Will Elizabeth Holmes' Conviction Send a Warning to Silicon Valley?
In the land of false confidence and black turtlenecks.
Former Theranos CEO Elizabeth Holmes was convicted of conspiracy and consumer fraud on Monday after founding her company on the lie that it could detect diseases with a mere few drops of blood. Prior to her public downfall, Holmes’ company was worth $9 billion USD, raising money from investors who believed in Theranos’ promise of advanced healthcare.
Holmes’ hubris is not uncommon in Silicon Valley. In order to secure funding, startups with lofty dreams often exaggerate their claims. With stiff competition and an abundance of new inventions, ambitious entrepreneurs adopt a “fake it until you make it” attitude to make their companies stand out. Everyone dreams of being the next Steve Jobs, as did Holmes who took to wearing the Apple CEO’s signature work uniform.
“Let’s face it: Silicon Valley is based on dreams and you need people to keep stoking the fire to help keep those dreams alive,” says Richard Greenfield, a lawyer who represents investors in startups, in an interview with USA Today.
While Holmes’ conviction may have some in California’s technology hot spot wary of potential jail time, most are staying the course. Greenfield adds, “I think it will generate some more caution among entrepreneurs, but for the most part, human nature being what it is, there is still going to be a tendency to exaggerate, especially when you know you might not get funded if you don’t.”
Holmes is currently on bail, awaiting her sentencing. Stay tuned for further developments.
