Elizabeth Holme’s Revolting Impact on Medical Innovation
Bernie Madoff, Ken Lay, and now Elizabeth Holmes have become pariahs by concocting mistruth at such an impactful level that millions of lives are impacted. For years, I’ve said the most important conversation we have is the one we are having with ourselves. If we want to improve the quality of our lives, improve the quality of the conversation. In other words, let’s start telling ourselves better stories. The manipulation of our word, choosing to tell little untruths, can quickly lead to some of the most damaging events in our culture.
I feel betrayed by Elizabeth Holmes, the founder, and CEO of Theranos. While I hadn’t invested in the company, I had told her story: “Stanford sophomore drops out of college to develop an innovation that would transform diagnostic testing only to become the country’s youngest female billionaire.”
It was a romantic idea and by retelling her story I became complicit in getting others engaged in the excitement generated by a con artist. Elizabeth left school to pursue a new technology that would move blood testing out of medical offices into local pharmacies and would require a tiny droplet of blood, a slight pinprick, to conduct all of the tests. Squeamish patients like me loved the idea and Wall Street simply fell in love with her story. Now, Elizabeth Holmes is becoming the new Millenium’s Kenneth Lay, bilking a fortune from investors and letting anyone down who was roped into her story or held hostage as an employee.
America is a nation of storytellers. Tech journalists tell the stories of start-ups, innovation, and vision. In fact, they wield a great deal of power. If a tech company takes issue with a journalist’s content, they often get blackballed from further attention. All too often, it is hard to tell whether they are objectively giving us the news or becoming the snake oil salesmen of print media. As an owner of a business that is about to turn digital, there is a bit of a chill that runs down my spine by even bringing this up. Tech journalists gain much of their access by telling investors and consumers of innovation in glowing and sometimes hyperbolic terms. For example, Ken Auletta, a journalist with The New Yorker and author of numerous technology books recounts Elizabeth Holme’s presentation at TEDMED in 2014,
“She was wearing her daily uniform – a black suit and a black cotton turtleneck reminiscent of Steve Jobs – and had pinned her hair into an unruly bun. As she spoke, she paced slowly, her eyes rarely blinking, her hands clasped at her waist. Holmes started Theranos in 2003 when she was nineteen; she dropped out of Stanford the following year. Since then, she told the audience, the company has developed blood tests that can help detect dozens of medical conditions, from high cholesterol to cancer, based on a drop or two of blood drawn with a pinprick from your finger.” People like Ken Auletta paved the way for Holmes to ascend as the new rock star fueling the way for more investment capital coming to everyone who dared to change the world.
The problem was that Theranos, behind closed doors, was still a concept and the technology had not been invented, never would be invented, and rather than being transparent, Ms. Holmes claimed the technology was done but couldn’t be revealed until they had ironclad protection. By the end of 2017, her story was becoming far more unruly than her hair bun. The journalists and other consumers of the Kool-Aid fueled Holme’s entry into the billionaires club. People who listened to her were seduced and mesmerized before she opened her mouth. William Perry, the US former Defense Secretary, and former Theranos board member said, “She has sometimes been called another Steve Jobs but I think that’s an inadequate comparison,” Perry, who knew Jobs, said, “She has a social consciousness that Steve never had. He was a genius; she’s one with a big heart.” No, this young priestess of good fortune was going to disrupt the likes of industry giant Quest Diagnostics. I remember going into Quest for tests and asking the staff what they thought of Theranos. Most didn’t know about it except the manager who became so upset that I regretted bringing it up. He told me he feared for his future as he had been with the company for many years.
In 2015, Elizabeth was named the country’s youngest billionaire and Vanity Fair included her in their annual New Establishment issue. The ascendance plummeted when John Carreyrou of The Wall Street Journal uncovered that Theranos was using other companies’ machinery to run tests. The company’s internal technology did not work. Recently, Elizabeth Holmes was banned from running a public company and appears to be close to becoming the target of a federal indictment for “gross fraud.”
What can we learn from her story?
I’m often asked during our seminars for any shortcuts in becoming a successful business owner, writer, attorney, employee or artist. In any real game of success, the only shortcut is to recognize there are no shortcuts. For the consumer and the investor, it is time to hold up the standard called, “prove it.” Elizabeth Holmes has turned out to be a masterful storyteller but an awful scientist. When we add immorality to the mix the results can be devastating. Development of medical technology will suffer the consequences of Holme’s hubris and dishonesty.
By extension so will patients who are hanging by slim threads waiting for innovation to improve or save their health.
I’m reminded of the book, A Million Little Pieces “by” James Frey. In 2003, Oprah Winfrey made it the selection of the month for her book club. About a week later, a copy of the book arrived from my editor. She had placed a Post-It on the cover with the words, “What do you think of this?” I was running out the door to Palm Springs and ended up reading it next to the pool non-stop. I was enraged and called her yelling in the hot sun, “It’s all bullshit. This guy has masterfully made up a story that hits all of the buttons the publishing industry looks for: shock, devastation, redemption, and triumph. But, there are nuances, especially around issues of recovery, that are so untrue that I’m really angry. Why? Drug addicts and alcoholics are always looking for shortcuts and easy ways out of their illness. This guy tells them he kicked a habit that was as bad as it gets and he kicked it on his own. How many people will die because they use his lies as evidence there are shortcuts?” Two or three weeks later, the scandal hit the fan. The book was pure fiction. Oprah brought James Frey onto her show for the public execution. I remember her snake eyes glinting and settling somewhere on the side of his neck. But, the damage had been done and Oprah had been complicit as well. In addition to the impact his story had on alcoholics and addicts, the scandal put a damper on autobiographies that continue in the publishing industry to this day.
Here is the rub. James Frey, Elizabeth Holmes, Kenneth Lay told stories that turned out to be complete fiction. One of the real crimes is that people and organizations that are doing the right thing and have valid life-changing technology can be met with closed doors to getting needed capital. If all of us had been just a little more cautious and a bit more protective, so much damage could have been averted. But, people like them, just like focus-group driven politics are not about the truth, they are about the hope that causes us to believe any message that offers a shortcut. A little pinprick at the pharmacy for blood. A book that will solve addiction. Stock that is going through the roof. Conceptual currency that turns into the lottery of all time.
Let us not turn our backs on the possibilities of innovations coming our way. But also, let’s clearly ask and get answers to the question,
“Is it true?”
Let us keep our optimism for innovation but let us also pay more attention to the difference between the truth and the hype that so often pushes emerging technology forward.
All of us will be better for the journey ahead.