Patterico's Pontifications


Elizabeth Holmes and the Politics of Feminist Entrepreneurialism [Update & Edit]

Filed under: General — JVW @ 7:30 pm

[guest post by JVW]

UPDATE: Ugh, I started this post last month and let it fester, then finished it up today. In my haste to post it before I had to head out, I failed to notice that I repeated myself at one point. I’m going to make a post-publication edit, but I’m appending this note for transparency’s sake. The sentence that begins “The goal of the company. . .” originally mentioned the origin of the name “Theranos,” which was then repeated two sentences later. Damn, I’m senile. – JVW

News came down last month that Elizabeth Holmes, the founder of the too-good-to-be-true company Theranos, had been charged by the SEC with massive fraud, raising money for their innovative startup by falsifying lab results and overstating patent claims in order to secure hundreds of millions of dollars in investment money. Ms. Holmes has agreed to step down as CEO of the company she founded 15 years ago, forfeit 18.9 million shares of stock that she holds (the company was valued at $9 billion in 2013, but the scandal has dropped it by a factor of eleven down to $800 million today), pay a $500,000 fine, and be ineligible to hold a leadership in a public company for the next ten years. As part of the deal, Ms. Holmes is pretty certain to avoid jail time, and she does not have to admit culpability for the scandal that set Silicon Valley tongues wagging for the past few years. Today, word came down that Theranos has laid off virtually all of its employees, save for a skeleton crew that will likely either quickly revamp and salvage the company’s work, or turn out the lights and lock the doors for good.

Elizabeth Holmes’s road to being a Silicon Valley superstar started when she left Stanford as a 19-year-old junior to start Theranos in April 2004. The goal of the company was to “democratize medicine,” whatever the hell that is supposed to mean. Her credentials were strong: a whiz-kid Stanford student who talked her professors in to allowing her to do graduate-level research as a freshman, who filed and received her first patent before closing her teen years, who — like Bill Gates, Steve Jobs, Larry Ellison, and Michael Dell — left college early in order to pursue her dream. Theranos, a combination of the words “therapy” and “diagnosis,” promised to perform a series of valuable medical tests from a mere drop of blood drawn by the tiniest of pin-pricks which could be conducted at your local pharmacy instead of at a medical office. The concept would have brought a fast and cheap method of diagnosing patients and would have indeed revolutionized the medical industry. The company used an avalanche of positive media coverage and the Silicon Valley gossip network to raise over $750 million in capital, leading to the $9 billion valuation at its peak.

And then, sadly, it all came crashing down. The testing procedure never worked as it should have, and the hundreds of diagnoses promised never materialized. Worse still, it became apparent that Ms. Holmes and other Theranos were actively misstating trial results to potential investors, leading the government to intervene and begin the investigation that brought the entire house of cards tumbling down.

Once upon a time, Elizabeth Holmes was the most celebrated businesswoman in America. Young, intelligent, and attractive, she served as a sharp rejoinder to the largely testosterone-driven world of Silicon Valley and proved that women could be entrepreneurs — and successful ones at that — just the same as the boys could. Moreover, she was running a company that had a bona fide altruistic mission that would save lives, not like those knuckleheads who were figuring out more inventive ways to stalk your ex-girlfriends or argue politics with strangers. Many feminists understandably rejoiced when she replaced Mark Zuckerberg as the youngest self-made billionaire in the world. Maybe her natural competitiveness and hubris would have led her astray regardless, but as we look back on the wreckage it’s only natural to wonder if this sort of status as a trailblazer and icon didn’t push Ms. Holmes towards recklessness out of a sense of duty to the sisterhood, and ultimately cause her to fly too close to the sun.

We can all admire the spirit of exploration and discovery that helped build our nation, and there is nothing wrong with wanting Americans from all walks of life to participate. But we do a real disservice when we add trendy social politics to an already intense and stressful business undertaking.


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