Holmes & Forbes: The Cost of Obsessing Over a Founder’s Wealth
Forbes has recently claimed that Elizabeth Holmes’s, founder and CEO of Theranos, a healthcare startup, net worth is zero after her company has been the focus of criminal investigations by the SEC for misleading investors and board members, as well as recently voiding tests from its key proprietary technology, Edison. Several media outlets immediately jumped along the bandwagon of Forbes’s drastic reevaluation of Holmes’s net worth, parading along the narrative that she’s gone from hero to zero.
One tiny drop tried to change too much, apparently.
Regardless of whether Holmes is worth a single penny or not, it is clear that Forbes and other publications focused on the tech industry care more for astronomical valuations of companies and their CEO’s respective net worth than whether these companies actually have true societal impact on the rest of the populace.
In this specific case, there is an unhealthy amount of focus around the state of Elizabeth Holmes’s net worth at the cost of ignoring the following: one, those who have been affected by invalidated test results; and two, the risk of disruptive innovation in heavily regulated industries.
There has generally been little, if any, coverage of those who have been affected by Theranos’s recall of 1% of their blood test results. From Bloomberg, we get an idea of the inconvenience and mistrust harbored by affected patients:
Even though his report said the majority of his results were accurate, Penttinen said in a telephone interview that it’s hard for him to have faith at this point.
“I feel I need to review all those tests.”
Other patients that have had their blood tests processed by Theranos have been recommended by their doctors to get their blood work redone as a precaution. Some have not just stopped at getting their blood work redone by other laboratories — a lawsuit has been filed against the Palo Alto company by an Arizona resident that seeks class-action status.
“Tens of thousands of patients may have been given incorrect blood-test results, been subject to unnecessary or potentially harmful treatments and/or been denied the opportunity to seek treatment for a treatable condition…”
This lawsuit highlights the potential problems patients who have been misled by Theranos face — misdiagnosed conditions, improper medications being prescribed, and even potential health insurance issues based on the results of those tests.
With all of these damaging issues that Theranos’s affected customers are dealing with, I am left wondering: why are there not greater substantial discussions surrounding the risks of disruptive innovation in heavily regulated industries, such as healthcare, finance, and insurance?
One reason could be is that it is impossible to fully understand or accurately evaluate the impact that a startup could have in any strictly controlled area of business. Yet, we should still attempt to comprehend the ramifications that any emerging company could have entering these regulated markets as their strategy would be built around existing regulations. I do not want to come off as discouraging any emerging startup from venturing into heavily regulated and bureaucratic industries — that is not the aim of this portion of the discussion, nor is it my goal to uphold a given status quo in a given market.
The aim of the question I posed earlier is to understand how venture capitalists and tech journalists view the potential risks of a company entering a heavily regulated sector, and ultimately how that measured risk influences their funding and coverage of said startup, respectively. From my limited perspective as just another person reading the news, I can’t help but come to the conclusion that venture capitalists are more focused on the potential return a startup could generate by managing to circumvent these regulations that reduce a given company’s profits and efficiency in that market. Tech journalists are the same as well — they are more concerned about being the lead reporter on the next Facebook or Uber, instead of posing questions to these startups and the to public at large concerning the risks of innovating in these tightly controlled spaces.
That doesn’t leave the rest of the populace without culpability — our obsession with who will get rich off of the next startup trumps the critical questions that need to be posed to these ambitious, innovative entrepreneurs — will their start ups benefit humanity as a whole positively? Or will their venture be for the advancement of a certain few while the rest of us receive the leftovers?
This story originally was published on LinkedIn.