Cold Sweat in Silicon Valley

Imagine a startup’s owner, beautiful and blonde like a heroine from a Hitchcock film, captured in a scandal that could facilitate her downfall. Elizabeth Holmes, 31 years old and founder of Theranos, promised to change the face of the world through the technology developed in her labs in Palo Alto. Her creed? Give them a drop of your blood, just one, and her machines will allow you to realize a multitude of analyses in only a few hours at a very low cost.

Elizabeth Holmes has a magnificent story to tell. She studied at Stanford without finishing her degree — a must since Bill Gates and Steve Jobs — then developed her “revolutionary” technology in secret for 10 years before some very fortunate angels looked into her project, one of whom was Larry Ellison, the owner of Oracle. Henceforth, entrepreneur Ms. Holmes raised $400 million and owned half of a firm evaluated at $9 billion. This made Elizabeth Holmes the youngest self-made billionaire, and Theranos one of the legends — startups evaluated at $1 billion and more — adored by Silicon Valley.

The problem is, while Elizabeth Holmes is among the personalities who are much in demand by large technology conferences, and while the media adore her well-scripted story-telling, her eternal black turtleneck and her porcelain complexion, something is wrong in Theranos’ story. The scientific results obtained by the company were never correctly exposed to the research community. Many doubts surround the true effectiveness of the famous tests. And to top it off, a Wall Street Journal investigation has sowed discord. In a paper devastating to her company, John Carreyrou, a French journalist specializing in questions of health and crowned with a Pulitzer Prize, purports that Elizabeth Holmes sells nothing but hot air.

Is it sufficient to flaunt youth, a narrative that makes venture capitalists swoon in an unwavering faith in its mission to fool the world? At this point, Theranos’ story is far from over. Elizabeth Holmes has sufficient resources — and $400 million — to go on the counterattack and maybe “pivot” her enterprise — that is, see the scope of its activity repeat again. At the very least, there will remain a great deal of unease. In an era of zero percent interest, where capitalists desperately search for yield, the risk exists of startups that aren’t worth much seeing their values rise into the billions of dollars. To paraphrase the master of suspense, there is at the least a shadow of a doubt, and the Hitchcock blonde of Palo Alto should certainly be in a cold sweat.