Theranos CEO Elizabeth Holmes used to attract the kind of press founders dream of. She had a glowing profile in the New Yorker and landed on the cover of Fortune and Forbes.
But now those same articles have been entered into evidence in her criminal fraud case, where she faces 11 charges for fraud and conspiracy to commit fraud. The statements Holmes made to hype her blood-testing startup are now what the government is using to prove she committed crimes.
“At the time, Theranos was an embarrassment for the entire comms world because it highlighted the worst possible stereotype — the evil PR spin doctor with no moral compass,” said Hadley Wilkins, who helps startups with storytelling as VP of Communications at Atomic. “Theranos was so wildly egregious in every aspect, but it did serve in making founders and startup comms in general laser-focused on data and numbers to tell your story.”
Gone are the audacious timelines of solving cancer tomorrow or getting self-driving cars by Christmas. In the years since the Theranos scandal broke, startup communications professionals say they field more questions on transparency and data, particularly those working in life sciences. The health care founders Wilkins works with are now spending more time and resources to bring on experts as board members (unlike the political heavyweights on Theranos’ board) and communicating more with regulators.
“No one wants to make claims before you have proof,” Wilkins said in an email.
Journalists have also become more skeptical. As a comms professional, Wilkins has had to do a lot more expectation-setting with founders so they know upfront that it’s likely a journalist will have to include a quote from an analyst on why a startup may fail. It’s also much more routine for journalists to be talking to former employees, she said.
Startup comms adviser Shernaz Daver has made it part of her job to help educate the media covering life-sciences startups on what questions they should be asking. When she was working for 10x Genomics in 2019, she was still hearing the “Why are you different from Theranos?” question from reporters. Life sciences and health care startups, particularly those founded by women, have faced more scrutiny, she feels.
“If you’re doing an app in the enterprise software business, you’re doing comms the way you’ve been doing comms,” said Daver, who is now CMO for Khosla Ventures and has been attending the Theranos trial. “I would say it’s different in life sciences. The media needed to be educated about what it was to be a legit scientific company.”
Often she’d point reporters to look at whether the startup had a chief science officer or a chief medical officer. Another clue could be the founder’s age: It matters less in the tech world, but for science, most founders stay in college longer and pursue graduate work, so founders tend to be in their 30s, she said. Peer-reviewed papers and patents are also indicators that a startup is doing actual research versus being another case of smoke and mirrors.
Often overlooked in the conversation is internal communications, said Catherine Afarian, who previously worked at 23andMe and is now head of Corporate Communications at health care revenue startup Akasa. Employees want to work on things that matter, and it’s important for there to be transparency and confidence that the leadership team is being honest and running the company with integrity, she said.
“The transparency and communications and scientific rigor is exponentially more important than I think it ever has been,” Afarian said. “It’s been fundamental, but now you can’t afford to discount it or downplay it.”
Theranos was infamous for a culture of internal secrecy, former employees testified in the trial. It sequestered its R&D lab, called Normandy, on a different floor from the rest of the company, and didn’t allow for much communication between the clinical and R&D sections. It also lacked the peer-reviewed research that would’ve been expected from a company of its age.
Afarian’s team at Akasa has had explicit conversations about wanting to publish in peer-reviewed papers about its AI models. It drives the internal culture to be research-first, but also helps in communications because it validates the work for employees and potential customers, she said.
“I think pre-Theranos, reporters, business partners and employees were probably slightly more likely to take companies at their word,” Afarian said. “I think now, because of Theranos, you have more employees and more business partners that would say ‘That’s great, but can you show me the data? Where was that published?’”
While the Theranos saga may have pushed more startups into showing their work and being more transparent, there’s still a shadow over female founders.
“It was already harder for them to get funding, and now it’s like, ‘How do we know you’re not going to be the next Elizabeth Holmes?’ And that’s not a question a male founder would necessarily get,” Afarian said.
It’s been tougher for female-founded startups, particularly those in health care, to shake the comparisons, Wilkins said.
“The ghost of Elizabeth Holmes is lurking in the back of people's minds,” she said. “Even if it's at a subconscious level, the comp is still there.”
