My Complicated Relationship With a Criminal
Holmes is, unequivocally, a criminal. But is there more to her story than that?
Image by arstudiozz from Pixabay
Elizabeth Holmes, the entrepreneur who was convicted of defrauding investors with her defunct blood-testing startup, Theranos, began a more than 11-year sentence in a Texas prison this past week.
As pictures emerged of her walking into the facility, it felt somewhat like the final act in a trite drama: the completion of a story arc, from the glossy cover of Forbes magazine to the drab confines of a federal correctional facility; an epic fall from grace fit for the big screen.
As I skimmed the headlines and images, I couldn’t help but reflect on my feelings towards Holmes and my complicated relationship with her story. I’ve read the book, watched the show, and binged on the news coverage. Yet still, I struggle to decide what I actually think about the whole saga.
Holmes is, categorically and unequivocally, a criminal. But is there more to it than that? In the interest of—perhaps not answering, but at least attempting to respond to— that question, I’m dedicating today’s newsletter to Elizabeth Holmes: the not good, the outright bad, the unthinkably ugly, and some other things along the way.
First, a bit of background. Last year, 39-year-old Holmes was found guilty of three counts of wire fraud and one count of conspiracy for falsely claiming that the revolutionary tests she purportedly developed at her Palo Alto-based company, Theranos, were capable of detecting a variety of conditions and diseases with just a few drops of blood.
Together with her former business partner, Ramesh Balwani, she was ordered to pay $452 million in restitution to defrauded investors. She appealed her case, but her requests to remain out of prison during the appeal have been denied. And so, on Tuesday, in the city of Bryan, Texas, she started her years-long sentence: punishment for orchestrating one of the most elaborate and peculiar hoaxes that corporate America has ever seen.
The Charm of Elizabeth
Journalists first started questioning the legitimacy of Theranos back in 2015, and the Wall Street Journal’s John Carryeou squarely led the coverage. But Holmes caught the public’s attention many years before that, for reasons that—at that point at least—had absolutely nothing to do with misconduct and outright lies.
The Theranos story’s appeal was related to the fact that it seemed almost too good to be true. (Ironically, of course, we all now know it was.) This was a company that was going to save lives at the prick of a needle and the push of a button. It was going to prolong familial joy and togetherness. It was going to enable us to make precious memories with loved ones for years to come. And to boot, this fantastic tale featured a central character so divinely compelling that even the most creative screenwriter would’ve struggled to dream her up.
Holmes was cryptic: slim and blonde with haunting blue eyes and a deep-pitched voice that belied her at times elvish appearance. She sometimes looked timid—an antithesis of the caricatured, laddish Silicon Valley tech bro—and yet she beguiled and enchanted investors with an extraordinary confidence.
She won statesmen as mentors. Business moguls became her friends. Her act was bizarre, but it worked a charm. In 2014, when Holmes was just thirty, Forbes crowned her the world's youngest female self-made billionaire. Her stake in Theranos, by that point, was worth $4.5 billion.
The Downfall
Shortly thereafter things started to go awry.
As everyone in Silicon Valley seemed to gasp at the web of lies and deceit that Holmes and her business partner Ramesh “Sunny” Balwani had spun for so long, there was also another—barely audible—sound: a sigh of relief. The dramatic plot twist demonstrated so beautifully what happens if we upset the tried-and-tested cultural narrative around the roles that men and women, respectively, should play when it comes to money, power, and influence.
Look what happens, was the screaming subtext of some of the headlines, when we tolerate a young woman dropping out of college to pursue a venture that may or may not change the world.
After the trial and in the wake of the verdict being announced, Guardian columnist Emma Brockes noted that “we dislike Silicon Valley’s grifters, but the glee over the Theranos founder’s ruin seems disproportionate.” Despite the severity of the crimes that Holmes committed, the damage she caused and the individuals she defrauded, the scale of contempt leveled at her, Brockes commented, seemed outsized.
“I can’t summon a particular face or any real antipathy towards the board members of Enron. I loathe the architects of the 2008 financial crisis in a vague way that has never attached to a single image. Here is Holmes , however, with her too-red lipstick and wispy hair; and up it comes, a violent surge of dislike,” Brockes wrote.
Sexism, Ageism, Racism, Tokenism
I’ll say it again, Elizabeth Holmes is a criminal. Her behavior had extremely grave consequences for the lives and livelihoods of many. Her company could’ve wrought unthinkable damage if it hadn’t collapsed when it did. But many of the undulations in her story—her meteoric ascent and calamitous fall—are illustrative of what’s still wrong in the parts of the economy where most power resides, and why gender still matters when it truly shouldn’t.
