikTok and Twitter, and other investors. From New York, she jetted to Paris for a crypto conference and hosted a “creator salon” at a cafe on the Left Bank.

She then flew to Greece on an invitation from Daniel Ek, the chief executive of Spotify, and later attended a dinner on the beach with Emma Watson, Nicky Hilton and others, which was organized by the Brilliant Minds Foundation.

Last month, she headed home to Pittsburgh to regroup and reflect.

“It’s just so improbable that I’m here,” Ms. Jin said, “that I was born in Beijing speaking Chinese as my first and only language and something happened to bring me to the U.S. and now I have the tools to be able to have a voice and influence.”

2021-09-01 09:00:17

Entreprise

The Sisters Behind Veracruz All Natural’s Breakfast Tacos in Austin

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AUSTIN, Texas — It was early morning in the lobby of the Line Hotel, and everyone was eating migas.

The migas, from a restaurant called Veracruz All Natural, have long been a fixation for the breakfast-taco-obsessed populace of Austin: scrambled eggs flecked with pico de gallo and freshly made tortilla chips that hang onto their crunch, then topped messily with Monterey Jack cheese, cilantro and a sliver of avocado. The whole thing is nestled into a tortilla and wrapped tightly in foil like a present.

“When I go out of town, that is the meal I have before I leave, and when I come back into town, that is the meal I have,” said Nadia Chaudhury, the editor of Eater Austin. “Theirs is by far the best example of Austin’s tacos.”

But if the migas, sold in the hotel and five other locations, are attention-grabbers, their creators are quite the opposite. Reyna and Maritza Vazquez, the owners of Veracruz All Natural, are shy and laid back, often clad in jeans and sneakers.

The Vazquez sisters have done more than serve popular tacos from a food truck. They’ve changed the landscape of Austin dining, paving the way for more regional Mexican offerings in a city long defined by Tex Mex cooking, and helping other immigrants, and their families, to build restaurant groups with minimal capital.

“There wouldn’t be so many new and different styles coming in if it wasn’t for them,” said Armando Rayo, a journalist and producer at Identity Productions in Austin who writes about tacos. “They did a lot for the immigrant entrepreneur.”

They’ve accomplished this by making the dishes they grew up with in Veracruz, Mexico, and not bowing to the pressure that many immigrant chefs feel to change their food to fit in. If anything, Mr. Rayo added, the sisters are setting the trends in Austin. Certainly there were food trucks, breakfast tacos and freshly pressed juices in the city before the Vazquezes came along, but Veracruz All Natural feels prescient for combining so many of the elements that would come to be Austin signatures.

In September, after requests from customers around the country, the Vazquezes will start a food truck in Los Angeles, expanding the business beyond Texas. “If we can go and be successful there, we’ll try elsewhere,” said Reyna Vazquez, 38.

While the sisters are proud of their success at home, they do sometimes feel conflicted about how it has played out. They’ve built a customer base that is overwhelmingly non-Hispanic — without a broad following within their own robust community. East Austin, where they started Veracruz, has significantly gentrified, and many of its longtime Mexican American residents have moved elsewhere.

The sisters don’t feel as if they fit into the primarily male chef circles in Austin, either. Customers often assume, they say, that the restaurants are run by their husbands, who are white. “It is interesting how people think automatically that a successful business, it has to be a white-owned business,” Reyna said.

“We are trying to change that,” she added, and not by following some template for success laid out by other restaurants. They are creating their own.

Their arrival in Los Angeles will be characteristically low-key. They’re going with what they know: a truck parked at the Line Hotel in Koreatown. An eventual brick-and-mortar restaurant is also part of the plan.

The truck, called Hot Tacos, will have a less regional menu than their Austin locales: taco bowls, tacos (including migas), quesadillas and nachos. The idea, the sisters say, is to serve high-quality Mexican food at a reasonable price — $11 for a steak taco bowl, for example — occupying a middle ground between the fancy places and the street carts.

They say they have received lucrative offers to open in several states, including Colorado, Washington and New York. But Los Angeles has always been their dream. The city’s thriving, diverse taqueria scene might be daunting for some newcomers. For the sisters, it’s exciting, Maritza Vazquez, 42, said in Spanish. (The sisters are bilingual.) “We want to show that we can succeed in a city that has a lot of variety.”

The Los Angeles move comes 22 years after they came to the United States, crossing the border illegally with their mother, Reyna Senior, and Maritza’s ex-husband and her stepdaughter, Lis-ek Mariscal.

While working at an Austin taqueria, the sisters noticed that the Mexican dishes bore little resemblance to what their mother served at the restaurant she ran out of their home back in Veracruz. Tex Mex, with its rich chili con carne and queso, was by far the city’s predominant take on Mexican food.

In 2006, with $6,000, Reyna bought a truck and opened Antojitos Veracruz on North Lamar Boulevard, offering the city a taste of her home, with juices, smoothies and snacks like elote and raspados. Two years later, Maritza joined, and they began serving tacos based on their mother’s recipes on East Cesar Chavez Street.

“People weren’t used to buying from a food truck” at first, Reyna said, though the city would become a center of the national food-truck boom just a few years later. Neither sister spoke English at the time, and they feared that people would discover their undocumented status. (Both are in the process of applying for citizenship.)

Business picked up after Veracruz attracted coverage in the local papers — a 2009 article in the Austin Chronicle spotlighting their pork torta, and a short feature in the Austin American-Statesman in 2011.

There were Mexican restaurants all over East Austin, said Mr. Rayo, the journalist and producer. But Veracruz All Natural stood out for its emphasis on fresh produce and vegetarian dishes. The truck was easily accessible because of its proximity to Interstate 35, a major highway widely regarded as an unofficial barrier between Austin’s white and nonwhite populations.

