Jottings - Slice of life - 279 ( The rise and fall of Elizabeth Holmes - the poster girl of the Silicon Valley)

Jottings - Slice of life - 279 ( The rise and fall of Elizabeth Holmes - the poster girl of the Silicon Valley)

“Some in clandestine companies combine,
Erect new stocks to trade beyond the line:
With air and empty names beguile the town,
And raise new credits first, then dry 'em down:
Divide the empty nothing into shares,
To set the town together by the ears”

Daniel Defoe - “London”

The meteoric rise and ignominious fall of young Elizabeth Holmes, the former founder, CEO of Theranos, and a billionaire by the age of thirty-one is nothing short of a fairy tale, with the only twist that from the very beginning the fairy herself was flawed, never clean of intent or truthful of purpose. In his widely read book, “The extraordinary popular delusions and madness of the crowds” written nearly two centuries ago, in 1841, the Scottish writer Charles Mackay records many cases of what he calls “moral epidemics” — an irrational attachment to a crazy idea that starts off as a trickle but quickly generates enough momentum, gathering in its course, people from all walks of life, sometimes consuming an entire nation, to act on an idea or scheme, which in the normal course the individuals involved would never have undertaken by themselves. It is called the herd mentality, (or what we have now euphemistically rechristened as “crowd platforms”) The moral epidemic could be anything from a business scheme, to medical quackery to religious belief. It doesn’t matter what the idea is, but the snowballing effect it has on the populace is undeniable and nothing short mass hysteria, and for the period of time when the frenzy prevails, nothing can shake the confidence in people’s minds, about the venture, until the scam runs its course is suddenly revealed for what it is, and the duplicity of its progenitor and the bankruptcy of the idea stands starkly exposed in the public eye. When that happens the glass house crumbles with a resounding thud breaking into million pieces of no value whatsoever; and overnight, the heroes of yesterday are vilified as villains and monstrous schemers of today. The rise and fall of Theranos is a story that Charles Mackay would have loved to include in his book if he were alive to revise his 1841 edition. That an insane idea, with no medical backing at all, could lure hundreds of millions of dollars not only from middle-income groups, but from billionaires known for their financial and business acumen, and from former secretary of states and minister of defenses known for their judicious decision making - is nothing short of baffling. The story of Human greed and uninhibited ambition is as old as civilization, and no matter how much we progress outwardly, we never learn our inner lessons despite regular episodes of deception and malfeasance. Perhaps, the debacle of Theranos may be our moment of truth. But if past experience is anything to go by, I think, it will be foolish to assume so.

The silicon valley is a fascinating, yet strange place. Within those fifty square mile radius of the Bay Area, there is more wealth created than on any other patch of land on the human-inhabited globe. Dreamers are welcome there. Nothing is a taboo or inappropriate as an idea in the Valley, as long as one can fund and sell the idea. For those who seek millions in quick time, aspire to own lavish homes overlooking sunny California beaches, and drive expensive and handcrafted lamborghini’s, silicon valley is the place to be if they have the gumption, smartness and the ruthlessness to convert their promises into reality, and to live up to their dreams. It is not at all surprising then, that Elizabeth Holmes would, when the time was ripe, chose to make her fortune in the silicon valley. Nowhere else would one find the license to dream weird dreams, and hope to get away with it. As a child of five years old, when a relative asked Elizabeth in her home in Washington DC, what she wanted to become when she grew older; she responded without hesitation that she wished to be a Billionaire. That was the seed right there. Elizabeth’s parents were technically well off. Her father worked in a senior role in Enron, and her mother for the Federal government. Education, Money, and status was never an issue, and the young girl was innately precocious, intelligent and possessed that rare ( and sometimes) disturbing quality of getting what she wanted. Homeschooled in Mandarin, a language she supposedly liked, Elizabeth enrolled into Stanford - the mecca for the liberal-minded - in their summer program in Mandarin. Perhaps, it was at this point, that her ambition, which lay seething and throbbing inside began to finally sense its opportunity, and a vent in the fertile intellectual atmosphere of Stanford. Soon after school, she applied and got into undergraduate chemical engineering course at Stanford. Professor Phyllis Gardner, Professor of medicine at Stanford remembers Elizabeth as a hyper-intelligent student. Even before the idea behind Theranos was fully formed, Elizabeth discussed her thoughts with Dr. Phyllis, about a device that could run blood tests with just a spot of blood. The veteran professor dismissed the idea as incredulous and scientifically infeasible, but she vividly remembers with a shudder the look of nonchalance, nonacceptance, and a tinge of arrogance in those deep, blue eyes of Elizabeth when questioned. There was something about her inability to listen that troubled me", was Phylis cryptic comment about Elizabeth.

