Elizabeth Holmes, Theranos and the Need for Reforming Silicon Valley
Elizabeth Holmes, the founder and former CEO of Theranos, has become one of America’s most recognizable names as a female entrepreneur, both as an object of fascination and the target of much derision. In recent months, she has been featured prominently across several podcasts, documentaries and news feeds as her trial continues following a dozen federal fraud charges. As researchers who examine gender and business, we find that the media coverage of Ms. Holmes doesn’t do justice to the myriad ways individual, organizational and institutional sexism take shape in Silicon Valley.
As we argue in my book c0-authored with Banu Ozkazanc-Pan, Entrepreneurial Ecosystems: A Gender Perspective and elsewhere, simply investing in more women is not going to resolve the systemic issues that disadvantage women in Silicon Valley and beyond. Such an approach assumes that the decision-making and investment-making system in place is meritocratic. Yet looking at the fact that male founders received 97.6 percent of overall venture funding in 2020, according to Crunchbase, we see a much deeper problem beyond the ‘pipeline’. We suggest that the media scrutiny and analyses of Elizabeth Holmes and Theranos stand in remarkable contrast to Adam Neumann and WeWorks — these cases read in parallel reveal deep flaws in the ways investors make emotional decisions based too much upon gendered charisma, overconfidence, and hyper-masculine styles and behaviors of founders rather than solid business analyses.
While many have lamented the downfall of what was previously lauded as the Silicon Valley glass ceiling breaking with the success of a multi-billionaire female founder, we find the overt focus on a single woman problematic. The media’s hyper focus on this case indeed may be driven by a widespread case of culturally systemic, misogynistic Schadenfreude. Based on our research, we suggest that the real focus should be on the entrepreneurial ecosystems and those gatekeepers and actors who perpetuate a culture that vastly rewards hubris and sensational-but-unsupported claims of founders rather than transparency, honesty, due diligence, and sustainable environmental, social, and governance practices.
This case also raises the specter of which ideologies and approaches guide the investment decisions of venture capitalists. It highlights the problematic ways for-profit, market-driven technology and consumer products sectors guided purely by use or instrumental value such as profitability have become the templates for assessing technologies designed for humanity that contribute to things with intrinsic value.. Medical technologies that directly impact people’s health and ultimately life itself—such as was purported to exist with Theranos—should not be treated the same as a Smartphone, app or platform for commercial exchange. Philosophies in Silicon Valley that are inherent in common phrases such as “move fast and break things”, “don’t worry, be crappy”, and “fake it until you make it” do not belong in the domain of human health and products that can kill a person if they fail.
As covered in the press, Elizabeth Holmes from a young age was enamored with the Silicon Valley icons and culture, which is very dominantly hyper-masculine. Indeed, she took on the same strategies, lowering her voice and speaking with unquestioned authority despite her lack of education and expertise, over-claiming, acting with a combination of hubris, charisma and authority, dressing like Steve Jobs, and acting on the same playbook as the many technology startups that came before her. Until Silicon Valley takes a hard look in the mirror, realizes the damages and poor investment decisions that result from its culture and ideologies, and commits to transformative change, continuing to invest in the next Adam Neumann’s and Elizabeth Holmes’ of the future will result in crash and burn startups and potential harms to people and society.