I have neglected including a song at the beginning of each of my blog posts. For this post please consider this tune.
The rise and recent fall of the bio-tech firm Theranos is yet another example the challenges inherent in the valley’s startup business culture and the media echo chamber which supports it.
Theranos, founded in 2003 by Elizabeth Holmes while she was a student at Stanford became a poster child for both disruption and all that that is insanely great about the valley. Theranos was going change the world. Hmmm where have we heard that before ?
Under Holmes’ leadership Theranos was developing a more efficient blood test. The test could reportedly provide the requisite chemical analysis in support of 30 or more different blood tests using only a single drop of blood obtained through the pin prick of a finger. This test was supposed to enable blood testing services in just about any location. These efficiencies in turn were going to empower the average consumer with information which could ultimately lead to better health and wellness outcomes.
There were early signals that Theranos’ technology may not have been delivering the results originally claimed. The company, mid to late last year admitted to backing away from the technology upon which it’s original value proposition was predicated. For some reason these early signals did not result in any serious re-evaluation of the company.
Entrepreneurs by nature, are optimistic and fiercely committed to their ideas. Holmes was no exception. Unfortunately she also believed her company could ignore common practices around peer reviewed work in the health and science fields. This thinking finally caught up with Theranos. Earlier this year, the FDA and The Center for Medicaid and Medicare Services (CMS), the organization which certifies providers for the Medicare and Medicaid determined the company’s claims and lab practices questionable. CMS has taken actions to de-certify the company. The FDA and CMS have gone as far as to ban Ms. Holmes and others in the company from running any sort of lab for two years effectively removing Theranos from any sort of relevance in the near term.
Going forward it’s not clear what is to become of Theranos. Maybe lady luck will strike and Theranos will survive to prove the value and efficacy of its original technology. Maybe not. Ms. Holmes in all likelihood will lay low and find herself a gig as an EIR at one of the VC firms here in the valley. Certainly this is not the last we will see of Ms. Holmes in the valley based on her ability to raise capital alone.
What is certain is the more Silicon Valley (and the industry friendly press which writes about it) claims to be the purveyor of only the best, ideas, best in breed “power of the market and merit” community, and ethically evolved in contrast to the rest of the U.S. business sector the less it seems to ring true.