Inside Silicon Valley’s Bloody Battle:
Lately, gossip magazines, pundits, opinionators and lifestyle sections of major newspapers have been busy covering a flurry of news stories related to flamboyant fraud, deception and duplicity. There was the infamous Bahamas Fyre Festival that never took place, the amazing case of the fake German heiress Anna Delvey, and the most spectacular unraveling of Theranos, the billion dollar biomedical blood testing startup founded by the eccentric Elizabeth Holmes. The public could not get enough of these shams and flim flams, which collectively fleeced billions of dollars from individuals and business entities, thus turning the “Summer of Scam” into the “Fall of Fraud”.
Even though the Fyre Festival swindle and the Anna Delvey hustle are more closely aligned with the entertainment world, the Theranos gyp has rightfully attracted more attention. The antics of Elizabeth Holmes, who not long ago was the CEO of a company valued in the billions of dollars, and her co-founder Ramesh Balwani have resulted in numerous investigative journalism articles, an explosive book, a didactic podcast, a gripping HBO documentary, an upcoming film starring Jennifer Lawrence, and a criminal case unwinding in federal court. Holmes, a self proclaimed Steve Jobs acolyte adopted the mantle of a once-in-a-generation disrupter who could take biomedicine to whole new level. With her Theranos machines, she straddled the supranormal by claiming she could perform over two hundred blood tests from a pinprick, a droplet of blood. Industry experts quietly huffed and sniffed: impossible. And they were right, it was – impossible. But they stayed quiet. Initially, nobody really confronted Holmes. With an opaque management style, a cult-like charisma, a coterie of rich and powerful men dutifully handing over hundreds of millions of dollars, and with her co-founder cheering her on, Holmes succeeded in duping even the most rational minded individuals and investors.
As the situation stands, Holmes and her former boyfriend Ramesh “Sunny” Balwani have been charged with multiple wire fraud charges. Federal prosecutors reportedly assembled millions of pages from documents outlining the lies and misrepresentations that were the norm at the Silicon Valley office of Theranos, which used to be located not far from the Palo Alto headquarters offices of Tesla and HP. The web of deceit woven by Holmes was formidable enough to attract high-profile investors from the Walton and DeVos families, not to mention former top government officials such as George Shultz and Marine Corps General James Mattis, who both occupied board member seats at the disgraced Theranos.
News media outlets cannot get enough of the Theranos case and that is largely due to Holmes, a quirky and curiously compelling character who seems to be still enjoying herself despite the serious charges she is facing. Currently, Holmes is purportedly engaged to hotel heir Billy Evans who works in Silicon Valley, and who reportedly comes from a very connected family. She and her fiancé attend music festivals and baseball games with journalists in tow, who all seem bent on reporting on her wardrobe, behaviors and foibles. Holmes built an enduring cult of personality, and that is what captivates her audience.
Perhaps we as watchers should all pay attention to what the Theranos case tells us: if a certain attraction, a force of personality, privileged background and powerful allies can easily bilk investors with tall and bloody tales, then who or what can stop the next Elizabeth Holmes from happening again?
Well, It so happens that the two whistleblowers who exposed Theranos have started a nonprofit organization to teach young tech entrepreneurs about doing business ethically. In Silicon Valley, where there’s always a handful of scam artists seeking to fool investors and the public for a lot less, Ethics in Entrepreneurship has got your back.
