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Individual Paper 2: Holmes at Theranos

Individual Paper 2: Holmes at Theranos

Introduction - Elizabeth Holmes was only 19 years old when she decided to open up a company

that in her eyes was going to bring future to biotechnology and laboratories that perform blood
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tests. She was a young woman who appeared to be motivated into changing the world and

helping others with her knowledge. Everything started when she decided to leave Stanford to

start “Theranos”. She belonged to a wealthy family and with the help of her grandfather, she

started to go after influential people that could help her raise money to start her dream. (Ramsey,

2019)

Theranos started to make history in 2004 when they were being recognized by their

technological and revolutionary laboratory work, however, in 2006 the company started to raise

suspicions about how the company was run and all of its confidentiality once the Therano’s

Financial Chief was fired after he started questioning about their product’s liability and their

honesty. But Theranos was still powerful and growing more and more. The company made a lot

of progression throughout the years and it had a value of 9 billion dollars in 2014. Afterwards, a

Wall Street investigate journalist started to investigate the company and found out about the

unethical and damaging practices that were occurring at Theranos (Ramsey, 2019).

Consequentially, the downfall of the company started to happen because of their secrets and

methods being exposed to the public. Thus, Holmes “has been accused of fraudulently claiming

that her company's technology was able to do health tests with only a little bit of blood.” (Kiersz,

2019). Therefore, Theranos stopped its operations.

Issues at Theranos and Holmes

Theranos’ culture - Elizabeth Holmes did a fairly good job in hiding from everyone her

company’s failure. It is known that Theranos was a company that had a high level of secrecy.

Ex-employees explained the secrecy inside the company “Holmes organized the company on a

way that everyone was uncommunicative on purpose. Employees could not talk with each other

about their duties, they were also not available to expose the company on their social media sites
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such as LinkedIn. Holmes thought her company had commerce secrets so she wanted extreme

confidentiality.” (Dunn, 2019). Therefore, everyone that worked there was subjective to follow a

value that is not always the best which is not being completely honest about the way that they

perform their work inside the company. We can understand that she did not want anyone to find

out about their technology, however, the way that she managed the company’s culture, could rise

suspiciousness among other businesses, journals, stockholders, and everyone who had an

involvement with her company. Plus, it is not appropriate for her to be so private about the work

that is done at her company because they dealt with people’s health. Millions of people placed

fate on their products and started to use them, consequently, they expected to buy a rightful

product.

An extra culture observed at Theranos was that the CEO Elizabeth seemed to not be interested in

her employees’ ideas. She was looking more towards outcomes than their opinion “Holmes was

not interested to hear other people’s views, she was just looking for positive outcomes. If you

disagreed with her ideas, she would immediately fire you. It was a very peculiar and unpleasant

atmosphere.” (Dunn, 2019). This shows that Elizabeth did not manage to have a positive work

environment since she seemed to be selfish and not reliable as a leader, negatively impacting her

company’s culture.

Holmes’ Traits and Behavior - Elizabeth Holmes is a person who can lie and trick other people

easily. An example of that is her company, Theranos, which functioned for more than 15 years

even with all of the lies, frauds, and secrecy. However, Dan Ariely who is a psychology

professor and behavior specialist (Wikipedia, 2018) considered that she believed in her own lies.

Ariely affirmed, “people will focus on information and data that supports what they believe or

want to be true” (Ginsberg, 2019). Holmes was also good with inspiring and moving people with
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her stories on how she decided to open Theranos and what her goal was “She would talk about

how her much-loved uncle inspired her to open Theranos. He was diagnosed with skin cancer in

a young age which quickly spread to his brain and bones. With her blood-testing machinery, she

was hoping she could decrease people’s pain in having to say goodbye too early to their loved

ones.” (Ginsberg, 2019). Therefore, she was good with her words and made people believe in her

ideas and that she was going to make a change with her company, which lead to a lot of

investors, for example, ″If you think about the people who invested in [Holmes] with very little

amount of data, it’s about emotional appeal and having trust and believing the story and being

moved by this, and being able to tell themselves a story.” (Ginsberg, 2019). Holmes did certainly

have a good approach when it occurred to make others believe in her company’s technology.

Potential Concerns - I believe that the reason for the downfall of Theranos was the CEO

Elizabeth Holmes. She surely had a good vision in the beginning and showed that she was on the

right path trying to give back to the society with her knowledge. However, she knew that her

technology was not reliable and that is why she tried to keep such secrecy from the public and

the investors. She ended up faking so many facts from the public and even from her employees

that it became a snowball and, in the end, after so many lies and manipulations it was impossible

for her to save her company.

Leadership Style of Holmes - Many can say that Holmes had positive leadership qualities

throughout her career because it led her to her business’ success. However, Holmes was not as

amusing as the public thought she was. Instead, inside her company, she was more of a powerful

figure than a leader to her employees “Holmes wanted her employees to work as hard as they

could, she was a challenging boss. She demanded her assistants to keep track of all employees

and record the time they arrived and left the company. She even started to provide dinner as an
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incentive to them to stay longer and work extra.” (Hartmans, 2019). Understandably, power is

“the capacity that A has to influence the behavior of B so that B acts in accordance with A’s

wishes” (Robbins & Judge, 2019, p 437). Therefore, we realize that Holmes appeared to be

someone who enjoyed to have power and total control when it was about her company and her

employees’ performances, instead of being a leader that her employees could be inspired by.

