The U.S. Securities and Exchange Commission announced Wednesday it charged the CEO of Theranos, Elizabeth Holmes, with massive fraud, along with the former president of the company, Ramech Balwani.
The two of them allegedly raised more than $700 million dollars from investors on what the SEC calls “an elaborate, years-long fraud.” This alleged fraud included lying about partnerships with the Department of Defense, grossly exaggerating revenue, and deceiving investors (and media) about the abilities of its products. Holmes and Balwani agreed to resolve the charges.
For many in the biotech and health worlds, this charge is a long time coming. In fact, many are pushing for future criminal charges. But the fraud itself is only the tip of the iceberg for the larger Theranos problem.
“The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, Director of the SEC’s San Francisco Regional Office. She is referring to the common white lies and exaggerations told by startups to potential investors. But I think there is an even greater problem at play, making the Theranos scam possible: Women in STEM.
I am a woman. So I do not come to this conclusion lightly. I mentor women, I write about health tech and innovation by women, I connect women, and at present 100 percent of my employees in my health-related company are women with graduate degrees in the sciences. And we, women in STEM, failed to see Theranos for what it was.
How Did We Miss This?
I blame myself and my peers in the STEM movement for not holding Elizabeth Holmes or Theranos to the same rigor and skepticism as we do so many other “innovators” or potential “disruptors.” I also blame the STEM movement for allowing itself in many cases to become watered down. I’d go as far as to contend that in many organizations STEM is nothing more than a box to check that gets them extra funding and positive PR. It’s been stolen by any and every organization that wants to claim they’re making a difference. And without discernible metrics to show there have been advancements in the roles of women, we were desperate to see an example of what can be done.
Admittedly, it was refreshing to see a woman — a young woman — taking the business, health and technology arenas by storm. To see her on the cover of magazines (including ones I write for) as the youngest self-made female billionaire was remarkable. A college dropout, who by 30 was on the verge of breaking every glass ceiling in business and science we wanted to see broken.
Thus, she is the perfect example of what blinding desire can bring you: blindness. We overlooked the flaws. The significant, glaring, horrific flaws. The flaws that on the backend should embarrass everyone who followed her around oohing and ahhing. And that happened everywhere she went.
Elizabeth Holmes was paraded around by handlers at TEDMed in 2014 to keep the medical community in attendance from overwhelming her. In 2015, she spoke at the Forbes Health Summit — interestingly so did Martin Shkreli — about how she was “revolutionizing” health. I spoke with her at both of those events. And admittedly, I didn’t understand why people found her appealing. Her attitude was aloof, and she appeared constantly annoyed that I had questions. I left all of my encounters with her thinking I was missing something. And I was. But it wasn’t what I thought.
I missed the truth. The truth is that she was too good to be true.
And as the SEC charges came out, it was easy to feel some relief that Holmes is being punished. She agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. But that doesn’t solve the larger problem, nor prevent it from happening again.
It’s hard enough to be a woman in these spaces and be taken seriously. The last thing we needed was to create a demigod of a woman we misjudged for the sake of women in STEM. According to the Department of Commerce Economics and Statistics Administration Office of the Chief Economist (OCE), overall recipients of undergraduate degrees are roughly the same when it comes to women and men. However, women only account for about 30 percent of all STEM degrees. Additionally, women with STEM degrees are still less likely than their male counterparts to work in a STEM occupation.
There is far too much work to be done for us to allow another Elizabeth Holmes. If women (and men) are serious about advancing the fields of science, technology, engineering and math, it’s time we stop letting mediocre slide. For the sake of women who work tirelessly at the bench, in the lab, in the field, and in ivory towers, we need to be as aware, thoughtful and critical of our own work and progress as we are of everyone else’s.