Reminder:
I’ll also add a mod flag to that post asking people not too respond to it.
She was either lying to others, or lying to herself. Either way, she was a liar.
Could be both.
It doesn’t have to be an either/or situation.
There are plenty of fraudsters who seem to believe at least some aspects of what they’re selling, even as they rake in money under false pretenses and bask in the attention and worship of their followers.
It’s entirely possible to be a delusional schemer. Just look at those who’ve climbed to the top of the alt health/conspiracy-mongering pyramid.
Right. There is a difference between knowingly telling falsehoods (lying), and knowing that what you are doing amounts to fraud. I am happy to believe Holmes didn’t think she was committing fraud. But it strains credulity to imagine she didn’t know she was telling falsehoods (lying) about the product she was peddling. It’s like the difference between knowing you are killing someone and knowing you are committing murder.
IANAL, but I have a vague sense that a misunderstanding or ignorance of the law is no defense except in the very rare situation where knowing the law is itself an element of the crime (such as with certain tax-related crimes, and noting that “not a crime to be mistaken in good faith about tax obligation” does not equal “not obliged to pay taxes ever”).
They knew it didn’t work. They believed that they would eventually figured it out and everything would be fine in the end. They lied about the results. Fraud.
Elizabeth Holmes is on record claiming that “We have never used commercially available lab equipment for fingerstick-based tests. Every fingerstick test that we have ever done uses proprietary Theranos technology that is not commercially available,” even though it is now known that they were using equipment salvaged from Siemens machines to perform the tests. I don’t know any way to classify this other than deliberate fraud, and by the way theft of patented intellectual property. There were also the claims to investors that the technology was already in battlefield use with the US Department of Defense and production contracts secured with Walgreens and United Healthcare that were actually just non-binding Memorandums of Agreement. Misrepresenting business contracts and agreements to investors is unambiguously perpetrating fraud, and there is no chance that this was just an oversight or misunderstanding by Holmes and Balwani.
Most of these people are fraudsters, too. Alex Jones knows that he’s spewing bullshit and even claimed in court that his show is just performance art, and I guarantee that most of these alt-health hucksters would take their children to a pediatrician at the first sign of serious illness. It is the people down the chain who are desperate for financial stability or who can’t afford the very best in medical care who desperately clutch to these “alternatives”.
Stranger
It’s interesting you bring up Bernie Madoff, because I was going to mention him by way of contrast, and I think his case was as you say. Madoff probably wasn’t thinking “I know, I’ll found a Ponzi scheme, build it up for a while, then abscond with millions in the middle of the night and disappear into some country that doesn’t have an extradition treaty with the US!” the first time he paid a client an inflated investment return out of another client’s principal. Maybe he thought he could just do it one time to impress that client and build up his business. Then one time leads to another, and then to another, and then he woke up one day and absolutely did consciously realize that he unmistakably had a Ponzi scheme going on–but by that point, there’s no way out. His options were to 1) turn himself in and go to prison then, or 2) keep it going for as long as possible and maybe not have to go to prison until the end of his life, in which case it’s no surprise he chose #2.
Also, we know that once Madoff realized he was done, he told his family about the fraud. I just haven’t seen or read anything about Holmes that indicates she has that level of insight. Like Anna Sorokin, aka Anna Delvey, whom I’ve compared her to, who even at the point of her sentencing hearing appeared not to believe she had done anything wrong. Though I haven’t read the book, and if what @Dr.Winston_OBoogie says is true, that does seem to indicate that she knew she was lying, since someone who genuinely believed their product would work would have no reason to ban the software developers from talking to the engineers.
Another thing about this case makes it hard to believe she ever thought she would get away with it. Bernie Madoff could at least for a time, and did in fact for years, deliver the service he claimed to. It was a scam destined to come crashing down, but before it did, Madoff had plenty of clients who successfully withdrew their “investment” “returns.” Before the end, if you were a client of Madoff, you got your money, so why would you think anything was wrong? Theranos’s business, on the other hand, was based entirely on building a machine that accurately did CBCs, BMPs, and other blood tests that heretofore have required a vial of blood, on a couple of drops from a fingerstick instead–something it never did. It just made its initial false claim, then kept repeating it while stalling and stalling for years until it was inevitably exposed. What else could Holmes and her associates possibly have thought would happen?
What’s insane to me is how much people wanted to believe and didn’t follow normal protocol. When I was involved in developing products, we had periodic demonstrations where we had to meet certain agreed upon goals to get the next round of funding from either external customers or internal management. On occasion we weren’t there and asked for another couple of weeks to get there. None of this happened. It’s crazy.
