Image courtesy of Vanity Fair – ETHAN PINES/THE FORBES COLLECTION.
It’s 2003. Arnold Schwarzenegger has been elected Governor of California. Scientists from around the world have just completed the Human Genome Project, and somewhere on the campus of Stanford University, a young, bright-eyed, 19-year-old Elizabeth Holmes has handed in her last assignment. The feeling of finality is a few semesters too early as Holmes isn’t leaving University a graduate but rather a dropout, eager to follow the likes of other successful entrepreneurs before her who had dropped out, such as Steve Jobs (whom she greatly admired and dressed like), Mark Zuckerberg and Bill Gates. According to her, a few more classes in Chemical Engineering are useless in her quest to fulfil her childhood dream.
And what an audacious dream it is! Holmes has skilfully held on to the hope that she would one day revolutionize the healthcare industry after seeing a family member die from cancer. Healthcare, to her, should be affordable and accessible to all.
With fierce commitment to cause, Holmes uses her tuition money to start a healthcare technology company that become Theranos (a combination of “therapy” and “diagnosis”) in 2003 – a company which allegedly offers accurate diagnosis of over 240 tests, including cancer and high cholesterol, using a shockingly small amount of blood gotten through a simple and pain-free pinprick.
For those of us who have never had to endure multiple blood tests with scores of needles pushed into major veins, we couldn’t possibly appreciate the game changer of Holmes’s model. Her method involved a machine she named Edison (after the inventor Thomas Edison), but later changed to miniLab, that made blood tests easier and more comfortable, results faster, and had the capacity for democratizing the process, allowing patients to request a lab test without a doctor’s prescription.
Out For Blood
By 2014, Holmes and her company, Theranos, were sitting on top of the world or rather, aloft floors within a building smartly positioned in Silicon Valley – a genius move by the woman many would later hail as the female Steve Jobs.
And why not?! Holmes had successfully raised more than $700 million from investors and included on her board the who’s who of big names like Secretary of Defense Jim Mattis, world leader Henry Kissinger and former U.S. Secretary of State, George Shultz. After inking deals with corporate giants like Walgreens and Safeway, Theranos became a household name, valued at $9 billion and its CEO was named the youngest female self-made billionaire, beautifully showcased on the covers of Forbes, Fortune, The New York Times and ranked #110 on Forbes 400.
Well, at least that’s the story before the mirror on the wall shattered and the dream quickly turned into a bizarre and horrible nightmare. In 2015, a series of investigations, heralded by stories written by Wall Street Journal reporter John Carreyrou, revealed doubts about the company’s technology claims and whether the darling of Silicon Valley had misled investors and the government.
Carreyrou found after scrutiny of Theranos’ operations that, Theranos’ blood-testing machine was not giving accurate results, so the company was running its samples through the same machines used by traditional blood-testing companies. While that may not have been bad for consumers, it was certainly not what investors wanted to hear. Holmes had told them that the Theranos miniLab was capable of testing over 240 diseases when in fact, the device could only test for roughly 20 diseases. Since the company was privately held, there was never an audit required to test the performance of the company’s proprietary device nor the accuracy of the tests results.
Theranos’ head scientist, Ian Gibbons, had been working for Theranos since 2005, and was increasing frustrated by the false claims being made by Holmes, the failed attempts to get the Theranos technology to work as expected and the rigid work culture that inhibited open communication between departments. During a legal dispute surrounding Theranos’ patents, Gibbons was called to be a witness since he was a co-inventor on the patents in question. Torn between feeding into the lies or telling the truth and losing his job, he attempted to commit suicide the night before he was scheduled to give his deposition, and subsequently died on May 23, 2013.
By 2018, The U.S. Securities and Exchange Commission (SEC) charged Theranos and Holmes with ‘massive fraud’. Walgreens closed operations at all 40 Theranos Wellness Centers at its stores in Arizona and Fortune named Holmes in its 19 Most Disappointing Leaders.
