Despite the clamor of the STEM initiative (now STEAM—following true illogic, Art was added back into the fold) and the pushback on the “bro” culture, the real tragedy in Silicon Valley is not the lack of equal opportunity or education to succeed, but the role model chosen for the next generation of young business women.
Elizabeth Holmes, previous CEO of biotech company Theranos, became a media darling and super-hyped example of male-dominated venture capitalists indeed funding a billion-dollar-valued start-up founded by a woman. Surrounded by illustrious board members, Holmes was the shining example of progress in the supposed boys’ club of the technology world. No one wanted to look too closely at how she achieved her success. They simply piled on with congratulations and warm fuzzy feelings that finally, a woman had achieved equal status with the men.
Only this empress had no clothes.
Certainly, Holmes imitated the successful tactics: identify a breakthrough technology; drop out of Stanford University to develop and patent the idea before someone else did; ask for help from respected academes; land investors from the best of the best VCs; add an experienced executive to ride herd on the company; sell, sell, sell the idea to anyone and everyone who would listen; and land a whale of a customer—in her case, Walgreens.
She even was shrewd enough to channel a female version of Silicon Valley’s iconic Steve Jobs in his black turtleneck, presumably hoping his decades-long success would rub off on her. Attractive, young, ambitious, she catapulted to business stardom and magazine covers in a blink of an eye.
The only problem: her product didn’t work, and she couldn’t admit her failure.
Call it hubris, call it a tragic flaw of Shakespearean proportions, at some point Holmes crossed that very important ethical, moral, and illegal line of lying to the people who entrusted her with their money.
The Silicon Valley mantra of “Fake It ’til you Make It” went one step too far into outright fraud. Sales pizzazz and hustle became deliberate deception, apparently in cahoots with her President and COO. This was one tactic she should NOT have imitated of previous tech winners…err, losers
One very important lesson taught to me early in my career was to surround yourself with people who will tell you the truth, no matter what. The role of a board of directors is to look a CEO in the eye and say “no” to unethical behavior, to remove executives who don’t deliver results, to share sage wisdom earned through years of experience to our youngest entrepreneurs.
However, in this age of technologies beyond the comprehension of even savvy engineers and top-notch scientists, how is an investor to trust that the breakthrough has indeed been vetted? That it works as planned? That a few years down the road there won’t be consequences of the worst kind—in the case of biotech, that includes death and biology run amok as in science fiction thrillers—that bankrupt the entire company?
Where is the trustworthy joining of business and invention that compel and reward our society for taking risks to enhance all of our lives?
In the case of Theranos, I believe the A-list board failed in its duty to have at least one member conduct due diligence on the science. Certainly, VCs should have done so, and ridden herd on their clients’ money. By the time Walgreens came into the picture, just the fact that so many others had sanctioned the company was apparently enough for them to sign a contract to try out this unproven “lab-on-a-chip” product.
Board members protect the interest of the shareholders, the ultimate owners of the company. When a CEO anoints herself as all-powerful and knowing, there is bound to be a reckoning some day, just as the Greek tragedies of old foretold. Human nature hasn’t changed all that much over the millennia, so we shouldn’t be surprised that so-called Millennial women follow in the footsteps of men’s errors, too. Mark Zuckerberg of Facebook is having similar troubles, as is Elon Musk of Tesla. Confident claims of trustworthiness and infallibility do not make them true.
The SEC has fined Holmes, but criminal charges have not (yet) been filed. While unfortunate, I think they are deserved. Remember Martha Stewart? She went to jail for receiving inside information, knowingly acting on it, and profiting from it. Nowhere did she herself create lies or subterfuge or scam investors of millions of dollars. She, too, was a media darling. And she accepted the consequences of her actions, served her time, and put it behind her.
Holmes is still very young, and I certainly hope she has learned a valuable lesson.
Business, and capitalism, is based on the concept of trust. We used to shake hands on a deal and that was enough. Our word was our bond, and our sterling reputation our only currency.
It’s sad that instead of progress in the world of Silicon Valley technology, Holmes’ legacy will be to doubt the word of the next young woman entrepreneur. Yes, men lie too. But when she accepted the mantle of fame and acclaim, responsibility came with the title of being first. Careless disregard for the consequences of her actions makes Holmes’ story a tragedy of epic proportions, instead of an inspiration for future female leaders.
I speak more about this with Terry Gilberg on her nationally syndicated radio show, “Think! America”. For more of my insights into business in Silicon Valley, read “Private Offerings“, named 2015 Best Business Fiction by Wealth Management Magazine.
Tragic mask photos courtesy of Wikimedia Commons.