Lessons that Investors should Learn From Elizabeth Holmes Trial

Theranos former CEO Elizabeth Holmes
Theranos former CEO Elizabeth Holmes

If you’re passionate about tech start-ups and Silicon Valley, then you’ve probably heard of Elizabeth Holmes, the founder and former CEO of Theranos, a healthcare start-up. 

The 37-year-old former businesswoman secured investments from big names such as Rupert Murdoch as well as the former Education Secretary Betsy DeVos and the Walton family of Walmart fame who gave her over $700 million. The investors will mislead by Holmes’s called blood-testing technology. The company’s claims about its technology, as well as its business and financial performance were either exaggerated or false, according to the Securities and Exchange Commission.

“The Theranos story is an important lesson for Silicon Valley,” Jina Choi, director of the SEC’s San Francisco Regional Office, said at the time charges were filed. 

“Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”

“There’s going to be a lot of attention on what did Elizabeth Holmes know and when did she know it, but a better question is what should the investment community know and when should we know it?” said Len Sherman, professor of business at Columbia Business School.