For a fleeting moment, Theranos was huge and Elizabeth Holmes, the rare female Silicon Valley entrepreneur, was flying high. Too high, as it turned out.
Ms. Holmes’s case has been held up as a parable of Silicon Valley’s swashbuckling “fake it till you make it” culture, which has helped propel the region’s start-ups to unfathomable riches and economic power. That same spirit has also allowed grifters and unethical hustlers to flourish, often with little consequence, raising questions about Silicon Valley’s tightening grip on society.
Holmes raised hundreds of millions of dollars for the blood-testing start-up. The only problem was that it was based on lies about the technology. She’s now on trial for fraud, and former Reddit CEO, Ellen Pao, who wanted to turn Reddit intersectional, blames sexism.
When she founded the unconventional blood-testing company Theranos in 2003, I was relieved to see a woman finally benefit from the hyperbole that dominates venture investing, a world I worked in for nine years, total. Why shouldn’t a woman show the same single-minded confidence that her male peers did? By 2015, Ms. Holmes raised more than $400 million in financing and Theranos was valued at $9 billion. At last, I thought: a charismatic woman with a compelling vision, actually able to raise huge amounts of funding at astronomic valuations.
But after it was revealed that Theranos was not transparent when its blood-testing equipment failed, it became clear that the company would be the exception that proves the rule that tech chief executives rarely face the full consequences of the harm they cause.
There’s a little detail in there that might fly under the radar the way Pao phrased it. The problem wasn’t exactly that “Theranos was not transparent,” but that Holmes allegedly lied to people’s faces as she took the money that it worked. There’s a bit of a difference between the usual puffery of grandiose disruption wrapped in future breakthroughs and a lack of transparency. What you cannot do is claim something works when you know it doesn’t. What you cannot do is take money from people by claiming something works when you know it doesn’t. If that’s what happened here, then Holmes, Steve Jobs wannabe waif, may be convicted. And that’s what has Pao pissed.
Questionable, unethical, even dangerous behavior has run rampant in the male-dominated world of tech start-ups. Though never charged with crimes, WeWork’s Adam Neumann and Uber’s Travis Kalanick hyped their way into raising over $10 billion for their companies, claiming they would disrupt their stagnant, tired industries.
These were men, and they weren’t prosecuted, is the argument. Missing from the point is that they may have overhyped their business model, but did they commit fraud or demonstrate the same Millennial ignorance of basic business economics that drove Silicon Valley to throw stupid money at anything that smelled slightly hip?
Pao then runs through a litany of vague accusations, from sexual harassment claims to “inciting genocide” on Facebook, questioning why Zuckerberg has never “faced significant legal consequences.”
Yet Ms. Holmes is also exceptional for the basic fact that she is a woman. Time and again, we see that the boys’ club that is the tech industry supports and protects its own — even when the costs are huge. And when the door cracks open ever so slightly to let a woman in, the same rules don’t apply. Indeed, as Ms. Holmes’s trial for fraud continues in San Jose, it’s clear that two things can be true. She should be held accountable for her actions as chief executive of Theranos. And it can be sexist to hold her accountable for alleged serious wrongdoing and not hold an array of men accountable for reports of wrongdoing or bad judgment.
The Department of Justice decided to prosecute Holmes, not the cabal of male venture capitalists. Fraud is not “reports of wrongdoing or bad judgment.” And, indeed, Pao doesn’t complain that Holmes doesn’t deserve to be prosecuted, but that all the men who did things that Pao finds wrong haven’t been prosecuted. Missing from this polemic is that some things are crimes and some things are not. A lot more men are prosecuted than women, but when it’s the one woman who dresses like Steve Jobs, it’s different.
If the expectation is that there be perfect parity between demographics and prosecution, even if such a thing could be measured rather than hyped by the artful inclusion of one-off stories that serve a goal and omission of those that don’t, it wouldn’t matter. The commission of crimes doesn’t necessary follow society’s demographics, and the rationalization for why doesn’t change whether someone committed a crime.
Whether Elizabeth Holmes committed fraud awaits the verdict of the jury, and her defense, that she was merely the front person collecting money and not the tech person who knew that the product was never going to happen, may yet prevail. But if it does, there’s a good chance that it’s because Holmes is a woman, a “waif” who didn’t let her pretty head get filled with all that science-y stuff. And then she was subject to her then-boyfriend’s “oppression.”
In sealed court filings from 2020 that were made public over the weekend, Ms. Holmes said that her relationship with Mr. Balwani had a “pattern of abuse and coercive control.” The filings said Ms. Holmes’s lawyers might introduce expert testimony on her mental state and the effects of the alleged abuse. Mr. Balwani’s lawyers denied the accusations in a filing.
Is this trial a reflection of sexism? If I’m Holmes’ lawyer, I’m betting the defense on it. As for all the guys who did stuff that makes Pao mad, nothing stops her from calling the United States Attorneys office on these guys if that’s what will make her feel more intersectional about it. Was that her point, that if one woman is prosecuted, they need to prosecute more men to balance it out?