Don't Let the Theranos Trial Deter You From Being an
Entrepreneur
For
every lying scoundrel like Elizabeth Holmes, there are thousands of folks
grinding it out to get new companies off the ground. They deserve our attention
and our dollars.
BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN
The much-anticipated verdicts of the Elizabeth
Holmes/Theranos trial will definitely send some complicated messages (good and
bad) to entrepreneurs around the world. In cases like this one, it's useful to
try to put the entire proceedings into some realistic context. There is
definitely going to be a time of mixed emotions - somewhat like watching your
mother-in-law go over a cliff in your brand-new car. And it's gonna take some
explaining.
However this media circus and huge waste of
time and resources turns out won't be especially good news for the millions of
honest, hard-working men and women who are trying to start or sustain their own
dreams and turn their visions into real enterprises. Whatever the technical,
hyper-legal outcome may be, to the average citizen, Theranos is a big black
stain on eager entrepreneurs. The trick for all of us is to not let the trial,
the turkeys, and the decision that takes place get us down, dismayed or discouraged.
Every entrepreneur knows that life - and especially the law - is never fair. If
it was, we'd deserve all the nasty things that happen to us along the path to
eventual success.
A positive approach is especially important
for the folks who are in the trenches every day trying to raise the
often-modest funds that are essential to sustain and keep building their
businesses. We're not talking about billions-chasing bullshit spewed by
blondes in black turtlenecks here, but the bucks needed to keep the
doors open and the companies moving forward. And we're also not talking about
the greedy, ignorant, and allegedly sophisticated investors and VCs who
will still be running around like headless chickens,
carelessly tossing around tens of millions of dollars as they look for the next
great deal long after the Theranos dust has settled. Those guys never learn
anything from their losses. They just keep betting that they'll get lucky the
next time.
We need to be sure that the stain and stigma
of Elizabeth and Sunny Balwani (her ex-boyfriend and co-conspirator) and the
whole "fake it 'til you
make it" culture that they unfortunately represent doesn't stifle
the steady and substantial stream of new capital investments we've seen over
the last few years into all sorts of startups from investors of every size and shape.
Right now, nothing could be more important to
our country's long-term health and growth than honest and solid innovation in
the area of medical technology, although fixing education is certainly a close
second. We can't let the lies and frauds of these two phony fantasists dissuade
or discourage serious investors from continuing to support the efforts and
investigations of real entrepreneurs in these crucial areas.
And speaking of Sunny B, whose separate trial
will begin shortly, I'm a little concerned, as a lawyer, that the current jury
will be just confused and misled enough by Elizabeth's lawyers to give the poor
little dear a pass and justify it by assuming that the evil and manipulative
Sunny will get creamed in his trial and that's how "justice" will be
served. As much as she play-acted the hapless and naïve young waif at the
trial, this woman is a convincing liar and a sociopath who was willing to keep
risking patients' lives with her seriously flawed testing and fake "black
box" machines. One lesson Sunny will learn for sure is that when you get
in a cage with a tiger, you're not a visitor or a spectator, and you're
certainly not in charge. The fact is that you're soon to be lunch.
So, when the topic of Theranos and what
happened there comes up, as it inevitably will with friends, family, and
especially prospective financing partners, you want to be sure (unlike
the Democrats who can't
seem to get even the simplest story straight these days) that you've got some
honest and straightforward answers and explanations. Here are some suggestions.
1. What Passes
for Truth in a Courtroom has Nothing to Do with the Real World
Honestly, between the original Wall Street Journal
articles, the book(s), the podcasts, and the daily coverage and commentary
about courtroom testimony, the entire outside world clearly knows the truth
about the Theranos scam. They know who the prime mover and liar-in-chief was
during the many years the fraud persisted. In fact, and sadly, the only folks
likely still in the dark about the sum total consequences and impact of Holmes'
lies are the poor members of the jury. They have to deal with bizarre rules of
evidence and exclusion, extensive and often conflicting instructions from the
judge, and flat-out half-truths and lies by the defendant and her lawyers. As
the saying goes, 99% of lawyers give the others a bad name.
2. The Primary
Defense Objective in a Criminal Trial is Confusion and Doubt, not Truth
It's more disgusting than merely disingenuous
when highly paid senior attorneys spend days attempting to confuse and mislead
jurors about timeframes using years-old documents to claim current connections.
Or highlighting positive "discussions" that ultimately went nowhere
and ended in rejections and disclaimers rather than contractual commitments. Or
alleging the failures and shortcomings of many company employees and senior
executives (some deceased but not to the jury's knowledge). And, above all,
there's the defense's constant assertion of their client's alleged ignorance
concerning fundamental parts of the company's business, finances and
operations. Never mind that she spent years telling the entire world that the
company was owned by her, tightly managed under her direct supervision, and all
part of her special talent and genius.
And then, of course, there's the utter BS
about her romantic relationship with her long-time business partner and lover -
now conveniently turned abuser. Interestingly enough, toward the end of the
trial the defense largely abandoned the "poor picked-on me" pleas -
perhaps realizing that they really didn't square with the other days of
Holmes's testimony. They decided to not even call their expert witness on
abusive relationships to testify - again perhaps realizing that even the jury
would realize that for every courtroom "expert", there's an equal and
opposite expert standing right around the corner.
3. When Even the Best
Initial Intentions Collide with Life's Harsh Realities and Lie After Lie
Follows - Fraud is the Result
This case has nothing to do with medicine or
science since the Theranos machines never worked as repeatedly
described and promised by Holmes. The entire question is simply about whether claiming
that Holmes was just "trying really hard" and had the "best of
intentions" when she began more than a decade ago justifies and excuses
(a) her continuous and current lies to countless people after she knew the
Edison machines were deeply flawed; and (b) whether her at-best- deluded belief
that the machines would someday work is somehow an effective defense to (i) the
clear evidence from her own taped conversations, in which she makes knowingly
false statements; (ii) doctored pharma documents, which she faked and then
offered up as pharma endorsements; (iii) fictitious and fudged test results as
well as tens of thousands of belatedly voided and canceled tests - all for real
patients; (iv) repeated claims about the broken Theranos boxes performance while
secretly doing thousands of tests on third-party machines, and, of
course, (v) the many lies about actual in-theatre use by the armed forces.
In some respects, it's unfortunate that the
government took on the extra burden of a criminal fraud proceeding where intent
is a crucial element of the burden of proof instead of a civil action where -
even as proficient a liar as Ms. Holmes - wouldn't have had a snowball's chance
of overcoming the cumulative and compelling amounts of testimony and evidence
in order to avoid serious liability.
As always, no one puts these complex questions
more simply than Bruce Springsteen. As he asks in The River: "Is a dream a
lie if it don't come true - or is it something worse?" In this case, it's
a crime.
JAN 3, 2022
The
opinions expressed here by Inc.com columnists are their own, not those of
Inc.com.