- Talent Management
Over the past 24 months, there have been no shortage of articles about Theranos. First, there were the articles about its turtleneck clad young multi billionaire founder and CEO, Elizabeth Holmes, who started the company in her dorm room at Stanford, dropped out, and eventually found herself luring her former professors away from Stanford as employees. It was a made-in-television movie of the month dream scenario–a smart and ambitious young woman proves that she can become a leader not only in the world of science but also the world of business and do it in the cut-throat and apparently highly sexist context of the Silicon Valley. Then, trouble started brewing.
The Wall Street Journal swept into to launch a grueling take down of Holmes. In the end, their investigation would have a snowball effect and lead to other investigations, including one at the federal level. In the end U.S. regulations banned Holmes’ from operating clinical labs based on the WSJ’s finding that her technology for blood testing does not in fact work. It’s no surprise then that the company has now announced that it will close its testing labs and cut 340 staff from its books as it regroups and looks to the future.
Earlier this week, Holmes issued a short letter to her share holders explaining Theranos’ next steps:
After many months spent assessing our strengths and addressing our weaknesses, we have moved to structure our company around the model best aligned with our core values and mission. We have decided to close our clinical labs and Theranos Wellness Centers, which will impact approximately 340 employees in Arizona, California, and Pennsylvania. We are profoundly grateful to these team members, many of whom have devoted years to Theranos and our mission, for their commitment to our company and our guests. We will return our undivided attention to our miniLab platform. Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care. We have a new executive team leading our work toward obtaining FDA clearances, building commercial partnerships, and pursuing publications in scientific journals. We are fortunate to have supporters and investors who believe deeply in our mission of affordable, less invasive lab testing, and to have the runway to realize our vision. I look forward to sharing more with you as we progress along the way.
Could this be Holmes’ ultimate goodbye, or will she be back? Since she is currently laying off 40% of her staff due to what most onlookers would describe as a combination of errors in judgement (she made bad decisions about how quickly to scale up her company and didn’t adhere to compliance issues) and simple arrogance (even after she was under investigation, there are reports that Holmes and Theranos employees continued to deny wrongdoing and remained less than transparent with government investigators), it seems likely that Holmes’ will now face an uphill battle. Also, as reported in the WSJ there are still some pending issues that make further complicated Holmes’ proposed restructuring plan: “The impact on Theranos’s ongoing appeal of regulatory sanctions is unclear. Regulators also sought in July to ban Ms. Holmes from owning or operating any lab for two years, throwing the future of the Arizona lab into doubt. Theranos has appealed her ban, which hasn’t taken effect.”
Bearing in mind that Holmes is only 32, she has a lot of time to recover, but there is also no question that in the end, her career did not exactly get off to a good start. It seems that her wisest move may be to go back to the drawing board to retreat, research and rebrand. While one may question the wisdom of starting from scratch, the deep damage already done to the Theranos brand seems like something that may be difficult to overcome.
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