This piece follows-up to Michelle's article that was published on Executive Vine in 2015. Read her original Theranos article here.
Last October, I wrote a post on the story The Wall Street Journal published on Elizabeth Holmes and Theranos. The WSJ piece made strong allegations of misleading claims, faulty testing and even potential danger to those who relied on Theranos technology. My post was titled, “What Entrepreneurs Can Learn From Elizabeth Holmes and Theranos,” and I wrote it from my perspective, that of a female tech entrepreneur. It was primarily focused on what could be learned from the early, then unfounded allegations that were strongly refuted by Holmes and her team. Now, six months later, Theranos has been investigated by The Center for Medicare Services, state health regulators and most recently, the Security Exchange Commission and U.S. Attorney’s Office. The word “criminal” has officially been uttered. Holmes states she is devastated and seems to claim she didn’t have knowledge of the problems with her lab that concerned regulating bodies to such an extent, they are considering taking away Holmes’ ability to own a lab for quite some time.
The series of events that lead to the current situation with Theranos and Holmes, provides far more important lessons that the ones I outlined last October. Lessons that go beyond what a tech entrepreneur, male or female can take away. There are critically important messages for all of us to at least contemplate.
Quality investigative journalism is absolutely essential to democracy. This is true now more than ever before. There has been a massive shift in the way individuals get news and information. Some have said the newspaper industry is dying because of the ability for everyone to share news via social media outlets, personal blogs and even photo sharing apps. Statistics have suggested that the number of individuals who even look to formal news sources anymore is dwindling as fast as the aging population is growing. While I believe the ability for, quite literally, everyone to share news and information has taken the power of speech to a new level and has been a catalyst for much needed transparency, it is a far cry from investigative journalism.
For decades, journalists have been bringing to light the ugly secrets that have put citizens at risk and undermined humanity.
From Upton Sinclair taking on the Stockyards of Chicago in 1906 to Watergate and the Catholic Church, we would be a very different country without these experts who dig in, take risks and validate or refute accusations. I am not comparing Theranos and the alleged discrepancies to the gravity of child sexual abuse however, the power of an expert journalist shedding light on dangerous secrets to reveal truth is vital to our safety as a nation.
Money leads to power which leads to nobody telling the empress she’s naked. Theranos was an ever growing snowball of money and heavily publicized success. There are a few problems with this scenario. First, everyone who sees the money, wants to get their piece so they are all too happy to quell misgivings and keep quiet if things seem less than copacetic. In addition, when as much is at stake, as was at Theranos, there is often a culture of implied consent and an undercurrent that indicates questioning authority isn’t appreciated. I don’t know this to be true of Theranos but it is apparent that nobody seemed to be reporting what is now known to regulating bodies, who have stated it may have put consumers at risk.
It takes courage to speak up when you know something is wrong, it takes even greater courage when you see your company founder being celebrated on just about every magazine cover available in your industry.
Companies with millions and billions of dollars don’t necessarily have awesome products that people use and are safe. Many do, but some don’t. I think everyone assumed Holmes must have had the technology she professed to have developed. I even heard people say Theranos could do things they didn’t even claim they could do. Sound, rational, everyday people assume a company wouldn’t be able to get massive amounts of money from investors if they don’t have proven technology. This is not the case. Technology is a funny thing and has changed the landscape of investment. Owners can put just about any price they want on their company and it sticks if investors agree to the valuation. This can mean you have no revenue and even no proof your product or idea actually does what you say it does, and still get money. I know, this sounds crazy but it is true. I say this because I think many people assume validation of something if there is a great deal of money attached, especially if that money comes from well known and respected investors like those Theranos attracted.
The outcome, as it stands, is depressing to me. Holmes says they are going to rebuild their lab and correct their deficiencies. I think it’s too late. Things are moving so quickly in the world of technology. Even I know brilliant, qualified, ethical scientists who are working on technology to vastly improve what we currently can assess from a drop of blood and who are more than deserving of investor money. The time Theranos spent covering up and blowing smoke while attempting to develop the technology they were already selling, put them too far behind to catch up. I think her fall will be long, hard and lonely and I wouldn’t be human if that didn’t make me feel a bit somber. At the same time, I hope we take heed and while I am very grateful to the journalists who broke the story, it should have been revealed long before it was by professionals who have a responsibility to keep us safe.
That is the very real and seemingly, recurring lesson, we can’t quite seem to learn.
Michelle Chaffee is the Founder and Chief Executive Officer at Älska, a technology solution created to empower patients and their caregivers through improved communication with care teams, secure, mobile storage of personal health records and tools to better manage chronic disease. She is based in Minneapolis, MN. Follow her on Twitter.