The end point of unbridled self-belief went on trial in San Jose in California this week, as Elizabeth Holmes – founder of defunct health tech company Theranos, and former world’s “youngest self-made billionaire” – appeared in court accused of fraud.
After dropping out of Stanford at the age of 19, Holmes built a company that was valued, at its height, at $9bn (£6.5bn), and appeared on the cover of every news magazine in the land. On Wednesday, she sat with her legal team as an assistant US attorney accused her of being a liar and a cheat. It was a thrilling end to the kind of American drama that makes the non-billionaires among us feel good.
The schadenfreude, familiar from other recent executive flameouts – most spectacularly, Billy McFarland’s catastrophic Fyre festival in 2017 – is rooted in a general exhaustion with the mechanics of self-promotion.
The point at which self-belief shades into self-deception and then active fraud is only detectable when the perpetrator is skilled enough to recruit others to their reality. In the case of the average Instagram influencer, it is tempting to think of these exaggerations and distortions not only as victimless crimes, but as the packaged delusions that make up the product itself. (I’m envisaging Caroline Calloway, the 29-year-old lifestyle guru exposed two years ago for selling – and then refunding – underwhelming “creativity workshops” for $165 a pop, to a crowd it was hard to drum up much sympathy for.)
In the case of Holmes, the scale of the alleged deception, if proven, will have been of a different order altogether, with the potentially serious consequences that come from faking medical technology. And yet what remains striking about Holmes and the case against Theranos is how, in broad outline, it is indistinguishable from any fake-it-till-you-make-it Silicon Valley startup.
Robert Leach, assistant US attorney, set out the case against Holmes in language familiar to viewers of Dragons’ Den (or its US equivalent, Shark Tank), accusing her of puffing up her company with standard-sounding PR guff. Holmes had, said Leach, exaggerated her revenue projections and used the media to make unprovable claims about her product – like so many other companies chasing investment.
She had also, he said, knowingly promoted the company’s blood-analysing technology as revolutionary, when in reality it did nothing that standard blood-testing tech couldn’t do. If convicted, Holmes could land in jail for up to 20 years for, as her defence attorneys are framing it, the crime of doing what every other dreamer in Palo Alto is doing: simply “trying your hardest”.
Corporate deceit, when uncovered, is often a lot less sophisticated than the product it’s promoting, raising the question of why so many people so readily fall for it. In the case of Theranos, the prosecution alleges that, early on in the company’s development, it produced a recommendation from Pfizer, in which the drug giant praised the blood-analysing tech for its “superior performance”. The problem, said prosecution attorneys, is that Pfizer wrote no such thing; it merely appeared on Pfizer-headed notepaper, an astonishingly entry-level scam, if true.
And yet otherwise smart people were allegedly taken in by Holmes, including Henry Kissinger, and former US secretary of state George Shultz, both of whom agreed to sit on the Theranos board. There is a nobility in overreach: it is the typifying American gesture, and the grandness of Holmes’ claims had a seemingly irresistible pull. There’s also a gender aspect here. Part of the narrative around Holmes’s success is that, by using her swishy blond hair and big eyes, she conned otherwise sensible elderly men into lending her their credibility. Being a woman has not, historically, worked out well for aspiring CEOs, but Holmes broke the mould here too.
The defence team’s approach appears to be to dump a lot of the blame for Theranos’s failure on Holmes’s business partner, Ramesh Balwani, with whom she was in a relationship at the time. She was naive, say her lawyers. Her company failed, and failure is not a crime. “The villain the government just presented is actually a living, breathing human being who did her very best each and every day,” said her lawyer, Lance Wade – an oddly infantilising bid for sympathy that seemed gendered too.
At this stage, recasting Holmes as a wronged woman will be an uphill struggle. As we know from other fallen stars, once there’s blood in the water, that which once looked impressive appears ludicrous and cheap. From Holmes’s wardrobe – overnight, the black turtleneck went from uniform-of-a-genius to Steve Jobs Halloween costume – to the garbled poetry she texted to Balwani while the pair were still seeing each other, cited in court papers and inviting a short stab of sympathy for the woman in the dock (“You are breeze in desert for me / My water / And ocean / Meant to be only together tiger”).
Holmes has elected to take the stand, a risky move and one that nods towards some lingering vestige of what landed her here in the first place. At the height of Theranos’s fortunes, one got the sense about Holmes that no one found her as impressive as she found herself. The root of so much success – and crashing delusion.