The much-anticipated verdicts of the Elizabeth Holmes/Theranos trial will definitely send some complicated messages (good and bad) to entrepreneurs around the world. In cases like this one, it’s useful to try to put the entire proceedings into some realistic context. There is definitely going to be a time of mixed emotions — somewhat like watching your mother-in-law go over a cliff in your brand-new car. And it’s gonna take some explaining.
However this media circus and huge waste of time and resources turn out won’t be especially good news for the millions of honest, hard-working men and women who are trying to start or sustain their own dreams and turn their visions into real enterprises. Whatever the technical, hyper-legal outcome may be, to the average citizen, Theranos is a big black stain on eager entrepreneurs. The trick for all of us is to not let the trial, the turkeys, and the decision that takes place get us down, dismayed or discouraged. Every entrepreneur knows that life — and especially the law — is never fair. If it were, we’d deserve all the nasty things that happen to us along the path to eventual success.
A positive approach is especially important for the folks who are in the trenches every day trying to raise the often-modest funds that are essential to sustain and keep building their businesses. We’re not talking about BS spewed by blondes in black turtlenecks here, but the bucks needed to keep the doors open and the companies moving forward. And we’re also not talking about the greedy, ignorant, and allegedly sophisticated investors and VCs who will still be running around like headless chickens, carelessly tossing around tens of millions of dollars as they look for the next great deal long after the Theranos dust has settled. Those guys never learn anything from their losses. They just keep betting that they’ll get lucky the next time.
We need to be sure that the stain and stigma of Elizabeth and Sunny Balwani (her ex-boyfriend and co-conspirator) and the whole “fake it ’til you make it” culture that they unfortunately represent don’t stifle the steady and substantial stream of new capital investments we’ve seen over the past few years into all sorts of startups from investors of every size and shape.
Right now, nothing could be more important to our country’s long-term health and growth than honest and solid innovation in the area of medical technology, although fixing education is certainly a close second. We can’t let the lies and frauds of these two phony fantasists dissuade or discourage serious investors from continuing to support the efforts and investigations of real entrepreneurs in these crucial areas.
And speaking of Sunny B, whose separate trial will begin shortly, I’m a little concerned, as a lawyer, that the current jury will be just confused and misled enough by Elizabeth’s lawyers to give the poor little dear a pass and justify it by assuming that the evil and manipulative Sunny will get creamed in his trial and that’s how “justice” will be served. As much as she play-acted the hapless and naive young waif at the trial, this woman is a convincing liar and a sociopath who was willing to keep risking patients’ lives with her seriously flawed testing and fake “black box” machines. One lesson Sunny will learn for sure is that when you get in a cage with a tiger, you’re not a visitor or a spectator, and you’re certainly not in charge. The fact is that you’re soon to be lunch.
So, when the topic of Theranos and what happened there comes up, as it inevitably will with friends, family, and especially prospective financing partners, you want to be sure (unlike the Democrats who can’t seem to get even the simplest story straight these days) that you’ve got some honest and straightforward answers and explanations. Here are some suggestions.
1. What Passes for Truth in a Courtroom Has Nothing to Do With the Real World
Honestly, between the original Wall Street Journal articles, the book(s), the podcasts, and the daily coverage and commentary about courtroom testimony, the entire outside world clearly knows the truth about the Theranos scam. They know who the prime mover and liar-in-chief was during the many years the fraud persisted. In fact, and sadly, the only folks likely still in the dark about the sum total consequences and impact of Holmes’s lies are the poor members of the jury. They have to deal with bizarre rules of evidence and exclusion, extensive, and often conflicting instructions from the judge, and flat-out half-truths and lies by the defendant and her lawyers. As the saying goes, 99 percent of lawyers give the others a bad name.
2. The Primary Defense Objective in a Criminal Trial Is Confusion and Doubt, not Truth
It’s more disgusting than merely disingenuous when highly paid senior attorneys spend days attempting to confuse and mislead jurors about timeframes using years-old documents to claim current connections. Or highlighting positive “discussions” that ultimately went nowhere and ended in rejections and disclaimers rather than contractual commitments. Or alleging the failures and shortcomings of many company employees and senior executives (some deceased but not to the jury’s knowledge). And, above all, there’s the defense’s constant assertion of their client’s alleged ignorance concerning fundamental parts of the company’s business, finances, and operations. Never mind that she spent years telling the entire world that the company was owned by her, tightly managed under her direct supervision, and all part of her special talent and genius.
And then, of course, there’s the utter BS about her romantic relationship with her long-time business partner and lover — now conveniently turned abuser. Interestingly enough, toward the end of the trial the defense largely abandoned the “poor picked-on me” pleas — perhaps realizing that they really didn’t square with the other days of Holmes’s testimony. They decided to not even call their expert witness on abusive relationships to testify — again perhaps realizing that even the jury would realize that for every courtroom “expert,” there’s an equal and opposite expert standing right around the corner.
3. When Even the Best Initial Intentions Collide With Life’s Harsh Realities and Lie After Lie Follows — Fraud Is the Result
This case has nothing to do with medicine or science since the Theranos machines never worked as repeatedly described and promised by Holmes. The entire question is simply about whether claiming that Holmes was just “trying really hard” and had the “best of intentions” when she began more than a decade ago justifies and excuses a) her continuous and current lies to countless people after she knew the Edison machines were deeply flawed; and b) whether her at-best deluded belief that the machines would someday work is somehow an effective defense to the clear evidence from her own taped conversations, in which she makes knowingly false statements; from the doctored pharma documents, which she faked and then offered up as pharma endorsements; from the fictitious and fudged test results as well as tens of thousands of belatedly voided and canceled tests — all for real patients; from the repeated claims that were being made about the broken Theranos boxes performance while thousands of tests were secretly being done on third-party machines; and, of course, from the many lies about actual in-theater use by the armed forces.
In some respects, it’s unfortunate that the government took on the extra burden of a criminal fraud proceeding, where intent is a crucial element of the burden of proof, instead of a civil action, where even as proficient a liar as Holmes wouldn’t have had a snowball’s chance of overcoming the cumulative and compelling amounts of testimony and evidence to avoid serious liability.
As always, no one puts these complex questions more simply than Bruce Springsteen. As he asks in “The River”: “Is a dream a lie if it don’t come true — or is it something worse?” In this case, it’s a crime.