Founder to fraudster: 9 startup ideas I learnt from a TV present on Elizabeth Holmes’ downfall

Once I watched Inventing Anna on Netflix earlier this yr, I used to be enthralled, to say the least. There’s one thing about watching fraudsters (particularly ones based mostly on real-life) rise and fall that’s so entertaining.

Plus, most of the time, the drama and persona that fills the display screen are much more charming than most actuality reveals might ever attempt to be.

Whereas watching Inventing Anna, I recalled one other fraud case that has been on my radar for some time—the one with Theranos and its founder and CEO, Elizabeth Holmes. So, after I came upon Hulu can be airing a present about it—starring Amanda Seyfried, no much less—I instantly put it on my watch record. 

Amanda Seyfried stars as Elizabeth Holmes in The Dropout / Picture Credit score: Hulu

When you’ve by no means heard of Elizabeth Holmes or her well being tech startup, right here’s a fast abstract for you. Holmes dropped out of Stanford at 19 years previous with the aim to start out her personal firm, Theranos.

A mixture of “remedy” and “diagnose”, Theranos aimed to reinvent blood testing in order that solely a small quantity of blood was wanted to check for an array of various illnesses.

The corporate was nowhere near reaching that aim, however Holmes primarily lied to buyers and the media that they have already got the tech.

Anyway, the entire story is crazier than that, so if you wish to know extra, it is best to undoubtedly try the collection or take heed to the podcast it’s based mostly on, additionally known as The Dropout.

Whereas watching the present, listed below are some entrepreneurial takeaways that I picked up on—a few of which I learnt from Holmes at her peak, whereas others have been precisely what prompted her downfall.

1. Figuring out your strongest ambition may help you keep pushed

Elizabeth Holmes’ ambition actually carried her very, very far. She knew what she wished, and what she needed to do to get there. In her earlier days, Holmes’ drive was really type of inspiring, and I can see why she made it on the quilt of varied respected magazines.

2. However possibly have an ambition that’s targeted on extra than simply cash

At a ripe younger age, Holmes had already shared that she wished to be a billionaire when she grew up. It’s actually not unsuitable to be money-motivated, but it surely nearly felt like every thing she did was a method to an finish, with the top being wealth. Numerous it.  

With this imaginative and prescient, it’s straightforward to develop into blindsided and neglect why you even began this entrepreneurial journey, which we are able to deduce is what occurred to Holmes. This turns into significantly problematic in relation to the biomedical discipline.

3. Realise when one thing isn’t working and know when to surrender

It’s necessary to know while you’ve reached the top of the highway and let go of a mission as a substitute of stringing folks on. Nevertheless, I additionally perceive that this recommendation is type of a troublesome one to observe. Perhaps if Holmes had succeeded as a substitute, I’d be saying “by no means hand over”.

All through the film, Holmes continuously requested, “What would you do in case you knew you may not fail?” As I watched her lies snowball, I realise that it’s essential for entrepreneurs to even think about failure as an possibility.

Elizabeth Holmes posing with a tiny vial of blood / Picture Credit score: Theranos

Aptly put by this Inc article, “Scientists are skilled to attempt to show themselves unsuitable within the technique of making an attempt to uncover actual breakthroughs. Why are entrepreneurs not keen to do the identical?”

In the identical method, entrepreneurs must be keen to repeatedly re-evaluate and disprove their concepts to enhance them, and quit on them upon realising they’re not possible.

4. Have humility and hear actively to criticism

In faculty, Holmes approached Phyllis Gardner, a professor at Stanford, and pitched certainly one of her concepts. Gardner was sceptical and expressed as a lot to Holmes, who didn’t precisely take her criticism critically.

So as to add, each time somebody criticised Holmes, she acted defensively and was not receptive to the suggestions. She most likely noticed herself as perseverant, but it surely was really extra like cussed vanity.

Most entrepreneurs price their salt seemingly already perceive the worth of suggestions, however generally it’s a much-needed reminder when an enthusiastically-pursued concept finally ends up getting extra flak than reward, to an entrepeneur’s disappointment.

5. Analysis potential buyers and be taught to pitch nicely

One thing that impressed me about Elizabeth Holmes was that she was all the time on prime of her sport when it got here to buyers. I imply, she needed to be, so as to deceive them into shopping for into her internet of lies.

As awkward as Holmes was depicted in her on a regular basis life, she grew to become an entire new charismatic and pushed particular person when it got here to securing funds. She would discover out what her buyers have been obsessed with and use it to her benefit.

