Discussion #1: Case p.39 - Blood, Brilliance, Blind Ambition, and Fraud

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PROBLEM-SOLVING APPLICATION CASE Blood, Brilliance, Blind Ambition, and Fraud How can you change the world of medicine, or at only other person within the company besides Holmes least medical testing, monitoring, and diagnosis? how knew the truth.9 One potential way is to invent a device that performs more than 240 tests with just a couple of drops of blood, faster, more effectively, and with less pain HOW DID THIS HAPPEN? than existing approaches." Coming up with the idea She went from Stanford undergraduate engineering stu- is one thing, but raising the funds and assembling dent and celebrated female entrepreneur, to the the necessary talent is another. It's not enough to founder and leader of one of the most astounding have an idea, you need to bring it to life. If you were frauds in science and business in the recent past. to do this it would help to be extremely intelligent, Theranos was the company she founded with the hopes even more driven, and be willing to do anything it and claims that its technology would revolutionize blood takes. Anything. This describes Elizabeth Holmes testing and in the process medicine. Holmes always and the company she founded, Theranos, which wanted to make an impact, and at 19 saw this as her aimed to revolutionize medicine with a new blood path. She spent the next several years assembling the testing technology. necessary talent, money, influence, and notoriety to realize her vision. But as we now know it was a sham. FORECLOSURE OF A DREAM Holmes was single-minded and unwavering in pur- suit of her vision. She ruled the company like a dictator, Unfortunately, the technology didn't work. But that making all critical decisions herself, sharing informa- didn't stop Holmes from telling investors, customers, tion on a need to know basis, and expressing enthusi employees, the press, and everyone else it did. Her asm and positivity even in instances of flat out failures, ambition transformed to fraud and resulted in the death such as demonstrations and presentations to investors of Theranos. The testing that supposedly certified the and potential customers. She quickly soured on, then efficacy of the company's product has since been dis- avoided, and even retaliated against those who ques- credited, and it is now known that some of the demon- tioned her or her ways. Absolute loyalty, which meant strations of prototypes of the company's products were agreement and obedience, was demanded by Holmes. rigged. Individuals and groups who spoke out or otherwise fell The billions of dollars in estimated value of Ther- out of favor were quickly dismissed, as was any feed- anos are gone, along with It the accolades once show- back that was inconsistent with Holmes's desired mes- ered on Holmes as being the youngest self-made sage or outcome,30 billionaire at age 30. At one point $9 billion but now Although it was Holmes's company, and she $0. Also gone is the $700 million of investors' actual hoarded authority, other factors supported her ulti- money, and the jobs of many very talented employees mately disastrous approach. Her vision, charisma, con- who were either fired or quit during the company's viction, and delivery persuaded many wealthy and existence. These employees, along with the unfortu otherwise powerful people and organizations to sup- nate few who stayed to the end, may have tarnished port her cause. For Instance, two of the largest Inves- reputations for years to come as a result of their asso- tors were Betsy DeVos, now education secretary and ciation with Holmes and her company. Holmes is now part of the founding family of Amway, as well as Rupert faced with the fallout and is confronted with criminal Murdoch (the media mogul who owns Fox among many charges related to defrauding investors, customers, others). The board was stacked with celebrities from employees, and most anyone else connected to the government (Henry Kissinger and George Schultz, both company. Her ex-boyfriend, and Theranos's president former secretaries of state). Along with others with and COO, Ramesh Balwani is also facing many of the impressive track records from Apple and other tech same charges. He acted as confidant, advisor, and as companies, these prominent Individuals gave Holmes many insiders eventually learned, was seemingly the and Theranos credibility.$1