Posted by Sten Westgard, MS
You have probably already seen the news from the SEC that Elizabeth Holmes, founder of Theranos, has agreed to settle with the SEC, and while admitting no wrong-doing, she will pay a $500,000 fine, give up nearly 19 million shares in the company, leave the company, and accept a 10-year ban from serving as director or officer of any public company (she's already banned from heading up a laboratory). This may not be the end of theranos, but it should mark the end of Holmes' career as a start-up icon.
But the SEC report itself is worth a close read, just to see the sheer mendacity that pervaded nearly every moment of the rise of Theranos. One phrase echoes over and over, for example: "When presenting to investors, Holmes knew, or was reckless in not knowing [my emphasis], that the miniLab was not presently capable of processing a full range of laboratory test."
That phrase, "reckless in not knowing" applies to all of us. The way Theranos charmed its way to the top of the start-up world, raised $700 million in funding (and being valued at $9 billion) on the flimsiest claim of industry "disruption," reveals a critical weakness in the silicon valley "fake it 'til you make it" culture, as well as a disappointing gullibility in the venture capital funds and industry journals. Most germane to the laboratory world, this episode showed a damning passivity on the part of our professional organizations. That the AACC gave this fraud a prominent stage on which to further spread lies will forever be a black mark on the institution. I hope the AACC luminaries still sitting on Theranos's board and advisory groups are properly ashamed of themselves. At the highest levels of our profession, there, too, was reckless ignorance.
