Theranos: Silicon Valley’s status in the face of the rise and fall of Elizabeth Holmes
SAN FRANCISCO – Shortly before the criminal proceedings against Elizabeth Holmes ended, her attorneys presented her grueling plan for self-improvement as evidence.
The document, hand writtenIt began like this: “4:00 am Get up and thank God.” Then followed exercise, meditation, prayer, breakfast (serum and “bannanna”). At 6:45 a.m., the time lazy people are still fumbling for the alarm clock, he was already in the office of Theranos, the blood-testing company he founded in 2003.
Holmes had many rules at Theranos: “I am never a minute late. I don’t show any emotion. EVERYTHING HAS TO DO WITH BUSINESS. I am not impulsive. I know what the outcome of all the meetings is. I do not hesitate. I make decisions constantly and modify them when necessary. I speak little. I can detect lies immediately ”.
And that worked. Holmes’s determination was so forceful and fitted so well into the cliché that in Silicon Valley the impossible is achieved when you refuse to accept that it is impossible, which managed to inspire confidence until the moment when, on Monday, a jury declared it officially guilty of four crimes of fraud.
This verdict marked the end of an era. In Silicon Valley, where the line between rhetoric and achievement is almost always blurred, there is finally a limit to fraudulent.
Is about an epic rise and fall that runs from Holmes’s dropout from Stanford University to his conviction, through the appraisal of Theranos at $ 9 billion, and will be the topic of conversation in every coffee shop and juice bar in Palo Alto, California, until the tech industry set out and start a new life in the colonies of Elon Musk and Jeff Bezos on faraway worlds. Over the course of a decade, Holmes fooled seasoned investors, hundreds of smart employees, a multi-star board of directors, and a media eager to enshrine a new star, even if he had no academic degrees, or mostly because of that.
Just as Silicon Valley is a caricatured version of general American ideas about the virtues of hard work and quick riches, Holmes was an empowered version of Silicon Valley.
As evidenced by his plan for self-improvement, Holmes was trying to become a machine who had no time but to work. Of course that was not for his own benefit, but for the benefit of all humanity. Holmes perfectly encapsulated the Silicon Valley manifesto that technology exists to serve us, regardless of exactly how it would serve us, how much billions of dollars it was making, or whether its project was working.
Whenever anyone – a regulator, an investor, a reporter – wanted to know more about exactly how Theranos devices worked, the company yelled that they were “Industrial secrets”. Of course, the real secret was that Theranos didn’t have any trade secrets because their devices weren’t working. But Holmes’s answer worked for a long time.
Hiding the fraud behind the demands of secrecy was not the only way in which Holmes’s actions followed tradition. His plan for self-improvement came from Benjamin Franklin, but he found his most indelible expression in Jay Gatsby, the character created by F. Scott Fitzgerald: the mysterious, charming and handsome millionaire who also perpetrated some scams.
Gatsby was practically Holmes’s brother. He too got where he was thanks to a plan and precise rules. In the case of the literary character, he wrote them on the inside of a book when he was a busy young man:
5 pm-6pm: Practice speech, pose and how to achieve it
7 pm-9pm: Study necessary inventions
The echo between Gatsby and Holmes is even seen in some spelling inaccuracies. “No more fouling or chewing gum” [en inglés, Fitzgerald escribió “smokeing”], it was proposed.
Gatsby was a smuggler, but he also used Wall Street to perpetrate his scams. He was selling fake stocks. Holmes chose Silicon Valley, the last and greatest of all human dreams. During the first decade of this century, Silicon Valley promised to reinvent transportation, friendship, commerce, politics, and money.
Compared to this, the blood tests must have seemed like child’s play, especially since Holmes was an innate salesperson, as good at twisting reality as Steve Jobs himself. This is an interview from 2005, in the programa de radio Tech Nation in which he explained what Theranos was:
“We focused on creating a personalized medical tool that all patients could use at home, so that, every day, the patient can have their blood samples analyzed in real time.”
Who would not acclaim such an invention? Theranos was turning a cumbersome, uncertain and time-consuming medical process into something simple and painless. “It is a small needle that draws out a drop of blood,” he explained. The software would do the rest.
Tech Nation host Moira Gunn has a master’s degree in computer science and a Ph.D. in mechanical engineering philosophy, but she was in awe. “How old are you, Elizabeth?” He asked.
“I am 21 years old,” Holmes replied.
His age was brought up not to dismantle what he was saying, but to underline how impressive his claims were. “I’m going to tell my two kids that they better start focusing,” Gunn said.
Holmes claimed that the Theranos device was in “the production phase.” “In fact, we hope to give it to a pharmaceutical partner in the middle to the end of this year,” he added. Thirteen years later, when the company was dissolved, it had not successfully launched any gadgets.
In 2005, however, reinventing blood tests at age 21 was not enough, so deep were our expectations of genius. When Holmes was asked about his future, he gave a typical Silicon Valley response: They haven’t seen anything yet.
Theranos already had prototypes for the “next generations” of its device, he said. They had been miniaturized to be faster and updated for “higher performance.” According to her, it would be an automatic process. “You don’t even have to touch the device with your finger,” he said.
So in one of the first interviews he gave, he said that Theranos had a working device that could analyze your health without even touching it. No one questioned her on that. It is no surprise that she, along with her advisor and boyfriend, Ramesh Balwani —The company’s chief operating officer known as “Sunny” —they thought they could be bold and follow the Silicon Valley tradition until they had something that really worked.
We are living in an era of credulity. William Perry, one of the members of the Theranos board of directors, was the US Secretary of Defense during the term of President Bill Clinton, he is a mathematician, engineer and professor at Stanford. In other words, you are no fool when it comes to Silicon Valley. However, in 2014, he told The New Yorker magazine that “Holmes has sometimes been labeled as another Steve Jobs, but I think the comparison is inappropriate. She has a social conscience that Steve never had. Jobs was a genius; Holmes is a genius with a big heart ”.
Perry declined to comment.
Jobs, who passed away in 2011, he could also have been a good hiring manager at Theranos. Adam Rosendorff, laboratory director at Theranos, testified at Holmes’s trial that he believed the company was going to become “the next Apple.” He applied for the job after reading a biography of the Apple co-founder.
“For me, all the fuss around Steve Jobs was very compelling,” he said. “I wanted to contribute something to health care on a more global level and I believed that working in a diagnostics company would help me achieve that.”
Rosendorff was disillusioned before the allegations of fraud by Theranos came to light, but Perry stayed until December 2016, when the startup had to change its board of directors in a futile attempt to survive.
With followers like these, Holmes’s dream seemed so close that it would have been impossible not to get it. A few more sleepless nights from her engineering team, a few more magazine covers that considered her a genius, and all would be ready.
So where does this criminal conviction leave us all – your former followers, promoters, investors, your valuations?
Maybe we’ll keep an eye out for the next charlatan to show up. Some Silicon Valley promises are so sweet that we always want more. Immortality, cryptocurrencies, flying cars, Mars, digital harmony, unmatched wealth.
As Fitzgerald wrote, the orgiastic future that year after year recedes before us will never fail to attract us.
David Streitfeld has written about technology and its effects for twenty years. In 2013, he was part of a team that won a Pulitzer Prize for explanatory reporting.