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Founder to fraudster: 9 startup tips I learnt from a TV show on Elizabeth Holmes’ downfall

When I watched Inventing Anna on Netflix earlier this year, I was enthralled, to say the least. There’s something about watching fraudsters (especially ones based on real-life) rise and fall that is so entertaining.

Plus, more often than not, the drama and personality that fills the screen are a lot more captivating than most reality shows could ever strive to be.

While watching Inventing Anna, I recalled another fraud case that has been on my radar for a while—the one with Theranos and its founder and CEO, Elizabeth Holmes. So, when I found out Hulu would be airing a show about it—starring Amanda Seyfried, no less—I immediately put it on my watch list. 

Amanda Seyfried stars as Elizabeth Holmes in The Dropout / Image Credit: Hulu

If you’ve never heard of Elizabeth Holmes or her health tech startup, here’s a quick summary for you. Holmes dropped out of Stanford at 19 years old with the goal to start her own company, Theranos.

A combination of “therapy” and “diagnose”, Theranos aimed to reinvent blood testing so that only a small amount of blood was needed to test for an array of different diseases.

The company was nowhere close to reaching that goal, but Holmes essentially lied to investors and the media that they already have the tech.

Anyway, the whole story is crazier than that, so if you want to know more, you should definitely check out the series or listen to the podcast it’s based on, also called The Dropout.

While watching the show, here are some entrepreneurial takeaways that I picked up on—some of which I learnt from Holmes at her height, while others were exactly what caused her downfall.

1. Identifying your strongest ambition can help you stay driven

Elizabeth Holmes’ ambition certainly carried her very, very far. She knew what she wanted, and what she had to do to get there. In her earlier days, Holmes’ drive was actually kind of inspiring, and I can see why she made it on the cover of various reputable magazines.

2. But maybe have an ambition that’s focused on more than just money

At a ripe young age, Holmes had already shared that she wanted to be a billionaire when she grew up. It’s certainly not wrong to be money-motivated, but it almost felt like everything she did was a means to an end, with the end being wealth. Lots of it.  

With this vision, it’s easy to become blindsided and forget why you even started this entrepreneurial journey, which we can deduce is what happened to Holmes. This becomes particularly problematic when it comes to the biomedical field.

3. Realise when something isn’t working and know when to give up

It’s important to know when you’ve reached the end of the road and let go of a project instead of stringing people on. However, I also understand that this advice is kind of a difficult one to follow. Maybe if Holmes had succeeded instead, I would be saying “never give up”.

Throughout the movie, Holmes frequently asked, “What would you do if you knew you could not fail?” As I watched her lies snowball, I realise that it’s crucial for entrepreneurs to even consider failure as an option.

Elizabeth Holmes posing with a tiny vial of blood / Image Credit: Theranos

Aptly put by this Inc article, “Scientists are trained to try to prove themselves wrong in the process of trying to uncover real breakthroughs. Why are entrepreneurs not willing to do the same?”

In the same way, entrepreneurs should be willing to continuously re-evaluate and disprove their ideas to improve them, and give up on them upon realising they’re not feasible.

4. Have humility and listen actively to criticism

In college, Holmes approached Phyllis Gardner, a professor at Stanford, and pitched one of her ideas. Gardner was sceptical and expressed as much to Holmes, who didn’t exactly take her criticism seriously.

To add, every time someone criticised Holmes, she acted defensively and was not receptive to the feedback. She probably saw herself as perseverant, but it was actually more like stubborn arrogance.

Most entrepreneurs worth their salt likely already understand the value of feedback, but sometimes it’s a much-needed reminder when an enthusiastically-pursued idea ends up getting more flak than praise, to an entrepeneur’s disappointment.

5. Research potential investors and learn to pitch well

Something that impressed me about Elizabeth Holmes was that she was always on top of her game when it came to investors. I mean, she had to be, in order to deceive them into buying into her web of lies.

As awkward as Holmes was depicted in her everyday life, she became a whole new charismatic and driven individual when it came to securing funds. She would find out what her investors were passionate about and use it to her advantage.

