Elizabeth Holmes claimed to investors that she was able to diagnose many diseases using just a few drops blood. It wasn’t possible.
She was found guilty last week of fraud. Will the verdict be any change with all that money in Silicon Valley?
This week, Tech Tent talks to those who believe that the Theranos scandal could benefit Silicon Valley long-term – as well as to others who disagree.
- You can listen to the Tech Tent Podcast on BBC Sounds
Robert Weisberg from Stanford University, an expert in legal matters, says that there is a false belief out there that everyone lies.
“It will probably scare some entrepreneurs to be very, very careful,”
Other believe Theranos may be a kind of parable that investors should learn from – invest only in things you already know.
“Certainly, most VCs [venture capitalists]”We are extremely averse having headlines published in the Wall Street Journal,” Patricia Nakache from Trinity Ventures, a venture capital firm.
She believes that VCs should be advising their clients to “stay in your lane and invest only in areas you have a lot of knowledge about.”
There are obviously still investors out there who insist that start-ups exaggerate.
- Elizabeth Holmes, a former tech-star and convicted fraudster
- Silicon Valley is undergoing another major storm?
Tyler Shultz was one of Theranos’ key whistleblowers that exposed the fraud. Although he has his own biotech business, he says that despite being under pressure to exaggerate growth potential, entrepreneurship is a natural choice for him.
“I feel under immense pressure to exaggerate the technology claims. He says that investors may tell him to increase revenue by up to 10x, 4x, and even 5x, depending on how realistic they think it is.
In an interview with Bobby Allyn of NPR, he said this. Bobby Allyn is skeptical about the idea that Theranos would change Silicon Valley.
He emphasizes the fact that investors may be attracted to scientists’ methodical approaches when they seek rapid growth.
“Venture capital wants what they call hockey-stick growth, more and more and more growth…. Science moves at this slower, peer-reviewed rate. “They’re kind of incompatible,” Mr Shultz says.
Theranos’ idea wasn’t bad. There are many Silicon Valley biotech companies that specialize in blood diagnostics.
Karius, one of these companies, is currently developing technology that can identify approximately 1,500 types of bacteria and viruses in blood.
Tim Blauwkamp was one of the founders. He told me about the difficulties in getting investors to invest after Theranos.
He thinks Theranos has brought more attention from investors, which is a positive thing. He also believes that the scandal caused delays in innovations in blood diagnostics.
It has been a game changer for our industry, I believe. “It is not possible that this much capital could be up in smoke and leave a scare,” he said.
Some people are skeptical about investing in this space. Scientists have not seen a benefit. It has not been good for patients.
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