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The Pointless Parable of Elizabeth Holmes

Is there a lesson to be learned from Theranos? Is anyone learning it?



Photo: AP Photo

We like to think our frauds mark important moments and teach us deep lessons. WorldCom and Enron took the greed of the dot-com boom too far, and their falls signaled a return to more sober times. Bernie Madoff’s demise capped a period of gross financial engineering and reminded everyone that returns that seem too good to be true usually are. And now we have the fraud conviction of Theranos founder Elizabeth Holmes, which highlights the end of … well, possibly nothing.

Silicon Valley investors won’t be changing their ways because of Holmes. Members of the venture capital class have made it clear that they never bought into Holmes or the miraculous tale she told about her blood-testing startup in the first place. Just about every venture capital firm that had a chance to invest in Theranos passed. It was the rich suckers with old family money who fell for her charms and scientific boasting, allowing Theranos to raise more than $1 billion. Because venture capitalists see no connection between Holmes and other problematic companies they’ve backed, they intend to go right on being infallible geniuses and leave the rubes to continue being rubes.