Despite Elizabeth Holmes’s best attempt at looking like Steve Jobs, her imitation game falls short in the world of business success. The last half-year has been increasingly trying for her company-- former media darling Theranos-- since the WSJ first broke news that the blood-testing company was having issues with its offerings. Back in February, its key relationship with major drugstore chain Walgreens was under heavy fire; now, the SEC is checking the company out, in addition to a criminal investigation launched by federal prosecutors. From the article:
Federal officials began requesting information about Theranos in January and February, according to the people familiar with the matter. Those informal requests were followed by grand-jury subpoenas from a federal court in San Francisco in March, the people said. Agents from the Federal Bureau of Investigation and U.S. Postal Inspection Service are assisting in the investigation, the people said.
And the cherry on top? Federal regulators are looking to ban both Holmes and Theranos president Sunny Balwani from owning or operating any lab for the next two years. While certainly a unique case, these recent allegations, along with the devaluing of tech investments by large asset managers might just be a sign of the end of Silicon Valley’s current boom cycle. Anybody willing to wager on whether or not this is Holmes's last hurrah?
I've been watching Theranos ever since it came out of stealth. I don't think the entire premise of the business is a fraud.. What I think happened here was a promising technology's potential was blown out of proportion when there was no solid evidence to support that it would work. It seems that every aspect of the business was structured in such a way so as to maximize media attention, from the board of directors featuring luminaries such as Kissinger and David Boies (but no one with extensive in biotechnology) to "female Zuckerberg" story.
Looking back, it seems ludicrous that it rocketed to a $9 billion valuation without a proven product. It makes me wonder how good VCs really are at picking winners. Perhaps most are just lucky and crowd followers.
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