this week it’s theranos part 2 the
epilogue I’m gonna tell you why is this
board got so much orange riding on it
and how do entrepreneurs get in damn big
theranos a year ago I did part one of
the case study as a matter of fact it
was August of 2017 and it’s a little bit
less than a year from right now as we’re
filming this I went through and looked
at everything and it was clear that
there was fraud lies deceptions and big
problems and suits but so much more even
worse has come let’s look at a quick run
through history to catch you up a little
bit if you’re interested go watch that
full case study we’re following up in a
series we did last week on failures and
this one was a pretty big failure Thera
knows but I’ll catch you up a little bit
here and then I’m gonna take you through
two things one how do entrepreneurs get
in trouble what are those things in the
psyche of an entrepreneur that causes
them to lose track of truth and to lose
track of reality and to stay in a mode
of denial and run forward and end up in
big trouble and how’s the way it’s
supposed to work there’s a structure to
venture capital with milestones along
the way and I’m going to take you
through that which would be important
lesson for all of you they’re about to
walk that path for your business
theranos you will call last year in the
case study I made an interesting flub I
said she dropped out of Harvard even
though the title of the video we said
she dropped out of Stanford because I
was thinking about all these drop
outside gates and Zuckerberg that had
dropped out of Harvard but to be clear
she drops out of Stanford and then goes
and builds the company through amazing
contacts and her family she gets George
Shultz who’s Secretary of State at one
point time Henry Kissinger also
Secretary of State at one time and an
amazing board of directors that were
helping other people be confident I
think that was one of the first problems
people were believing in and confident
and a board of director that had no
medical experience but they had plenty
of celebrity cachet secretaries of
states pillars of government but those
aren’t the people that are gonna write
peer review and get your product passed
by the FDA nonetheless it was people
that caused investors such as Tim Draper
Rupert Murdoch and Larry Ellison to be
very excited about it and be wow what a
wizkid this Stanford dropout is
look at all the people on the board so
there was a lot of enthusiasm that went
along that way and along the way there’s
a suicide of a prominent researcher
inside theranos and the first thing the
Elizabeth Holmes does is over 24-hour
period worries about getting his laptop
back and securing company data why the
secrecy didn’t want people to know
didn’t want to dive in and find the
truth
well there’s a lot of people that
question that and there’s even some
calls for folks who really want to
investigate the suicide and find out
what was on this guy’s mind that was so
tumultuous so deep they routed off
himself nonetheless it brought some
early seeds of doubt but the PR machine
and an amazing board was in full speed
driving full ahead
before long were ten years into the
theranos sly and guess where suddenly
she’s becoming a household names the
cover of Forbes on June 30th 2014
then Forbes 400 the Forbes 400 is the
list of billionaires and suddenly she’s
the youngest self-made female
billionaire on the list then ink
magazine calls her the next Steve Jobs I
happen to think that title is a little
bit click bTW but nonetheless ink was up
in the same PR Cyclone that everybody
else was and putting her on the cover
then truth comes in the form of the Wall
Street Journal and a brave reporter
named John Kerry rue who fought against
people that tried to intimidate him push
the story back but he did his research
and did what now we all know was a
fabulous reporting job in his book bad
blood so if you want to see the entire
story step by step by step you can read
bad blood I’m gonna take you through why
I think Elizabeth Holmes ran the red
light and kept perpetuating a lie how
you can avoid it and how the venture
capital cycle has natural red light
green lights it’s also an important
lesson for you so when she runs her last
red light she ends up an 11 count
indictment once upon a time she was a
darling of the media on the cover of the
Forbes 400 issue and a member of the
Forbes 400 means she was one of the
youngest female billionaires ever on the
list but that’s all gone now
what isn’t gonna
is the fact forever in history she’s
gonna be known as the girl that started
this company had all these amazing
people on her board and then ended up
with eleven count indictment eleven
counts and there’s only one word for
that and that is damn you managed to
turn eleven years into an 11 count
indictment that’s pretty cool stuff I
hope she ends up in Danbury and by the
way that’s kind of the reason that I’ve
made everything orange because I think
it’s a color she needs to get used to as
opposed to wearing black and
impersonating Steve Jobs or claiming
that she was inspired and she was no
Steve Jobs I don’t know who she was
now this 11 count indictment I think
should be treated differently than a
white-collar crime because you deceived
investor and you’re making a social
media app why do I think that we’re both
are lies and those investors get hurt
bad by the loss of their money but this
is biotech people are going into
