Because of its acclaimed unique medical breakthrough in making low-cost blood tests and its supportive investor and marketing machines, Theranos is considered to be one of the top 15 billion dollar companies by some of the most renown venture-capital firms around.
However, despite being one of the most celebrated start-ups in Silicon Valley, Theranos was recently exposed as a business that is not only grossly under-delivering on its promise, but one which is also working hard to hide problems with its technologies.
Whilst the Theranos’ story highlights deeper concerns, it also may be a good example of why Gartner’s Hype Cycles are relevant to understand and explain the ups and downs of new Tech concepts.
The Two Challenges Faced by Any Start-up Leader:
Reading the articles on Theranos published by The Wall Street Journal and Wired magazine, I can see that tech leaders need to address two challenges.
- To set a vision that investors and customers buy into, but that is not so remote that it cannot be achieved
- To ensure transparent disclosure and communications. Never hide. Never lie. Never overstate.
It is indeed interesting to note that just like Facebook, Airbnb and Uber’s CEOs, Theranos’ CEO claimed that the company’s technology did things that could not be done when it raised funds. It can be argued that such claims are necessary to convince investors and users of the ability of the concept at hand, and the company’s leadership in order to leapfrog a market. Unfortunately, whilst the tech sector wants its heroes and can support a little overstating, such an approach does not work when people’s lives are at stake.
Furthermore, according to the Wall Street Journal’s reviews, although Theranos claims to have designed new technologies able to identify illnesses and diseases from a single drop of blood, the company is actually utilising Siemens' technology rather than new innovative tech. It was also revealed that the “proficiency tests” that are widely marketed, were potentially not that accurate. As a result, only one test, within the 100 tests developed, is currently FDA approved and in used by the Theranos’ Labs.
Most start-ups want to come up with the next big idea that will change the world. At the same time, stories like Theranos’ actually expose a deeper problem with the way Silicon Valley is currently spinning technology hype into start-up gold.
So let's see what happens next.
But Theranos is a cautionary tale of what happens when that mentality creeps into sectors other than software, such as medicine. As one Theranos patient quoted by the Journal put it, “trial and error on people, that’s not OK.” It’s not that any of this is done maliciously. It’s just that the tech industry wants its heroes. It wants to find the next Steve Jobs. It wants to be responsible for discovering not just the next big chat app, but the next big idea that will change the world. Once the industry finds a protagonist who seems to fit that narrative, the story can take on a life of its own, separate from the more mundane reality.