Elizabeth Holmes
Photo: Jane Tyska/Digital First Media/The Mercury News via Getty Images

Does the Theranos verdict even matter?

Source Code

Good morning! This Thursday, Elizabeth Holmes is the last story of 2021, omicron is wreaking havoc on Silicon Valley, and the latest advancement in COVID-19 testing might be a Yankee Candle.

Happy holidays

Hey! David Pierce here, Protocol's editorial director. We made it to the end of 2021! (Though it's possibly still March 2020. Time has lost all meaning.) Now's the time of year when we check out for a bit and spend some time recharging. We hope you're getting to do the same, and staying safe in the midst of all this uncertainty.

This is our last Source Code issue of 2021. We have a bit of regularly scheduled programming for you this morning, but before we get to that, we just wanted to take a quick second to say thanks for making this such a fun year. We got to spend 2021 chatting with you every morning about the craziness of the crypto industry, the topsy-turvy world of work, the somehow never-ending series of Facebook — sorry, Meta, we'll get it eventually — scandals, the metaverse, Washington's haphazard attempts at regulation, a frenetic IPO market, the geopolitical fight for tech supremacy and so much more. It's been a thoroughly bonkers year, and we're really grateful for all the time you've spent reading and replying to our emails, asking questions, goofing around with us on Twitter and making us better and smarter every day.

You get to see a lot of our team's work in this newsletter, but there are two people who don't get enough shine who we want to thank before we sign off. First, Karyne Levy, who edits this newsletter, decides what's in it and makes sure it's great every morning. And second, Sarah Roach, who tirelessly scours the internet to find all the moves, quotes and news that matter every single day. Without Karyne and Sarah, there's no Source Code. Huge thanks to both of them for everything they do.

Anyway! Thanks again for being part of the Source Code community. We have big plans for how to make things even better next year, and if you have ideas or feedback or thoughts on what you'd like to see Source Code become, all you ever have to do is email sourcecode@protocol.com. We'd love to hear from you.

Now let's get to some news before we all sign off. Happy Holidays!

Tech after Theranos

Financial and health care regulators have already sanctioned Elizabeth Holmes as the last story of 2021, and the court of public opinion convicted the former CEO long ago. But after four months, with one day left on the court docket, a jury of her peers could decide as soon as today whether the Theranos founder is criminally guilty of defrauding investors and patients. Or the jury could keep deliberating into the new year. But does the verdict really matter?

For Holmes, a guilty verdict will have obvious personal consequences, including the threat of up to 20 years of prison. But for the rest of tech, experts outside the bubble say either outcome is unlikely to change much.

  • A guilty verdict won’t scare entrepreneurs off from exaggerating the numbers to get funding, and a not-guilty verdict won't embolden a generation of founders to stretch the truth.
  • Instead, many of the lessons of Theranos are already learned, and in some cases, already being forgotten during a time when there’s plenty of money sloshing around at sky-high valuations.

Holmes modeled herself after tech heroes like Steve Jobs and Larry Ellison. But she rose to prominence in part because of how atypical she was.

  • Her charisma helped her raise nearly a billion dollars and attract a board of political heavyweights.
  • But Holmes’ uniqueness will keep founders and investors from taking the verdict as any kind of wake-up call, said Jennifer Chatman, a UC Berkeley professor who researches organizational culture and narcissistic CEOs.

If there’s a fundamental lesson here, it’s about psychological bias. Specifically, one called fundamental attribution error.

  • People are more likely to look at Holmes and view her bad behavior as inherent to her personality or a character trait, while they’re less likely to hold themselves accountable in that moment because they have full context of their actions, Chatman explained.
  • A classic example is a manager calling an employee lazy when that worker shows up to a meeting late, but then making apologies when they are the ones delayed, knowing why they were held up.
  • People are likely to dismiss Holmes’ verdict and distance themselves from it by saying, “That’s not me,” Chatman said. “It's too easy for people to discount her.”

One group that has at least learned a little is investors. But they learned their lessons six years ago when the first whiff of scandal arose around Theranos in a Wall Street Journal story that revealed its dependence on third-party testing devices.

  • All of those unique outliers for Holmes became signals for venture capitalists to reevaluate. Investors now point to the lack of Silicon Valley VCs in her cap table as a major warning sign: Many tech leaders hailed her as the next Steve Jobs, but even Jobs raised money from Sequoia and Venrock.
  • A board filled with former generals and politicians rather than scientists would now be seen as a red flag, not a calling card.
  • Most unfairly, the path has become even harder for female founders, particularly in health care, as many say they still feel they face more scrutiny in the wake of Holmes.