The idea of dropping out of college to make a fortune has been both the boon and the curse of the modern generation. From Michel Dell to Bill Gates to Steve Job to Marc Zuckerberg to Larry Ellison to many more, who left prestigious graduate courses in leading universities to forge their own paths has unfortunately created a contemporary archetype for dissenting adolescents to mimic role models without basis or integrity. The creed for modern breed of youngsters is: if one dares to drop out of college, then something good is up the sleeves. While this approach has worked for some, such an archetype can quickly become an excuse for prematurely ambitious and half-baked minds to embark upon a course action without necessary training and preparation. Genius and luck, together, are uncommon property, and few cases where it has come together and succeeded, cannot be extended as a general principle to be followed. Personalities such as Elizabeth’s wouldn’t understand or acknowledge this fact. Perhaps, it is the electrifying environment and the glitter of successful entrepreneurs all around - we don’t know, but Elizabeth decided that two years of Chemical engineering at Stanford and a three month of lab internship at the genome institute of Singapore at the end of her Freshman year was enough formal education to drop out and incubate her “revolutionary” idea of testing blood without the pain of intravenous procedure. It is typical of people with delusionary ambition and the impatience to get rich quickly; they don't pause to think of their own preparedness. They possess raw courage, without the tempering of patience and counsel. Elizabeth, even for a moment, did not question her own understanding of medical science or mastery over the chemical process needed to test blood, before she set out to commercialize this wild idea. She was supremely confident that she could pull it off with her magnetic personality, powers of articulation and force of persuasion.

One look at Elizabeth Holmes in any of her pictures over the last eight years, and what strikes us with intense force is the glassy look in her eyes and the carefully orchestrated body language. There is something in those wide, deep, blue pair of eyes that uneasily stirred the depths of the viewer. Like the deep sea, the surface shimmered with dazzling light, but one could instantly sense a quality of deep brooding darkness underneath. To paraphrase GK Chesterton, the master stylist, who described one of his female characters in a Father Brown story: “ She had the eyes of startling brilliancy, but it was the brilliancy of steel rather than of diamonds. She was one of those women whom one always thinks of in profile, as of the clean-cut edge of a weapon. She seemed to cleave her way through life…” This description fits Elizabeth perfectly. From the time she floated Theranos ( formed with the words “Therapy” and “Diagnosis”) to commoditize her idea, using the college money she had, Elizabeth transformed herself into a different persona. Her voice became more of a baritone, an octave less to make the words come out deep and intense, the costumes changed to mimic Steve jobs black turtle necks ( which she ordered from the same designer Jobs’ employed), her body language on stage and in interviews was carefully practiced to look more flamboyant and expressive, and more importantly, she held a crystal clear narrative in her head, which she expostulated to audiences and investors with passionate zeal and a contagious conviction. Between 2003 and 2016, in a span of 12 years , she managed to attract money in millions ( around 750 million dollars) from capital investors, opened offices in the heart of Silicon Valley, attracted top talent from Apple, many of whom, blown away by her vision joined Theranos leaving behind financially valuable shares in Apple. in 2014, at the age of thirty, Elizabeth Holmes was ranked by Forbes the youngest self-made billionaire and her assets valued at over nine billion dollars. She had reached the pinnacle of her dreams, and she was single-handedly instrumental in changing the way the world perceived women entrepreneurs in the Silicon Valley. Elizabeth’s success in a predominantly male-dominated valley was on the verge of rewriting history.

That brings us to the question: What exactly was Elizabeth’s business proposition and what went wrong. The idea was simple. For patients, who need regular blood tests done for a variety of reasons, the traditional method of drawing blood using syringes can be painful, and the results from such tests can often take days or weeks to process, keeping the patient waiting in a state of anxiety. Elizabeth hit upon the “bright idea”, based on her rudimentary understanding of biology and the chemical testing process that a drop of blood from a pinprick is enough to conduct over 240 tests using a proprietary portable Theranos appliance called Edison, which would use the capsule of blood as input, and yield accurate results within a short span of time. What made this idea especially enticing to the public and investors is that in cases of emergency, blood tests performed through Edison can quickly identify a serious medical problem, which could then help in saving lives. In a way, Elizabeth’s vision, if true, would have changed medical science in a profound way. After all, blood tests are the heartbeat of most medical diagnoses, and if a revolutionary technology like what Theranos was proposing, could expedite the process and make it less painful, it would definitely prove to be very beneficial in cases of emergency and in circumstances where there may not be enough time for a conventional intravenous blood test to be administered — for example, on the battlefield (which was incidentally one of Theranos claim that her method worked on the battlefield in Iraq saving valuable young lives) However, there were three key elements to make the idea work: The quality of the blood samples taken, the manner it was stored and the reliability of the appliance to generate accurate results based on those minute samples. Theranos began commercializing the product even before any of these factors were thoroughly tested and certified by FDA (Federal drug Administration) Patients cannot, at any cost, be subjected to inaccuracies in testing methodology, and consequent results. In 2006, Elizabeth, through carefully managed articulation, managed to fund the idea, and set up a thousand strong company staffed with creme de la creme of talent from Apple and other places. She did not pay attention to the fact that the patented machine Edison ( which was to test the blood samples) wasn’t producing right blood results even for a few simple tests, let alone over two hundred of them as claimed by Theranos. The technicians, alarmed and frustrated, repeatedly bought this fact to Elizabeth and her partner Ramesh Balwani ( an Indian immigrant who had made millions in venture capitalism and was living with Elizabeth for few years); but it fell on deaf ears. Theranos as a brand was overwhelmed with money and adulation. It didn’t matter that idea and the methodology it evangelized was skewed, misdirected and driving headlong over an inevitable precipice. It was only a matter of time before the charade ended.

