The start of 2022 was marked, among other things, by the resolution of the media case against the North American entrepreneur Elizabeth Holmes. Theranos, the name of her unicorn startup, promised to revolutionize the healthcare industry. Through a sample of a single drop of blood, its technology would be capable of producing multiple results at a very low cost in real time.
Very quickly Theranos managed to get rivers of investment. At an early age and without sophisticated technical knowledge, Holmes persuaded the likes of Bill Gates, George Shultz, Donald Lucas, Carlos Slim, and Henry Kissinger to join his promise as advisers and/or investors. Her eyes were on her. At long last, Silicon Valley had a woman at the helm. However, in 2018, Holmes was accused of a massive scam of more than 700 million dollars. The indictment argued that it was an elaborate fraud in which data was exaggerated or altered. She always pleaded not guilty.
A brief tour of some of Theranos’s main milestones allows us to detect some root problems. In the period from 2005 to 2007, Elizabeth begins to develop prototypes of her technology. These prototypes never worked, confirming the prognosis of Stanford professor Phyllis Gardner who always claimed that Holmes’s idea could not be executed. By 2007, Holmes had raised $197 million. Between 2009 and 2010, she started talks with the giants Walgreens and Safeway to put Theranos technology in their stores. In 2013 the agreements with both companies were made public and in 2014 Theranos was valued at 9 billion. At this point, there was still no prototype that worked properly, however, the technology was already being used with patients. In the midst of this journey, Holmes appeared on cover after cover, she was awarded and recognized as the female Steve Jobs. In 2015 the Wall Street Journal published an article in which it unmasked the reality of Theranos: its technology never worked.
An innovation process in the health industry can take up to 15 or 20 years from the initial testing phases until the product hits the market. Theranos was testing patients six years into the project and without a working prototype. It circumvented the requirements of the US Food and Drug Administration (FDA) with cunning maneuvers and continued to attract capital.
The mecca of entrepreneurship and innovation, Silicon Valley has validated a noxious “Fake it till you make it” culture. Not only are they approved, but the lies that they call “legitimate” are encouraged. Those who listen to the business proposals of these young promises assume that there is something “untrue” in what they are saying. If this is combined with the fact that the entrepreneur seemed to enjoy the attention, then this is a recipe for disaster.
Adopting a lens that forces us to make the environment responsible means asking whether Holmes is the only one to blame here. The famous management framework for stakeholders or interest groups has been very useful and enriching in recent decades to ensure that those who run organizations know how to co-create value with others. The central premise of this approach is that organizations are a collection of interactions between actors that jointly build the business purpose. What a task!
When we assume ourselves as actors who are co-creating value hand in hand with the company, it becomes the task of all the members of this network to shield and protect that the purpose endures even in the most macabre of circumstances. In this case, the young and passionate founder made us fall in love with the nobility of her vision: to make health accessible to millions of people. However, given Holmes’s lack of experience and expertise, and the characteristics of the environment in which he operated, it was also the duty of his board, investors, employees, regulators, among others, to put enough locks so that this would not happen. Otherwise, we will continue to perpetuate situations where “Fake it ’til you make it, but if you don’t, I’ll take you down.”
*The author is a professor in the Political and Social Environment area at IPADE Business School.