The Elizabeth Holmes fraud trial was the talk of the town (in Silicon Valley, you know, on Twitter). The four-month trial was so popular that the journalists who covered it had to get up at 3 a.m. to make sure they could get a seat in the courtroom and do their jobs. Many curious spectators and fans of the famous John Carreyrou film “Bad Blood” wanted to see the history of technology for themselves.
One of those curious onlookers was Danielle Baskin, a San Francisco-based artist who often satirizes tech culture with elaborate pranks (like Blue Check Homes) that sometimes turns into actual businesses (like Branded Fruit). I arrived at the courtroom in San Jose with a torn suitcase, selling illicit Holmes products: blonde wigs, lipstick, black tight jackets, blood energy drinks.
It was a joke, mocking the absurdity of the fact that someone on trial for fraud has “Stans” calling themselves “Holmi”. But as Baskin watched the third day of Holmes’ testimony, she shared her main insight into how Theranos could spiral out of control.
“Having come out of Holmes’ trial, I think one of the biggest pieces of advice I give startup founders is to have friends,” chirp After the court was raised. “You need people in your life that you enjoy hanging out with and saying things like ‘lol what are you talking about’ or ‘that’s a bad idea’ when you say weird things.”
smoke and mirrors
In his opening statement to the case, federal prosecutor Robert Leach described how Holmes built a $10 billion company based on technology that was, at best, seriously flawed. One of Holmes’ techniques, he said, was to rely on “false and misleading” media coverage of Theranos to secure funding from investors. Holmes has appeared on the cover of Fortune, Forbes and Inc. Magazine, was celebrated as one of TIME’s 100 Most Influential People in 2015, and was lauded as a “Tech Visionary”. It made sense for people to believe seeing her when a lot of powerful people and institutions said she was the next Steve Jobs.
When did you meet Elizabeth before? [former Secretary of State] George Schultz, her plan sounded like a college student’s dream. I told her she only had two possibilities: complete failure or great success. There will be no compromise,” Henry Kissinger wrote in the TIME 100 publicity about Holmes. “Elizabeth accepted only one option: make a difference.”
Kissinger went on to describe Holmes as a “colossal defender” who was “on the verge of realizing her vision”. But already, a level of uncertainty has surfaced around Theranos. “Others will judge the technical aspects of Theranos, but the social implications are broad,” Kissinger wrote in the last line of the propaganda.
Holmes was surrounded by hype – investors such as George Schultz treated her like another grandson. So when his grandson Tyler Shultz, who worked at Theranos, told him he suspected Holmes was lying about the effectiveness of Theranos technology, Senior Shultz didn’t believe him.
“Elizabeth is a very charismatic person,” Tyler Schultz told CBS News this week. “When she talks to you, she makes you feel that you are the most important person in her world at that moment. She has an almost reality distortion field around her that people can immerse themselves in.”
Isolation and abuse
Tyler Schultz became Theranos’ first whistleblower, but at great personal and financial cost – in his “Thicker than Water” audio memoir, he discussed being threatened by and followed by prominent lawyers such as David Boies private investigators. But Schultz told in his memoirs a brief but touching tale of attending a family dinner with his grandfather, who always invited Holmes and hosted her thirtieth birthday party.
There was a strange situation my parents kept telling them [Holmes] to invite her parents and they kind of assumed she did and then my grandparents were talking to Elizabeth’s parents on the phone Elizabeth’s parents were completely unaware that she was having a thirtieth birthday party so it doesn’t seem like she was Schultz remembers that being so close to her parents at all . Throughout the trial, Holmes is usually seen holding her mother’s hand – but according to Schultz’s remembrance, not all of them were nearby at the time of her crimes.
Schultz goes on to describe the attendees at her birthday party: He says he and Holmes’ brother were the only people under 30, and the next younger person was Theranos’ COO Sunny Balwani, who was about 50 – he met Holmes when she was 18 and he He is 37 years old. They dated secretly for more than 10 years, without the knowledge of most Theranos employees and investors. Holmes moved in with Balwani in 2005, shortly after she withdrew from Stanford.
“It affected everything about me and I don’t quite understand it,” Holmes said in his testimony.
Weeping, Holmes explained in court that Balwani had sexually and emotionally abused her throughout their relationship. She said it controls what you eat, when you sleep and how you behave.
“He told me I didn’t know what to do at work, that my convictions were wrong, that he was amazed at the poor performance, and that if I followed my instincts I would fail,” Holmes said at the podium. .
Her defense presented as evidence two documents that showed how Holmes was under Balwani’s control: one was a schedule for her daily routine, while the other laid out instructions for how she should act. Holmes said these guidelines would help her “become the new Elizabeth.” One declared “non-negotiable” in her instructions that she would never meet with anyone – especially direct reports – for longer than five minutes unless she had written a clear agenda for the meeting. According to the documents, her lifestyle was monastic: getting up at 4 am, praying, mediating, exercising, eating only certain foods and doing nothing for entertainment.
Holmes’ schedule has become somewhat of a meme, with some journalists even experimenting with her schedule of flicks – but the reality is much bleaker than that. It can be hard to take Holmes’ account of abuse seriously, as she was notoriously liar and just convicted of criminal fraud — but these documents, if legitimate, show a woman whose every act was controlled by an older partner and business partner.
“He said that I need to spend all my time at work, that I should only spend time with people who can help the company succeed, that I need to work seven days a week, and that I should be doing the things that can only contribute to company success.
In this context, Schultz’s account of Holmes’ thirtieth birthday party makes more sense. She was so committed to building Theranos that she didn’t seem to have any friends or hobbies, nor did she communicate enough with her parents to invite them to her birthday party.
“Sunny would be very upset if I were with my family,” Holmes said at the trial, “because he said it was distracting me from work.” Her defense cited a text from Balwani from Thanksgiving weekend in 2013, which said, “When your family is here, I feel lonely because you spend a total of 10 seconds with me per day.”
Perhaps if Holmes had trusted friends, someone would have told her she was going too far by broadening the truth with investors, or that it wasn’t a good idea to provide unreliable blood test results to patients, even if her boyfriend- slash-COO said to do So. But by design, there was no one to talk to the one-minded entrepreneur with.
Founders need society
This does not mean acquitting Holmes of her crimes. It may be true that she was abused by a controlling, manipulative partner and the elderly, yet at the same time it could be true that she committed fraud. Additionally, although she has not been found guilty of defrauding patients, her lies have caused great distress to Theranos clients who received alarmingly false blood test results.
We talk a lot about what the tech industry has learned from Theranos, but we miss one very simple thing: startup founders need a life outside of their jobs.
We appreciate founders like Elizabeth Holmes who are so dedicated to their vision that they will make huge sacrifices, giving up their social lives to build their companies. But this isolated form of hustling culture doesn’t usually generate success – it generates burnout at best, and millions of dollars in criminal fraud at worst.
If you’re a startup founder, you’re probably not the next Elizabeth Holmes. But if you’re just doing normal stuff like, I don’t know, watching a cool movie with some friends (COVID permitting), you might as well stop yourself from making a few shortsighted mistakes.