The suddenly sober mood of 2016 is extending to Silicon Valley. The tech sector’s experiencing a sense of caution and maybe a renewed commitment to diligence after much exuberance. Part of that is something Fast Company calls the “Theranos effect.”
The rise and fall of the once-promising health technology startup is a warning for investors chasing the next unicorn. But it’s also a lesson for PR practitioners and journalists. The Theranos narrative is about the triumph of PR and optics over substance and maybe even science.
Through its telegenic founder Elizabeth Holmes, Theranos articulated a bold vision: it would completely upend the traditional diagnostic laboratory industry by offering over 200 medical tests at a fraction of the price of established labs, and with far less discomfort and blood – just a fingerprick’s worth, in fact. In 2014 Fortune put Holmes on its cover. She was featured in a lengthy profile in The New Yorker, interviewed by dozens of women’s and lifestyle publications and lionized on the women-in-technology circuit. Time magazine named her one of the 100 Most Influential People of 2015. Theranos was valued at an impressive $9 billion.
But the story started to fray after the Wall Street Journal reported that, in contrast to the innovative promise of the fingerprick, Theranos was using the same technology as conventional labs for all but one of its blood tests. Other doubts came to light, and the media, smelling – well, blood, began to pile on. Holmes responded to the challenges, but skepticism persists, and the company still hadn’t opened its scientific methodology to outside scrutiny.
Things may yet turn, but it’s safe to say that the Theranos story grew out of proportion to the reality. One factor is the recent frothy environment for technology startups. Many think there’s simply been too much money chasing deals.
But there are other reasons – a lack of media diligence, a PR strategy that ignored science in favor of personality, and our desperate need to believe in the next technology hero – or heroine.
Holmes was great PR because she seemed right out of central casting. Her emergence as a 30-year-old, newly minted billionaire (on paper); her story (well-connected Stanford student drops out of school to pursue her word-changing idea); and her role as disruptor of the healthcare status quo and champion of personal healthcare empowerment was irresistible to media. She was the Silicon Valley version of a triple threat.
Connections led to more connections. Holmes happened to be a friend of the daughter of Tim Draper of legendary VC Draper Fisher Jurvetson, who kicked in the first $1 million of financing. And with the cash came credibility, and more contacts. Holmes ultimately assembled a Board of Directors with boldfaced names like ex-Secretaries of State Henry Kissinger and George Shultz, among others. With such heavyweights, no one seemed to notice the relative absence of scientific experts or practicing medical professionals.
Media follow media. It’s a dirty secret in PR. When it comes to a hot story, sometimes all you need to do is crack that first feature. Journalists can have a herd mentality even as they scramble for a fresh take, coverage begets more coverage, and the hits just keep rolling in. Although some details seem odd in hindsight, there were few tough questions. The story was just too good, and there was something for everyone, from Holmes’ lofty idealism to her closet full of black turtlenecks.
Finally, there’s gender. You can’t underestimate the influence of Holmes status as a young, blonde woman at the helm of a technology company with a sexy story.
She was the sole female chemical engineering student in her class at Stanford University. She took risks that led her to the rarefied air of so-called unicorn founders, where women are more than scarce. As Fortune – which has done plenty of post-mortem coverage as Theranos has fallen – points out, “the media is desperate for a woman to hold up as a model of success at this level.”
And it’s true. Anyone with a female tech-company founder as a client knows how hot the demand is for speaking opportunities, profiles, and board memberships for women in tech. Silicon Valley has been justly criticized for female-unfriendly policies, and the Theranos story was an inspiring change to the drumbeat of recrimination.
For its part, the women’s media are equally hungry for stories about brilliant, ambitious young females who are breaking barriers. As Elle magazine’s Mattie Kahn says, “feminists need CEO Elizabeth Holmes.” Everyone needed her, because everyone benefited from the Elizabeth Holmes that the PR machine created. So much that they were willing to ignore the science (or lack of it), defer the hard questions, and overlook the unusual degree of secrecy around Theranos. As annoying questions about the “stealth research” and lack of peer-reviewed literature arose, the company doubled down on the personal narrative and the challenge to the status quo. That’s a defense that works only if the scientific underpinning is in place.
Now the backlash has begun, and the press will scrutinize every move at Theranos from here on. That’s okay. But there’s a danger that they’ll overreact and demonize Holmes, not because of her gender, as some suggest, but in their embarrassment and haste to do what they should have done in the first place. In cases like these there’s always the risk of a media pile-up because they feel they’ve been duped.
A better approach by the company would have involved a positioning informed by science, a communications approach more in line with reality, and a narrative reflecting the inspiring potential of the technology instead of one dominated by a cult of personality. The right role for journalists is to hold Theranos to its commitment to disclose its data as promised, not to crucify it.
It will be unfortunate if Theranos crashes and burns, because it could still be a great narrative and a successful business. And I’d like to think that there are many future Elizabeth Holmeses in waiting, and that, one day soon, one of them will go all the way.