The Theranos Trial Will Decide the Fate of ‘Fake it Till You Make it’
Is it the end for the infamous startup strategy?
At the heart of the Theranos trial is a story about a founder with a potentially world-changing idea who took some questionable steps in desperation to achieve it, only to see that dream go up in flames. The fate of Elizabeth Holmes — the one-time “future Steve Jobs” — and her actions aside, the trial is also putting the very practices of Silicon Valley under the microscope; namely, the practice of ‘fake it till you make it.’
Silicon Valley has a long history with the idea that you can talk the talk before you can walk the walk, selling potential investors and users on the dream, rather than the proof. Elizabeth Holmes is far from the first founder to deploy this tactic; Steve Jobs famously demoed the first iPhone before it worked properly, preparing a presentation around the various bugs and glitches he expected to encounter. Bill Gates won a bid to provide an operating system for IBM, despite not having one, and the resulting product became the foundation for Microsoft’s success. Silicon Valley icon Larry Ellison, founder of Oracle, regularly misled investors and customers about his products, even selling them software that wasn’t built yet (giving rise to Vaporware). In these cases, and many others like it, all was forgotten, forgiven or never discovered once the company successfully got its product or service to market. Even when scandals have been uncovered, very few founders or CEO’s have ever faced severe comeuppance.
But with Theranos, it’s more serious because, despite what Holmes told herself and others, Theranos was not a software company. It was barely a tech company. It was a healthcare company, and in an industry where people’s lives are at stake, there is little room for faking it. The outcomes of doing so can lead to serious harm. Yet from the early years of Theranos, Holmes fully bought into the adage, happy to tell customers, shareholders and potential investors that the product worked, proceeding to do anything to convince them it did. Holmes often secretly used third-party machines to carry out the blood tests or produced pre-made results to woo investors during demonstrations. She would confidently talk at tech conferences and exaggerate about the progress…