Elizabeth Holmes, the woman that went from being the most promising young entrepreneur to the epicenter of a fraud scandal. She once held roughly 50% of Theranos, a company that was valued at $9 billion dollars at its peak, in 2014. However, the very same idea that turned her into a billionaire, also convicted Holmes to an 11 years and 3 months sentence. She had dreams and tools. Yet, investors, extremely equipped labs, trained personnel, and of course some belief and passion, was not enough to surpass the barrier right in front of the CEO’s face: her product was simply impossible. Holmes founded Theranos in 2003 with the hopes of democratizing blood testing and early detection of diseases. The company suddenly caught the attention of investors with the promise to perform over 200 tests from a single drop of blood. The issue started when the CEO’s blank promises became lies, in a desperate attempt to make her dream a reality.

 

The documentary “The Inventor: Out for Blood in Silicon Valley” highlights how emerging tech companies in Silicon Valley often embraced the mantra of “fake it until you make it.” While promising unrealistic results to secure investments is unethical in itself, the dishonesty reaches a whole new level when it endangers people’s lives. Holmes believed that her emerging healthtech gem was like any other Silicon Valley company, where there was room for “small lies.” However, these small lies led her down a slippery slope — a course of action that, once initiated, led to increasingly negative and unintended consequences. Initially minor ethical issues gradually escalated into significant fraud and deception.

 

Holmes had the choice to fold or double the bet. Instead of humbly coming forward about the blank promises and lies to the investors, the entrepreneur took a leap of faith and lied again. She was officially going down the slippery slope.

 

The ex-CEO had a problem: she needed to ensure the truth about what was happening in her company did not come out. To achieve this, a Ring of Gyges protocol was imposed. The Ring of Gyges, a concept from Plato’s “Republic,” refers to a mythical ring that grants its wearer the power of invisibility, allowing them to act without fear of being caught or facing consequences. In the context of Theranos, this meant creating an environment of secrecy and control, where unethical actions could be hidden from supervision.

 

Holmes and her team took several steps to ensure their “invisibility.” To prevent employees from revealing the company’s internal troubles, they implemented severe non-disclosure agreements (NDAs). Employees were isolated in small teams, receiving only information pertinent to their respective tasks, preventing them from seeing the big picture. Theranos falsified test results and utilized third-party machines to confirm its claims, further hiding the reality from investors, regulators, and patients.

 

The presence of high-profile individuals on Theranos’ board of directors significantly contributed to the company’s perceived credibility and legitimacy. With names like Henry Kissinger, Jim Mattis, George Shultz, and Richard Kovacevich, the board was composed of influential figures with extensive political and business connections. Their direct participation in Theranos operations helped to keep regulatory agencies away, creating an environment susceptible to fraud.

 

Elizabeth Holmes’ actions can be understood through a deontological framework. Deontology focuses on following moral rules and duties, which Holmes clearly violated through her intentional deceit and dishonesty. Her misconduct wasn’t solely about the harmful outcomes but about fundamentally breaking ethical principles like honesty and transparency. By repeatedly choosing to lie and manipulate, she neglected her moral responsibilities.

 

The Theranos case shows us that honesty is truly the best choice in the long run. Even though Elizabeth Holmes achieved a lot of success and respect for a short moment, and believed her lies would eventually become reality, she ultimately failed, leading to the collapse of her company. The idea of “fake it until you make it” did not work out, and in the end, all that was left was the “fake.”

 

References

https://philosophersinamerica.com/wp-content/uploads/2018/10/GygesRing-SOPHIA-One-Sheet-v1-101118.pdf

 

The Inventor: Out for Blood in Silicon Valley

https://news.crunchbase.com/health-wellness-biotech/theranos-elizabeth-holmes-trial-investors-board/

 

https://lrn.com/blog/key-takeaways-ethics-compliance-theranos-trial-elizabeth-holmes