For instance, when speaking to Don Lucas, a enterprise capitalist, she used phrases like “cowboy” and appealed to Lucas’ appreciation of America and freedom.

When speaking to Ana Arriola, a product designer, she appealed to her sense of being “othered” within the male-dominated tech business.

Elizabeth Holmes on the left, Amanda Seyfried’s on-camera depiction of her on the correct / Picture Credit score: Getty Photographs / Hulu

Holmes knew methods to play into others’ pursuits throughout her pitch and get them on her aspect, utilizing emotional attraction and private tales (although they might have been pretend or exaggerated).

Discovering factors of relatability between your self and a possible investor may be that further push wanted to persuade them, with enterprise potential, efficiency, and different components apart. In spite of everything, it’s been mentioned that discovering an investor is like discovering a life accomplice.

6. Rent proficient people that may take you far

In my perception, Theranos might run for so long as it did due to the surprising quantity of expertise Holmes recruited and even poached from massive firms corresponding to Apple.

By having such respected names on her workforce, she was in a position to persuade buyers of the potential of Theranos. It was comprehensible why the media additionally purchased into her entire ruse.

It’s clear that a lot of Theranos’ workers have been extremely succesful and competent. But, most of them additionally realised how darkish issues have been changing into at Theranos, which led to excessive turnover charges. Which brings me to the subsequent level.

7. Practise transparency and accountability within the office

Holmes was in a position to maintain the truth that the blood-testing machines didn’t work by primarily isolating every division and prohibiting them from interacting with one another.

She was by no means clear to her workers, which should have made it all of the extra damaging when everybody immediately misplaced their jobs.

Nevertheless, whereas Theranos was nonetheless alive, some workers felt inclined to dig deeper into the state of affairs, and so they ended up being whistle-blowers who helped the world realise how fraudulent the enterprise was. It simply goes to point out {that a} lack of transparency isn’t going to assist maintain the reality from being uncovered ultimately.

8. Create self-image as a result of it issues too

Certainly one of Holmes’ key signatures is the best way she clothes. Does the black turtleneck remind you of anybody?

That’s proper, Holmes was a fan of Steve Jobs and wished to decorate like him as nicely. So, she purchased the Issey Miyake turtlenecks Jobs was recognized for and began sporting them.

Steve Jobs and Elizabeth Holmes each sporting black turtlenecks / Picture Credit score: Ben Stanfield, Flickr / HBO

It labored in her favour for some time, as folks drew similarities that would have not directly influenced how they perceived Holmes. (Nevertheless, now that the reality has come to mild, it solely additional enhances her picture of being a copycat and worse, a fraud.)

9. Finally although, impress along with your actions, not your phrases

Faking her fashion was one factor—Holmes additionally seemingly faked her voice. The previous CEO was as soon as recognized for her deep, charismatic voice, however that when distinctive trait has became the butt of the joke.

The alleged fake deep voice has develop into emblematic of her personal fraudulent actions. Each time she speaks now, everyone seems to be anticipating to listen to the unnaturally low pitch. She has succeeded in standing out, albeit not in the best way that she initially hoped.

So not solely have been the phrases that got here out of her mouth relating to Theranos typically crafted lies, however the voice she used to convey them was presumably pretend too.

On the finish of the day although, phrases can solely take you to date. Ultimately, lies will begin cracking aside, and stakeholders will realise that there are not any actions to again up the promising phrases mentioned to them, be they an investor, accomplice, or buyer.

Buyers who do their due diligence will ultimately realise that an organization’s financials don’t add up (if it carries out correct auditing practices), and prospects will realise {that a} service or product isn’t performing in the best way that was promised to them, for instance.

Then it’ll all come crashing down, and it’s arduous to rebuild that belief when it’s been damaged so immediately and severely, particularly if folks have put cash into—and misplaced it to—your small business by investments or purchases.

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These are simply among the classes I picked up from watching the present, however one thing to notice is that The Dropout remains to be a dramatisation of info on the finish of the day.

Due to this fact, some parts of the Theranos case could have been ignored or deprioritised in favour of the extra surprising occasions. In the meantime, some parts could have been exaggerated for emotional responses from viewers.

However Theranos’ failure remains to be very, very actual, and there’s heaps to be taught from the truths surrounding the case. If you need a fast style of what this rabbit gap of a scandal has in retailer for you, you can begin with The Dropout’s trailer:

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Featured Picture Credit score: Hulu

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