The troubling legacy of Elizabeth Holmes

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January 4, 2022

Good morning, Broadsheet readers! Ivanka Trump is subpoenaed, A.I. could predict breast cancer, and we parse the meaning of Elizabeth Holmes’ guilty verdict. Have a lovely Tuesday.
– The legacy of Elizabeth Holmes. One part of the years-long Elizabeth Holmes saga ended yesterday when a federal jury in San Jose, Calif., convicted the Theranos founder and one-time Silicon Valley darling on four of 11 charges that she duped investors and patients with overhyped claims about what her blood testing startup could accomplish. The jury found her guilty on three counts of wire fraud and one count of conspiracy to commit wire fraud against investors. It acquitted her on four counts related to defrauding patients and couldn’t reach a verdict on another three counts pertaining to investors. Each count carries a maximum prison sentence of 20 years, though for her white collar crime, Holmes is likely to receive lesser sentences and serve any jail terms concurrently.
Holmes is expected to appeal the verdict and prosecutors could bring a new case against her based on the three unresolved counts. Given those unsettled legal matters, the legacy of her demise is far from certain, but it’s beginning to take shape.
Even before her conviction, Holmes’ downfall haunted other female entrepreneurs, especially those in biotech and health care. Alice Zhang, co-founder and CEO of drug discovery startup Verge Genomics, told The New York Times that she was frequently compared to Holmes even though she and her company have little in common with Holmes and Theranos. “I could see no similarity besides the fact that we’re both women in the hard-science space,” Zhang said. Implicit and explicit associations with Holmes have made the uphill climb for women in the male-dominated space even steeper.
Bonnie Anderson, co-founder and executive chairwoman of Veracyte, told Fortune’s Brainstorm Tech conference in December that Holmes’s downfall raised the already high bar for startups trying to disrupt the diagnostics space. “Every patient on the other side of a test result could be you and the integrity of highly accurate results just couldn’t be overstated,” she said.
Beyond Holmes’ actions, the trial was also a referendum on Silicon Valley’s “fake it ’til you make it” ethos that encourages founders to exaggerate their startups’ potential and blurs the line between salesmanship and falsehoods. In that sense, yesterday’s verdict could have had a sobering effect, forcing venture capital firms to improve their vetting processes and making founders think twice about how they embellish their pitch decks. But early analysis indicates that the startup world was glued to the Theranos trial for its theatrical appeal, not for the cautionary tale it told. Insiders are skeptical that the guilty verdict will lead to any real change in the blazing hot investing market. “I’ve heard zero people say, ‘Oh, this should make me look differently,’—zero,” Angela Lee, who teaches at Columbia Business School and runs investment network 37 Angels, told Bloomberg. “It’s treated like salacious gossip or an entertaining story.”
Even if broader lessons of the Holmes case don’t stick, the pall she’s cast on female founders is likely to, triggering comparisons that are mostly imagined. That itself is an indictment of Silicon Valley and just how few female founders it’s elevated as compelling counterpoints.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
The Broadsheet, Fortune’s newsletter for and about the world’s most powerful women, is coauthored by Kristen Bellstrom, Emma Hinchliffe, and Claire Zillman. Today’s edition was curated by Emma Hinchliffe.

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