Is Theranos Biotech a faltering Unicorn?
[dropcap custom_class=”bl”]There are striking similarities between the story of Elizabeth Holmes, founder of Theranos and Steve Jobs, founder of Apple. Both of them were withdrawn and introverted children, both of them struggled with releasing products which were scrambled together few hours before the media pitches. Both of them dropped out of college, and both of them used opacity as a cover for protecting their company’s developmental secrets. Both of them brushed aside any differing opinion or accusations quickly and firmly. Media and analysts were not kind to either to them. This is where the similarities end.[/dropcap]
Elizabeth Holmes started Theranos Biotech as a 19-year-old, when she dropped out as a sophomore at Stanford. Theranos is an American privately-held health-technology and medical-laboratory-services company based in Palo Alto, California. Theranos has claimed to have developed a blood-testing device named Edison that uses a few drops of blood obtained via a fingerstick rather than vials of blood collected via traditional venipuncture, utilizing microfluidics technology.Its founders have raised over $400 million from investors, valuing the company at $9 billion, without their testing device ever being subject to peer-reviewed study. (Source – Wikipedia).
I realized there had not been a sole female founder-CEO of a multibillion-dollar technology company. I didn’t believe it. I still don’t believe it – Elizabeth Holmes
Her motives for starting this venture may provide us some insights into her psychology. It seems like she was driven towards perfection and validation from the world. While yearning to be a CEO of a multi-billion dollar technology company as a woman, she may have finally overreached the cliff without a parachute or a landing strategy. Accusations against the company are building up, and investors, public, and investigators are now paying keen attention to the mythical unicorn status this company acquired.
Motives for venture creation are usually studied in academic research to understand the propulsion of venture creation. Ventures also provide an in-depth insight into the psychological drivers of individuals. Wrong motives for venture creation can end up badly as superficial reasons can cleverly mask the underlying need for psychological surrogates e.g., to be loved and validated by all. Sometimes, the motives take on a narcissistic slant where people do things to prove oneself to others by fame and wealth as levers of power. In psychology, transference and countertransference are the terms used to explain the masked motives in individuals which can set one in the wrong direction if not uncovered early.
What is a noticeable problem in the way Holmes shuts down any criticism is how she accuses her dissidents to be suffering from poor memory recall or lack of understanding of scientific process. Her dissidents have also been accusing Holmes of the same tactics. Some call Holmes aggressive representations of what her products to be Wonkavision (embellished visions of reality), where she may have crossed the fine line misrepresenting thereby attracting potential lawsuits. It is possible that Holmes idea is futuristic, and we can’t yet see the breakthrough innovation in her idea. It is also possible that she is an extremely ambitious narcissistic who got caught her in own dreams to change the world and is unable to admit that she overreached.Either way, there is a lot of damage being done and multiple investigations are underway. This could eventually ruin the reputation of women entrepreneurs in male-dominated Silicon Valley. Another kindred spirit of Holmes, Marissa Myers, CEO of Yahoo is struggling with accusations of running her company into the ground.
One thing is sure in all these flying accusations against Theranos; someone is lying! In an accusation reported in WSJ, Sunny Balwani, CEO of Theranos who also dropped out of Stanford to join Holmes responded to an employee (who claimed that Theranos had cherry picked data to project the company’s test kit named Edison more accurate than traditional lab machines)“This is product development, this is how startups are built.” The reply ended with an edict that the “only email on this topic I want to see from you going forward is an apology that I’ll pass on to other people.” – Source – WSJ.
Sunny Balwani may be right; this is how startups are built in the era of the current startup frenzy. As discussed in “Tech Bubble Burst – 2016“, startups have replaced house flipping investors. Founders and Investors perceive startups as a new way of making money, cashing on the “Greater Fools” who will believe anything the startup founders are telling us. Most of us are so awestruck with them that we need a hard pinch to get us out of the trance. Theranos is not the only one facing accusations of a sham product, recently an employee from uBeam, claimed that the company does not have a working product. Here is a full timeline of the Therasnos mess development. The company is also under fraud investigation which is unusual for a private corporation.
We have already heard of narcissistic motives in Enron, where people had woven a colorful web of lies. Theranos’s alleged tampering of data is strikingly different in that such tampering has been unheard of in the biotech world till now. It is already eroding the confidence of public and investors in overhyped ventures. The party is ending and it’s about time.
Whichever way this ends, one thing is sure, Theranos story will tell us more about human nature than science.