For example, when talking to Don Lucas, a venture capitalist, she used terms like “cowboy” and appealed to Lucas’ appreciation of America and freedom.

When talking to Ana Arriola, a product designer, she appealed to her sense of being “othered” in the male-dominated tech industry.

Elizabeth Holmes on the left, Amanda Seyfried’s on-camera depiction of her on the right / Image Credit: Getty Images / Hulu

Holmes knew how to play into others’ interests during her pitch and get them on her side, using emotional appeal and personal stories (though they may have been fake or exaggerated).

Finding points of relatability between yourself and a potential investor can be that extra push needed to convince them, with business potential, performance, and other factors aside. After all, it’s been said that finding an investor is like finding a life partner.

6. Hire talented individuals that can take you far

In my belief, Theranos could run for as long as it did because of the shocking amount of talent Holmes recruited or even poached from big companies such as Apple.

By having such reputable names on her team, she was able to convince investors of the potential of Theranos. It was understandable why the media also bought into her whole ruse.

It’s clear that many of Theranos’ employees were highly capable and competent. Yet, most of them also realised how dark things were becoming at Theranos, which led to high turnover rates. Which brings me to the next point.

7. Practise transparency and accountability in the workplace

Holmes was able to keep the fact that the blood-testing machines did not work by essentially isolating each department and prohibiting them from interacting with each other.

She was never transparent to her employees, which must have made it all the more damaging when everyone suddenly lost their jobs.

However, while Theranos was still alive, some employees felt inclined to dig deeper into the situation, and they ended up being whistle-blowers who helped the world realise how fraudulent the business was. It just goes to show that a lack of transparency isn’t going to help keep the truth from being uncovered eventually.

8. Create a good self-image because it matters too

One of Holmes’ key signatures is the way she dresses. Does the black turtleneck remind you of anyone?

That’s right, Holmes was a fan of Steve Jobs and wanted to dress like him as well. So, she bought the Issey Miyake turtlenecks Jobs was known for and started wearing them.

Steve Jobs and Elizabeth Holmes both sporting black turtlenecks / Image Credit: Ben Stanfield, Flickr / HBO

It worked in her favour for a while, as people drew similarities that could have indirectly influenced how they perceived Holmes. (However, now that the truth has come to light, it only further enhances her image of being a copycat and worse, a fraud.)

9. Ultimately though, impress with your actions, not your words

Faking her style was one thing—Holmes also likely faked her voice. The former CEO was once known for her deep, charismatic voice, but that once unique trait has turned into the butt of the joke.

The alleged faux deep voice has become emblematic of her own fraudulent activities. Every time she speaks now, everyone is expecting to hear the unnaturally low pitch. She has succeeded in standing out, albeit not in the way that she initially hoped.

So not only were the words that came out of her mouth regarding Theranos generally crafted lies, but the voice she used to convey them was possibly fake too.

At the end of the day though, words can only take you so far. Eventually, lies will start cracking apart, and stakeholders will realise that there are no actions to back up the promising words said to them, be they an investor, partner, or customer.

Investors who do their due diligence will eventually realise that a company’s financials don’t add up (if it carries out proper auditing practices), and customers will realise that a service or product isn’t performing in the way that was promised to them, for example.

Then it’ll all come crashing down, and it’s hard to rebuild that trust when it’s been broken so suddenly and severely, especially if people have put money into—and lost it to—your business through investments or purchases.

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These are just some of the lessons I picked up from watching the show, but something to note is that The Dropout is still a dramatisation of facts at the end of the day.

Therefore, some elements of the Theranos case may have been left out or deprioritised in favour of the more shocking events. Meanwhile, some elements may have been exaggerated for emotional responses from viewers.

But Theranos’ failure is still very, very real, and there’s lots to learn from the truths surrounding the case. If you want a quick taste of what this rabbit hole of a scandal has in store for you, you can start with The Dropout’s trailer:

  • Read other reviews we’ve written here.

Featured Image Credit: Hulu




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