Theranos had no backup plan, and may soon have no employees

Long on words, light on numbers.
Long on words, light on numbers.
Image: Reuters/Mike Blake
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In 2015, Stanford Business School published a fawning interview with Elizabeth Holmes, founder and CEO of Theranos, the now-discredited biotech company that claimed to have invented cheap, effective, and revolutionary blood-testing technology.

In the interview, Holmes said her road to success “wasn’t weighted by influences that I couldn’t do it,” and, perhaps most tellingly, said would-be billionaires should avoid backup plans: “I think that the minute that you have a backup plan, you’ve admitted that you’re not going to succeed.” 

Oh well.

That thinking on Jan. 6 resulted in the announcement of 155 layoffs (paywall)—40% of the company’s staff. Those job losses, The Wall Street Journal reported, come on top of 340 cuts in October, leaving Theranos with about a quarter of the staff it had last August. In a statement, awkwardly titled “Company Re-engineers Operations,” the company said it has “identified a core team of 220 professionals to execute on its business plans,” and that its rejiggered executive team has ”substantial additional regulatory, compliance, and operational expertise.”

They’ll need it. In the wake of allegations that Theranos falsified lab results for its blood tests, investigators are examining whether Holmes misled investors and partners about the company’s ”groundbreaking” technology. Theranos faces shareholder lawsuits, regulatory challenges, and federal probes (both criminal and civil). The company has disputed the allegations in the suits, and promised to fight them vigorously.

Before its fall from grace, sparked by a 2015 Wall Street Journal investigation (paywall), Theranos had raised some $900 million, and inked a retail partnership with Walgreens, which sunk $140 million into the relationship.

In her Stanford interview, Holmes said that failing was part of the process: “You don’t do something like this without embracing failure constantly.” She also said she’d only hire people willing to go on that ride, and stay on it for the long haul. “This is not, you know, ‘I’m going to go to this company and try it for two years and then go somewhere else,’ and so on and so forth,” she said. “This is about ownership of a mission.”

Here’s hoping Theranos employees had their own backup plans.

This story was updated with the company’s response to lawsuits.