A few months after I graduated from Stanford’s business school in 2013, Theranos was generating buzz on campus—and not all of it was good.
One evening, I found myself in a dinner party conversation with a group of some of the university’s brightest scientific minds. When talk landed on the still mostly-unknown medical technology startup that had raised nearly $100 million in venture capital since getting its start on campus a decade earlier, this group of grad students and postdocs—from fields such as bioengineering and microbiology—were roasting the company, despite its apparent success.
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Some of them knew Theranos and its team well. Others were only familiar with the company’s product. All of them were highly skeptical. One by one, they took turns lamenting what they saw as the implausibility of the technology Theranos was promising.
I had only heard of Theranos because of its board of directors, which at the time included a retired four-star general, at least one former Fortune 500 CEO, and a former U.S. Senator, among others. I was awestruck at the star-studded list of political and business titans but also curious about what these individuals knew about blood testing. As we would all come to learn years later, they didn’t know enough.
As the jury deliberates in the fraud trial of Theranos’ founder Elizabeth Holmes, too little attention has been paid to the failure of Theranos’ board and the lessons to learn from it. As more capital flows into private companies that are far away from mainstream public scrutiny and under increasing pressure to support lofty valuations, there will be more Theranoses. In this new era of corporate malfeasance, they will be less likely to engage in accounting trickery and more likely to exaggerate the promise of their “disruptive” technology, overstate their growth, or misuse their customers’ data. What hasn’t changed is that their boards of directors will be the first line of defense.
But…
Source : time