When Elizabeth’s photo was splashed on the cover of the 2014 Forbes magazine, she was at the height of her fame. Her descent began soon enough after. By 2016, her carefully constructed empire started disintegrating. A few key whistleblowers broke their silence, and a reporter for the Wall Street Journal picked up the scent to penetrate this hoax. About the same time, business partners like Walgreen began to sense that Theranos was massively violating federal regulations, and the blood samples, as promised to the public, weren’t tested on site, but flown into a secret basement at Theranos’s silicon valley office. Patients also began to note wide discrepancies between blood tests performed at more established labs. Many patients also felt odd that Theranos technicians, more often than not, drew blood using syringes along with prick on the forefinger, when the company’s advertisements clearly stated that syringes wouldn’t be used. The whole business was beginning to sound murky, mired in confusion and misinformed. Based on published reports, In 2016, the securities exchange commission stepped in to investigate and quickly noticed widespread scam and lack of integrity. The company was violating basic principles of a public enterprise. Instantly, the market valuation of Theranos fell from billions to zero in no time, and Elizabeth was prohibited from joining the board of any public company for a period of ten years. During her lengthy deposition to the SEC, the usually confident Elizabeth was hesitant and unsure of her answers over 600 times. She couldn’t clarify her position on critical questions regarding Theranos technology or the application of it. Her plain, ashen face, devoid of the usual meticulous make-up, showed visible signs of confusion, strain, and failure. She did not, however, accept any wrongdoing, and denied knowledge of what happened at the grass root level.

Elizabeth is now facing criminal charges along with Ramesh “Sunny” Balwani, her accomplice in the adventure. If found guilty, she could land in prison for decades. But that is a battle still going on. Meanwhile, Elizabeth continues to live in the Silicon Valley, and rumors have it that she is engaged, and is contemplating a new business idea, for which she is soliciting capital. Recently, on Hulu and HBO, documentaries on the meteoric entrepreneurial career of Elizabeth and her personality have attempted to answer a few critical questions. Is Elizabeth a Sociopath whose narcissism blinded her to facts ? or is it that she genuinely believed in the efficacy of her idea, and hoped she could get it right before the avalanche of money submerged her good intentions? or is she a product of modern times when our role models are billionaires who have made a name and fortune for themselves selling an outrageous idea and lead rich lifestyles, and imitation of those Demi-Gods becomes the ultimate purpose of one's life and career? or is it just a plain case of deception and fraud in the world of business? There are no answers right now. Elizabeth Holmes is only 33 years with a full life ahead of her, yet it seems she has lived a dream with nothing much left anymore. But Elizabeth will resurrect. That is who she is. In an event couple of years ago, just after the sham was publicized she said:
“You’ll get knocked down over and over and over again, and you get back up, I’ve been knocked down a lot, and it became really clear that this was what I wanted to do, and I would start this company over 10,000 times if I had to.”

When I watched the documentaries about her, I felt a trifle sad that such talent, nerve, and passion was wasted defending an idea that wasn’t intrinsically viable. Her idol is Steve Jobs, and in many ways, she imitated his work culture and mannerisms. But what she didn’t learn from Jobs was to never sell an idea before it can be thoroughly studied, researched, designed and tested. iPhone took remained five years in incubation, and so did the iPod before Jobs triumphantly announced the products to the world. Unfortunately, Elizabeth failed to incorporate this seminal work ethic of Steve Jobs in her entrepreneurial vision. Her goal was to make good money, with (let's give the benefit of the doubt) a vague notion of “doing good” for those who suffered from intravenous blood tests. But her approach, adamancy, and unwillingness to retract from her position despite good counsel from colleagues and others pushed her along a road doomed to failure. Her reckless attitude short-circuited her journey as a woman entrepreneur in the Silicon Valley, and knowingly or unknowingly her acts of deliberate omission and misrepresentation have cast a shadow on the creative world of Silicon Valley. It will take some time to heal the damage done by Elizabeth Holmes and the idea of Theranos. But there is still hope, as always.

God bless…

yours in mortality,

Bala