Silicon Valley Martyr: The Curious Case of Elizabeth Holmes

Ben Kleschinsky
Oct 1, 2020 · 13 min read

Tune into the news lately. When it was live on television I watched Nightline episode The Dropout about a bright young entrepreneur out of Silicon Valley who was now facing up to 20 years in prison. Her name was Elizabeth Holmes and she was the 19 year old college dropout from Standford.

She was labeled as the next Steve Jobs. She was an icon of woman empowerment and the next generation of entrepreneurs. She was an inspiration, a leader in her community, and paid every one of her workers at least a $15 minimum wage. However something drastically went wrong in the year 2016. From 2016–2018 her company went bankrupt and her lab was shut down by CMS under the Trump administration. Almost overnight the signals changed from being a role model to a hardened criminal.

Her revolutionary idea of making a new kind of blood testing kit that could be deployed in hospitals and the military world wide never happened, and she was now being detained by the FBI. The Nightline episode brings you through a grueling account of the transactional history and email accounts of why she was going to prison on newfound charges of fraud and lying to authorities. It was a spectacle for the eyes and ears.

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Elizabeth Holmes posing in front of her now defunct company’s floor in Newark, CA. (Chavarria/NYT)

If you were supposed to walk away hating Holmes after listening to a handful of disgruntled employees then I did not catch the memo, but was the intent to show her in a bad light on television? Before you cast judgment on my article I would just like to say that I have been a progressive my entire life. I believe pharmaceticul companies are too powerful today. I worked on the Sanders campaign in the 2016 election to rally behind holding the powerful and elite accountable on Wall Street. I refused to vote for Hillary Clinton when she became the nominee. My grandfather was a labor union boss as a bricklayer and locksmith. I have no financial interest in the company or outcome of the case. I have never traded in the stock market in my life and wouldn’t even know how to do it.

However while I was watching the documentary something didn’t seem right to my eyes and ears. Something was completely off the rails, as if you knew that there was another side to the story. Just for the fact that so many powerful institutions were all coming together to make sure America’s new most hated person was Elizabeth. She was the new Casey Anthony, the face of everything wrong with an out of control and unregulated tech industry in California. She was the example of the next generation of fraud artists, not the next generation of leaders. Her mug shot was plastered on every magazine and newspaper, as her family was forced to go in hiding from the number of death threats. She was the corrupted millennial.

I hold an unpopular opinion amongst my peers. I happen to believe that Elizabeth Holmes deserves no prison time and that what has happened to her has been nothing short of character assassination, and of course that is completely my opinion. However these are the facts I based my opinion around which I will now showcase. This deserves to be heard.

We can talk for days about documents that showed what she was going to produce and what she didn’t produce, but we have to get down to the crux of the matter. It’s not Elizabeth Holmes who did not deliver, it’s Theranos that did not deliver. It’s important we realize this because under capitalism in a free democracy, what is happening to Elizabeth Holmes threatens the future of entrepreneurship and free association to create and innovate.

In a free society you have a right to fail. If Elizabeth Holmes deserves 20 years in prison for committing so called fraud, you can believe Thomas Edison and Nikola Tesla and practically every entrepreneur in history are hardened criminals because they have failed in life before. Take on our President of the United States Donald J. Trump. You can hear countless stories of what he did for his entire life to his contractors and failed business ventures, and that he declared bankruptcy four times on failed or fake products. Yet one person is getting 20 years in prison, and the other one is the President of the United States. Is that fair justice?

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Elizabeth Holmes walking to federal court with her lawyer on July 17, 2019 in San Jose. (White/Getty)

Elizabeth Holmes contracted with the United States military, and perhaps that was the biggest mistake she would ever go on to make in her life. If the United States government brings a person to court, that person is almost always guaranteed to lose in front of government lawyers and you are almost always guaranteed to have a harsh sentence. Unless you are Bill Gates of course. Elizabeth Holmes is being charged with a felony on many counts of fraud, because she is a woman and not Bill Gates.

What exactly is her crime? She told investors she was going to deliver a product that didn’t exist, and she told the government claims of what her product was going to be able to do for them before they purchased the product. Somehow that meant she was “falsifying reports” when they did not come true. She took a lot of money from investors and public contracts and never paid anyone back, and never delivered a product. However that is not fraud in the classic sense. They would have to prove that she started the company on the sole purpose that she wanted to commit fraud. There is right now zero evidence that her company did not originally have legitimate intentions to make a good product. In fact the laws of logic and reason suggest, no one would intentionally want to be a failure.