Though Veracruz drew many diners to East Austin for the first time; some who lived there thought the tacos were too expensive, and not the Tex Mex they were used to.

“I guess the product we were selling didn’t really aim toward the community we were in,” said Ms. Mariscal, who is now Veracruz’s training manager. “They were like, ‘What is this healthy stuff?’”

In 2012, the sisters were invited to set up a food trailer on East Sixth Street for the South by Southwest festival. Emeril Lagasse, Rachael Ray and other celebrities stopped by and ordered. In 2015, Veracruz All Natural was highlighted on the Food Network show “Top 5 Restaurants.” Their blue trailer with the straw umbrellas had become a destination.

Today, diners can find Veracruz across Austin. All but three of its 60 or so employees are Hispanic, the sisters said. But they are still trying to build a stronger connection to their own community.

Because Veracruz has drawn so much notice in English-speaking publications and attracted such a large a non-Hispanic audience, Reyna said, Hispanic people can feel too intimidated to visit. They make up only about one-fifth of the customers.

To make Veracruz feel more welcoming, last spring the sisters began hosting salsa nights featuring musicians from the Latin diaspora, and Frida Friday ATX, a monthly market, named for the Mexican artist Frida Kahlo, that spotlights local purveyors of color. “I miss talking to people in Spanish,” Reyna said.

Regina Estrada, whose family opened the Tex Mex restaurant Joe’s Bakery in East Austin in 1962, said her place has been around long enough that Mexican American customers who moved out of the area will make a special trip to eat there. Veracruz, she said, may not have cultivated those regulars because it is newer.

Ms. Estrada, 40, used to live near the restaurant’s first location. “To kind of watch them grow and see the recognition and the accolades they received is really just a testament to the work ethic” of the Vazquez sisters, she said. At the same time, she added, one place could never be representative of Austin’s wide variety of taquerias. “But I think it is so much easier to say it is. It is a nicer story to spin.”

Still, Luis Robledo, 31, who grew up in East Austin, says Veracruz has had a positive impact on Austin dining and restaurants like his own. Mr. Robledo, who goes by Beto, was raised on Tex Mex, but his restaurant, Cuantos Tacos, which opened in 2019, focuses on the cooking of Mexico City. “Without people knowing it,” he said, Veracruz “opened up their minds to new ways of eating tacos.”

His is one of several taquerias, run by people of color and focused on various regional styles, that have recently opened on the East Side, including Nixta Taqueria and Discada. He said the Vazquez sisters had freely offered business advice to him and other owners.

That’s the kind of help the sisters say they haven’t received from chefs who run other popular restaurants in the city. “They don’t invite us to their events, or to do collaborations,” Reyna said.

Ms. Chaudhury, of Eater Austin, called Veracruz’s exclusion from major Austin food festivals “an unintentional form of gatekeeping,” as the people who organize these events tend to be white men who ask others like them to participate.

This doesn’t bother the sisters, who haven’t sought out the conventional trappings of success for a chef, like a television hosting gig or a cookbook. Three years ago, they were asked to make tacos on the Food Network show “Beat Bobby Flay,” but declined because Reyna had planned a vacation. (Their business director initially said they were too busy to be interviewed for this article.)

They’re not done expanding in Austin. On a recent Wednesday, the sisters gathered at what will become their second brick-and-mortar location in Austin, scheduled to open early next year. This space, at the former Robert Mueller Municipal Airport, used to be a Youngblood’s Fried Chicken, part of an old-school Texas chain. Black-and-white photos of young couples filled the walls, along with a big sign over the pass that said, “Save room for pie!”

The sisters will replace those decorations with vibrant murals inspired by Mexican street art and the Veracruz coastline. Their menu will have tamales veracruzanos and cochinita pibil. Quietly and unapologetically, they’ll make the place their own.

Entreprise

Jury selection for the Elizabeth Holmes trial starts today.

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Jury selection begins on Tuesday in the long-awaited trial of Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos who faces a dozen counts of fraud and conspiracy to commit wire fraud.

At the heart of the trial are questions of what exactly Ms. Holmes, 37, knew of the problems with Theranos’s blood-testing devices and whether she intentionally misled investors over the company’s technology. If convicted, she could serve up to 20 years in prison.

The case has captured public attention as another example of a Silicon Valley start-up gone wrong. But Theranos was unusual in that it was led by a female entrepreneur. Ms. Holmes exploited that difference, using it to build attention. She often wore a Steve Jobs-esque uniform of a black turtleneck and spoke in an unusually deep voice. Before Theranos fell from grace, Ms. Holmes was crowned the world’s youngest billionaire and regularly posed for magazine covers.

Her high profile may pose a challenge for jury selection. Prosecutors and her defense lawyers may find it difficult to pick jurors who have not already made up their minds about the case. Around half of the 200 potential jurors had already consumed media related to the case, according to court filings last week.

Potential jurors have filled out a 28-page questionnaire asking them about their media consumption habits, medical history and knowledge of more than 200 possible witnesses. An even more extensive questionnaire put forth by Ms. Holmes’s legal team included more than 100 questions. In June, it was rejected by Judge Edward Davila of U.S. District Court for the Northern District of California, who is overseeing the case. The trial is in San Jose, Calif.

Jury selection is expected to extend into Wednesday and could run longer. Opening arguments start next week.

2021-08-31 08:58:30

Entreprise

The Shy Sisters Behind Austin’s Breakout Breakfast Tacos

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AUSTIN, Texas — It was early morning in the lobby of the Line Hotel, and everyone was eating migas.

The migas, from a restaurant called Veracruz All Natural, have long been a fixation for the breakfast-taco-obsessed populace of Austin: scrambled eggs flecked with pico de gallo and freshly made tortilla chips that hang onto their crunch, then topped messily with Monterey Jack cheese, cilantro and a sliver of avocado. The whole thing is nestled into a tortilla and wrapped tightly in foil like a present.

