Posted: 1st August 2022
By M.V. Ramana
In 2006, Elizabeth Holmes, founder of a Silicon Valley startup company called Theranos, was featured in Inc magazine’s annual list of 30 under 30 entrepreneurs. Her entrepreneurship involved blood, or more precisely, testing blood. Instead of the usual vials of blood, Holmes claimed to be able to obtain precise results about the health of patients using a very small sample of blood drawn from just a pinprick.
The promise was enticing and Holmes had a great run for a decade. She was supported by a bevy of celebrities and powerful individuals, including former U.S. secretaries of state Henry Kissinger and George Shultz, James Mattis, who later served as U.S. secretary of defense, and media mogul Rupert Murdoch. Not that any of them would be expected to know much about medical science or blood testing. But all that public endorsement helped. As did savvy marketing by Holmes. Theranos raised over $700 million from investors, and receive a market valuation of nearly $9 billion by 2014.
The downfall started the following year, when the Wall Street Journal exposed that Theranos was actually using standard blood tests behind the scenes because its technology did not really work. In January 2022, Holmes was found guilty of defrauding investors.
The second part of the Theranos story is an exception. In a culture which praises a strategy of routine exaggeration, encapsulated by the slogan “fake it till you make it”, it is rare for a tech CEO being found guilty of making false promises. But the first part of Theranos story—hype, advertisement, and belief in impossible promises—is very much the norm, and not just in the case of companies involved in the health care industry.
Nuclear power offers a great example. In 2003, an important study produced by nuclear advocates at the Massachusetts Institute of Technology identified costs, safety, proliferation and waste as the four “unresolved problems” with nuclear power. Not surprisingly, then, companies trying to sell new reactor designs claim that their product will be cheaper, will produce less—or no—radioactive waste, be immune to accidents, and not contribute to nuclear proliferation. These tantalizing promises are the equivalent of testing blood with a pin prick.