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Theranos: Victim of Fake it Till You Make it

Theranos: Victim of Fake it Till You Make it

I recently got my hands on the book Bad Blood by John Carreyrou, it was long due in my reading list. Bad Blood details the dramatic rise and fall of the Silicon Valley start-up Theranos and its founder Elizabeth Holmes.

If you aren’t aware of Elizabeth or Theranos, here is a short summary. Elizabeth founded Theranos, just at the age of 19, after dropping out of Stanford, and both she and Theranos quickly became the darling of Silicon Valley. She promised that she can give you a complete picture of your health, just by using a few drops of blood. And partnered with Walgreens and Safeway to put her blood testing technology across the United States.

She knowingly indulged in vapourware and made false statements and promises to her investors and partners on the capability of her technology. Vapourware, a term quite common in the tech world, is basically over promising and under delivering.

The problem was the technology never worked and anyone who questioned Elizabeth or his number two Sunny Balwani was shown the door immediately. Her deceit and lies came to light in 2015, when John Carreyrou published a story in the Wall Street Journal.

On its peak, Theranos was valued at more than $10 billion and had raised close to $900 million in funding. A surprising point was that Theranos raised all the funding, while never having a CFO. Its last CFO, Henry Mosely was fired by Holmes in 2006, after questioning the integrity of the Company’s lab testing equipment’s.

How come a company is able to raise close to a billion dollars without a CFO. An early stage venture capitalist not doing a through due diligence can be understood, but a private equity investor in the later rounds of funding not doing any due diligence is dumbfounding.

After reading the story of Elizabeth, I can’t stop thinking and draw comparisons to other white-collar criminals like Bernie Madoff or Barry Minkow. Both of them started with the intent to deceive their investors and customers and were driven by the sole intent of greed.

But when I look at Elizabeth Holmes, it seems to me that she never wanted to dupe its investors or customers, instead wanted to provide people a revolutionized way of blood testing. She really had a great vision to disrupt the blood testing industry. But somewhere in her quest to succeed, became so blinded by ambition that she was ready to cross every line and even ready to put human lives on stake.

Fake it till you make it mentality is good up to a point, but one should not be so much carried away that they forget the reality. At some point one should just accept the reality and change the methods or in some cases just move on. There is a thin line of difference from being a visionary to turning into a sociopath.

What you think of Fake it till you make it mentality?