Elizabeth Holmes was recently convicted for fraud in her role as the figurehead and firebrand for her medical start-up Theranos. The whole sordid tale is contemporaneously accounted in John Carreyrou’s excellent book Bad Blood: Secrets and Lies in a Silicon Valley Startup, as well as several documentaries that express surprise on how so many smart people and investors were conned to put their clout and faith in what turned out to be the impossible.
I have the perspective of having been part of Silicon Valley culture at the time, as a columnist for a lifestyle magazine, and as a tech writer. My work didn’t intersect with reporting on Theranos, but the hype for it and the overt desire to celebrate a female entrepreneur, and one still in her 20s was overwhelming, and clearly overshadowed any critical consideration.
Start-ups were the hot thing at the time, and venture capitalists and investor angels were eager and on the prowl to find the next “unicorn” — a company that could warrant over a billion dollars in value. Uber, Lyft, and Airbnb were ideas that discovered a need that could be leveraged by crowd involvment. It wasn’t as much about the ability to make money, but rather the ability to disrupt the current way of doing business so that they would eventually become the norm. For reference, neither Uber nor Lyft have made a profit yet, though their product/service is one I use far more readily than taxis. Airbnb (a service I also like) only makes money off its service fees.
As a result of this investor fever, there were a lot of people shopping a lot of ideas around, hoping to capture some of the money the investors were throwing around. Some of these people had viable ideas; some of those actually had the ability to execute said ideas; and some of those caught on enough to keep getting more money; and if they were lucky, they got bought up by a company with a lot of stock money. Many more people were shopping around ideas which were more along the lines of convincing investors to give them money. If they got it, they hired junior people who wouldn’t ask questions when things started going pear-shaped and hoped they would get bailed out with more money or by another company before everything fell apart. Theranos wasn’t alone in this — before I left Silicon Valley, which was before the Theranos case imploded — I had notes for a potential book about the Valley, with examples of just such start-ups, like Skully and Beepi.
You couldn’t not know this at the time, and Elizabeth Holmes was exactly what all the investors wanted — not another geeky guy with spreadsheets and charts and an earnest Powerpoint presentation about how his new social media platform/resource sharing/cheap sourcing app was going to eventually make its money back — but rather a fresh-faced young woman who told them she knew, but couldn’t share the secret, of how she was going to save people from premature death.
Her crime was not her idea, and my next post is about how, with more preparation and research, she could have come up with something more modest that may already be being developed by someone else in this world. It was the hubris of playing the role, and not being able to scale down, or give up.
It must certainly have been hard, if not impossible, to be humble at the time that she rolled into deceptions and lies. She was one of the most celebrated women in the world, at least by tech industry standards. She had glowing articles written up about her in national business magazines like Fortune; CEOs and world leaders clamored for her attention; and the local Silicon Valley press, including the San Jose Mercury News, gushed about her and how wonderful she was almost constantly. Anyone who wasn’t down with the young, new, hot flavor of the tech entrepreneur Silicon Valley wanted to have transforming the world was a loser.
I kid you not, ads for jobs at start-ups literally asked for candidates who were willing to “drink the kool-aid” in order to put in the long hours with the passion it would take to get a new company off the ground. Elizabeth Holmes not only sold the Kool-Aid of Theranos, she drank it, too. And that was her downfall, and perhaps a harsh lesson for the Silicon Valley culture of the mid-2010s that was more about style than substance.