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Elizabeth Holmes -Investors Learn the Cost of Limited Disclosure & Transparency

  • Broadcast in Business
Karen Rands

Karen Rands

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Karen Rands provides context, prior to the replay of her popular podcast on transparency and disclosure between entrepreneurs and investors, for the fraud perpetrated by Elizabeth Holmes, Founder and CEO of Theranos, a company that sought to develop and manufacture a medical device that could identify, monitor, and deliver therapeutics for disease detected through a prick of blood. Introductory comments set the stage for lessons to be learned by all investors.
Elizabeth Holmes had all the characteristics of the ideal startup founder: 
-visionary capable of big noble ideas
-intensely competitive
-internally motivated
-strong drive and determination
-highly intelligent
-charismatic
Except one: commitment to truth & transparency
She had the fatal flaw that often comes along with these other characteristics, which can hide underneath the surface only to reveal itself when faced with undeniable defeat - total inability to accept and admit failure, due to a fragile ego and innate since of entitlement to succeed at any cost, and therefor not learn from it.
This case is also an example of the weight and validity that investors will place on the tacit endorsement of an early prominent investor, who may not be able themselves to identify the red flags and believe that with enough money a deal can be fixed. Their own ego won't let them admit they made a bad investment decision so they continue to invest good money after bad, with a wish and a prayer it will work out. In some cases, it does. In the case of Elizabeth Holmes and Theranos, and the $945M invested, it did not.
Article on the history and case of Theranos: https://www.businessinsider.com/theranos-founder-ceo-elizabeth-holmes-life-story-bio-2018-4
Elizabeth Holmes Wikipedia: https://en.wikipedia.org/wiki/Elizabeth_Holmes
Connect with Karen: http://karenrands.co/contact

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