Silicon Valley’s culture isn’t responsible for Holmes’ crimes

The reputation of Silicon Valley, once compared to the glory of Florence during the Renaissance, plummeted in recent years because of its power, its privacy lapses and its arrogance. Then, as the trial of Theranos founder Elizabeth Holmes wrapped up, cynics decided that things are even worse than they thought.

Mind you, they’re talking about Silicon Valley, described in happier days as the place that made things possible that never had been possible before. Suddenly, the critics said it was the valley’s culture that turned Elizabeth Holmes into a crook.

“Theranos founder can cite Silicon Valley hyperbole in defense,” a headline in the Los Angeles Times said. The Associated Press wondered if this case could “deliver a sobering message to a Silicon Valley culture that often gets lost in its own hubris and swagger.” The New York Times described the problem as “Silicon Valley’s world of make-believe.” The Washington Post said that Holmes’ conviction represents “the ultimate reckoning for the brazenness of Silicon Valley that she personified.”

Of course, it’s fun to kick someone when he (or she) is down. But it’s Elizabeth Holmes, not Silicon Valley, who deserves the kicking.

Yes, she was hyperbolic. She also committed fraud. Others in the IPO gravesite died, but for much more mundane reasons as they tried to turn the impossible into the routine.

Some were ahead of their time, in technology or in customer demand. Some had no one in management with experience in the underlying industry. Some couldn’t raise enough money. Remarkably, their successors often enjoyed huge successes because of their Silicon Valley brilliance — and without being crooks.

For example, Webvan was brought down largely because of its extravagant costs in a business where you “make a few pennies on a loaf of bread,” as my dad, the grocer, used to say. But, 20 years after its bankruptcy, grocery delivery seems a pretty keen idea and certainly not a fraudulent one. In fact, Instacart, one of Webvan’s heirs, is valued at $39 billion, suggesting that a big vision executed well is better any day than fraud or hype.

A company called etoys thought selling toys on the internet would work. It didn’t, because of execution, not fraud. Amazon picked up where etoys fumbled and now owns a huge share of the toy market.

A former U.S. surgeon general started drkoop.com, arguing that the web could provide deep layers of medical information for those of us who aren’t doctors. He was right, but the site went bankrupt in 2001. It was a competitor, WebMD, which started a year earlier, that confirmed his hunch. WebMD was sold five years ago for $2.8 billion.

They succeeded as Silicon Valley always has: by learning from the mistakes of others, by recognizing the transformational power of the internet, by unearthing a niche that would appeal to investors and customers, by hiring brilliant employees and by, in a few cases, creating remarkable cultures. (Full disclosure: I lived in Silicon Valley for almost 30 years and still have valley-related connections.)

Guess what’s missing from these successful startups and others: criminal activity, swagger, make-believe, brazenness, hype. These founders didn’t need them. Anyway, the Sarbanes-Oxley Act of 2002 largely prohibits them. If you doubt that, ask Elizabeth Holmes to explain.