Yahoo Finance's 'Valley Of Hype' Looks At Theranos And Elizabeth Homes

A blood droplet illustrates the challenges faced by the tech startup Theranos, outlined in ‘Valley of Hype,’ from Yahoo Finance

On Aug. 31, jury selection begins in San Jose, California, for the federal fraud trial of Elizabeth Holmes, who became the world’s youngest self-made female billionaire as CEO of now-defunct tech start-up Theranos. But there’s a lot more to the story than just possible financial misdoing. Much of it goes to the heart of perception vs. reality, the importance of understanding the dynamics of a subculture, and what happens when you try to bypass the laws of biology itself.

Valley of Hype uncovers Silicon Valley’s tangled web

On Aug. 30, Yahoo Finance presents Valley of Hype, the latest of several in-depth documentaries and podcasts from different outlets that look at how 19-year-old Stanford dropout Elizabeth Holmes managed to amass a powerful board of directors and attract investors to her biotech company. (I previously wrote about it here and here.)

UPDATE: Click here to watch the whole thing, with a transcript.

Her stated goal was to democratize healthcare and disrupt medical testing by creating a machine that could do a panoply of blood tests from a tiny amount of blood taken from a finger stick.

The aim of the documentary is to place Holmes in context of the Silicon Valley culture in which she operated. It’s difficult to understand how Holmes got people to fork over billions of dollars for what remains largely a scientific impossibility without comprehending what investors were looking for, and what motivated their decisions.

Valley of Hype presents a framework in which to understand Holmes and the surprisingly small and interconnected world of Silicon Valley entrepreneurs, investors and supporters. One board member connects to another, and one venture-capital firm connects to another, and round and round it goes.

In the midst of this, the young and attractive Holmes — habitually wearing a black top, like her idol, Apple co-founder Steve Jobs — spun a compelling story, frequently headlined with a personal anecdote about losing a beloved uncle too early.

The press was also a large part of Holmes’ drive to the top, enchanted as journalists were by the idea that this energetic young woman could set modern medicine on a new path.

Also, she looked very good on their magazine covers and in their online stories.

Until it all fell apart, that is, thanks to whistleblowers and the work of former Wall Street Journal reporter John Carreyrou, in his articles and his bestselling 2018 book Bad Blood: Secrets and Lies in a Silicon Valley Startup.

Valley of Hype is a cautionary tale of optimistic excess, willful blindness, and how wanting something to be true so badly (even if that’s just because it all looks so good) can lead even seasoned investors and journalists down the garden path.

Now, this is a finance documentary, and it’s a very interesting one, but there’s another dimension to the rise and fall of Theranos.

But it’s not all about money — it’s also about the biology of blood itself

Mark Zuckerberg once famously said, of running a tech startup, “Move fast and break things.” These days, even the Harvard Business Review rejected its former student’s motto, in a story called The Era of Move Fast and Break Things Is Over.

But, Zuckerberg was creating a social network and now, an advertising platform and data company. He wasn’t dealing in diagnosing diseases and treating patients.

In the end, what really stood in Theranos’ way were biology, chemistry and physics — how blood platelets work, how blood tests detect substances and diseases, and the limits of fluid dynamics. A tech whiz can play with bits and bytes all he or she wants, or create virtual worlds in a computer’s memory, or upload whatever to the cloud faster and better.

Nature doesn’t care about your ambitions

Holmes and Theranos ran up against Nature, and Nature doesn’t care about your ambitions. Either what you create works with the laws of Nature, or it doesn’t. Human beings can’t be reduced to programming. Our bodies work by laws and systems that we didn’t create, and which we violate or circumvent only with great effort and at great risk.

Holmes’ machines ultimately couldn’t get more than one test — finding a kind of herpes — to work with the tiny amounts of blood she wanted to use. The company actually did the bulk of its testing with traditional vials of blood, drawn with a needle and syringe, and existing lab-testing equipment.

Holmes — who is now married and a new mother — allegedly bamboozled board members (just about all non-scientists, by the way) and investors, but she couldn’t bamboozle Nature.

Her dream may one day come true, but it won’t be by hopscotching reality.

Valley of Hype premieres on August 30, 2021, at 5 p.m. ET/PT on YahooFinance.com and it will also be available on the Yahoo Finance app, Android TV, Apple TV, Fire TV, Samsung TV+, Roku and on linear broadcast via Fios.