Holmes was known for a destructive behavior “Holmes started a deep path of covering unreliable

results and lying about their accuracy that no one was brave enough to stand up and face her. She

would only hire people she trusted and was close to her and she would insist on having extreme

confidentiality with information from the company.” (Glazer, 2018). She had trust issues since

she would only hire people that she had a close association with. Also, Holmes had poor

leadership traits as she would not accept views and ideas from other people other than herself.

Key Features in Terms of Contemporary Leadership Theories - Holmes did have her voice

heard before the downfall of her company. Many listened to her as she was an inspiration after

Forbes nominated her “the youngest and wealthiest self-made female billionaire in America on

the basis of a $9 billion valuation of Theranos” (Wikipedia, 2019). Furthermore, it is possible to

compare her leadership in terms of contemporary leadership. For example, Holmes had

charismatic leadership traits “Charismatic leaders are essentially very skilled communicators –

individuals who are verbally eloquent, but also able to communicate to followers on a deep,

emotional level.” (Riggio, 2012). Because, at the beginning of her career, she was able to get

millions of dollars of outside investment for her company. “Investors gave money to Holmes

even after she proposed her conditions of not telling them anything about how her technology

operated and that she would have the final say about all the procedures concerning her

company.” (Hartmans, 2019). She sold an idea, something that was still in growing process and
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also to blindfold the investors since she got the money without telling them how her company

would function. A lack of authentic leadership was also noticeable with Holmes “Authentic

leaders are self-aware and genuine. They also show their real selves to their followers. They do

not act one way in private and another in public; they don’t hide their mistakes or weaknesses

out of fear of looking week." (Kruse, 2013). However, Holmes was known to act differently

when she was in public. She was showing a figure of herself that was not entirely genuine “To

make herself fit in a business world that was dominant by males, she would always have a deep

voice and would carefully expose her image. Even former employees said that she would leave

her character sometimes, especially after drinking.” (Hartmans, 2019). Amongst that, Holmes

showed that she was more part of an act instead of showing her real personality.

Conclusion – An important lesson from the downfall of Theranos is that sometimes the

leadership style that we approach is not always the best one. Elizabeth Holmes was a promising

young adult with a great resume and a lot of help from investors when she started her

multibillionaire company. Still, her approaches for the company throughout the years showed

that she was not able to handle the pressure and the lies, even if she was in her best interests. Her

obsession with secrecy and power were some factors that kept her from meeting a total success.

However, it is impressive how she was able to keep the non-function of her company’s

technology. Holmes was the reason Theranos failed but it still functioned for more than 15 years,

even with all the lies.

Works Cited
Dan Ariely. (2019, October 26). Retrieved from https://en.wikipedia.org/wiki/Dan_Ariely.
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Dunn, T., & Jarvis, R. (2019, March 12). Ex-Theranos employees describe culture of secrecy at

Elizabeth Holmes' startup: 'The Dropout' podcast ep. 1. Retrieved from

https://abcnews.go.com/Business/theranos-employees-describe-culture-secrecy-elizabeth-

holmes-startup/story?id=60544673.

Elizabeth Holmes. (2019, November 4). Retrieved from

https://en.wikipedia.org/wiki/Elizabeth_Holmes.

Ginsberg, L. (2019, March 21). The psychology of deception: How Elizabeth Holmes fooled

everyone about Theranos for so long. Retrieved from https://www.cnbc.com/2019/03/20/hbos-

the-inventor-how-elizabeth-holmes-fooled-people-about-theranos.html.

Glazer, R. (2018, November 15). What Leadership Lessons Can We Learn From Theranos's

Downfall? Retrieved from https://www.forbes.com/sites/quora/2018/11/15/what-leadership-

lessons-can-we-learn-from-theranoss-downfall/#68ed0907d3b1.

Hartmans, A. (2019, July 26). The rise and fall of Elizabeth Holmes, who started Theranos when

she was 19 and became the world's youngest female billionaire but will now face a trial over

'massive fraud' in July 2020. Retrieved from https://www.businessinsider.com/theranos-founder-

ceo-elizabeth-holmes-life-story-bio-2018-4.

Kiersz, A. (2019, March 19). A behavioral economist explains why Elizabeth Holmes might not

have felt bad lying about Theranos. Retrieved from https://www.businessinsider.com/theranos-

elizabeth-holmes-the-inventor-hbo-psychology-of-lying-dan-ariely-2019-3.

Kruse, K. (2014, April 25). What Is Authentic Leadership? Retrieved from

https://www.forbes.com/sites/kevinkruse/2013/05/12/what-is-authentic-

leadership/#1114c1c9def7.
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Ramsey, L. (2019, April 11). The rise and fall of Theranos, the blood-testing startup that went from

Silicon Valley darling to facing fraud charges. Retrieved from

https://www.businessinsider.com/the-history-of-silicon-valley-unicorn-theranos-and-ceo-

elizabeth-holmes-2018-5.

Riggio, Ronald. (2013). What Is Charisma and Charismatic Leadership? (n.d.). Retrieved from
https://www.psychologytoday.com/us/blog/cutting-edge-leadership/201210/what-is-
charisma-and-charismatic-leadership.

Robbins, S. P., & Judge, T. (2019). Organizational behavior. Harlow, England: Pearson Education
Limited.