This blog covers A cautionary tale for entrepreneurs and aspiring revolutionaries who want to establish a business with their unique talents.
So fasten your seatbelts because you are in for a ride. This is the story of Theranos and its creator Elizabeth Holmes.
Who is Elizabeth Holmes?
Born on February 3, 1984, Elizabeth Holmes is the daughter of Christian Rasmus Holmes IV and Noel Anne.
A dropout of Stanford who gave birth to the Idea of Theranos on the grounds of Silicon Valley is an entrepreneur whose rise and fall can be a handbook for aspiring entrepreneurs to learn the dos and don’ts of a good business.
The timeline of Theranos
To understand the analysis of Elizabeth Holmes and Theranos, if not dive in but at least you need to splash into its world.
This summary of Theranos will help you do that.
- Holmes dropped out of Stanford, where she was studying chemical engineering, and found the health tech company Theranos, This acronym combines “Therapy” and “Diagnosis” at the age of 19.
- Her idea was to incorporate microfluidics and nanotechnology into a patch.
- In simple words, to create a technology that will sample blood without tubes and giant syringes but with just a drop and deliver antibiotics which to this day has not been a success and is argued to be against the rules of science.
- Sunny Balwani, an MBA and later the romantic partner of Elizabeth Holmes guarantees a loan of $10 million to Theranos.
- Sunny later became the chief operating officer and president of the company.
- The partnership between Theranos and Walgreens
- First operational center in Palo Alto where people can access the blood test.
- Holmes was named one of the richest women in America by Forbes. Her personal wealth was estimated to be $4.5 billion.
- More than $400 million was raised by Theranos with investors like Larry Ellison, Betsy DeVos, Rupert Murdoch, and The Walton family
- FDA approval for finger stick blood test for Herpes, the first and only approved diagnostic test for Theranos.
- An investigation by Journalist John Carreyrou, who busted Theranos for the world with his article in the Wall Street Journal and later wrote Bad Blood.
- A letter is sent to Theranos by the Centers for Medicare and Medicaid Services (CMS) stating it failed to comply with federal standards and that patients are in “immediate jeopardy”.
- Walgreens suspends Theranos services.
- The net worth of Holmes – revised to $0
- Holmes was banned from running labs for two years.
- Investors sue Theranos.
- The US Securities and Exchange Commission charges Holmes and Balwani with “Massive Fraud.”
- It included fraud of more than $700 million, which included false statements about the company’s services and how it could perform only 12 of the 200 tests provided in the menu.
- Holmes and Balwani plead not guilty to charges like wire fraud.
- September 4, 2018 – The end of a saga, Theranos dissolves.
- Elizabeth Holmes and Sunny Balwani were found guilty.
|I highly recommend these sources to uncover the story of Holmes and Theranos.
Drama series- The DropOut starring Amanda Seyfried (Hotstar)
Documentary – The Inventor: Out for Blood – Documentary (Hotstar)
Book – Bad Blood (There are speculations that this book will be made into a movie starring Jennifer Lawrence! Aren’t we all excited?
Why did people trust Theranos?
It is affirmative that Theranos was a complete disaster and a threat to everyday folks with insufficient knowledge of the medical world, but we can all agree that it sold! Even after the skepticism by critics, people chose to believe Theranos.
We can all take notes from this, so here are the tactics that led to Theranos becoming a billion-dollar business.
Tactics to sell your business
- Believing in your cause –
An experiment might explain how Miss Holmes, even after being proved to be an absolute fraud, never backed out from believing that Theranos was the revolution.
A tyrant is born once in a million years, and even though Elizabeth is not one, this experiment can help you understand the psyche of a tyrant.
|The Die Experiment- Dan Ariely, Behavioral Economist
Participants roll a six-sided die and are rewarded corresponding to the number on the die. If they rolled a four, they’d get $4. However, participants are asked to pick a side of the die.
If they pick the top, they would be rewarded the number on top and vice versa.
They were told not to tell researchers their choice of side.
Participants turned out to be incredibly lucky as they would simply lie and be rewarded more.
After this, the experiment was again conducted but with a lie detector.
The detector confirmed that people still cheated but not always and not perfectly.
The next part of the experiment is when things get interesting.
The same experiment with the lie detector is conducted, but this time the participants are told that the money rewarded will be donated to a charity of their choice.
Do you know what happened?
People cheated more. The lie detector? It stopped working!
The association plays a massive role in determining how people look at your company and its goodwill, so make sure the person with whom you tie your company’s name is reputed and with a good background.
