KEY TAKEAWAY: Federal investigations of Theranos are ongoing and cover both civil and criminal law. Most companies that have partnered with Thetanos have since terminated their relationship and their CEO, who fancies herself as the Steve Jobs of healthcare, could be barred from the company.
How could such a highly valued startup on its way to upending the $76 billion laboratory diagnostics industry by replacing test tubes of blood drawn from a vein with a few drops from a finger stick fall so far so fast? And how could Holmes’ star, which shone so brightly, fall practically overnight?
The crucial missteps, according to Fox Business News include:
- An investigative journalist from the Wall Street Journal called to tell Theranos that he’s got credible sources saying bad things about your company on the record and wants to chat about it, assume he’s not really serious. Keep stonewalling him and hope he finds something more exciting to write about.
- When the story finally breaks, and it’s a front-page blockbuster that casts serious doubt on the efficacy and accuracy of your technology, claim that it’s “inaccurate, misleading and defamatory” and that the allegations are “grounded in baseless assertions by disgruntled former employees and industry incumbents.
- Post long rambling rants on your website that deny everything the two-time Pulitzer Prize winning investigative reporter wrote because he’s simply flat out wrong. Attack him as being out to get you from the start. Call your posts “Theranos Facts” without actually stating any facts that can be verified by an objective third party.
- Suggest that you voluntarily filed for FDA approval because it’s the highest standard. Watch as an FDA investigation concludes that your proprietary nanotainer is an unapproved medical device and approves the use of your proprietary technology for just one of the more than 240 blood tests you offer. Act as if that was all part of the plan.
- Stack the board with insiders and retired big-name politicians and administrators who have no real vested interest in the company.
- Announce plenty of partnerships with big-name healthcare providers like the Cleveland Clinic and San Francisco-based Dignity Health. Never mind that not one of those relationships ever gets off the ground.
- Go dark when it’s revealed that Safeway is abandoning plans to open Theranos wellness centers in 800 supermarkets, even after spending $350 million on the initiative. Mum’s the word when Walgreen’s halts expansion of your relationship and searches desperately for a way to distance itself from a growing scandal.
Holmes recently told a group of Stanford graduate business students that, “The minute you have a back-up plan, you’ve admitted you’re not going to succeed.” That may be good advice if you’re writing an app, but when human beings are counting on you for an accurate diagnosis, it’s delusional.
Frankly, I can’t see Theranos ever becoming a business again. Their name has been tarnished too much and has a negative association. However, a lot of the responsibility falls on investors who were so easily duped by Ms Holmes. Perhaps it would have been better if she had stayed in school instead of dropping out.