How is Theranos different to startups today?

To my existing subscribers –

You’ve probably noticed my writing has been a little ad-hoc lately. Moving forward, I’m striving for the same weekly consistency that got me this far with Legit since I first came up with the idea, mid-pandemic, almost one year ago today.

The goal is to place less emphasis on how much I write in each issue, and more on publishing at least one piece of writing every week.

In the most anticipated antitrust ruling of 2021, Judge Yvonne González Rogers handed out a marginal win to Apple.

Epic, the maker of Fortnite, accused Apple of abusing its monopoly over the iPhone and App Store by forcing app makers to pay 30% commissions and use Apple’s in-app payment system.

The market in focus isn’t the App Store, but “digital mobile gaming transactions” where Apple faces competition from Google’s Android operating system. While Apple does control over half of this market, it’s not stepping across any hard lines by virtue of its success.

“Success is not illegal” - Judge Rogers.

The ruling isn’t fully steeped in pro-Apple sentiment. Although the tech giant didn’t violate federal antitrust law, the Judge ruled it engaged in anticompetitive conduct under California’s competition law.

A win with so many caveats that calling it a win seems a little farfetched. Both Apple and Epic are expected to appeal in the coming months.

In the meantime, Apple’s share price has fallen by 3% since Friday, wiping billions of dollars from its valuation.

Theranos founder Elizabeth Holmes went on trial this week for wire fraud and conspiracy.

Robert Leach, assistant US attorney, set out the case against Holmes, accusing her of papering over the gaping holes in Theranos’ tech with PR fluff and exaggerated revenue projections.

She’s also accused of knowingly promoting the company’s blood tech as revolutionary, when it did nothing standard blood-testing tech couldn’t do.

The defence’s strategy is pretty twofold: blame Holmes’s business partner and ex, Ramesh Balwani, for Theranos’s downfall, and argue naivety-induced failure isn’t a crime.

This approach was captured by Holmes’ lawyer:

…debatable.

What makes this trial interesting - other than the schadenfreude I feel at Elizabeth Holmes’ Icarus Syndrome - is its relevance to the startup landscape today.

Theranos represented an exhilarating idea, a charming-if-not-odd founder, and a charismatic team. What makes it different to any other startup VC’s are chasing after today?

Over-promising and hype is baked into startup culture, perhaps unsurprisingly given the influx of investment in early stage companies with grandiose valuations lately. This influx, and the excitement that comes with wanting to get in on investment rounds as early as possible, makes it incredibly easy for basic gaps in science, engineering technology to slip through the gaps.

Is this the fault of the founder, who exaggerated his or her ability, or of the investor, who let their excitement get in the way of doing enough due diligence? I’m conflicted.

The line between fraud and ‘faking it till you make it’ is so thin. This case will be pivotal in helping draw it.