And those lessons may well have been forgotten in this most recent period of exuberance. Columbia Business School professor Len Sherman admitted he felt like Scrooge at Christmas while saying this, but he doubts a verdict in either direction will change the entrepreneurial ecosystem. “This is the way business is being done, and we're going to see it again,” he said. The verdict will establish a narrow fact of criminal liability. What it won’t settle is whether Holmes is an object lesson or outlier. Holmes’ impact on the broader culture is indelible, and a part of the narrative others place on the tech industry. But it hasn’t bent the story Silicon Valley tells about itself.

— Biz Carson (email | twitter)


In 2020, U.S. merchants sold over $54 billion worth of products to Chinese customers on Alibaba’s e-commerce platforms, which rely on Alipay to facilitate the transactions. The year prior to the pandemic, Chinese tourists in the U.S. engaged in 800,000 transactions using the Alipay App, for sales valued at $232 million.

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People are talking

Jack Dorsey, who's having quite a week on Twitter, said Marc Andreessen blocked him on Twitter:

  • “I’m officially banned from web3.”

Dorsey also said Twitter's biggest mistake was shunning its third-party developers:

  • "Worst thing we did. I wasn’t running company at the time. Company has worked hard and will continue to open back up completely."

Other Big Tech companies want more scrutiny on Microsoft, a source told the Financial Times — particularly that other Seattle company:

  • “Andy Jassy is obsessed with Microsoft. His refrain internally has been ‘they should be going after Microsoft because they’re still doing bad things.'”

Elon Musk isn’t on board with the metaverse:

  • “I don’t see someone strapping a frigging screen to their face all day and not wanting to ever leave. That seems — no way."

Meanwhile, RSA Conference VP Linda Gray Martin said the big IT convention won’t happen till June:

  • “With the surge in cases of the Omicron variant in the US and around the world, we believe the best decision we can make is to delay the event until later in the year when we can bring the industry safely together in-person."

Making moves

Triller is going public. The social video app is merging with a video software firm in a deal valued at $5 billion.

Skillsoft is buying Codecademy, which offers free computer coding courses, for $525 million.

Tencent is giving away most of its stake in JD.com to its shareholders, trying to please regulators. That will make Tencent significantly less powerful in China's ecommerce market.

McDonald’s sold Dynamic Yield, a digital kiosk startup it bought in 2019. It recently sold another tech company after owning it for a short time, but execs said that’s part of the plan.

Horacio Gutierrez joined Disney as general counsel. Gutierrez most recently led Spotify’s legal team.

Erin Chapple joined Procore’s board. Chapple is Microsoft’s corporate VP of Azure Core.

In other news

Omicron is turning Silicon Valley upside down. Companies are continuing to back out of the in-person CES 2022, Amazon brought back its mask mandate for warehouse workers and at-home COVID-19 tests sold by online vendors are clearing house.

Things are looking worse and worse for CES 2022. Lenovo joined the chorus of tech companies pulling out of the show, but for now, organizers say the Vegas conference is still on.

Beijing is mad at Alibaba for not reporting the Log4j flaw soon enough. The Chinese regulator is punishing Alibaba for reporting the vulnerability to the organization maintaining the software tool before telling authorities.

Another day, another AWS outage. The company’s northern Virginia data server brought down sites like Slack and the Epic Games Store yesterday in its third shutdown this month.

Tesla’s video game feature is under investigation. U.S. vehicle safety regulators are looking into drivers’ ability to play games, which could increase the risk of a car crash.

Everyone uses social media, but few trust it, according to a new poll reported by The Washington Post. Just about three-quarters of internet users don’t trust Facebook “much” or “at all,” and over half distrust TikTok and Instagram.

Staten Island Amazon workers refiled a union petition. The group’s original request for a union was dropped last month after the NLRB said it needed greater support.

Remember that person who backed out of a Blue Origin space trip? Justin Sun, a tech leader and crypto enthusiast, said that was him.

Yankee Candle and the COVID-19 pandemic

Maybe one of the worst parts of coming down with COVID-19 is losing the ability to smell. Unfortunately for Yankee Candle, that symptom is hurting its reputation.

The number of people complaining that their Yankee Candle orders have “no smell” spiked over the past year, according to Northeastern University professor Nick Beauchamp. One reviewer said, “This candle had no scent when lit, very disappointed.” “Very little scent. Very disappointed,” said another. Maybe Yankee Candle can double as an at-home COVID-19 test to help with the shortage.


According to a Nielsen Report, 94% of Chinese tourists said they would pay with their phones if the method becomes more widely adopted overseas; 93% said using that method would likely increase their spending. To meet them where they are, more and more U.S. companies — both here and in China — are embracing Alipay.

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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you in 2022!

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