This week one of the most anticipated court cases of the year has finally kicked off. Perhaps not “anticipated” in the sense that the OJ Simpson case was, and it probably won’t have the same global public interest the trial of Jeffrey Epstein co-conspirator Ghislaine Maxwell is expected to stoke. But jury selection for US versus Elizabeth Holmes et al started yesterday, and with it a kind of reckoning for tech hype.
Holmes was once, briefly, the darling of the start-up universe. Her medtech company Theranos was slated to “revolutionise” private health care and disrupt medical laboratory testing. She founded the company at just 19 years old, and cultivated an air of “maverick genius” about herself, trading on being a Stanford University dropout like Google founders Larry Page and Sergey Brin and Microsoft elite Steve Ballmer.
She adopted Apple Founder Steve Jobs’s signature black turtleneck look, and made the rounds on just about every public speaking stage you can think of. She had a deep, calm, confident voice, and spoke of innovation that would make drawing blood for this kind of testing virtually obsolete. The tech world — and tech media — were enthralled.
Among Theranos’s promises was the idea of gleaning incredible amounts of health data from a single drop of blood. Holmes promised the new technology — a testing tool dubbed the Edison — could detect and diagnose diabetes and cancer with a single finger prick, as well as many other conditions. By 2010 she had raised venture capital to the tune of $92m. Soon Theranos-branded machines were rolling out in Walgreens across the States, and in 2014 the company was valued at $9bn. Off the back of this, Forbes Magazine declared Holmes the “youngest self-made female billionaire”.
The only problem was that nothing about the technology was true. In 2015 the Wall Street Journal blew the lid off, detailing how Edison was incapable of doing what was claimed and that the Theranos labs had been using standard testing equipment to operate all along. We later learnt that even her deep speaking voice was as much an affectation as any other part of the lore around her.
It also looks like she will be trying to throw Theranos COO Ramesh ‘Sunny’ Balwani under the bus for this. They were in a secret romantic relationship at the time
Holmes doubled down, going on a media blitz defending her company and their work, and without any apparent shred of shame said: “This is what happens when you work to change things. First they think you’re crazy, then they fight you, and then all of a sudden you change the world.”
In 2016, though, the writing was on the wall. Holmes was hit with and settled civil charges from financial regulators for fraudulently raising $700m, and then she was arrested on criminal charges, specifically for wire fraud and conspiracy to commit wire fraud. She was released on bail in 2019 and the trial was set for 2020, but it then faced multiple delays due to — like everything — Covid-19.
According to a statement on the US justice department website, “Holmes and Balwani used advertisements and solicitations to encourage and induce doctors and patients to use Theranos’s blood testing laboratory services, even though, according to the government, the defendants knew Theranos was not capable of consistently producing accurate and reliable results for certain blood tests”.
They stand accused of “numerous misrepresentations to potential investors” on when they expected to break even and what the revenue would be.
Some lessons
Maybe now, six years later, we will learn how she planned to turn things around when she was uttering those “change the world” words with nothing to back them. Early filings from her lawyers, however, suggest she will be claiming she believed the “alleged misrepresentations” herself. It also looks like she will be trying to throw Theranos COO Ramesh “Sunny” Balwani under the bus. They were in a secret romantic relationship at the time. His trial is scheduled for early 2022.
I will be watching this closely when arguments kick off next week, as will the investors who sank millions into the company. If you are setting up your own tech start-up for world domination I hope you will be watching too — and taking on board some of the lessons, such as transparency is king.
Also, listen to the naysayers, to learn and be challenged if nothing else. Critics, including Holmes’s professors, warned for years that her aspirations for the capabilities of the tech were unfounded. A naysayer is an unpopular thing to be in this age of incredible innovation (just ask anyone who speaks lukewarmly about the latest crypto trend). We don’t want criticism to stop transformative ideas in their tracks, but a smart and patient critic will challenge an idea. A good idea can withstand critics, and be stronger for it.
Moreover, the whole saga reads like an allegory, a warning for tech, its founders, investors and beyond, about company culture and the cult of personality that we see so often in tech spheres. WeWork founder Adam Neumann is a great example, and his mingling of personal and company finances and subsequent downfall sent the company into a spiral from which it is still struggling to recover.
Make no mistake, we are living in the golden age of exponential innovation and technological development. The dark side, however, is the potential to be sucked in by the promise of technology where it is more style than substance — by a look, by a turtleneck, even a voice.
• Thompson Davy, a freelance journalist, is an impactAFRICA fellow and WanaData member.
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