Elizabeth Holmes wanted to start a company that could diagnose anyone’s health from a single drop of blood.
Her invention didn’t work, but that didn’t matter.
She knew that product isn’t important, all that matters is brand.
So she dropped out of college and started her company: Real Time Cures.
It wasn’t successful, she thought because the name wasn’t impressive enough.
Everyone knows product isn’t important, all that matters is brand.
So she changed the name to THERANOS, a combination of therapy and diagnosis.
She wanted an impressive board of directors for her company, so she asked George Schultz, former Secretary of State, to join her board and he agreed.
He attracted other impressive names: Henry Kissinger, Senator Sam Nunn, Senator Bill First, Admiral Gary Roughead, General James Mattis, together they made an impressive brand.
Showing product Isn’t important, all that matters is brand.
Now she could raise real money: $120 million from Rupert Murdoch, $100 million from Sec. of Education Betsy De Vos, plus founder of Oracle Larry Ellison, and so on.
By 2014 she had raised $700 million and Theranos was valued at $10 BILLION.
Because product isn’t important, all that matters is brand.
She needed an image and publicity so she copied Steve Jobs: she had a wardrobe stocked with nothing but black turtlenecks, like him that was all she wore.
It got her on the covers of: Time Magazine, Fortune, Forbes, New York Times Style, and Inc.
She had her profile in The Wall Street Journal, Forbes named her ‘The Youngest Self-Made Female Billionaire’, Fortune named her ‘Business Person of the Year’, she was listed in Bloomberg’s ’50 Most Influential People’, and she was appointed to the Harvard Medical Board.
Proving that product isn’t important, all that matters is brand.
She did multi-million dollar deals with Safeway, Walgreens, AmericanHealth Caritas, Capital Blue Cross, GlaxoSmithKline & Pfizer.
Her company was approved by the FDA, vice-president Joe Biden visited her laboratory and said he liked what he saw.
Validation that product isn’t important, all that matters is brand.
But then something unexpected happened.
In October 2015, John Carreyou, a reporter for the Wall Street Journal, spotted that all this time she didn’t have a product that worked.
Everyone had been so fixated on her brand, no one had noticed there was nothing behind it.
But suddenly the product, or lack of one, became VERY important.
The US Dept of Health and the FDA banned Theranos from claiming to test blood.
Elizabeth Holmes was banned from being a director of any public company.
She was investigated by the FBI.
The SEC charged her with fraud and, in 2018, Theranos was dissolved.
She was sentenced to 11 years in prison and ordered to pay her victims $452 million.
Forbes listed her as one of ‘the World’s 19 Most Disappointing Leaders’.
She had succeeded in convincing everyone she had the most amazing brand, and no one had noticed she didn’t have a product that worked.
Does that remind you of our business: people who think the hype, the brand, is all that matters?
People who get the language right, their publicity right, they’re seen at all the right conferences, they write articles in all the right trade publications, expressing all the fashionable opinions complete with numbers, charts, graphs, etc.
But one question: if we’re all so good, how come the state of advertising is so dire?
I think we’ve got a great brand, we just haven’t got a product.
Very true but at least there’s a brand.
Nowadays some countries specialize in producing stuff that don’t work/last.
Let’s start with shoes. I got a beautiful pair. Not expensive & I quickly found out why.
The soles came apart after one wearing. It was a long meeting so maybe my body heat melted the glue and the soles stuck onto the carpet.
Next, pens. The design is appealing and the price, low.
But after writing a few lines, the ink stops flowing.
Most of us test pens by scrawling lines onto paper. The pressure makes the ink flow. But writing’s gentler. So the ink doesn’t flow.
No use saying such pens could be used for drawing either. They’re only good for producing deep gashes. So maybe as an instrument to deface posters.
These inferior products have a brand.
But most people don’t care about the brand.
We buy em (probably just once) because they’re dirt cheap.
Many built companies on “fake it till you make it”, but you certainly have to make it at some point.