“When I go out of town, that is the meal I have before I leave, and when I come back into town, that is the meal I have,” said Nadia Chaudhury, the editor of Eater Austin. “Theirs is by far the best example of Austin’s tacos.”

But if the migas, sold in the hotel and five other locations, are attention-grabbers, their creators are quite the opposite. Reyna and Maritza Vazquez, the owners of Veracruz All Natural, are shy and laid back, often clad in jeans and sneakers.

The Vazquez sisters have done more than serve popular tacos from a food truck. They’ve changed the landscape of Austin dining, paving the way for more regional Mexican offerings in a city long defined by Tex Mex cooking, and helping other immigrants, and their families, to build restaurant groups with minimal capital.

“There wouldn’t be so many new and different styles coming in if it wasn’t for them,” said Armando Rayo, a journalist and producer at Identity Productions in Austin who writes about tacos. “They did a lot for the immigrant entrepreneur.”

They’ve accomplished this by making the dishes they grew up with in Veracruz, Mexico, and not bowing to the pressure that many immigrant chefs feel to change their food to fit in. If anything, Mr. Rayo added, the sisters are setting the trends in Austin. Certainly there were food trucks, breakfast tacos and freshly pressed juices in the city before the Vazquezes came along, but Veracruz All Natural feels prescient for combining so many of the elements that would come to be Austin signatures.

In September, after requests from customers around the country, the Vazquezes will start a food truck in Los Angeles, expanding the business beyond Texas. “If we can go and be successful there, we’ll try elsewhere,” said Reyna Vazquez, 38.

While the sisters are proud of their success at home, they do sometimes feel conflicted about how it has played out. They’ve built a customer base that is overwhelmingly non-Hispanic — without a broad following within their own robust community. East Austin, where they started Veracruz, has significantly gentrified, and many of its longtime Mexican American residents have moved elsewhere.

The sisters don’t feel as if they fit into the primarily male chef circles in Austin, either. Customers often assume, they say, that the restaurants are run by their husbands, who are white. “It is interesting how people think automatically that a successful business, it has to be a white-owned business,” Reyna said.

“We are trying to change that,” she added, and not by following some template for success laid out by other restaurants. They are creating their own.

Their arrival in Los Angeles will be characteristically low-key. They’re going with what they know: a truck parked at the Line Hotel in Koreatown. An eventual brick-and-mortar restaurant is also part of the plan.

The truck, called Hot Tacos, will have a less regional menu than their Austin locales: taco bowls, tacos (including migas), quesadillas and nachos. The idea, the sisters say, is to serve high-quality Mexican food at a reasonable price — $11 for a steak taco bowl, for example — occupying a middle ground between the fancy places and the street carts.

They say they have received lucrative offers to open in several states, including Colorado, Washington and New York. But Los Angeles has always been their dream. The city’s thriving, diverse taqueria scene might be daunting for some newcomers. For the sisters, it’s exciting, Maritza Vazquez, 42, said in Spanish. (The sisters are bilingual.) “We want to show that we can succeed in a city that has a lot of variety.”

The Los Angeles move comes 22 years after they came to the United States, crossing the border illegally with their mother, Reyna Senior, and Maritza’s ex-husband and her stepdaughter, Lis-ek Mariscal.

While working at an Austin taqueria, the sisters noticed that the Mexican dishes bore little resemblance to what their mother served at the restaurant she ran out of their home back in Veracruz. Tex Mex, with its rich chili con carne and queso, was by far the city’s predominant take on Mexican food.

In 2006, with $6,000, Reyna bought a truck and opened Antojitos Veracruz on North Lamar Boulevard, offering the city a taste of her home, with juices, smoothies and snacks like elote and raspados. Two years later, Maritza joined, and they began serving tacos based on their mother’s recipes on East Cesar Chavez Street.

“People weren’t used to buying from a food truck” at first, Reyna said, though the city would become a center of the national food-truck boom just a few years later. Neither sister spoke English at the time, and they feared that people would discover their undocumented status. (Both are in the process of applying for citizenship.)

Business picked up after Veracruz attracted coverage in the local papers — a 2009 article in the Austin Chronicle spotlighting their pork torta, and a short feature in the Austin American-Statesman in 2011.

There were Mexican restaurants all over East Austin, said Mr. Rayo, the journalist and producer. But Veracruz All Natural stood out for its emphasis on fresh produce and vegetarian dishes. The truck was easily accessible because of its proximity to Interstate 35, a major highway widely regarded as an unofficial barrier between Austin’s white and nonwhite populations.

Though Veracruz drew many diners to East Austin for the first time; some who lived there thought the tacos were too expensive, and not the Tex Mex they were used to.

“I guess the product we were selling didn’t really aim toward the community we were in,” said Ms. Mariscal, who is now Veracruz’s training manager. “They were like, ‘What is this healthy stuff?’”

In 2012, the sisters were invited to set up a food trailer on East Sixth Street for the South by Southwest festival. Emeril Lagasse, Rachael Ray and other celebrities stopped by and ordered. In 2015, Veracruz All Natural was highlighted on the Food Network show “Top 5 Restaurants.” Their blue trailer with the straw umbrellas had become a destination.

Today, diners can find Veracruz across Austin. All but three of its 60 or so employees are Hispanic, the sisters said. But they are still trying to build a stronger connection to their own community.

Because Veracruz has drawn so much notice in English-speaking publications and attracted such a large a non-Hispanic audience, Reyna said, Hispanic people can feel too intimidated to visit. They make up only about one-fifth of the customers.

