Blood cells to jail cells
The attraction of a smooth, sharp and sweet-talking business leader can sway investors, the media and the public alike, but as recent shakeups in the health tech world show, it pays to play hard to get sometimes.
It was meant to revolutionise testing for medical conditions with just a few drops of blood and a pioneering level of technology, but the game-changing promises made by the company Theranos ended with its CEO being sent to prison recently.
The Silicon Valley startup and its wunderkind founder, Elizabeth Holmes, then just 30, promised in 2014 that its Edison test could detect conditions such as cancer and diabetes quickly and without the use of needles. It even had political heavyweights such as Henry Kissinger and James Mattis on its board.
But by 2015, the seams were coming apart, and within a year, Holmes was exposed as a high level grifter, defrauding investors, her peers and the media. The technology she espoused didn’t work, and by 2018 the company – once valued at USD $9bn – had imploded amid allegations of fraud.
Holmes was found guilty by a California court for fraud and recently jailed for 11 years, in spite of her being pregnant.
A plasma placebo
The case serves as a stark warning about the spell some entrepreneurs can cast, despite a little probing telling potential clients and partners that all may not be as it seems. It’s easily cross referenced by recent scandals at FTX, Three Arrows and several other apparent miracle working CEOs.
It also will undoubtedly affect the rigour with which health tech innovations are evaluated in the future.
Holmes and her team raised millions of dollars from venture capitalists and eventually persuaded industry giants like Walgreens to partner with the company. Ultimately it took a whistleblower and a Wall Street Journal investigation to bring down the house of cards.
All in vein?
So, what can be learned from this fiasco? Chiefly, that despite best hopes technology might not be the answer to medical miracles and that investors should not be blinded by digital lights, at the expense of old fashioned due diligence.
Companies with a clear purpose and values are more likely to be successful. Theranos envisioned an easy and accurate way to test blood, but could not do it ethically – tests and data were faked, and prosecutors said the entire enterprise was like one long con.
Our take
Accountability ensures a business is doing their best and not juking the stats. In addition, being accountable creates an atmosphere of trust among those around them and ensures success – so seeking out companies, and their executives, who embody this is general good sense.
The health tech sector is a dynamic and rewarding field not just for potential returns for savvy investors, but in a broader sense for the advancement of society.
Healthcare is a hot button issue, especially as not everyone globally has affordable access to it – which makes Holmes’s crimes all the more unsavoury. But also why the market is one that will always be seeking progress and funding to match.