Why Did Theranos Fail?
I recently picked up a copy of Bad Blood by John Carreyrou at the recommendation of one of my co-workers. This riveting piece of journalism tells the story of Elizabeth Holmes, Theranos, and gritty details surrounding the meteoric rise and rapid fall of a once upon a Unicorn start-up in Silicon Valley.For those who aren’t familiar: Theranos was a company that claimed to have the ability to perform a litany of diagnostic blood tests ranging from Potassium levels to Vitamin D tests to even HIV testing – all from a single drop of blood.
As this bombshell article from the Wall Street Journal in October of 2015 reports, however, the technology that Theranos had purportedly perfected was far from functional, let alone acceptable, for actually diagnosing real-life patients. Concerns about the viability of Theranos diagnostic machines began from the inside almost as soon as they launched in the early 2000’s and, as Carreyrou poignantly reports, continued throughout the life of the company. A culture of internal intimidation, secrecy, blatant lies, and deception came from the top-down while hundreds of millions of dollars of external funding & press continued to flow in and rocketed Theranos to a $9 Billion valuation and the center of Silicon Valley fame.
Secretary James Mattis served on the Theranos board, former vice president Joe Biden toured the Theranos HQ and praised Holmes for her ingenuity, and organizations like Wallgreens and Safeway were putting massive investments into integrating the Theranos “analyzers” into their pharmacy offerings via in-store clinics. Regulators were evaded for years, employees were fired for airing their concerns, and lawsuits were constantly threatened towards those who spoke out against the company.I won’t get into more of the gritty details since Carreyrou does a phenomenal job at telling the story (I definitely recommend picking up a copy of the book), but this got me thinking a lot about ethics in business, how companies grow, and the types of culture that breeds progressive (and sustainable) growth.
I’ve had the pleasure of working across various industries over the course of my career thus far – in areas ranging from financial services to marketing to medical devices – and have found one thing to ring true across all of my experiences: kind people find easier paths to success while unkind people struggle to be able to rally support behind their projects, careers, and initiatives to climb the proverbial ladder. I’ve seen this simple concept of “being kind” apply to people I worked with during my first job at a bagel shop back in high school, the golf course, my internship at a nonprofit one summer & an investment bank the following summer, and all of the roles that I’ve held since then. By putting effort towards being the best you can be and “not being an asshole”, as one of the managing directors at the investment bank I worked at for a summer so eloquently put, people will listen to you, fight for you, and work hand-in-hand with you to push each other forward. This applies to growing a business, launching a new client, building a personal relationship, and completing a successful surgery. Kindness breeds kindness which breeds collective success. Granted, there are plenty of unkind people out there who have achieved massive success, but there are plenty of better ways to accomplish your goals.
The thing that is so tragic about the Theranos story is that Elizabeth Holmes’ idea could actually be something that is viable. We may actually have the technical capability to perform a litany of diagnostic tests from a single drop of blood, which could actually have an incredible impact on the future of medicine, but the internal politics, control, and “silo-ing” of R&D efforts stunted the innovation that Holmes was trying to achieve. She was so self-absorbed in her “genius” and “innovative mind” that she lost sight of what actually needed to be executed on to achieve her endgame, which resulted in losing the trust of her employees, investors, and industry partners for being all-talk without any tangible results.
Anyways – this book is definitely something that I’d recommend everyone to pick-up. Beyond telling a fascinating story, it teaches a lot about kindness and the role that it plays in the world. Thanks for reading – I’ll be back soon!
Nick
