Earlier this month the founder of the blood testing company Theranos, Elizabeth Holmes, was found guilty of fraud in one of Silicon Valley’s highest profile trials.
The jury found the former CEO guilty of committing fraud against the company’s investors, while remarkably acquitting her of conspiracy to defraud patients – what did the company need to have done to have been found guilty on that count?
Theranos and Holmes claimed to have developed a test for a wide range of health conditions using just one small pin-prick of blood, opening the door to predictable diagnostics.
However, it’s now apparent that Theranos had been playing fast and loose with FDA regulations, supplying a device without proper clearance, playing with data and manipulating test results.
Classed as laboratory-developed tests, or LDTs, that is designed, manufactured and used within a single laboratory, test results did not need to be sent to the FDA before the device was used on patients, meaning that Theranos did not require regulatory evaluation of its tests.
Shockingly over 900,000 such test results were generated by Theranos at its peak, many of which were tampered with, providing misleading information to both patients and professionals.
Holmes traded on her claim to be a ‘visionary’ and on a commitment to intelligence and hard work and took an optimistic view of the technology.
Vast sums of money were raised based on Holmes’ claims with little if any scientific proof but as a photogenic, media-savvy, woman she offered an incredibly attractive narrative in terms of what this simple diagnostic tool was going to deliver.
What does this mean for Silicon Valley and for the wider technology sector?
Perhaps companies are going to have to stop overpromising and start-up companies are likely to be advised by their legal teams to be a lot more careful when it comes to what they say to investors. There is certainly a need for greater transparency, which in turn could mean that more employees, many of whom spoke out against the claims made by Theranos, are taken more seriously and are able to speak out about the wrongdoings of powerful companies.
Despite Holmes’ lies we should also not forget that while there are a lot of companies that overpromise, and that’s unlikely to change, there are certainly many out there that are doing truly exciting things and, if we have learned one thing from all this it is that investors and the media need to ask more sensible questions when it comes to technology and the claims that ‘visionaries’ make for it.
