Bad Blood-Secrets and Lies in a Silicon Valley Startup by John Carreyrou

Bad Blood-Secrets and Lies in a Silicon Valley Startup by John Carreyrou

A NEW COMPANY AND ETHICS

Elizabeth Holmes founded Theranos company in 2003. Holmes dropped out of school in her second year at Stanford, and she was determined to become a billionaire someday. Theranos company’s primary goal and success line were to develop a technology in which a microneedle would painlessly draw a tiny blood sample. From this sample, various blood tests could be conducted with the doctor receiving the patient’s tests timely and guiding for appropriate medication dosage. In the process, time and money would be saved. This was a fake-till-you make it scenario. Holmes perceived herself as the female Steve Jobs. Her invention was the multiple blood assays done on a drop of blood. Obsession with her goal resulted in her lying to her investors, staff, and Federal officials.

The most indispensable and ultimate ethical subjects that organizations must deal with are integrity and trust (Reynolds 57). This is one concept that Holmes missed out in founding her company. A general comprehension of integrity includes knowledge of conducting business with a pledge of treating every consumer in a just manner and fairness. Theranos failed miserably on this as well. Health is an essential and risky part of human wellbeing. Her technology was not ready, yet she rolled it out to the public. A wrong test and an erroneous finding would result in improper medication that would determine life or death. Holmes understood this but abandoned it all with the vision of being a billionaire like Steve Jobs. If the consumers believe that a business is exhibiting total pledge to ethical commercial practices, trust is developed. A trusting relationship between a company and the consumer erects the success of a company (Reynolds 62). Theranos company succeeded in the short term to an extent it was valued at US$10 billion, but the collapse was always coming. It was an unethical operation, and consumers, employees, and investors lost their trust in Holmes and her technology.

INVESTORS DEMAND AND RESPONSIBILITY

Big-name investors poured money in the project that they believed to be the next big thing. Marquee investors, including Carlos Slim, Betsy DeVos, and Robert Kraft, shelled over US$900. The media accorded the company adoring profiles, and its board attracted retired politicos, including Henry Kissinger and George Shultz. Walgreens and Safeway were persuaded to spend billions of dollars in setting up clinics to showcase the newest and revolutionary technology. The company further vowed an associate dean at Stanford.

When an investor chips into a company, they expect that they will generate profit with time. It is normal to consider the rate of inflation, investment history, nominal interest rate, and, most of all, the risk level (Rodgers and Timothy 40). Some argue that the higher the risk of an investment, the higher the return. From the pitching that Holmes accorded her company and the description of a technology invention that would transform healthcare, the investors trusted Holme’s idea and invested in her. They also presumed that the company would turn out to make them wealthier. Walgreens and Safeway believed that their income would rise and that they would portray a positive image to the public. All the investors, despite their big names and positive records of past investments failed. They were duped by a technology that was yet to turn out to be a reality. They believed what Holmes communicated to them, and they were unable to conduct adequate background research to determine the viability of the invention. Having invested heavily, the pressure was turned to Holmes and her Theranos company. It was time to make money for the investors.

PRESSURE TRANSFERRED FROM MANAGERS TO EMPLOYEES

As time progressed, the pressure to generate income turned the working environment oppressive, resulting in multiple employees being fired for very tiny mistakes such as inserting a USB drive into a Theranos office PC. An employee is an internal consumer who contributes to the sale of products and, thus, generation of income (Rothlin and Dennis 253). For Holmes, she failed in realizing this. She was aware that her invention was bogus, and the projected results from the technology was still far away. She, however, always insisted that even though not doable today, it would be achieved tomorrow. Any employee who stood in her way was fired. She was not to be questioned. The thing she did not put into consideration is that the high employee turnover results in increased expenditure for a company (Rothlin and Dennis 260). Additionally, these employees were released to a free world that they would give information about the Theranos lies. The pressure to generate more income for the company and the investors received a blow from this approach.

BREAKING THE LAW IN PURSUIT OF PROFITS

Together with her partner, Sunny Balwani, Elizabeth operated in secrecy and demanded that employees should not talk or share about any operations at Theranos. Trade secrets were implemented to avoid proper Theranos evaluation even by the Federal Health officials. In attracting investors and demonstrating the majestic nature of the company, Holmes had also communicated that the military was additionally using the company’s technology. She was crafty. By withholding information from the Federal authorities, Theranos was violating the law. Federal Health officials whose primary responsibility is to evaluate the effects of procedures and products on the human body and establish control was only fed with information that would trick them into believing that the technology was a win for human health. The trade secrets and the pressure for employees to stay silent was a move to avoid any chance of investigations that would result in a reduction of income and a negative image of the company.

FAILURE TO BALANCE ETHICS AND PROFITS THERANOS

Elizabeth Holmes always believed she would be the female version of Steve Jobs. The significant difference is that Steve Jobs’s technology was founded on honesty and trust in the investors, employees, and product consumers. They included positive ideals, such as the implementation of sound corporate social responsibility. Though cases have been brought against his company, they have been able to always settle the issues either at court or outside the court, and their profits have always been high. The investors blossom due to the balance between finances and ethics. Holmes and Sunny continue to face federal and malpractice charges. Theranos closed in 2017 with over US$900 million spent in settling lawsuits. That almost equals the amount paid by investors on the company. Theranos failed employees, investors, and patients. It is a case of a dangerous voracious ambition by Holmes that sought success at all costs, no matter the collateral damage it would leave behind.

Works Cited

Carreyrou, John. Bad Blood: Secrets and Lies in a Silicon Valley Startup. Vintage, 2018.

Reynolds, John N. “Applying Business Ethics.” Sharing Profits, 2015, pp. 51-72.

Rodgers, Waymond, and Timothy G. McFarlin. “Six Decision Pathways for Personal Investment Decision Making.” Decision Making for Personal Investment, 2016, pp. 17-42.

Rothlin, Stephan, and Dennis McCann. “Investors: Investment, Ethics, and Corporate Responsibility.” International Business Ethics, 2016, pp. 249-272.