Right. I don’t dispute that. It really is that simple. I am merely highlighting that the lie/fraud distinction is an utterly trivial one. Legally, it doesn’t matter if she knew she was committing fraud as long as she knew she was lying, and I am largely indifferent as to whether she knew she was committing fraud. I am just not that interested in trying to parse how delusional one Elizabeth Holmes of Washington DC may or may not be. She, like so many other fraudsters, is really not that interesting to me as a person (“banal” might be the right word for her), and to the extent there is anything interesting at all about her it’s the fraud she perpetrated. And, again, fraud doesn’t require knowledge of the law, relegating Holmes’ ignorance (or lack of it) on the subject to just one more of the “uninteresting” things about her.
Welcome to the world of SiVal startups, funded by people who made a killing by selling some ‘app’ to another company and have applied their mentality of software development to physical things that are not ultimately amenable to marketing hype. There are a bunch of companies right now promising various anti-senescence, genetic modification, and brain-machine interface technologies that are nothing but pure hot air, and while I won’t name any specifics at peril of warning, I think it has become pretty apparent of late that at least some of those are willing to cross essentially any ethical boundaries in pursuit of puerile goals and patently unachievable timelines. The investors just want to hear about how they’re going to make another billion dollars in five years and literally do not want to hear about why their fanciful dreams aren’t practical. In the case of Theranos, one of the major drug store chains willfully ignored the experts they brought in to perform due diligence and pressed forward with Theranos anyway.
Stranger
With hardware? Unbelievable. No fucking shame.
Another take on her rise and fall - not sure I agree with it, but I found it interesting:
Yes an interesting take. I don’t know if it explains Holmes, but perhaps it’s a contributing factor to her leadership style.
As I read the article I got more of a sense that the author was explaining, or complaining about, Toxic Ladybosses that they’d personally encountered. I also got the sense that the author attached Holmes to the article to attract attention.
To me and what I know of Holmes from blogs, podcasts, and reading, what explains Holmes is a blind driving ambition, hubris, inadequate skillset to scale a company from an initial idea, and unmitigated pride.
This. I can believe that Holmes may have really believed the technology would eventually work and lied about its viability in the belief that eventually it would be true. But it was still fraud to make the claims that she had contracts with the government and that her machines actually did the testing when she knew or should have known they weren’t actually true. So, it was fraud.
At one point, after it had all blown up, I saw an interview with her where she was lamenting that the establishment just denied her ‘enough runway to land the plane.’ I don’t know what she believed in her secret heart, but that sounds about right. The lack of an exit strategy makes me skeptical that it was a scam from the start, but she clearly knew she was telling lies when she told them.
I wasn’t expecting her to get that much time, but I thought 10 years was about right.
Holmes might have set out to commit fraud, but not this much fraud. Maybe the original intent was to fleece a few angel investors to the tune of a couple hundred thousand dollars, then, “Oh, sorry, the prototype didn’t pan out,” and hope that the individual losses are small enough that no thinks to look closer, and they chalk it up to “some investments just don’t pan out.” But then the scheme took off, and the money just kept coming in, and at some point, there’s so much money involved that there’s no way for her to shut the con down without people wanting to look very closely at what was actually going on.
Loathe her as I do, I’m actually inclined to believe that she didn’t start out intending to fleece anyone. I think she genuinely wanted to develop a cool, useful and beneficial technology. But the money came rolling in by the barrelful, the tech never worked as she promised it would, and she got more and more tangled in her web of lies.
After reading Bad Blood, I believe that Holmes was an example of Silicon Valley startup culture gone rotten, the sincere belief that with enough courage and hard work you can manifest success, the power of positive thinking turned into a malevolent, oppressively optimistic zombie. Unfortunately, she chose a task that was physically impossible, and cognitive dissonance resulted when it failed.
Supposedly she had a plaque on her desk that read “What would you do if you knew you couldn’t fail?” Instead of inspiring courage, adherence to this trite aphorism caused her to pretend, and probably convince herself, that she hadn’t failed when it should have been obvious that she had. Just a little more time and money and hard work and all the problems would be overcome….
But here’s what has puzzled me …Exactly what cool technologies did she think she was developing? I hear people talking about new developments in microfluids, but what exactly were those new developments supposed to be? It seems to me that at one time an idea made its way into her mostly empty head, that idea was “wouldn’t it be great if my doctor could do instant blood testing on a finger stick sample?”, and she was dumb and entitled enough to believe it that thought made her a once in a lifetime genius.
It would be like if I said “I hate charging my iPad, I’m going to invent one that never has to be charged.”, and managed to get a bunch of investors to throw money at me and call me genius even though I had no clue as to how I was going to make my perpetual motion iPad.
What technology did she think she was developing? A unique chemical agent that would dilute the sample while still allowing for perfectly accurate tests? A molecular analyzer? It seems to me like her idea of the “tech” was “make a miniature dollhouse version of a blood lab that uses really tiny miniature test tubes. Unless she was inventing a shrink ray, that’s not technology, it’s stupid.
I do think she is a combination of toxic positivity and stupid, and that she tricked herself into believing she was a genius. But it’s really baffling, because I’ve read a lot about this case and haven’t seen any evidence that she had anything, technology wise.