View from Washington: Is the Valley failing the Theranos test?
A new documentary highlights how the infamous unicorn's collapse may not prove to be an isolated incident.
There is a large and growing Theranos industry – just not the one that was intended.
That was supposed to involve disruption of the blood-testing industry. Instead, following the largest Silicon Valley vapourware fraud, it has become a media feeding frenzy dedicated to explaining the company’s collapse. And no, I can’t resist a nibble myself.
That said, there have already been a book and a podcast, both of which I thoroughly recommend. Bad Blood is the most detailed analysis, as you would expect from the journalist who unearthed the scandal, John Carreyou of The Wall Street Journal. The Dropout, by Rebecca Jarvis and a team from ABC News in the US, gives you a real sense of the people who were abused by Theranos’s management.
Tonight (March 25) sees the UK premiere on Sky Atlantic of another piece, The Inventor: Out for Blood in Silicon Valley, a documentary from Oscar-winner Alex Gibney. As the title suggests, its focus is Theranos’s founder, CEO and ‘villain’ of the piece, Elizabeth Holmes.
Most engineers will be familiar with the basics. Back in 2003, the 19-year-old Holmes dropped out of Stanford and founded the company, based originally on a lab-on-a-chip concept that evolved toward a desktop blood analyser. It never worked. Holmes was warned that it would never work. But she ploughed on, using a combination of obfuscation, deceit, bullying and (if you mattered) charm. Some 15 years and $700m in investment later, Holmes and her enablers got rumbled.
I don’t want to steal the thunder from any of the three main works. There’s plenty worth noting in them all (though if you have time for only one, it must be Bad Blood). I do, though, want to highlight something that connects the entire trio: a disturbing sense that Theranos was not an outlier, but rather the culmination of a still widespread management and investment culture in Silicon Valley.
The casual nature of Theranos’s lies and the cynical way in which its leaders manipulated business relationships both have comparisons elsewhere. We can’t name them, but I imagine a few bells are clanging among readers.
Theranos did deliberately target healthcare, a phenomenally and rightly stringent market, but its dilettante attitude toward the social and moral implications of its business echoes strongly in other markets.
Bullying of both the personal and legal kind is disturbingly widespread, and far too many sub-C-level staff are willing to play along with it.
And the whole ‘Cult of the CEO’ trend that allowed Holmes to steal as many of Steve Jobs’s clothes as she could (in some cases literally) and then flannel across conference after conference – from TED to TechCrunch – is still being peddled. Technology might be complex, but it’s remarkable how many smart people – just like some of Holmes’s more profound dupes – still believe the next big thing could be an individual Mozart.
And finally, ‘Unicorns’: companies with billion-dollar valuations run by founders as personal fiefdoms. Yeah, that’s been going really well, hasn’t it just.
In the Valley itself, there is the hope that feeding frenzies such as that around Theranos (and the impending trials against senior execs) will provide some sort of catharsis. Elsewhere though, you watch and worry that, even if not on the same scale, something like Theranos could happen again. And all too soon.