Walgreens thinking they could just have
their little child’s finger prick so it
won’t be so traumatic to have blood
taken and they can find out things to
make health decision about their kids
that’s not a social media app that is
running red lights and lying about it as
the public is depending on this as they
make health decisions about themselves
family and kids no bueno
I hope that this 11 count indictment is
pressed hard by the federal government
and it she actually does time now let’s
shift to how did it happen to Elizabeth
Holmes and why does it happen to some
entrepreneurs a lot of you have asked me
to dive deeper into the why and
wherefore ‘he’s involved at the base of
the case study rather than just taking
you on a tour through the history well I
think there is a tour of history that
was needed today that kind of catch us
up a little bit but now I want to go
here and where here is I believe there
is an intersection of two points and the
first was ego and the second was hubris
ego it’s this unbridled passionate
conviction that you can do it that
nothing can stand in your way and you
have a huge ego about your abilities
your opinion and your kind of
unassailable for people to talk to you
and when you have a hyper inflated ego
there’s usually control things that you
find in those organizations people with
a big ego don’t like to admit they’re
wrong and sometimes they’ll control
information flows coming
to and from them that was something
Elizabeth Holmes did and then on this
side there’s hubris excessive self
arrogance denial of truth and prohibit
truth from getting you
I believe these came together in the
case of Elizabeth Holmes and you see
that little drop of blood that is truth
slowly bleeding to death as she
perpetuated the lies and denials high
control system secrecy it was ego and
hubris and denial and control coming
together ultimately the death of truth
that’s what happened what are the courts
call it fraud perjury lies deception and
those are words that ended up in the
eleven count indictment I think this is
a risk that entrepreneurs can run into
you need people around you to help keep
your ego in check I’m sure you’ve heard
the phrase you also need people there to
draw down your hubris if your excessive
self-confidence is preventing you from
looking with transparency and reality at
the results are in front of you we all
want our startups to work we all believe
if you just give us one more day
one more round of financing one more
shot that we’ll be able to get the
business to hear but we need people
around us to say doc it’s time to stop
working this patient’s dead and it hurts
and it’s failure but it’s also a
learning nonetheless if this happens
those companies will run right off the
cliff by arrogant CEOs full of pride ego
and hubris and every dollar that’s on
the Shelf is burned to death in the
process probably one or two more rounds
of venture funding than are necessary
now I’m not making excuses for Elizabeth
Holmes I believe this can happen to a
lot of people but once you cross the
line and she certainly did she is
forever accountable and liable for the
lies deceptions and fraud which were
crimes now let’s go to something a
little more upbeat because I think I’m
very clear when I say I believe she
should be in jail for what she did spare
us the trial pliat take her 24 months
but she should do time nonetheless
that’s how I feel let’s move over here
to something a little more upbeat and
look at how the process should work
which should be a lesson for
entrepreneurs
this is how it should work and if you
avoid this you can let this do its thing
we have here a concept and an
entrepreneur maybe you and we have a
need for investment maybe the first
investment is bootstrapping
taking dollars usually less than $50,000
for you don’t take a salary you use what
you can you scrape together $50,000 and
maybe not it’s all at once maybe it’s
over a period of six months where you
work part-time jobs and you’re putting
money in your pocket and you’re working
late coding nonetheless the
bootstrapping process is just that it’s
bootstrapping where you’re trying to get
your idea to a certain milestone when
you reach that first green light and you
say I think I approve through my
bootstrapping and what I’ve done that
there’s something here I believe it’s a
green light and you go get seed
financing that could be friends and
family or others nonetheless if you
proceed down here from seed to series a
the series B and you move along you also
could move along to say you know what
this isn’t turning out the way I wanted
and perhaps you pivot and as you pivot
you can be on a new line also with red
lights or green lights as you move
forward lastly there’s the line where
you simply admit defeat a lot of people
want to blame the fact that couldn’t get
further investment every time literally
every time I’ve questioned and dove into
it it’s usually one of two things
product or market the market wasn’t
ready or the market didn’t take the
product because the product wasn’t right
there you have it it’s rarely related to
oh we just simply ran out of money but
we had this incredible great product you
know you could argue that but I have
most often seen in the three keys
product team and market that product and
market are the two where you miss on
product or you miss market timing you
could reach a red light after pitching
50 people when you’re running out of
