The legacy of the Theranos debacle weighs especially heavy on women in biotech

The trial of Elizabeth Holmes, former CEO and founder of Theranos, is set to begin next week. Holmes is charged with wire fraud, having allegedly defrauded investors about the accuracy of Theranos’ blood testing technology. She’s pleaded not guilty.

Many other women founders — especially in biotech and health care — have been getting compared to Holmes. Erin Griffith, who covers startups and venture capital for the New York Times, says investors often ask founders to prove they’re not another Theranos. One founder who had similar hair color to Holmes was even advised to dye it. The following is an edited transcript of our conversation.

Erin Griffith: Every male founder that is working on, say, office sharing, is not getting compared to WeWork and Adam Neumann. But in this case, because there was one woman who was so high-profile, and there are so few women that get to that level, that become billionaires, that build companies worth $9 billion, that are on the cover of every magazine, that becomes the the point of comparison for every other woman founder. 

Jed Kim: What kind of impact does this doubt have on these businesses? 

Griffith: I think it’s just kind of this insidious little bias that just adds to an already huge mountain of biases that women founders face. And I think what was most disappointing to me and talking to some of these people, for this article, was that it really affects female founders at the very earliest stages of the startup when they don’t really have anything yet, they’re just starting out. They really have to rely on investors and new recruits and partners, potential customers to just believe in them and their idea, because they don’t have anything to show yet. That is, I think, what is really curtailing some potential, because a lot of the women that I talked to said that the comparisons sort of slowed down or stopped as their company grew and had things to prove. But you need that support to get over the the starting line. 

Kim: You say Holmes and Theranos show a contradiction about sexism in the tech industry. What do you mean by that? 

Griffith: Women have to basically act like Holmes in order to get funding, in a way. You have to kind of follow this, “fake it till you make it” type of mentality. And there is a forgiveness for a lot of people who try that and fail. So there is that sort of mentality that this is baked into the culture of Silicon Valley, and almost part of what makes it great. The problem is the number one example of female success in Silicon Valley for the longest time, then turned out to have taken it way too far, and was a fraud. And so, women obviously don’t want to be compared to her, but they, at the same time, are sometimes being pushed to emulate her in a way. And that is a very awkward place to be. 

Kim: Speaking of that tension, where you’re advised to seem more successful than you might actually be, how much — in the people that you’ve spoken with — how much empathy has there been for Holmes? 

Griffith: Just to be clear, I don’t think there’s really a lot of empathy for what she did, because she put people’s lives at risk. I mean, this is not just, “Oh, I’m going to claim that my software works, and uh-oh, Twitter went down and we get a fail whale.” You know, that’s fairly harmless. But when your technology doesn’t work, and people are making medical decisions on it, that is pretty serious. And I don’t think anyone can justify those behaviors. But I think a lot of women that I talked to said that they did see sort of shades of what might have motivated Elizabeth Holmes to act the way she did, in that they are pushed by their investors to tout these lofty ideas — these like huge, big visions. And one woman told me that an investor told her to increase her financial projections by 10x, even though there’s no way she was going to get that. But they told her to do that, because that’s how you raise the money. And it’s like, well, at what point does that exaggeration and that view of the world, and that idea of kind of like hustling to make something, turn into fraud? And I think that line gets blurred for a lot of people, and Elizabeth Holmes took it way, way too far. But I do think a lot of people look at that, and they say, well, I can kind of see how you go down that road.

Kim: OK, so the trial is going to begin soon, does this make things worse for women in this sector? Possibly better?

Griffith: I think a lot of people were so outraged by what came out, when we learned what was really happening behind the scenes at Theranos, that they they believe that justice needs to be served and that if she doesn’t go to jail, or she isn’t punished in some way for this, that it sends the wrong message. And so I think, yes, many of the people who are working on legitimate businesses, particularly in health care, would like to see this in the past, so we can focus on the people who are doing good work and not committing fraud. So yeah, I think there is definitely a desire for justice from a lot of people who have been watching this from the sidelines and affected by it.

Related Links: More insight from Jed Kim

We, of course, must link to Erin’s piece in The New York Times. She spoke with several women entrepreneurs about their experiences seeking funding. It’s great, if angry reading is something you’re into. Who am I kidding? Of course you are. That’s why we read news!

Are you one of those people who loves handicapping courtroom strategies? The Wall Street Journal’s got an article on the upcoming Theranos trial and what you might expect to see from the prosecution and defense. And uh, if you live in San Jose, don’t read the news for a while. They’re worried they won’t be able to find unbiased jurors for the trial.

Investment into the life sciences is up. One way you can see that is by paying attention to real estate, specifically lab space that is under development. Bisnow, a digital media company serving the commercial real estate industry, says the top three markets — Boston, San Francisco and San Diego — have 54.5 million square feet of proposed development of lab space, way up from the end of 2020.

Another interesting tidbit: this snippet pulled by Bisnow from a life sciences report which says the field: “… remains at the top of the list of secular growth sectors of the economy that will continue to expand in the future, regardless of economic cycles or changes in monetary and fiscal policy.”

Maybe I should’ve stuck with biology. I’m not going to look at projections for the future of money in journalism.