The Fall of Theranos: What We Can Learn From Elizabeth Holmes


A little over a year ago, Elizabeth Holmes had earned VIP status in Silicon Valley. She’d become a visionary in medical technology through founding Theranos, a company with a revolutionary blood testing system. The company claimed to be able to run more than 240 tests using just one prick of blood taken from a finger (rather than a whole syringe worth like we’d been accustomed to). If you just thought to yourself, that seems impossible! You’d be right.

“It’s impossible to comment on how good this is going to be — it may be wonderful and it may bomb, but I really can’t be more definitive because there’s nothing to really look at, to read, to react to,” said Dr. David Koch, president of the American Association for Clinical Chemistry, upon its arrival into the medical industry.

While experts in the field were still scratching their heads at the science shrouded in mystery, Theranos had quickly raised $400 million from investors, got a valuation of $9 billion, and was contracted by Walgreens. Elizabeth Holmes had become the youngest female billionaire in the US.

Yesterday, Elizabeth Holmes was banned from the blood testing industry.


So what happened?

After a federal criminal investigation it was ruled that she mislead investors about the capabilities of the cutting-edge technology. She also committed the cardinal crime of owning a brand: She overpromised.

During a recent trip to Nashville, I decided to take a bourbon distillery tour. After they tell you their brand story and shown you around, distilleries will usually give you a sample of the drink. This place gave me four. Four big fat shots of bourbon…. and then sent me on my way.

Other than a very confused stumble back to my hotel in a city I didn’t know, that distillery delivered more than I even realized at the time – a shot of brand appreciation.

There’s great merit in under-promising and over-delivering! It’s a fine balance – you don’t want to bury the lead, either. You need to attract customers by letting them know how great your product is.  But if you hit the sweet spot that lies somewhere in between, your customer will both expect quality before they take your product for a test drive and be even more impressed walking away from it.