Disappointment. It’s the taste on our tongues as we watch a young, promising, accomplished woman, who held her own in a male-dominated space, fall from grace. We wanted, no, needed her to succeed as the number of female self-made billionaires is minuscule. Further, there is an unquenchable desire in society to see a female entrepreneur compete and win on the same stage and in the same space as men like Steve Jobs, Bill Gates, Mark Zuckerberg and Larry Page.
However, regardless of the acrid taste of loss, there are lessons we can take from Holmes’ journey from the precocious 7-year-old child who declared she wanted to be a billionaire to the 34-year-old CEO, who under immense public scrutiny, holds fast to the idea that her company will one day rise again.
Surround Yourself With The Right Team
While Holmes may have thought it prudent to surround herself with brand names of start-up investors of Silicon Valley, she certainly did not choose a team with the requisite knowledge and experience for the work required. Kissinger, Mattis and other members of Theranos’ high-profile board were more experienced in politics than healthcare. They could fund the projects but they couldn’t ask the right questions or the hard-hitting ones that could have assisted in building a solid and stable foundation for the company’s growth. In fact, according to John Carreyrou’s book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, Ian Gibbons was the first experienced scientist hired.
Don’t Overpromise and Under-deliver
Holmes once claimed that Theronos’ miniLab was the most important thing ever produced by humans. Sure, it got the employees pumped to produce but there were no facts to back this claim. The habit of over-promising was the foundation of Theranos and this became a huge part of its demise. You can’t be willing to say or do anything just to accomplish your goals. Instead of being unethical and spewing unbacked claims about your abilities, business or product, do the opposite. Pleasantly surprise people by stating tried and true outcomes and then they’ll be overwhelmed if you deliver on your word and more.
It’s OK To Admit Ignorance
New knowledge, practices and technology will come along that may leave you stumped. It’s perfectly OK to admit that you need additional training or experience. After all, we can’t and won’t ever know everything. Seeking training for the areas where you lack sufficient knowledge to effectively carry out duties or make sensible decisions, is not an admittance of weakness but rather a declaration of growth and possession of leadership abilities.
Admit Your Mistakes
History has shown that if you try to hide a huge error, it will only get worse. Own up to your mistakes. Be prepared to say you were wrong and apologize if your actions hurt others. Finally, fix it. Put strategies in place to correct your misdeeds as soon as you’re able to. This will not only show personal growth but garner respect.
Stay Humble While You Own Your Ideas
Part of Holmes’ demise was that she believed the false hype she had orchestrated for herself. She believed that she was Theranos, notwithstanding the almost 800 employees under her leadership. As a leader, you must stay grounded in the face of success and give credit where it is due. Acknowledge and reward your team, especially if they bring to light anomalies in your business structure or plan that may stall growth or scalability. The pressure to do something great, whether coming from outside forces or within, can be enormous. In today’s world, many get caught up in the hype of putting on a façade of success vs actually being successful.
Be Honest In All Your Communications – Even When It Seems Counterproductive
It goes without saying, but I’ll say it anyway, be truthful and transparent always. It has been alleged in a number of reports that Holmes kept employees and advisors in the dark about the challenges her organization was facing. Since she wouldn’t present the facts, she had to forgo the advice. Aside from that, her lies put her employees, like Ian Gibbons, in a compromising position. Discussing mistakes and failures is not comfortable for anyone, but leaders are obligated to seek advice when things are going haywire. Had Holmes decided to lean on the expertise of her staff and advisors, she might have been able to avoid the embarrassment of a very public downfall. By talking more and allowing some departments to more freely work together, perhaps a viable solution could have been discovered to resolve the issues the company was facing to begin with.
Holmes’ trial, U.S. vs Holmes, is scheduled to commence in March of next year. If convicted, Holmes faces up to 20 years in prison. Whether or not she will be convicted on fraud charges remains to be seen. Hopefully she will come out and speak the truth in her own words, helping others in a vast albeit less glamorous way than she initially intended. Until then, we must take heed and be guided by the mistakes she made, as well as our own, so as not to walk the same path on our journey to becoming better leaders.
Never give up…own it!