The Hidden Lesson in the Elizabeth Holmes Trial

Insight from someone with a similar criminal conviction.

A week from today, September 8th, opening arguments begin in the Elizabeth Holmes (Theranos) Federal Criminal case.

Like me, many of you have watched the multitude of documentaries and movies chronicling her story of deceit that cost investors hundreds of millions of dollars. All the while thinking, how does something like this happen at such a large scale with so many famous, wealthy people involved?

I am nowhere near the entrepreneur on a scale as Elizabeth, nor did I start my company in Silicon Valley, but I have experience that reaches some level of comparison.

For me, my entrepreneurial venture began with an idea that I felt passionate about because of personal experience. The attention I gained for the idea, reputation in the field at that time, and expert validation built a belief system that I had some special talent that was meant to change the world.

At first, that was enough and propelled me to put forth every effort to achieve global change. But at some point there was a shift away from the importance of the impact, to that of personal gain. I can’t pinpoint the exact moment of the change, but despite all rationalization attempts and blame, I am responsible for what occurred in the end. Which was a criminal conviction for theft from investors to the company. Something I take full responsibility and am remorseful for.

To shed light on the experience and transition, consider this. At the onset there are investor pitches to those that validate the idea could make you wealthy. There are press interviews shining light on your story and lead position in a growing market. There is contact from professionals or famous people in a class you’d always admired and wanted to be a part of. For me, I began to believe that my needs and desires were more important than the idea or those putting their finances behind their belief in me.

On a much larger scale, I believe this is what happened to Elizabeth Holmes. My guess is she did not set out to create a fake idea or deceive at a large scale. But then, the money came, along with the famous people, the media attention and there was a shift to focus on herself.

In the mix of emotion and the fast-paced start-up world for the CEO, comes the most difficult reality, things aren’t going like you had hoped. There could be glitches in the technology, underperforming staff, slow market adoption and a multitude of other factors. At the onset of the project, when real change was your focus, you would have revealed this fact. But not after the shift, at that point protecting your own interest and denying the issues (even to yourself).

Sadly, neither myself or Elizabeth Holmes had the bravery and strength in personality to communicate and deal with, normal start-up issues, in a straightforward way. My guess is, she is going to pay a price for that. But with that being said, does the outcome of the trial create any winner or loser?

If she is convicted, it will send a message throughout Silicon Valley that such behavior won’t be tolerated, and investments will flow more conservatively. Maybe the investors will feal vindicated, but it won’t return hundreds of millions of dollars.

If she is not guilty, her story will be one of another “fake it till you make it” start-up that followed the path of others who gambled away funds from those who knew the risk from the start. Then, things may not change much in the VC investing world.

I don’t think there are any winners or losers, but instead a lesson to be learned. That lesson is that there needs to be more of a focus on mental health and emotional support for start-up founders in order deal with the sudden emotions of success. This would help them stay grounded and true to the original mission and the people who believed in them. Just because someone has a great idea and can communicate it well and get others behind it, doesn’t mean they can handle the extreme stress of implementing it.

So, I suggest adding mental health professionals with regular contact with the entrepreneur throughout the investment process. This is a low-cost idea compared to the millions of dollars lost on cases like this. Most importantly, it is money well spent as it will counterbalance the input of the swarms of investors that want to leverage the entrepreneur in order to build or increase their wealth.

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