That’s what happens in a free democracy. You have the right to fail as a business. Every document that has been showcased so far on television and other forms of media has said I will do this for you, and my product will do that for you, and the blood tests will do this for you. Every promise she made failed. However why is she not getting a bailout instead? If we look at the economic recession caused by the largest financial institutions in America, not one Wall Street executive is behind bars today. Every Wall Street executive was bailed out by government, and every pharmaceutical company during that time was bailed out by government even though there are many pharmaceutical drugs out there which have destroyed the lives of countless Americans and spawned mass addictions.

Elizabeth Holmes greatest crime was that she tried to produce a product, and the product failed. Her greatest crime is that her major investors which included hedge fund Partner Fund lost tens of millions they won’t be getting back, and they are one of the main parties participating in the lawsuit and building the narratice. However the Trump administration chose to pursue her as a hardened criminal and that is the only reason we are talking about her today. The Trump administration and justice department used her as an example to set a precedent, just like they used Silicon Valley entrepreneur Ross Ulbricht to set an example. I’ve even heard comparisons of critics saying that if she was a poor man off the streets that robbed a bank, she would be getting much harsher treatment. That argument fails to understand the fundamentals of business and how the economy works.

For one it’s now inaccurate to call her rich. Forbes nows lists Holmes net worth as zero. She is in nearly 25 million dollars of debt she will never be able to pay back her investors. When you own a business your business is your net worth, so that is what you invest your life savings in. Anyone who has ever owned a business knows what I’m talking about and would agree. Her business has now failed. In order for this case to be a classic Ponzi scheme, she needs to have made a profit that benefits her. As hard as it may be to believe, Holmes is more poor today than a minimum wage worker. Most working and middle class Americans will never have to go through the ordeal of bankruptcy court and paying off debt from a failed business. Will never have to fear for their life with threats of prison from 7 figure debt.

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Elizabeth Holmes speaking at Clinton Global Initiative fundraiser in 2015. (JP Yim/Getty)

President Trump stated numerous times on Twitter that the “tech left” was considered a political enemy, as she was one of the largest contributors to the Hillary Clinton campaign. We can look at incriminating evidence on Twitter that President Trump has an automatic bias, simply because he has partaken in the same form of business deals throughout his life and yet he has not seen prison time. We simply cannot call what has happened to this woman justice. They even went so far as to leak her FBI deposition to ABC News so they could make the Nightline episode, during an ongoing trial.

I say that it’s such a dangerous precedent for what is happening, because entrepreneurship is already at a forty year low in America as we search for rising stars. We are telling the future generation of entrepreneurs that if you start a business and fail to deliver on a promise of your product, you can be held liable in prison for decades longer than many rapists and pedophiles. We may be punishing free market entrepreneurship and free market capitalism, because the federal government is using her name to set an example and I feel that is completely wrong to do. It simply is not fraud in the classic sense just because she broke a promise. You cannot stand on a high ground with that double standard.

Many of the largest financial institutions and pharmaceutical companies are cheering on her imprisonment, because they both lost money on investments in her company and they were given the opportunity to crush new competition. They are funding and supplying the defence lawyers and funding the court case against her side, when she’s going up at this alone. It would not suprise me if her competition was already seeking patents for a similiar product. Could you compare Elizabeth Holmes in many ways to Steve Jobs or Bill Gates in the beginning of Apple and Microsoft? Where these computer companies in the 1970's said they were going to deliver product to investors, made outrageous claims on what their product would be able to do, and yet they had not even made a product yet on paper. They started the company on a vision and a lie, even going so far as to copy software that was already in use by other companies. It was this vision and lie they took a gamble on that made them a success. But they could have very well went the other way and failed, and we would have never heard of these figures today in the same light.

Steve Jobs was forced to step down from Apple for failing to deliver product to investors. He was not thrown in prison for decades because Lisa didn’t work. This is the environment we are telling our next generation of entrepreneurs that they have to deal with. That they run the risk of imprisonment, when we tell the largest banks and pharmaceutical companies in the country that they are immune from liability every time.

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Steve Jobs and Steve Wozniak sitting in front of their new Apple Computer in 1976. (Avelar/Getty)

In contrast when I read that Elizabeth Holmes was caught using blood-test-analysis machines made from other companies and modifying them to buy her time, after claiming to investors that she was making her own it reminded me of a very similiar story. What happened to a brilliant woman from Silicon Valley may be nothing short of a disgrace because of this double standard. She was a leader, she was a visionary, and her greatest crime was that she made a mistake. Her factory employed over 800 American workers. Her money she borrowed was already spent, there was nothing to pay back. Her court case is due for the fall of 2020, and I would be seriously surprised if she gets a full sentence when she goes in front of a judge to make her case.

