Elizabeth Holmes, the founder of Theranos, has been fined $500,000 by the S.E.C. and likely prevented from making a profit from her work at Theranos (nytimes).
I wonder if this is unfair. Was it a 19-year-old college dropout’s job to know that she didn’t have an edge over a small lake of chemistry Ph.D.s at Siemens? If I tell you “I am smarter than Gauss so give me $700 million,” whose fault is it if $700 million evaporates?
Commenters on the nytimes article are often outraged because, supposedly, peoples’ lives were put at risk by a few inaccurate test results. How can that be right? Where is the evidence that any medical procedure was ever performed as a result of a test number coming back from Theranos? (And, while we’re at it, let’s see if we can find useful medical procedures that have been done in response to test results in general!)
There is one funny comment: “The lesson here: If you’re gonna steal, steal big!” (from NDanger, Napa Valley, CA)
Readers: What do you think? She pissed away a huge amount of money because she and her Silicon Valley pals overestimated their collective intelligence and value to humanity. Is that a crime?
[Note that a standard financing structure for Theranos, in which cash investors get preferred shares with liquidation preferences, would have already done most of what the S.E.C. has tried to do. If the company had sold for less than the total invested, all proceeds would go to the preferred shareholders (the cash investors), not to founders and employees holding common shares.]
- list of bad things that Theranos did (nytimes)
- “Five Visionary Tech Entrepreneurs Who Are Changing the World” (nytimes 2015), which says “It’s hard to overestimate the potential benefit of what Elizabeth Holmes has developed with her tech company Theranos.”
- What happens when Silicon Valley meets Washington (me, 2015)
- Good article for inspiring young people to learn Mandarin (me, 2014, quoting an expert friend who was skeptical about Theranos, a year befpre the company was trashed by the WSJ)