Theranos banned — what’s the aftermath?

It took longer than people expected, but the U.S. Centers for Medicare & Medicaid Services (CMS) came down hard on Theranos yesterday — banning the company and its CEO from owning or operating a medical lab for two years.

As I’ve written before, this is an important story for Silicon Valley business and marketing leaders to follow because crises rarely just impact one company. They tend to drag down a category of like companies (at least temporarily) and embolden (or guilt) outsiders to ask tougher questions.

There are certainly lessons in this case for Silicon Valley and other tech companies globally: 1) character matters; 2) believing it’s real doesn’t make it real; and 3) relationships and reputation are critical for business success. It’s also important to reinforce that this story is not really about Silicon Valley — it’s about one company, and that company’s actions shouldn’t tarnish or derail all the great work that other technology companies do.

The real question is where does Theranos go from here. Will the board and/or investors step up to salvage the company? Or will Hollywood movie-makers and the WSJ’s John Carreyrou make more money on Theranos via movie and book rights? Initial signs indicate Theranos (or at least founder Elizabeth Holmes) is still in denial — which reminds Forbes.com’s Peter Cohan of the Monty Python scene in which the Black Knight keeps bravely fighting despite his loss of various limbs. Theranos might actually win more points by claiming it’s “just a flesh wound” — or maybe another Python classic — “I’m not dead yet.”

Here are a few other real-time reflections and recommendations in 140 characters or less: