The fraud trial of Elizabeth Holmes, who based the failed blood testing start-up Theranos, has loads of implications for Silicon Valley.
Her rise and fall has been held up as the final word check of Silicon Valley’s fake-it-until-you-make-it tradition. At some scorching start-ups, it isn’t unusual for founders to inflate their income or hype their firm’s merchandise to boost cash and safe offers, even when their merchandise could not fairly do what was marketed, mentioned Margaret O’Mara, a University of Washington professor who has written a guide on the historical past of Silicon Valley.
Ms. Holmes additionally wrapped herself within the mythology of the tech trade. The Stanford University dropout styled herself after the late Apple co-founder Steve Jobs, headquartered her firm in Palo Alto, Calif., and benefited from a laudatory media.
The consequence of Ms. Holmes’s trial could also be a referendum on that habits, legal professionals and others mentioned. If Ms. Holmes is discovered responsible, start-up entrepreneurs could also be extra cautious with the claims they make to buyers and companions, realizing that they might be charged with fraud, mentioned Neama Rahmani, president of the West Coast Trial Lawyers and a former federal prosecutor.
But a “a non-guilty verdict will vindicate a Silicon Valley culture of celebrating aggressive innovation at the expense of the complete and whole truth,” mentioned Jeffrey M. Cohen, an affiliate professor at Boston College Law School.
Still, some in Silicon Valley have pushed again in opposition to the concept that Ms. Holmes and Theranos represented the everyday start-up. That’s as a result of Ms. Holmes raised the majority of her cash from funding companies that represented rich households, and never conventional enterprise capital companies that typically spend money on fast-growing tech start-ups. Ms. Holmes was additionally constructing medical units, not software program as with many different start-ups.
For that cause, Ms. O’Mara mentioned, some Silicon Valley insiders would possibly dismiss the significance of the end result.