It’s also true that Holmes used the mentorship of Larry Ellison, the co-founder of Oracle, and Don Lucas, a prominent West Coast venture capitalist, in order to rally others to her flag. At one point Theranos’s board was stuffed with such luminaries as Henry Kissinger, the former US secretary of state, and James Mattis, the retired US Marine Corps general who went on to serve as President Donald Trump’s secretary of defence.
But most venture capital firms didn’t fall for Holmes’s lofty claims. Many were put off by the aura of secrecy and obfuscation around the firm. Much of the financing came from wealthy individuals and naive Davos-types.
Then there is the idea that the hype around Holmes was fanned by a fawning media. Again, there’s an element of truth to this. But there’s a danger that the nuance gets lost. For example, Roger Parloff, the journalist who wrote the Fortune cover story on Holmes in 2014, testified during the trial that the entrepreneur essentially lied to him about both the types and volume of tests her company was capable of doing as well as its collaborations with pharmaceutical companies and the US military.
And, of course, it was the brilliant exposés written by John Carreyrou at the Wall Street Journal in 2015 and 2016 that ultimately pulled back the curtain on Theranos. It helped that Carreyrou was French-American as well as a healthcare reporter and therefore something of an outsider in Silicon Valley. But while the media may have helped build up Holmes it certainly brought her down.
Then there is the idea that Holmes’s trial will end Silicon Valley’s “fake it until you make it” culture of overpromising and under-delivering. This is the conclusion that is surely the widest of the mark.
First off, a jury has now decided that Holmes wasn’t just overpromising, she was committing fraud. Holmes claimed that Theranos’s technology meant it could test for hundreds of diseases from only a pinprick of blood taken from the tip of a patient’s finger. The trouble was, it couldn’t.
One of the most dramatic moments in the trial was when Holmes took the stand to defend herself. It was a risky move. She claimed she trusted what her scientists were telling her and that Sunny Balwani, her former business partner and lover, had abused her and pushed her to commit fraud.
But it also left Holmes open to cross-examination. Under intense questioning, she admitted to doctoring documents by adding the logos of drug companies without their knowledge and that her “Edison” machines could only perform 12 kinds of tests, not over 200 as she had publicly claimed.
What lesson is Silicon Valley supposed to learn from all this? Not to lie? Not to commit fraud?
Sure, this whole episode might mean everyone is a little more wary until the next highly plausible snake oil salesman comes along. At which point investors will fall for it all over again for the reason that people always have been and always will be duped: herd mentality, the fear of losing out and the power of a compelling story. Such is human nature.
Theranos never changed the world as its founder frequently claimed it would. Sadly, Holmes’s downfall is unlikely to alter much either.