To make Veracruz feel more welcoming, last spring the sisters began hosting salsa nights featuring musicians from the Latin diaspora, and Frida Friday ATX, a monthly market, named for the Mexican artist Frida Kahlo, that spotlights local purveyors of color. “I miss talking to people in Spanish,” Reyna said.

Regina Estrada, whose family opened the Tex Mex restaurant Joe’s Bakery in East Austin in 1962, said her place has been around long enough that Mexican American customers who moved out of the area will make a special trip to eat there. Veracruz, she said, may not have cultivated those regulars because it is newer.

Ms. Estrada, 40, used to live near the restaurant’s first location. “To kind of watch them grow and see the recognition and the accolades they received is really just a testament to the work ethic” of the Vazquez sisters, she said. At the same time, she added, one place could never be representative of Austin’s wide variety of taquerias. “But I think it is so much easier to say it is. It is a nicer story to spin.”

Still, Luis Robledo, 31, who grew up in East Austin, says Veracruz has had a positive impact on Austin dining and restaurants like his own. Mr. Robledo, who goes by Beto, was raised on Tex Mex, but his restaurant, Cuantos Tacos, which opened in 2019, focuses on the cooking of Mexico City. “Without people knowing it,” he said, Veracruz “opened up their minds to new ways of eating tacos.”

His is one of several taquerias, run by people of color and focused on various regional styles, that have recently opened on the East Side, including Nixta Taqueria and Discada. He said the Vazquez sisters had freely offered business advice to him and other owners.

That’s the kind of help the sisters say they haven’t received from chefs who run other popular restaurants in the city. “They don’t invite us to their events, or to do collaborations,” Reyna said.

Ms. Chaudhury, of Eater Austin, called Veracruz’s exclusion from major Austin food festivals “an unintentional form of gatekeeping,” as the people who organize these events tend to be white men who ask others like them to participate.

This doesn’t bother the sisters, who haven’t sought out the conventional trappings of success for a chef, like a television hosting gig or a cookbook. Three years ago, they were asked to make tacos on the Food Network show “Beat Bobby Flay,” but declined because Reyna had planned a vacation. (Their business director initially said they were too busy to be interviewed for this article.)

They’re not done expanding in Austin. On a recent Wednesday, the sisters gathered at what will become their second brick-and-mortar location in Austin, scheduled to open early next year. This space, at the former Robert Mueller Municipal Airport, used to be a Youngblood’s Fried Chicken, part of an old-school Texas chain. Black-and-white photos of young couples filled the walls, along with a big sign over the pass that said, “Save room for pie!”

The sisters will replace those decorations with vibrant murals inspired by Mexican street art and the Veracruz coastline. Their menu will have tamales veracruzanos and cochinita pibil. Quietly and unapologetically, they’ll make the place their own.

Entreprise

Schemer or Naïf? The Trial of Elizabeth Holmes

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SAN FRANCISCO — After four years, repeated delays and the birth of her baby, Elizabeth Holmes, the founder of the blood testing start-up Theranos, is set to stand trial for fraud, capping a saga of Silicon Valley hubris, ambition and deception.

Jury selection begins on Tuesday in federal court in San Jose, Calif., followed by opening arguments next week. Ms. Holmes, whose trial is expected to last three to four months, is battling 12 counts of fraud and conspiracy to commit wire fraud over false claims she made about Theranos’s blood tests and business.

In 2018, the Department of Justice indicted both her and her business partner and onetime boyfriend, Ramesh Balwani, known as Sunny, with the charges. Mr. Balwani’s trial will begin early next year. Both have pleaded not guilty.

Ms. Holmes’s case has been held up as a parable of Silicon Valley’s swashbuckling “fake it till you make it” culture, which has helped propel the region’s start-ups to unfathomable riches and economic power. That same spirit has also allowed grifters and unethical hustlers to flourish, often with little consequence, raising questions about Silicon Valley’s tightening grip on society.

But the trial will ultimately be about one individual. And the central question will be whether Ms. Holmes was a deceptive schemer driven by greed and power, or a naïf who believed her own lies and was manipulated by Mr. Balwani.

The case hinges on Ms. Holmes’s knowledge of the problems with Theranos’s blood testing devices. Her lawyers could argue that she was merely the start-up’s public face while Mr. Balwani and others handled the technology, legal experts said. They could make the case that the sophisticated investors who backed Ms. Holmes should have done better research on Theranos. And they could say that Ms. Holmes was simply following Silicon Valley’s norms of exaggeration in service of an ambitious mission.

Last year, Judge Edward Davila of U.S. District Court for the Northern District of California agreed to separate Ms. Holmes’s and Mr. Balwani’s cases. The move was unusual for such cases, legal experts said, and allows the pair to blame each other with no ability to respond.

In sealed court filings from 2020 that were made public over the weekend, Ms. Holmes said that her relationship with Mr. Balwani had a “pattern of abuse and coercive control.” The filings said Ms. Holmes’s lawyers might introduce expert testimony on her mental state and the effects of the alleged abuse. Mr. Balwani’s lawyers denied the accusations in a filing. If convicted, Ms. Holmes, 37, faces up to 20 years in prison. While high-profile start-up founders from Uber’s Travis Kalanick to WeWork’s Adam Neumann have experienced swift falls from grace over ethics scandals, Ms. Holmes may become one of the few to actually go to jail for it.

“All too often this kind of fraud doesn’t get prosecuted,” said Alex Gibney, director of “The Inventor,” a documentary about Theranos. “So many other people fake it till they make it, but that never justifies not bringing charges when someone has committed fraud.”

Ms. Holmes’s lawyers did not respond to a request for comment. A lawyer for Mr. Balwani, 56, declined to comment, as did a representative for the U.S. attorney’s office for the Northern District of California, which is prosecuting the case.

