It’s Elementary! Only this Holmes Can Figure Out the Fate of Theranos
It’s all up to Elizabeth Holmes. Theranos, a blood-testing lab started and led by Elizabeth Holmes, that promised to revolutionise the in- dustry, is now under criminal investigation and faces increasing scepticism about whether its core technology works.
Several federal agencies are looking into the company’s operations. Holmes herself may have to answer to federal regulators about what she told investors. Just last year, Theranos was a Silicon Valley favorite. Now, depending on the outcome of the investigations, including the threat of crippling sanctions by the Centers for Medicare and Medicaid Services, the company could be forced out of business and Holmes could lose her position as chief executive.
The troubles have led to a cascade of questions about what changes Theranos might make to rebuild its reputation and business prospects. Some have even said that Holmes should step aside.
After more than six months of intense questions, though, changes have been limited. And whatever future moves the company makes are up to Holmes. She — not the investors, and not even the board — controls the switches.
Holmes owns a majority interest in Theranos. What she wants done at her company, she can demand.
Holmes declined to be interviewed. But in an extended interview, David Boies, a heavyweight lawyer who is one of three outside directors on the Theranos board, hinted that some management changes may be coming soon.
“The board is right now in the process, and Elizabeth Holmes is in the process of adding significant talent to the company,” he said.
But an adviser to the company, Richard Kovacevich, a former CEO at
WHO’S IN CHARGE
Wells Fargo, acknowledged the limited role played by anyone other than Holmes.
“She doesn’t have to answer anything she doesn’t want to,” he said. The situation at Theranos offers a stark reminder of the perils of investing in Silicon Valley, where it is common for founders to control a company, leaving boards with little real power, including over who should be CEO.
Theranos’ board, which in its early years included some of its large investors, was later composed of an array of diplomatic, military and political leaders, including former Secretaries of State George Shultz and Henry Kissinger and former Senator Bill Frist.
But legal experts say that while the directors are responsible for representing the interests of all investors, Holmes does not have to listen. A founder with controlling interest can replace the board, so directors are ultimately left with the choice of being fired or resigning if they strongly disagree with the executive. — NYTNS
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