According to the documentary director Alex Gibney, the success of Elizabeth Holmes can be put down to Silicon Valley’s “fetishisation of the entrepreneur”.
Holmes’ story is depicted in his latest film, The Inventor: Out for Blood in Silicon Valley, released last week.
But her story has caught the imagination of just about everyone who has stumbled across it. And that isn’t surprising: who wouldn’t be enthralled by the tale of a teenage Stanford dropout who became America’s youngest self-made female billionaire before plummeting from grace?
The facts are these. In 2003, Holmes launched a startup based on new breakthrough technology that could diagnose a host of medical conditions using just a fingerprick of blood.
After years of hype that her genius invention was revolutionising the blood-testing industry, it was gradually revealed that Holmes was a fraud: the product as it was advertised was non-existent.
Even in 2013 when the blood tests were rolled out in the pharmacy chain Walgreens (and thereby made accessible to millions), the technology had never been externally validated.
The company collapsed in 2018, and Holmes now faces criminal charges.
But how did it even get to that point?
The investigative journalist John Carreyrou, who uncovered the Theranos scandal, points to how some incredibly powerful people bought into Holmes without conducting even the most perfunctory checks. Eye-watering sums of cash were handed over after expensive dinners. Former secretaries of state were persuaded to sit on the board.
Investment conveys legitimacy of a company to the outside world. It’s a form of public vetting. Once a founder has raised a certain amount, they can effectively hide behind this apparent proof of success. The big-money investors, unwilling to accept that they have poured cash into a black hole, will often hang on in the hope that something significant will change.
This is a major part of what kept Holmes’ lies going: the mammoth investments in Theranos convinced the public, the media, and other investors that she was onto something.
By 2013, 10 years after its launch, Theranos was valued at a cool $10bn; in the media, it was described as a “breakthrough” operator.
Theranos was also structured in such a way as to isolate groups of employees from one another. Ian Gibbons, the company’s chief scientist who took his own life in 2013, reportedly told his wife that Holmes would discourage departments from talking to each other, cutting off the means to flag problems and work towards common goals.
Holmes apparently claimed that these efforts to silo information protected trade secrets. It made her both powerful and unaccountable: not a good mix.
This is a prime example of the culture of entrepreneur “fetishisation” that Gibney talks about. We tend to get fixated on the people behind the products we know so well: Jeff Bezos, Tim Cook, Elon Musk. We want to know what they eat, when they wake up, why they wear the clothes they wear. (Holmes, incidentally, made a black turtleneck her fashion trademark because Steve Jobs wore one.)
And though Bezos, Cook and Musk run established companies, the Theranos story shows us that there are at least some investors who will buy into an untested founder without proper due diligence. Just look at the Fyre Festival fiasco for proof – the leaked pitch deck shows 43 slides heavy on vision and light on concrete detail, that somehow secured Billy McFarlane $26m in investment, for a totally delusional event plan.
It’s one thing to have an idea and quite another to make it a reality. Now, 16 years after Theranos was first conceived, there is a long, long list of defrauded investors, a “trail of agonised patients” according to the Wall Street Journal, and much more besides.
If it’s true that we “fetishise” entrepreneurs, sometimes favouring personality over product, we should remember there can be a human cost.