Looming large over the trial will be the public’s fascination with the scandalous details of the Theranos drama.

For years, Ms. Holmes cultivated her public image with an unusually deep voice, an intense stare and an uniform of black turtlenecks meant to evoke Steve Jobs. She installed bulletproof glass in her office and traveled by jet or chauffeur with a security detail. In 2019, she reportedly married William Evans, a hotel heir. She gave birth to their son in July.

Her high profile presents a challenge in finding jurors who have not formed opinions about her or the case. Jury members filled out a 28-page questionnaire outlining their media consumption, medical experiences and whether they have heard of Ms. Holmes or seen her TED Talk. Approximately half of the more than 200 potential jurors had consumed media related to the case, according to a court filing last week.

It is unclear whether Ms. Holmes will take the stand to defend herself. As Theranos’s chief executive and chairwoman, she was persuasive and inspiring. She fiercely defended Theranos and dismissed any criticism as a sign that the company was changing the world.

But if Ms. Holmes takes the stand, prosecutors could use past statements to hurt her credibility. In a Securities and Exchange Commission deposition in 2017, she responded to questions by saying “I don’t know” at least 600 times.

“It will be hard for her to say, ‘I remember it this way,’ when she said ‘I don’t know’ so many times,” said John C. Coffee Jr., a professor at Columbia Law School who is not involved in the case. “That is the most damaging evidence against her.”

By the time the United States indicted Ms. Holmes in 2018, the once high-flying Theranos was all but dead.

Ms. Holmes founded the start-up at age 19 in 2003 and dropped out of Stanford soon after. She hired Mr. Balwani in 2009 and raised more than $700 million from investors, valuing Theranos at $9 billion. The Palo Alto, Calif., company struck deals with Walgreens and Safeway to offer its blood testing in their stores. It also attracted dignitaries, senators and generals — including George Shultz, Henry Kissinger, William Frist and James Mattis — to its board of directors.

“We’ve reinvented the traditional laboratory infrastructure,” Ms. Holmes said at a 2014 conference. “It eliminates the need for people to have needles stuck in their arm.”

Then in 2015, The Wall Street Journal published a series of exposés that called the effectiveness of the Theranos machines into question.

“She committed a fraud,” said Dr. Phyllis Gardner, a Stanford medical professor who was an early Theranos skeptic. “She harmed many patients. She bilked people out of their money.”

Increased scrutiny from regulators and investors revealed further problems and accusations of deception, leading to civil fraud charges from the Securities & Exchange Commission and a lawsuit from investors and Walgreens.

By 2016, Forbes had lowered its estimate of Ms. Holmes’s net worth from $4.5 billion to nothing. In 2018, she settled with the S.E.C. and investors. That same year, Theranos shut down.

The Justice Department’s indictment, also issued that year, accused Ms. Holmes and Mr. Balwani of telling investors that Theranos’s blood testing machines could quickly perform a full range of clinical tests using a finger stick sample of blood, even though both knew the tests were limited, unreliable and slow. Ms. Holmes and Mr. Balwani also overstated Theranos’s business deals and told investors that the company would generate $1 billion in revenue in 2015, when it made only a few hundred thousand dollars, the indictment said.

Ms. Holmes’s lawyers have since repeatedly pushed for delays to the trial. They have sought to have evidence excluded and witnesses blocked. And they have argued over other details, such as whether Ms. Holmes must wear a mask during the proceedings.

Some fraud charges on behalf of doctors and patients, whose tests were paid for by insurance, were dropped from the case last year. But patients of Theranos whose test results were inaccurate are being allowed to testify.

The potential witness list of more than 200 people includes many big names who entered the Theranos orbit. Among them: Rupert Murdoch, the media mogul who invested in the start-up; David Boies, the star lawyer who represented Ms. Holmes and sat on Theranos’ board; and Mr. Kissinger, Mr. Frist and Mr. Mattis.

Lawyers in the case have also sparred over the hype and stretching of the truth in Silicon Valley fund-raising. To keep the focus on Theranos, prosecutors have tried to prevent Ms. Holmes’s lawyers from arguing that it is common practice for start-ups to exaggerate their claims to garner investments. But Judge Davila has said the court would permit general comments on the topic.

“Fake it till you make it — you don’t do that in medical devices,” Dr. Gardner said. “They’re highly regulated. They have to be perfectly accurate and not harm anyone, and this did.”

Entreprise

‘Nos complica la vida’: muchas empresarias deben soportar las comparaciones con Elizabeth Holmes, la fundadora de Theranos

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Beth Esponnette, fundadora de Unspun, empresa de pantalones jeans hechos a la medida, comentó que los inversionistas muchas veces la han alentado a ser más agresiva, a optar por acciones que bien podrían rayar en la deshonestidad. En una ocasión, un inversionista le recomendó inflar sus perspectivas de beneficios por un múltiplo de 10, un nivel de lo más irreal.

El mes pasado, Esponnette publicó un ensayo titulado “I Get It, Elizabeth Holmes”, en el que describe este tira y afloja. Muchas de las acciones de Holmes fueron inexcusables, escribió Esponnette, de 33 años de edad. “Pero de cualquier forma pienso que estaba convencida de que hacía lo correcto y solo seguía la recomendación universal de Silicon Valley: ‘Finge hasta conseguir el éxito’”.

Varias mujeres que trabajan en empresas emergentes del sector tecnológico le escribieron para agradecerle por escribir sobre los sentimientos que comparten muchas de ellas, afirmó Esponnette.

Lola Priego, de 30 años, fundadora de Base, una empresa que ofrece análisis de sangre y saliva en el hogar que luego son procesados en laboratorios tradicionales, dice que escucha una comparación con Theranos al menos una vez a la semana. Las referencias provienen directa o indirectamente de socios potenciales, asesores, inversionistas, clientes y reporteros, dijo.

