9 min read
The opinions expressed by the contributors of Entrepreneur are personal to you.
In January we saw the departure of not one but two documentaries about the infamous festival Fyre. Both Netflix as Hulu they brought out stories about Billy McFarland, the promoter of what should have been a music festival which has promised a luxury experience in the Caribbean that ended up being a total fallacy when they arrived attendees. McFarland is serving his sentence of six years.
If the history of Fyre sounds familiar, there’s a good reason: several have pointed out that you save a parallel with the scandal Theranos, the technology company whose apparatus for analysis of blood turned out to be a fiasco. So it is not surprising that another documentary about fraud is out in the air, this time with HBO. The chain announced that march 18 will premiere the documentary The Inventor: Out for Blood in Silicon Valley.
In the three documentaries, the founding fathers are presented as young liars and pathological take advantage of the media.
A bit of context
Theranos was a startup medical technology founded in 2003 by Elizabeth Holmes, a charismatic young man who left Stanford and became a devotee of Steve Jobs. The presentation of Holmes for Theranos it was simple: their machine would provide blood tests rapid, accessible and accurate, using a small drop of blood taken with a finger prick.
According to Holmes, Theranos will improve dramatically the health care system because it would reach the people who until now avoided the blood tests because they are considered as costly, inconvenient, time consuming, or by simple fear of the blood and/or needles. With new laws coming into effect (like the one that Holmes supported in Arizona), Theranos even could empower consumers to take exams by themselves without the need of going to the doctor.
But the compelling narrative of Holmes soon turned out to be false, involving the cover-up of regulatory scrutiny, equipment malfunction, results manipulated, and an administration that is paranoid.
To roots of a series of articles published in 2015 by the Wall Street Journal from the pen of the author John Carreyrouthe agreements with Walgreens and Safeway collapsed, in addition to facing a series of demandsso that Theranos has closed its doors, and Holmes (along with his partner and company president Ramesh Balwani) face legal fees.
The story of McFarland and Holmes, both point towards the dark side of entrepreneurship that tends to appear right behind the belief that a person can build something amazing, beyond the context of fraud and self-deception.
Even entrepreneurs more ethical and rational are going to find a similar image of themselves in these mirrors. The failures of these two young women offer big, very big lessons to entrepreneurs. Here we leave some that you can learn from the scandal of Theranos.
The stories are powerful
It may be that Holmes never seems experienced in matters of medical engineering or even business administration. But his talent as a storyteller is undeniable. Theranos arrived so far (including a valuation of $ 9 billionin addition to having alliances invaluable) because Holmes dominated its history. The corporate power of the narrative is a two-edged sword that serves both the good and the bad.
Holmes used the narrative to cover up a fraud, but entrepreneurs legitimate can use it to communicate your achievements and your vision.
The funding generates pressure
At the peak of their success, Theranos managed to collect $ 63 million in a single round of funding, which the position as a company of great value. Theranos is the dream of any entrepreneur, but it also made that Holmes was under the spotlight for its contradictory discourses, in fact, met investors and partners that we started demanding results.
The valuation and the funding does not always reflect the current accomplishments of a company, and entrepreneurs need to describe and to adhere to a line of realistic time when they are looking for funds for your business.
The youth is not everything
Theranos is levered to the youth of Holmes, implying that this allowed him to think “outside the box”, but their age didn’t make up for your lack of experience in medical engineering or its possible lack of ethics.
The most innovative ideas can come out at any age, but successful entrepreneurs value the experience and wisdom of older employees.
Being famous doesn’t mean you have experience
In the board of directors of Theranos had many faces popular, such as Henry Kissinger and the the former secretary of defense James Mattis (now accused of trying to help Theranos to turn to the regulations). However, there was a lack of experts in health.
Theranos not had much support in the scientific community, Holmes even attacked private practice banning independent studies of their technical staff. We do not believe that it would have been better if they had made friends with some of the experts, because their technology never worked in reality, but entrepreneurs legitimate itself should be made of connections experts (and not only get the support of famous people).
Accept feedback from your employees
In his book Bad Blood, Carreyrou he described a work culture that required a complete devotion and unwavering allegiance”. Employees who complained were given away or ignored, and many of them resigned after their concerns were brushed aside by Holmes and Balwani.
Not all relationships between boss and employee is going to be, but entrepreneurs legitimate know that the feedback from the employees is necessary for the success of the business. Open dialogue encourages everyone in the company to think critically and creatively to recognize new opportunities and to anticipate obstacles.
“Move fast and break things” is not the only way to be disruptive
In retrospect, we can see that Theranos is indicative of the culture of the startups, one in which the fraudulent marketing and the technology twisted not only delayed the delivery of food, but that put in danger the life of many people. “Move fast and break things” is not always the best advice when “things” are broken are people.
However, the partner of Forbes David Shaywitz is concerned that the people stay with the lesson incorrect on Theranos: that people feel that any type of disruption in the field of medicine is irresponsible. And it is worthwhile to reflect about it, because the truth is that there are many things that are worth changing in the industry. The disruption can be radical without being irresponsible.
Plans on reality, not on fantasy
Maybe we’re obsessed with both the story of McFarland and Holmes because it seems that they had an escape plan. Harold Hill, the con man fictional protagonist of The Music Man, is used to change the city when I felt that the people had already noticed, but both McFarland as Holmes remained firm in his narrative, even when the failure was obvious.
Even in companies that are well managed, the obstacles and failures are inevitable. But successful entrepreneurs plan for these realities instead of tucking their heads in the sand and hide.
Consumers want products that matter
Why are all of us we swallow the story of Theranos for so long? The journalists of business and technology share a portion of the blamebut there is also a social good irresistible that we must take the narrative of Theranos. Although Silicon Valley is rife with companies that promise to improve the laundry, reservations in restaurants and lots of little “difficulties” of daily life, Holmes offered a product that could genuinely improve the lives of the people and become a medical breakthrough real. The product was a lie, of course, but continues to demonstrate the enormous consumer interest in companies that can solve real-life problems.
The story of Theranos was, and remains, extreme and dramatic. It’s not surprising that you go to adapt the book of Carreyrous to make a script that estelarizará Jennifer Lawrence in the role of Holmes. But even though Theranos present a case of particular study about business failure, the story has lessons relevant for entrepreneurs with ethical ideas and well-established.