money and then you blame it on the fact
that none of them invested now wait a
minute what was in there was it perhaps
that you were living in a little bit of
a dream and after 50 people you couldn’t
find one that believed more money should
be put in this for the next milestone
it’s a process that works but you need
people around you to control your ego
and to control the influx of hubris so
we can transparently and objectively
look at the business and say we have got
this we believe in it we just need to
get a little more funds and move here
and we’re gonna find an investor that
believes in it with us or guys we’ve
gone to 70 investors none of them
believe it it’s either product or market
there’s a variety of opinions are out
there but we’ve reached the end of the
line and there’s no technology we can
seek here in pivot so thank you for the
ride we’re done go back and look at my
case study we did on uber and you’re
gonna see how Travis kalanick was part
of some startups that actually failed
they made him stronger as a CEO as he
built Ober and we all know that he had
his flaws and everything that went with
it and he lost his job for that for the
culture and for things that were
happening there but if you go back and
look at the development of him as a CEO
part of this failure process this red
light process that he went through early
in his career is part of the learning
and the refining process of some of the
greatest entrepreneurs out there I hope
those two lessons about how ego and
hubris can come together to kill truth
and make a huge problem for you as the
entrepreneur and how the process that
you’re gonna go through with its natural
red light green light process is very
helpful so that you understand where you
are and you see this as a compass I’m
gonna do an extended educational program
on this in the near future that I think
you’ll find valuable so what do you
think about theranos leave some comments
below how do you feel that this is
shaking out for her should other things
have happened we want to hear your
opinion and it also helps me craft my
next case studies you can also follow me
on Instagram and Facebook where I have a
new business page and please subscribe
to value tainment and remember we’re on
a mission to get to a million
subscribers and when we do the first
annual value tainment entrepreneur
conference featuring Patrick bet David
yours truly the biz doc and other
leaders talking about entrepreneurship
as we seek to make you better your
company better your employees better and
the people you serve with that company
friends and families and customers
better still until next time I’m Tom
Miller with the biz doc and I hope I
left you better than I found you you
epilogue I’m gonna tell you why is this
board got so much orange riding on it
and how do entrepreneurs get in damn big
theranos a year ago I did part one of
the case study as a matter of fact it
was August of 2017 and it’s a little bit
less than a year from right now as we’re
filming this I went through and looked
at everything and it was clear that
there was fraud lies deceptions and big
problems and suits but so much more even
worse has come let’s look at a quick run
through history to catch you up a little
bit if you’re interested go watch that
full case study we’re following up in a
series we did last week on failures and
this one was a pretty big failure Thera
knows but I’ll catch you up a little bit
here and then I’m gonna take you through
two things one how do entrepreneurs get
in trouble what are those things in the
psyche of an entrepreneur that causes
them to lose track of truth and to lose
track of reality and to stay in a mode
of denial and run forward and end up in
big trouble and how’s the way it’s
supposed to work there’s a structure to
venture capital with milestones along
the way and I’m going to take you
through that which would be important
lesson for all of you they’re about to
walk that path for your business
theranos you will call last year in the
case study I made an interesting flub I
said she dropped out of Harvard even
though the title of the video we said
she dropped out of Stanford because I
was thinking about all these drop
outside gates and Zuckerberg that had
dropped out of Harvard but to be clear
she drops out of Stanford and then goes
and builds the company through amazing
contacts and her family she gets George
Shultz who’s Secretary of State at one
point time Henry Kissinger also
Secretary of State at one time and an
amazing board of directors that were
helping other people be confident I
think that was one of the first problems
people were believing in and confident
and a board of director that had no
medical experience but they had plenty
of celebrity cachet secretaries of
states pillars of government but those
aren’t the people that are gonna write
peer review and get your product passed
by the FDA nonetheless it was people
that caused investors such as Tim Draper
Rupert Murdoch and Larry Ellison to be
very excited about it and be wow what a
wizkid this Stanford dropout is
look at all the people on the board so
there was a lot of enthusiasm that went
along that way and along the way there’s
a suicide of a prominent researcher
inside theranos and the first thing the
Elizabeth Holmes does is over 24-hour
period worries about getting his laptop
back and securing company data why the
secrecy didn’t want people to know
didn’t want to dive in and find the
