DRIVING THE ALPHA
Let’s Talk Leadership

Blood-testing company Theranos, once the golden child of Silicon Valley, is shutting down. The Wall Street Journal cited a shareholder email shared by CEO David Taylor, who said “We are now out of time.” Former-CEO and founder Elizabeth Holmes and other former top executives of the company stand accused of, what the SEC called, an “elaborate, years-long fraud.”
Founded in 2003, Theranos’ blood-testing product claimed it could perform traditional lab tests with just a few drops of blood. Many heralded the product as a revolutionary new way to conduct laboratory testing, at a fraction of the cost of traditional lab work. Holmes dropped out of Stanford at 19 to start the company, applied for her first patent before she was 20 and fearlessly owned any room she entered, exuding great confidence, wearing a Steve Jobs-inspired black turtleneck. Her leadership inspired employees and investors — the company raised $700 million in venture funding and at one point was worth $9 billion.
Things went downhill in 2015, starting with a WSJ investigation , which raised a series of questions raised about the accuracy of the blood tests and qualifications of the top executives. Walgreens ended its relationship with Theranos in 2015, and Centers for Medicare and Medicaid Services said the labs posed “immediate jeopardy” to patients. By April 2016, the SEC started looking at the company, ultimately concluding that Holmes exaggerated and even lied about Theranos’ technology. She stepped down as CEO in June 2018, and the company today reports it has $5 million left in cash and will not be able to pay its shareholders back.
This news comes at a time when Jeff Bezos-led Amazon reached $1 trillion in market cap, in a landmark year for the founder and visionary, known for his inspirational leadership style. In his 2018 annual letter to employees, the dotcom mogul who quit his hedge fund job at 30 to sell books online and built the behemoth that is now Amazon, addressed the subject of recognizing and maintaining high standards. In other news, Lyft, led by Logan Green, plans for a public offering and is on track to file before chief rival Uber. Valued at $2.4 billion in 2014, today the company is worth $15.1 billion. As Lyft grew its operations, it placed importance on governance, data privacy and corporate responsibility, treating its drivers and passengers with respect, and caring deeply about the carbon emissions of its cars. Meanwhile, Uber’s ex-CEO Travis Kalanick’s numerous controversies, ranging from secret software tools overriding local law enforcement to a video of Kalanick arguing with an Uber driver, paused the ride sharing company’s meteoric rise, as it aggressively entered (and was shunned) from multiple markets globally.
In a meeting, our CEO Anna-Marie Wascher was once asked, “What is one of the most important qualities we look for in our investments?” Her response was, “Strong leadership”. Strong leadership inherently entails aligning a company’s values with the values of the society and environment it operates in. This alignment drive impact which, in turn, drives alpha.
Divya Chaudhary, Associate



Economists are weighing in on the race between Amazon and Apple for the $2 trillion valuation mark. D.A. Davidson’s Tom Forte recently said Amazon has more room to grow into other areas of retail such as gas stations and travel. What are your thoughts?

Scooter company Lime has partnered with payments platform provider PayNearMe to expand its affordability program, offering participants 95% off a typical ride. Meanwhile, VCs are pleading with the San Francisco Municipal Transportation Agency to award Bird, valued at $2 billion, a permit to operate in SF. There’s even an online campaign called [though fellow scooter unicorn Bird also recently announced increased access to underserved populations.]Freebird.

Our favorite book on leadership right now is “Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration”, which shows how the leadership at Pixar was able to change Disney’s culture and overall performance when they were acquired by Disney.

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