The names on the board of directors vastly played in favor of Theranos; it had a board with whom people can trust their lives, like former CENTCOM commander General Mattis, Former Wells Fargo CEO Dick Kovacevich, Henry Kissinger, etc.
How many times have you heard a TedX talk and related so deeply to someone you don’t even know that you almost caught yourself shedding tears?
That is the power of a good story.
You need a vision and mission for your company backed up by a story that would appeal! A story that will build trust and invokes human sentiments of trust, partnership, and loyalty.
Elizabeth Holmes used this perfectly to tell the audience how she has made the sole purpose of her life to convert painful phlebotomy to using just a drop of blood for conducting tests that will tell you the disease and solution from small to significant conditions after she saw her uncle die from a late diagnosis of cancer of Bones, skin, and brain.
How can you build a good story to establish your brand?
1. Use experiences
Using a personal anecdote can help you build trust and credibility with your audience or, in the case of a business, your investors. You can look into the STAR Technique for doing this.
2. Tell people about your inspirations
People love a story that showcases the influence of inspiration on someone and how greatly it changes them.
Like, Elizabeth Holmes constantly mentioned how great of an impact Thomas Alva Edison made on her. She even named the first Theranos blood testing prototype after him, called “The Edison.”
3. Mastery at Negotiation
Call it manipulation if you want but to be just 19 and make older, much more experienced personnel believe in your vision is the work of someone who is a master of Negotiation.
To master this skill, you must develop your soft skills and thoroughly research your audience.
4. Your caricature
Establish yourself! Find your style, and choose a character. Do something that people remember you by.
Elizabeth did this by making black outfits her signature. In an interview, she said her entire closet is full of the same set of black clothes as she does not like to waste her time with what she wears.
Whatever the reason, when you think of Elizabeth Holmes, you envision the black turtleneck and coat with the gray-black fierce eye makeup she wears.
Most of the biggest names in history have some “signature style” associated with them.
Steve Jobs and his jeans, Bruce Lee and his yellow jumpsuit, Tarantino and his fetish with feet, and many other visionaries who have something or the other that will remind you of them.
5. Having a strategy
Even if you are in the clear, there should always be a plan of action in the case a crisis occurs.
Usually, PR professionals and an advisory team help companies with this.
Taking the example of Theranos, employing lawyer David Boies who represented big names like Al Gore and Harvey Weinstein, worked exponentially in favor of Theranos. Believe it or not, even after several allegations, David’s law firm added years to the life of Theranos.
Don’ts of entrepreneurship
You might have the best story in town. If it is a soft story, you can spice it up. In the art of storytelling, when needed, exaggeration is excellent as it excites the listener just enough.
When it comes to communicating about technicalities, you can not lie.
Faulty communication can be misleading and can harm yours and the company’s reputation and goodwill.
It can lead you to legal trouble
|Did you know?
T.A Edison deceived the entire world when in 1878, he claimed to have solved the mystery of Incandescent light bulbs. He faked demonstrations and bribed journalists with shares in his company, so they kept on with his narrative as the filaments kept melting.
Why does this anecdote of Edison matter?
“Fake it till you make it” is a great concept when it comes to soft skills like confidence and communication, but when it comes to the truth behind something, it instead takes a turn to the dark side.
If Edison did this, why can’t Elizabeth?
Well, the company was not dealing with a light bulb in a safe room but hundreds of employees and customers who had to work with the gore of a machine that did not even work!
I would like to hear from you in the comment section about your take on “Fake it till you make it”
- Not caring about your employees
Employee satisfaction is an essential factor in running a long-term business. You must create a healthy working environment where your staff is satisfied and knows what they are dealing with.
Did you know that the whistleblower that was one of the most significant leads to busting Theranos was Erika Cheung, a lab associate with Theranos?
When she went to Balwani to raise testing issues, she was told, “What makes you think you’re qualified to make these calls?”
Hence always, no matter what position, listen to your employees’ needs and make a plan of action for it, so the productivity and motivation does not fall.
If you want your organization to flourish, make sure that you are transparent with stakeholders and other organizations tied up with you.
Theranos not only played deception games with Walgreens after they continued to take blood out with the traditional method and lied to the clients that this is what their doctors prescribed but also gave false results, Putting at stake, not just the lives of its customers but the associated organization Walgreens.
Always remember successful organizations tear down walls, not build them. So constantly keep connecting to raise the bar in your industry.
Now that you have taken notes from the cautionary tale of Theranos,
It is your turn to apply these do’s and don’t and build a blockbuster business.