The scandal of Elizabeth Holmes, who was once considered a female version of Steve Jobs, has completely changed the Silicon Valley startup world.
When Alice Zhang raised funds for her medical technology company in 2018, investors repeatedly questioned Theranos, the startup that collapsed during the Elizabeth Holmes scandal that same year.
At the Stanford University event, an advisor told Alice Zhang that the people sitting below were constantly chatting about Holmes when Zhang introduced his biological company.
This really confused Zhang. Her startup, Verge Genomics, uses artificial intelligence to transform drug-making technology. This technology is completely different from using blood to diagnose the health of Theranos.
It’s hard to avoid comparisons
Elizabeth Holmes was a star in the startup world when she founded Theranos, with the goal of revolutionizing blood testing. However, everything is just a “trick” of the century.
After being accused of using conventional testing technologies to falsify results, Theranos was completely shut down in 2018.
Elizabeth Holmes at a trial in May. Photo: Reuters.
When Verge Genomics raised funds later that year, a prominent journalist wrote an article comparing Zhang and Holmes. Though the comparisons fade as the startup grows, the 32-year-old CEO still hears similar stories from other female founders.
“I don’t see any similarities other than that we are both women working in science,” Zhang said.
Businesswomen, especially those in the biotech and health sectors, still have to operate in the shadow of Elizabeth Holmes. Although Theranos closed in 2018, Holmes still left a grudge about the next female founder.
Elizabeth Holmes dropped out of Stanford University at the age of 19 and became a star in the startup world. In 2003, she founded Theranos.
Holmes was soon hailed as the next Steve Jobs and became the world’s youngest billionaire. But after the 2015 investigation of Wall Street Journal Regarding this female CEO’s lying claims, her image deteriorated rapidly.
The trial on August 31, trialing Holmes on charges of deceiving investors, doctors and patients could create new prejudices for female founders.
Many say they always have to prove themselves part of a male-dominated startup sector. Since the allegations about Elizabeth Holmes broke out, they have had to further contend with the assumption that they are like Holmes.
Alice Zhang says comparisons to the Theranos founder have perplexed her. Photo: The New York Times.
Heather Bowerman, founder of startup DotLab, has also been troubled by Theranos for years. DotLab is the company that developed the test to identify endometriosis in 2016.
At meetings with investors, she is often asked to explain how DotLab will be different from Theranos. The company then planned to publish its results in peer-reviewed scientific journals, something Theranos never did.
However, Ms. Bowerman once decided to stop raising capital from venture capitalists and rely on government grants to help make DotLab a success.
In 2019, Heather Bowerman’s startup raised 12 million USD venture capital. Even so, the stigma attributed to Elizabeth Holmes persisted.
“Investors are still hesitant to fund a medical diagnostics company,” Ms. Bowerman said.
Julia Cheek, founder of home health company Everly Health, said at a 2019 conference she was repeatedly compared to Holmes. This happens so often that Cheek’s advisor suggests she dye her hair to stop all comparisons. Both Cheek and Holmes have blonde hair, however Julia Cheek refused to change her hair color.
Long term prejudice
When discussing with investors, female founders are often asked “hedging” questions in a negative form, in order to prevent losses.
However, male founders are often asked “promotional” questions about a startup’s capabilities, allowing them to focus on their hopes and ideals.
Elizabeth Holmes idolized Steve Jobs and often imitated his way of dressing. Photo: New York Times.
“Because of Holmes, female founders are increasingly exposed to hedging questions,” Andy Coravos, founder of healthcare company HumanFirst, tells WebMD. New York Times.
Many female entrepreneurs say they also feel trapped in a startup ecosystem that celebrates businesses taking shortcuts to growth, and investors who tolerate rule-bending.
Beth Esponnette, founder of Unspun, an apparel company, said investors have regularly encouraged her to be upbeat to the point of dishonesty. Someone once advised her to increase her sales forecast tenfold, an unrealistic level.
“Holmes’ actions were inexcusable. But I believe she thought she was following popular Silicon Valley advice, pretending until it was true,” Ms. Esponnette said in a statement. his posts.
Lola Priego, the founder of the medical company Base, is often compared with Theranos at least once a week. They come from potential partners, advisors, investors, customers and reporters.
Priego understands the need for skepticism, as healthcare startups should be taken seriously to prevent negligence.
Usually, the comparisons stop when people learn that Base works with Quest Diagnostics, a multinational company.
Theranos is the biggest scam in Silicon Valley to date. Photo: Reuters.
The biggest shock came from a scientific advisor Priego tried to recruit in 2019. This person joined the meeting only to tell her that bringing technology into healthcare like Theranos was detrimental. for industry.
In July, Verge Genomics signed a three-year partnership with pharmaceutical giant Eli Lilly to research drugs to treat amyotrophic lateral sclerosis.
“The hardest part of a company is the early stages, when you have to convince investors about the people, the vision and the idea. Comparisons because of Elizabeth Holmes and Theranos are really damaging and limit the potential for growth,” said Alice Zhang.
About to hear the case that shocked Silicon Valley
Elizabeth Holmes, the director of the classic Silicon Valley scam, is due in court next week.