truth
well there’s a lot of people that
question that and there’s even some
calls for folks who really want to
investigate the suicide and find out
what was on this guy’s mind that was so
tumultuous so deep they routed off
himself nonetheless it brought some
early seeds of doubt but the PR machine
and an amazing board was in full speed
driving full ahead
before long were ten years into the
theranos sly and guess where suddenly
she’s becoming a household names the
cover of Forbes on June 30th 2014
then Forbes 400 the Forbes 400 is the
list of billionaires and suddenly she’s
the youngest self-made female
billionaire on the list then ink
magazine calls her the next Steve Jobs I
happen to think that title is a little
bit click bTW but nonetheless ink was up
in the same PR Cyclone that everybody
else was and putting her on the cover
then truth comes in the form of the Wall
Street Journal and a brave reporter
named John Kerry rue who fought against
people that tried to intimidate him push
the story back but he did his research
and did what now we all know was a
fabulous reporting job in his book bad
blood so if you want to see the entire
story step by step by step you can read
bad blood I’m gonna take you through why
I think Elizabeth Holmes ran the red
light and kept perpetuating a lie how
you can avoid it and how the venture
capital cycle has natural red light
green lights it’s also an important
lesson for you so when she runs her last
red light she ends up an 11 count
indictment once upon a time she was a
darling of the media on the cover of the
Forbes 400 issue and a member of the
Forbes 400 means she was one of the
youngest female billionaires ever on the
list but that’s all gone now
what isn’t gonna
is the fact forever in history she’s
gonna be known as the girl that started
this company had all these amazing
people on her board and then ended up
with eleven count indictment eleven
counts and there’s only one word for
that and that is damn you managed to
turn eleven years into an 11 count
indictment that’s pretty cool stuff I
hope she ends up in Danbury and by the
way that’s kind of the reason that I’ve
made everything orange because I think
it’s a color she needs to get used to as
opposed to wearing black and
impersonating Steve Jobs or claiming
that she was inspired and she was no
Steve Jobs I don’t know who she was
now this 11 count indictment I think
should be treated differently than a
white-collar crime because you deceived
investor and you’re making a social
media app why do I think that we’re both
are lies and those investors get hurt
bad by the loss of their money but this
is biotech people are going into
Walgreens thinking they could just have
their little child’s finger prick so it
won’t be so traumatic to have blood
taken and they can find out things to
make health decision about their kids
that’s not a social media app that is
running red lights and lying about it as
the public is depending on this as they
make health decisions about themselves
family and kids no bueno
I hope that this 11 count indictment is
pressed hard by the federal government
and it she actually does time now let’s
shift to how did it happen to Elizabeth
Holmes and why does it happen to some
entrepreneurs a lot of you have asked me
to dive deeper into the why and
wherefore ‘he’s involved at the base of
the case study rather than just taking
you on a tour through the history well I
think there is a tour of history that
was needed today that kind of catch us
up a little bit but now I want to go
here and where here is I believe there
is an intersection of two points and the
first was ego and the second was hubris
ego it’s this unbridled passionate
conviction that you can do it that
nothing can stand in your way and you
have a huge ego about your abilities
your opinion and your kind of
unassailable for people to talk to you
and when you have a hyper inflated ego
there’s usually control things that you
find in those organizations people with
a big ego don’t like to admit they’re
wrong and sometimes they’ll control
information flows coming
to and from them that was something
Elizabeth Holmes did and then on this
side there’s hubris excessive self
arrogance denial of truth and prohibit
truth from getting you
I believe these came together in the
case of Elizabeth Holmes and you see
that little drop of blood that is truth
slowly bleeding to death as she
perpetuated the lies and denials high
control system secrecy it was ego and
hubris and denial and control coming
together ultimately the death of truth
that’s what happened what are the courts
call it fraud perjury lies deception and
those are words that ended up in the
eleven count indictment I think this is
a risk that entrepreneurs can run into
you need people around you to help keep
your ego in check I’m sure you’ve heard
the phrase you also need people there to
draw down your hubris if your excessive
self-confidence is preventing you from
looking with transparency and reality at
the results are in front of you we all
want our startups to work we all believe
if you just give us one more day
one more round of financing one more
shot that we’ll be able to get the
business to hear but we need people
around us to say doc it’s time to stop
working this patient’s dead and it hurts
and it’s failure but it’s also a
learning nonetheless if this happens
those companies will run right off the
cliff by arrogant CEOs full of pride ego