It’s been popular to gang up on her image, it’s popular to hate on everything she has done, but put yourself in her shoes for a second. At the end of the day do you really believe that she wanted her company that she put her entire life, education, and marriage into to be a failure? Do you really believe that in a capitalist society that rewards you for success, she would want her product to fail? When you that invested in a dream admitting defeat is one the most difficult things you can do. She now has to live with this failure every day. She can no longer walk out of her home without body guards because of the death threats she receives on a daily basis. She’s lost all respect from her friends and family. She is followed and stalked by paparazzi like Princess Dianna. Her entire family is being punished because her company declared bankruptcy and failed. Her marriage is destroyed. Someone even tried to set her home on fire. How is this justice?

So you can pull out any document, we could look at any email chain where she said she was going to produce a product, where she made a promise, but we cannot ignore the fact that she is unlike many other examples of businesses leaders that were involved in the same behavior but that we admire because they got away with it. On a logical standpoint alone, this is wrong. This is the opposite of everything that this country once stood for. Thomas Edison and Nikola Tesla are no different from Elizabeth Holmes. They had many grave failures in life. They lost investors a lot of money on lies and broken promises, and even electrocuted elephants and dogs on public streets. By the way please don’t try something like that today. Most importantly they had the freedom to do that and admit defeat. That is the entire idea about why we incorporate a business.

I think it is more alarming that we have a president sitting in office, that regularly uses his power to bully his political opponents. We have proof that he does this every single day, so why should anyone be surprised? At the end of the day Elizabeth Holmes did not murder anyone, she did not rape anyone, and she did not kidnap anyone. She’s not a pedophile, she didn’t rob someone at gunpoint, and she didn’t dig up a grave and stuff dead bodies in a freezer like something out of Silence Of The Lambs. By the way she didn’t smuggle hard drugs across the border either. She was bright, fresh, young, and the future of America who has been politically assassinated not only by the tabloids but by government. The question we need to be asking ourselves would be, is that okay for us to accept?

This administration has made it loud and clear. Free entrepreneurship and the risk assessment factor of starting a new tech company is now a crime if you fail. This President threatens to go after tech companies every day, while simultaenously benefiting from the tech companies he rallies his base against. From Facebook to Amazon and Apple, perhaps no other administration has been so anti free association and anti free market innovation. That is the opposite of what the Republican Party is suppoesdly supposed to represent.

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Elizabeth Holmes seen leaving San Jose court house in tears July 17, 2019. (Short/Bloomberg)

Let me tell you what this article is not saying. I am not saying she did not force investors including the military to lose millions of dollars by making unsubstantiated claims. I’m not saying she produced a successful product. I’m not saying she could not have handled defeat more transparently and openly with her clients. What I am saying is that, historically we have never thrown an entrepreneur in prison for decades on something like this. The Trump justice department is setting the first example of its kind, and at the end of the day if she runs out of money to defend herself she will be forced to settle. That is not up for debate, but the debate should be the question of whether we should allow this to happen. Is Elizabeth Holmes a martyr?

Is this justice when pharmacetical drug company executive John Kapoor gets 3–5 years in prison for coaxing doctors with money and sexual favors to prescribe an addictive opiod painkiller. When not one member of the Sackler family is behind bars after they settled a lawsuit in multiple states, for a drug that has taken the lives of close to half a million Americans?

Judge grants Purdue Pharma, Sackler family pause in civil lawsuits

When Goldman Sachs was given a ten billion dollar award for crashing the economy, taking part in the recession that kicked an estimated ten million Americans out of their homes including millennials. When a real estate mogul can bankrupt a casino and airline while swindling contractors and become the most powerful person in America. Can we then really call what happened to Elizabeth Holmes justice and equity?

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We have to be asking ourselves these questions. You have to ask yourself if you are on the wrong side of history. Is it right to use the political power of an office and media might of tabloid journalism to promote character assassination, and to scare and attack free market companies? At the end of the day I think it is clear and evident that Holmes is the prime example. I don’t think we have to feel sympathy for her, as it was her company and she took that risk of failing or succeeding. It was her decisions that brought the company down into the gutter. I don’t believe she should spend the rest of her life behind bars either. Every American in this country has the right to defend themselves in court. She has already been tried for murder by the press and the American public. Whether she did right or wrong with her business model, she is the icon that is being used politically. That is the most unfortunate tragedy about this entire situation. Perhaps there is nothing more unsheathing than the sword of a vicious double standard. That is the ultimate irony.

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