One of the big tech stories of the week is that the founder and CEO of Theranos, Elizabeth Holmes, has been charged with fraud
and faces jail. If you don’t know the Theranos
story, the short version is that in 2003 Holmes (then aged 19) founded an apparently revolutionary medical technology company that claimed a breakthrough in non-invasive blood testing. Fifteen years and $700m of investment later, it seems that almost all the claims the company made were false. This tweetstorm
lays it out well.
Theranos’ spectacular failure has prompted critiques of Silicon Valley and its willingness to fund, well, bullshitters… but Theranos doesn’t really fit that pattern. Most of its funding came not from VCs, but from wealthy families, including those of Rupert Murdoch, Carlos Slim and US Education Secretary Betsey DeVos. And its board was full not of prominent West Coast names, but rather the DC establishment: Henry Kissinger, James Mattis
, William Perry
, George Schultz
and others. (If you want a truly bizarre story about Schultz’s involvement, read this extraordinary piece
on his relationship with his grandson, who worked at Theranos)
What can we take from this? To start with an easy one, governance matters - surprise! - and retired diplomats may not be best placed to provide it to a medtech company. More optimistically, it’s impressive how well investigative journalism worked
(You can read the book by John Carreyrou, the journalist who broke the story, here
). And, in a surprise turn for Rupert Murdoch as the good guy, it’s impressive that despite having $100m invested, he refused to kill
the WSJ investigation that ultimately killed the company. Hurray for good journalism!