Let me begin by saying that I have never built a company into the league of Theranos and I hope that they or another company has and or does develop new technologies and approaches that improve lab testing, service delivery, quality and/or costs. Healthcare delivery certainly needs a lot of improvements and not just in the lab area.  On the other hand I do have start-up experience, having bootstrapped a company in the healthcare industry pulling in ideas from existing services and modifying them to create a moderate but successful service company of which I was the majority owner for about a decade.
As such I have been intrigued by what is happening with Theranos and looking at it from a more person-centric view, trying to understand how it could have gotten to where it apparently is.  I use the term “apparently” because nobody outside Theranos knows for sure and I’m certain that even within Theranos only a few and perhaps one person really knows.
Here are a few key stories if you’re not up to speed basically in reverse chronological order:

At Theranos, Many Strategies and Snags Wall Street Journal

Theranos Wellness Centers aren’t using “Nanotainers” at This Time  TechCrunch

Theranos Founder Faces a Test of Technology, and Reputation NY Times

Letter to the editor: Theranos Responds  Fortune

Wall Street Journal: Letter to the Editor Theranos

How Theranos Misled Me Fortune

Theranos CEO: Company Is in a ‘Pause Period’  Wall Street Journal

U.S. Probes Theranos Complaints Wall Street Journal

Theranos CEO Calls WSJ a Tabloid at WSJ’s Own Conference Wired

Theranos: A hot company takes fire CNBC

Statement from Theranos  Theranos

Hot Startup Theranos Has Struggled With Its Blood-Test Technology Wall Street Journal

 
Let’s look at some possibilities about Elizabeth Holmes, Theranos and her thinking:

• The technology that Theranos has developed is close to complete and they will soon put all questions and naysayers to pasture by Theranos releasing data which shows that the technology works, is scalable and can be done as they have announced. Elizabeth Holmes is shown to be correct. Congratulations.

• The technology doesn’t work and Elizabeth Holmes got caught up in the hype.  Lets face it most companies hype their products to some extent, from the outright selling of vaporware, through “yes our product does that”, selling something they haven’t completed yet or agreeing to a time frame that is very tight. It’s hype, but in most cases it’s a calculated risk that the company can modify, create or launch the product or service to meet the clients demands. Although I will say, I’ve seen many a company, particularly silicon valley healthcare companies, throwing a lot of, let me say, bravado into their pitches.  In any case, it’s important to peel back the exterior veneer and see if there is hardwood underneath the shine.

So now imagine you are Elizabeth Holmes founder and CEO of a company that is the darling of everybody, the media ogles over you, your face is on magazine covers, you’re on television,  politicians praise you, President Clinton has you onstage at the Clinton Health Matters Initiative, you’ve spent a decade of your life building this, you’ve raised a ton of money and you’re a billionaire on paper! You look around and as a young, perhaps inexperienced businessperson say to yourself  “What do I do now? My product doesn’t work, I have all these people counting on me, I have built all this expectation, raised all this money, how do I unwind this hype? Can I tell anyone?” Perhaps her answer under the pressure is  “Nope I’m going to just keep running and hyping and hope I can catch up, I’m sure the fix is just around the next corner.” And there you have it, there is no easy way off that barreling train.

• And the last option,  The technology doesn’t work and Elizabeth Holmes knows it and has understood for years, she’s the pied piper, the Emperor with no clothes. Well, I really don’t want to delve into that one.

Lesson, you really need to closely monitor how far out in front your sales and marketing are from your reality. I still say that in a good business the back-end (operations and services) needs to match the front end (marketing and sales). Without one you will certainly die and without the other you may never grow; but if they are far out of whack, particularly on the marketing side, you can ride the growth curve as new clients come on or you raise enough capital before the experienced clients drop you for not delivering.
You can run for a while, but in the end the market will figure it out.
I guess with Theranos we’ll just have to wait and see. There’s a lot riding on them, jobs, dollars, new ideas and perhaps a little ego.