Priego afirma que entiende la necesidad del escepticismo porque las nuevas empresas de atención médica deben ser analizadas de manera crítica para prevenir la negligencia. A menudo, las comparaciones se detienen después de que la gente se entera de que Base trabaja con Quest Diagnostics, una empresa multinacional, para realizar el análisis de sus pruebas.

“Pero el sesgo y el escepticismo adicionales son difíciles de superar”, dijo Priego.

El mayor golpe vino de un asesor científico a quien Priego intentó contratar en 2019. El asesor asistió a la reunión para decirle que llevar la tecnología al cuidado de la salud estaba perjudicando a la industria, al igual que sucedió con Theranos. Eso hizo que Priego se cuestionara si podía contratar el tipo de asesores que necesitaba.

“Fue bastante desmoralizante”, dijo. Desde entonces, ha contratado a seis asesores.

En julio, Verge Genomics concretó una alianza con la gigante farmacéutica Eli Lilly que le permitirá trabajar durante tres años en fármacos para el tratamiento de la esclerosis lateral amiotrófica, o ELA, dijo Zhang. Además, la empresa publicó el año pasado en una revista científica un artículo sobre sus métodos y este año contrató a un director para el área de Ciencias.

Fue todo un alivio poder mostrarles algo a quienes dudaban, afirmó Zhang.

“La época más frágil de cualquier compañía es la etapa inicial, cuando tienes que ganarte a las personas, convencerlas de tu visión y de los méritos de la idea”, explicó. Acerca de Holmes y Theranos, añadió: “En esa etapa, este tipo de asociaciones pueden ser de lo más dañinas y mermar tu potencial”.

Erin Griffith escribe sobre nuevas empresas tecnológicas y capital de riesgo desde la oficina de San Francisco. Antes de unirse al Times, fue redactora sénior en Wired y Fortune. @eringriffith

2021-08-27 12:00:12

Entreprise

Pushing the Limits Paid Off for Didi, Until China Cracked Down

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China’s leading ride-hailing company, Didi, was an operation of dubious legality when it raised its first big bucket of money nearly a decade ago. And in one way or another, it has been testing the authorities ever since.

When a venture capital firm invested $3 million in the company in 2012, Didi lacked several of the state-issued licenses it needed to do business, two people familiar with the matter said. When Beijing, Shanghai and other big cities began requiring that drivers for ride-hailing platforms be local residents, Didi protested. Today, the company acknowledges that many rides are still being provided by drivers and vehicles that don’t meet local requirements.

And when China’s government demanded that ride-hailing services share real-time trip data for safety purposes, Didi dragged its feet, citing privacy concerns — until the rapes and murders of two female passengers finally pushed the company to relent.

Didi and other Chinese internet giants grew big and powerful by learning to thrive in regulatory gray zones. And by and large, Beijing was fine with that. The companies were making China richer, more productive and better entertained. They moved fast, and they might have broken a few rules. But so long as online conversations were filtered, search results were sanitized and videos were censored, internet companies’ success was the nation’s.

Didi, after all, was the homegrown hero that stopped Uber’s global expansion in its tracks. Didi showed that Chinese entrepreneurs could go head to head with Silicon Valley’s brashest and most cunning upstarts, and come out on top.

Those days are over. Under Xi Jinping, the Communist Party’s most powerful leader since Mao, China has taken a hard ideological turn against unfettered private enterprise. It has set out a series of strictures against “disorderly” corporate expansion. No longer will titans of industry be permitted to march out of step with the party’s priorities and dictates.

Silicon Valley may not have managed to halt the Chinese tech industry’s rise. But Mr. Xi might.

On issues like data security, privacy and worker protections, Beijing’s scrutiny is long overdue. Yet Chinese officials have moved against tech companies with a speed and ferocity that might unsettle even the most ardent Western trustbusters.

The United States and Europe also want to tame the excesses and extremes of capitalism in the smartphone age. China is smoothing out the rough edges with a chain saw.

In early July, two days after Didi went public in New York, China’s internet regulator ordered it to stop signing up new users while officials examined its cybersecurity practices. Then Didi’s apps were forced off mobile stores. Then the company was fined for antitrust violations. Then passels of government officials stationed themselves in Didi’s offices.

There is almost certainly more to come.

Didi’s ascent, which more than a dozen former employees described to The New York Times, did not merely end Uber’s business in China. It made Didi the biggest online ride platform on the planet. On average, 156 million people a month used Didi in China in the first quarter of this year, compared with 98 million for Uber worldwide. Didi handled 25 million rides a day in China during that period; Uber, globally, 16 million. Those numbers do not include Didi’s services in Latin America, Japan, Russia and beyond.

China wants to make sure Didi’s next chapter — and the whole tech industry’s — is less unruly than the first. In this age of distrust between China and the United States, one of Beijing’s concerns appears to be whether companies like Didi, with all their data and influence on ordinary lives in China, should really be going public on American stock exchanges.

After Didi’s initial public offering, the company was valued at $79 billion at its July 1 peak. Its 38-year-old founder and chief executive, Cheng Wei, and its president, Jean Liu, 43, who is almost certainly the most prominent woman in China’s internet industry, own shares worth billions.

It is taking much less time to destroy that wealth than it did to create it.

In late January 2015, Zhou Hang, the founder of one of China’s earliest ride-hailing companies, Yongche, got a call from Mr. Cheng. The two met at a luxury hotel near Beijing’s Summer Palace, and over dinner they discussed the possibility of a merger. Yongche had been a pioneer in ride hailing, while Didi was a leader in taxis. A union would make sense.