and hubris and every dollar that’s on
the Shelf is burned to death in the
process probably one or two more rounds
of venture funding than are necessary
now I’m not making excuses for Elizabeth
Holmes I believe this can happen to a
lot of people but once you cross the
line and she certainly did she is
forever accountable and liable for the
lies deceptions and fraud which were
crimes now let’s go to something a
little more upbeat because I think I’m
very clear when I say I believe she
should be in jail for what she did spare
us the trial pliat take her 24 months
but she should do time nonetheless
that’s how I feel let’s move over here
to something a little more upbeat and
look at how the process should work
which should be a lesson for
entrepreneurs
this is how it should work and if you
avoid this you can let this do its thing
we have here a concept and an
entrepreneur maybe you and we have a
need for investment maybe the first
investment is bootstrapping
taking dollars usually less than $50,000
for you don’t take a salary you use what
you can you scrape together $50,000 and
maybe not it’s all at once maybe it’s
over a period of six months where you
work part-time jobs and you’re putting
money in your pocket and you’re working
late coding nonetheless the
bootstrapping process is just that it’s
bootstrapping where you’re trying to get
your idea to a certain milestone when
you reach that first green light and you
say I think I approve through my
bootstrapping and what I’ve done that
there’s something here I believe it’s a
green light and you go get seed
financing that could be friends and
family or others nonetheless if you
proceed down here from seed to series a
the series B and you move along you also
could move along to say you know what
this isn’t turning out the way I wanted
and perhaps you pivot and as you pivot
you can be on a new line also with red
lights or green lights as you move
forward lastly there’s the line where
you simply admit defeat a lot of people
want to blame the fact that couldn’t get
further investment every time literally
every time I’ve questioned and dove into
it it’s usually one of two things
product or market the market wasn’t
ready or the market didn’t take the
product because the product wasn’t right
there you have it it’s rarely related to
oh we just simply ran out of money but
we had this incredible great product you
know you could argue that but I have
most often seen in the three keys
product team and market that product and
market are the two where you miss on
product or you miss market timing you
could reach a red light after pitching
50 people when you’re running out of
money and then you blame it on the fact
that none of them invested now wait a
minute what was in there was it perhaps
that you were living in a little bit of
a dream and after 50 people you couldn’t
find one that believed more money should
be put in this for the next milestone
it’s a process that works but you need
people around you to control your ego
and to control the influx of hubris so
we can transparently and objectively
look at the business and say we have got
this we believe in it we just need to
get a little more funds and move here
and we’re gonna find an investor that
believes in it with us or guys we’ve
gone to 70 investors none of them
believe it it’s either product or market
there’s a variety of opinions are out
there but we’ve reached the end of the
line and there’s no technology we can
seek here in pivot so thank you for the
ride we’re done go back and look at my
case study we did on uber and you’re
gonna see how Travis kalanick was part
of some startups that actually failed
they made him stronger as a CEO as he
built Ober and we all know that he had
his flaws and everything that went with
it and he lost his job for that for the
culture and for things that were
happening there but if you go back and
look at the development of him as a CEO
part of this failure process this red
light process that he went through early
in his career is part of the learning
and the refining process of some of the
greatest entrepreneurs out there I hope
those two lessons about how ego and
hubris can come together to kill truth
and make a huge problem for you as the
entrepreneur and how the process that
you’re gonna go through with its natural
red light green light process is very
helpful so that you understand where you
are and you see this as a compass I’m
gonna do an extended educational program
on this in the near future that I think
you’ll find valuable so what do you
think about theranos leave some comments
below how do you feel that this is
shaking out for her should other things
have happened we want to hear your
opinion and it also helps me craft my
next case studies you can also follow me
on Instagram and Facebook where I have a
new business page and please subscribe
to value tainment and remember we’re on
a mission to get to a million
subscribers and when we do the first
annual value tainment entrepreneur
conference featuring Patrick bet David
yours truly the biz doc and other
leaders talking about entrepreneurship
as we seek to make you better your
company better your employees better and
the people you serve with that company
friends and families and customers
better still until next time I’m Tom
Miller with the biz doc and I hope I
left you better than I found you you
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