It’s El­e­men­tary! Only this Holmes Can Fig­ure Out the Fate of Ther­a­nos

The Economic Times - - Disruption: Startups & Tech -

Reed Abel­son

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


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

Mbps or megabits per sec­ond is a mea­sure­ment unit. It is used to mea­sure dig­i­tal data trans­fer rate re­lated to me­dia and com­puter.

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