Soon after, rumors about a tie-up started circulating in the Chinese tech media. Mr. Zhou asked Mr. Cheng whether he had leaked the news. Only the two of them had been at the dinner. Mr. Cheng denied doing so.

But on Valentine’s Day, Didi announced that it would join forces with its biggest rival, Kuaidi. Mr. Zhou now believes that Mr. Cheng used their meeting to push Kuaidi to agree to the merger.

The boyish, bespectacled Mr. Cheng had brought a bagful of cutthroat corporate tricks to China’s booming online rides industry.

He was 22 when he talked his way into a job at the e-commerce giant Alibaba. The sales team he joined was nicknamed the “iron army” for its relentless drive. After climbing Alibaba’s ranks for six years, Mr. Cheng started Didi because of how hard it was to get a cab in Beijing. Populations in China’s megacities had swelled, but the supply of taxis wasn’t keeping up. The company’s name is meant to mimic the sound of a car horn.

In Didi’s early years, Mr. Cheng copied Alibaba’s tradition of ice-breaking rituals for new hires, including intimate questions such as how they lost their virginity, former employees said. Once, as punishment after Didi users reported bad experiences, he forced his chief technology officer to streak, Mr. Cheng told the Chinese magazine Caijing. He ordered other executives to clean bathrooms.

Mr. Cheng also adopted Alibaba’s zest for waging war against rivals.

According to Mr. Zhou, Yongche’s system was inundated with fake orders after Didi started its ride-hailing service in 2014. Cars were dispatched, but no customers showed up, tying up Yongche’s drivers. When Yongche investigated, it found that many of the orders had come from internet addresses near Didi’s offices, Mr. Zhou said.

The Times sent Didi a list of detailed questions for this article, but the company declined to comment. In the past, Didi has denied other allegations about faking orders.

Didi’s tactics against Uber in China could be equally underhanded. According to “Super Pumped,” a chronicle of Uber’s rise by the Times reporter Mike Isaac, Didi managers sent fake text messages to Uber drivers, saying that Uber had shut down in China and that they should work for Didi instead. Didi also sent new recruits to be hired by Uber as engineers. There, they acted as moles, feeding information back to Didi.

The trickery paid off. In August 2016, after the two companies had spent hundreds of millions of dollars fighting each other, Uber announced that it would sell its China operations to Didi. Bloomberg Businessweek splashed Mr. Cheng on its cover and called him the “Uber slayer.”

Like many Chinese business executives, Mr. Cheng is fond of military metaphors. In interviews, he has compared Didi’s years of conflict and competition to the Battle of Verdun. He said he saw his own spirit fighting Uber reflected in Russian propaganda films.

“Napoleon came to Moscow,” he told one interviewer. “Hitler came to Moscow. None of them prevailed. This place was never conquered.”

It was only four-odd decades ago that private ownership was forbidden in China, and the Communist Party has been hot and cold on the concept ever since. Private businesses have long had to figure out how to make a buck under threat of being squashed by the authorities.

If Didi was very worried about the government in its early years, it didn’t show it.

In 2014, when the city of Beijing banned the use of private cars for ride-hailing businesses, Mr. Zhou of Yongche obeyed and took such vehicles off his company’s platform, he said. Didi did not, as officials soon discovered. When Shanghai accused Didi of running an illegal taxi business, the company said it worked only with lawful car-leasing companies, not with individual car owners.

Mr. Zhou now says he made a big strategic blunder. But he had reason to be cautious. Yongche had been under constant pressure from regulators. Mr. Zhou and other executives were regularly summoned to government meetings for criticism and lecturing.

“We knew fear because we had seen the tiger,” Mr. Zhou said. “Cheng Wei didn’t seem to be as afraid.”

Didi had acquired some political capital. In September 2015, Mr. Cheng was the youngest member of the Chinese delegation that accompanied Mr. Xi on a visit to Seattle. Mr. Xi later stopped at Didi’s booth at a Chinese conference and listened and smiled as Mr. Cheng talked about his company’s global ambitions.

But at the time, Chinese officials were also unwilling or unable to challenge tech companies on antitrust grounds. After Didi merged with Kuaidi in 2015, Mr. Zhou filed an antimonopoly complaint to the authorities, but he never heard back, he said.

The next year, China’s Commerce Ministry said it would investigate Didi’s tie-up with Uber. The combined Didi was obviously a behemoth, with something like 90 percent of the Chinese market. But Chinese law did not contain clear rules governing mergers between companies, like Didi and Uber, whose owners were mostly foreign investors. Beijing never unwound their union.

China’s transportation regulators, too, were watching Didi. Many Chinese cities require drivers and vehicles to meet standards and obtain licenses to provide ride-hailing services. The police have regularly pulled over and penalized Didi drivers whose papers aren’t in order.

Yet several former Didi employees said that for many years, most local authorities seemed to know it would be impractical to demand total compliance. In big cities like Beijing, taxi licenses are often held by the rich and politically connected, who use their clout to prevent regulators from increasing the supply of licenses. Officials also understand that ordering Didi to bar unlicensed drivers would put the drivers out of work.

Didi has gotten so used to operating in this legal purgatory that it reimburses drivers for their fines. For Didi, the value of keeping drivers on the road is worth the potential penalties. But for the drivers, this arrangement is no guarantee they won’t be on the hook for fines or hassled on the job.

Many Didi drivers have taken to social media to complain about the company’s capricious reimbursement policies. One driver, Li Pei, had just dropped someone off in February when a police officer stopped him and fined him around $2,300 for not having a ride-hailing license. When Mr. Li, 29, asked Didi for reimbursement, the company said it wasn’t responsible because he hadn’t been carrying a passenger when pulled over.

Mr. Li said Didi had never told him anything about needing a special license.

“Do you think they would tell you that? If they did, who would still drive for them?” he said. “If Didi doesn’t fail, heaven wouldn’t tolerate the injustice.”