“Without the startup world’s sexism, Elizabeth Holmes may never have become the darling of magazine covers or the TED stage,” wrote journalist Sarah Green Carmichael, for Bloomberg. “In a world where female founders get funded at the rate they deserve, her success would not have been so unusual, and therefore not so newsworthy,” she added. “In a world where racism and ageism weren’t rampant, other female founders—those not young, blonde and white and whose products actually, you know, worked—might commandeer more magazine covers. In a more meritocratic world, the kind of tokenism that led to Holmes’s meteoric rise—outstripping her product’s utility—would not exist.”
Her crazed claims of being able to revolutionize the entire healthcare industry of course contributed to the immense hype that ended up surrounding her, but so too did the fact that she looked and sounded nothing like the average entrepreneur who shoots their shot in Silicon Valley. She was an oddball who dared to challenge the well-established model.
In a blistering essay for The New York Times published during Holmes’s 2022 trial, Ellen Pao, who—by her account—had experienced Silicon Valley’s sexism so acutely first hand, also weighed in. “Questionable, unethical, even dangerous behavior has run rampant in the male-dominated world of tech start-ups,” she wrote. She cited WeWork founder Adam Neumann and Uber founder Travis Kalanick, and described the ways in which they had “hyped their way into raising over $10 billion for their companies, claiming they would disrupt their stagnant, tired industries.” To be sure, their behavior and conduct cannot be compared to that of Holmes, but it’s nonetheless noteworthy that neither has faced criminal charges.
“Remember the accusations of harassment, privacy violations, price gouging, misleading advertising and any of the other dozens of scandals at Uber?” Pao asked. “How about the genocide incited on Facebook in Myanmar, or its engagement-centric approach that led to the proliferation of anti-vaccination propaganda on the platform?” she added. “Neither Mr. Kalanick nor Mark Zuckerberg has faced any significant legal consequences.”
The Problem with ‘Gender Salience’
Female entrepreneurs I spoke to in the aftermath of the Theranos verdict said that one of their concerns now was that Holmes—despite being a total anomaly in the sense that she’s a bone fide criminal—would become a sort of proxy for young women trying to raise money or sell an idea, particularly in Silicon Valley. I genuinely don’t know if this concern is justified. I’ve not heard evidence of it playing out. But if it’s the way that someone feels, then that’s an effect that’s worth considering.
Women already face a massive credibility challenge when trying to launch a new venture (we all know the stat about women founders only attracting about 2% of VC money), and when navigating the business landscape more broadly. Now, they might find themselves being blighted by the decisions made, and crimes committed, by someone who has nothing in common with them apart from her gender. They might have absolutely nothing to do with Holmes, and yet they might be reduced to everything that is wrong with her.
In doing research for my book, I dwelled on this concept and came across research done by academics Francesca Manzi and Madeline Heilman. In a series of studies, they presented individuals with information about successful or unsuccessful female or male CEOs.
“We told them that [a] company was seeking a replacement for the CEO and asked them to evaluate either a female or a male candidate,” Manzi and Heilman explain. “We found that the way a female (but not male) leader performed determined the impact her presence had for the women who followed.” They concluded that if a female CEO was deemed to be successful, then the chances of a woman following her into leadership were not hurt. But when a woman failed in her role as CEO, the opportunities available to aspiring female leaders were substantially hindered. They chalk the effect up to something they describe as “gender salience.”
“Because of their continued scarcity and gender stereotypes portraying women as not having what it takes to be competent leaders, a female leader’s gender is highly salient—that is, important and obvious—to perceivers,” they explain.
Basically, we think of CEOs who are women as female CEOs, but we think of CEOs who are men, simply as CEOs. “This heightened group-membership salience, in turn, can increase perceptions of within-group similarity,” Manzi and Heilman conclude. “For a woman leader, this means that people around her are more likely to see her as similar to other women and less likely to differentiate between her and a different, aspiring female leader.”
Once again, and for the last time, I would never and could never defend Holmes. What she did wasn’t only illegal, but immoral, unethical and profoundly stupid. But her story illustrates something more nuanced about what can happen if an oversized ego is fueled with bags of cash. It illustrates the warped impression and biases we still hold around who deserves to succeed and who doesn’t; around what’s normal success, and what’s weird and exceptionally newsworthy; and around the reasons why someone fails and where the fault for failure lies. Holmes is a con but, assuredly, there’s more to it than that. No, she’s not a victim. But she may also be a pawn in a bigger game over which she never truly had even a jot of control.
Thanks for reading. As ever, comments, questions and criticism are always welcome. And please feel free to share this newsletter with others who you think might enjoy it!
Did you read the most recent NYT profile? I found it fascinating. The voice thing was all an act. I ended up feeling bad for her that she had to adopt an act to be viewed as credible. Now she is “Liz” - running around with her kids in colorful sweaters. And while I can’t help but see her manipulation, I also know from my own time in Silicon Valley (14 years and 5 years as a VC funded CEO), that if you don’t play the games, you’ll never win.