Venture capitalists know Holmes shouldn't be in prison
After 30-plus years in venture capital and seeding companies like Skype, Baidu, Robinhood, Tesla, SpaceX, Hotmail and many others that were not so successful, I believe it is incumbent on me to do the diligence on any startup I back. If a company doesn't work out, I take my lumps and move on. Startups, by their nature, are risky. Investors know these risks when we write their checks.
Entrepreneurs, by their nature, are projecting a future that they want to accomplish and as my partner used to say: The best entrepreneurs have a reality distortion field because they often believe that they have accomplished what they have set out to accomplish because they have done so in their minds.
When I first met Elizabeth Holmes, she was 19 years old and told me she wanted to “change health care as we know it.” I could see how passionate she was. She is determined about what she feels is unconscionable: the system of health care in our country is expensive, unfair and provides inadequate service, and it can be so much better with new technologies she was attempting to build.
We knew Theranos was a long shot when we backed it. It was an ambitious project of incredibly advanced biochemistry and technological machinery that had never been conceived of, let alone built, and it was trying to wedge into an entrenched, customer-controlling industry. But we took a purposeful, calculated risk with our investment and, while Theranos failed, I do not regret it.
Although they have remained silent with respect to Holmes and Theranos, venture capitalists have a very different attitude than what the media or the courts have to date espoused. We VCs know the risks. We know that entrepreneurs have a reality distortion field, and that is what makes them so critical to our world. It is hard to imagine a life without a smartphone, without a car, without indoor plumbing, without electricity. It was entrepreneurs like Holmes who gave them to us.
The public (and possibly the courts) has been heavily influenced by what they have read about Holmes in the media and the various books and movies about her. They have turned her into a villainous caricature.
This is just wrong. She is heroic for her efforts, for all the challenges she has faced and pitfalls she has overcome to bring this technology to us to change our world. It is not our proudest moment as a country when we take down one who has tried to do so much for us.
I am concerned that this fiasco deters other entrepreneurs — especially women — from diving in and taking a chance at starting a business, because they believe that if they get to be a big enough deal, the press and the government may take them down too. It is not a far cry from the witch trials in Salem, Mass., in 1692.
I stand by my decision to invest in Theranos and Elizabeth Holmes — however unpopular that may be. Her vision for revolutionizing health care was only partially portrayed in her efforts at Theranos, and her ideas could save millions of lives over the course of the next few decades.
On Nov. 18, Holmes was sentenced to 11 years and 3 months in prison. But she is continuing to fight her case. I believe she is not only innocent, but also was almost heroic. Keep this woman free. She has only tried to make the world a better place.
Tim Draper is a venture capitalist who has founded 30 Draper venture funds, Draper University, Bizworld and two statewide initiatives to improve governance and education.
He is the author of “How to be the Startup Hero A Guide and Textbook for Entrepreneurs and Aspiring Entrepreneurs.” This commentary originally appeared in the San Jose Mercury News.