By 2018, Didi was busy taking over the world. It was expanding into Australia and other overseas markets. It had opened a lab in Silicon Valley to develop “intelligent driving technologies” and had begun contemplating going public.

Then came the murders.

The first victim was a 21-year-old flight attendant in the Chinese city of Zhengzhou. It was May 2018. Didi apologized and suspended Hitch, the car-pooling service the woman had been using when she was killed. But it was not until that August, when another woman was raped and stabbed while riding with Hitch, in the city of Wenzhou, that the company went into crisis mode.

After the second murder, some Didi employees were shocked that the company had brought Hitch back online just a week after suspending it, even if some new safety features had been added in the interim. But Hitch had been lucrative for Didi. It was cheaper to let customers drive one another around than to pay professional drivers. The company had celebrated Hitch’s manager, Huang Jieli, in an internal video that compared her to Hua Mulan, the female warrior of ancient Chinese legend.

It was hardly a secret that Didi had been making breakneck growth a priority. The company had to prove it was worth the eye-popping prices that investors like SoftBank had tagged it with.

At an employee conference that February, Didi’s president, Ms. Liu, had acknowledged some growing pains: “Like a soul that has not kept pace with a body, the maturing of our organization has not kept up with the growth in our business.”

In a contrite letter to employees after the murders, Mr. Cheng went further: “The ‘run like crazy’ model of development long ago planted hidden dangers.”

Not long before the first murder, on a chilly evening in Beijing, Yang Tingting had been in a Didi when she noticed her driver was smirking at her. She tried to ignore him. But then he began asking, “How much do you charge for one?”

Terrified, Ms. Yang, who was 30, thought about trying to jump out of the car.

Back at her hotel, she submitted complaints in the Didi app, but customer service didn’t call her until the next afternoon. When she explained what the driver had done, the male service agent asked: “Did you give him any hints? Could he have misunderstood you?”

When Ms. Yang said she had been dressed professionally and worked in media, the agent said that perhaps the driver had been asking how much it would cost to place an advertisement. She said she had felt that the driver meant to harm her. The agent just laughed.

By that point, Chinese officials had been dissatisfied with one element of Didi’s safety controls for years. Since 2016, the Transportation Ministry had been asking ride-hailing companies to upload real-time data about drivers, cars and trips to a central platform. But Didi was slow to share information, despite sharp warnings from national and local authorities.

“Is there really any need to give real-time data to regulators?” the company’s chief development officer at the time, Li Jianhua, told a reporter in 2017. “If our user information is leaked by a government department, who is responsible then?”

Only after the murders did Didi agree to upload all its data. It made other safety improvements and fired Hitch’s manager, Ms. Huang, who couldn’t be reached for comment for this article.

The company tried to win Brownie points with Beijing by hiring 1,000 Communist Party members to work as customer service agents. But its image had suffered.

It didn’t help when, a year later, Didi restarted Hitch in a few cities with a new feature that was supposed to protect women: After 8 p.m., the service would be available only to men. Web users denounced the policy as lazy and sexist. Ms. Liu apologized, and Didi made Hitch unavailable to everyone after 8.

Some employees were taken aback at how badly Didi had botched its big comeback. Even after Hitch functionality was restored, Hitch as a business never recovered.

After the murders, China’s government dialed up the pressure on Didi to get drivers and cars licensed. To defray the costs of upgrading their vehicles to meet standards, drivers demanded higher earnings. That meant higher fares, and higher fares meant slower growth. Slower growth made it difficult to recruit and retain talent. Didi cut bonuses and laid off workers.

In time, though, the convenience of Didi’s services proved irresistible even for customers like Ms. Yang, the writer who had been harassed by her driver in Beijing.

At first, the encounter cast a “psychological shadow,” she said, and she couldn’t bear to ride with Didi.

“But then I realized that the other ride-hailing platforms weren’t necessarily better than Didi when it came to safety, particularly after Didi made its improvements,” Ms. Yang said. She went back to being what she calls a heavy Didi user.

Safety concerns of a different kind led Beijing to bring down the hammer after Didi went public in June.

“Data is the lifeline of any business,” Mr. Cheng had told the BBC in 2018. “If you can’t guarantee data security, that’s going to be totally destructive for the business.”

China has enacted a series of laws to ensure that tech companies protect their data and store it locally. Regulators have also ordered the creators of hundreds of apps to stop collecting user information to excess. In regulatory filings ahead of its I.P.O., Didi noted that its business could suffer if the Chinese authorities were not satisfied with its data security and privacy practices.

But those specific risks barely came up in Didi executives’ discussions with investors and bankers before the listing, two people involved in the process said.

One of them said that because Didi had already talked with investors and lined up cornerstone shareholders in the months before, top company brass felt it didn’t need to spend as much time making formal sales pitches as would be standard for an I.P.O. Didi’s underwriting banks agreed, this person said.

Didi filed its preliminary paperwork on June 10. By June 29, it had priced its shares at $14 apiece. They began trading on the New York Stock Exchange the next day.

China’s internet regulator pounced first.

Didi may have hoisted itself into Beijing’s cross-hairs by choosing to go public in this year of crackdowns on Big Tech. Even so, the company is now a stand-in for something much larger than itself. What China does with Didi could tell us how Mr. Xi intends to treat all entrepreneurs and would-be disrupters.

“Something needs to be done; there’s just no question about it,” said Minxin Pei, a political scientist who studies China at Claremont McKenna College. But “the way they are doing it is very counterproductive.”

“The government tends to act in a way that errs not on the side of caution,” Professor Pei said, “but on the side of excess.”

Michael J. de la Merced contributed reporting, and Albee Zhang contributed research.

2021-08-27 09:00:29