After 15 weeks of testimony, the fate of Theranos founder Elizabeth Holmes now rests with a jury. Did she, as the prosecution has alleged, run a greedy scam? Or, as her defense contends, was she the victim — of her own inexperience, of sexual abuse, of overwhelming pressure to deliver? We’ll find out soon.
Under our legal system, Holmes is innocent until proven guilty. In my own court, though, she’s guilty on at least two counts: providing me with a terrible customer experience, and embracing one of Silicon Valley’s most dangerous philosophies.
I first encountered Theranos where all the magic began, on the campus of California’s Stanford University. My time there as a student in business school coincided almost perfectly with Peak Holmes. The place was, not surprisingly, high on the dropout-turned-billionaire, the seeming embodiment of everything the Valley prizes: youth, audacity, technological savvy and a vision for changing the world.
After all, Theranos was not just another app for sharing better photos of your Bichon Frise. Holmes offered what every angel investor and venture capitalist wants — the chance to make an obscene amount of money — and real nobility of purpose, by promising better health care for the masses. The seduction was irresistible.
I was taken in, too, but for different reasons. I’m a lifelong needle-phobe. Few things terrify me like the death grip of the rubber tourniquet, the savage piercing of tender flesh, the sight of my vital fluids being drained into a plastic vial. Holmes’s finger-prick alternative promised to be life-changing.
So when, in 2015, I was told I needed a basic metabolic panel to test potassium levels, I thought: Here’s my chance. Sure, I could have just done the test at Stanford’s clinic with student insurance footing the bill. But I was living in Palo Alto, and the local Walgreens — Theranos’s key pharmaceutical partner — had a testing site. It seemed worth the schlep and expense.
I marched into the Walgreens with a lab order in my purse and hope in my heart. But that hope was crushed when I was told that, for the test I needed, the finger-prick wasn’t an option; I’d have to do an old-school venous draw. Incredulous, I protested: This is a routine test. But, said the tech, no luck. In high dudgeon, I asked what the point was of taking the time to go to their site, and paying more, when I could have had the same experience at the Stanford health center, effectively for free?
Well, the tech said, we use less-scary butterfly needles. Plus, the space was nicer. No gray, sterile closet was this: The walls were painted a soothing hue, and I sat in a recliner next to a potted orchid. Like pretty much everything about Theranos, I’ll never know whether the recliner’s leather or the orchid’s blooms were real or faux. Including my results, delivered through a buggy app.
I forgot to pay the bill when it came — I was in transition after graduation, moving from one address to the next, starting a new job. A couple of months later I found it again sifting through some old mail. In the interim, John Carreyrou had published his exposés.
Suddenly my unintentional nonpayment was a righteous protest. Eventually, the company went under; problem solved.
Yet the lesson I absorbed was not “Postpone bill-paying until corporate bankruptcy.” What made the episode illuminating was that it unfolded near the conclusion of my B-school entrepreneurship course, which was built around case studies of company founders who came into class to share their origin stories. The innovators’ creed was dogma in the Valley: Fake it ’til you make it.
After all, no truly innovative product or business model is certain to succeed. The more revolutionary the idea, the less evidence there usually is to indicate the bet will pay off. So in a world where investors, the media, employees and customers want to back winners, the only way to get their buy-in is to bluff. The confidence that’s exaggerated, the sales pitch that’s too optimistic, the delivery deadlines that are too aggressive — you do what you gotta do to reach the next step toward world domination, or at least Series B funding.
And if you crash and burn? So what? Being willing to fail is the only way to spectacularly succeed. In the Valley, it’s an ethos thick in the air, like the fragrant eucalyptus.
Except failure can have consequences — consequences that don’t often make the tidy summaries in the case studies. Livelihoods are ruined, families upended, wealth destroyed. Part of the trouble with the cult of the young founder is that 20-somethings don’t usually have a solid grasp on the life-altering downsides of the risks they take. If Holmes skates because a sympathetic jury agrees she was too young to be a CEO, it will be the height of hypocrisy for venture capitalists to scream in outrage.
Because, in some industries, the price of faking it ’til you make it is measured in human lives. It’s fine to laugh alongside the bakery-chain founder reminiscing about overpromising on croissant deliveries to Starbucks. It’s another when your product is all that stands between a patient and, say, a deadly reaction to a prescription drug.
Just as there is a fine line between madness and genius, there’s a blurred distinction between the brazenness that defines successful entrepreneurs and outright fraud. Holmes now waits to see which side of the line 12 jurors think she was on.