In his 2005 Stanford University commencement speech, Steve Jobs described the very public humiliation of being ousted from Apple. “It was awful tasting medicine but I guess the patient needed it,” he said. “Sometimes, life hits you in the head with a brick. Don’t lose faith.”
That “brick” led to the founding of NeXT and Pixar, falling in love with his future wife Laurene and ultimately returning to resuscitate Apple. “I’m pretty sure none of this would have happened if I hadn’t been fired from Apple,” he said. “I didn’t realize it at the time, but [it] was the best thing that could have happened to me.”
On Friday, federal regulators delivered some awful tasting medicine to Theranos founder Elizabeth Holmes, banning her from the laboratory testing industry for at least two years and revoking the federal certification of her company’s flagship Silicon Valley lab.
Since the ban prohibits equity ownership of a lab, and a blood-testing startup can hardly do its job without one, it’s hard to envision a scenario where Holmes isn’t forced to part ways with the company she founded. As with Apple and Jobs, that could very well turn out to be the best thing that could happen to both Theranos and its young CEO.
While running a full range of tests from a few drops of blood and providing real-time diagnostics to the masses is Holmes’ vision, I think the company’s best chance of realizing it is without her at its helm. After all, how can anyone continue to have faith in a CEO who used live patients as test subjects, whether she realized it or not?
Never mind the grandiose dreams of changing the world, the culture of secrecy that kept anyone from vetting the technology, the self-aggrandizing PR tours, the burned relationships with Safeway and Walgreens, and the months of steadfast denials in the face of media and regulatory scrutiny.
If launching technology that isn’t ready for prime time and having to walk back two years-worth of blood-test results doesn’t cost a CEO her job, what does? Any one of those tens of thousands of tests may have led to a serious misdiagnosis.
After 13 years of development, I have to believe that Theranos is worth keeping its doors open. With an effective management team that knows what it’s doing, maybe the company will someday revolutionize the lab test business. But that’s not going to happen until the toxic leadership that led to these dire circumstances has permanently left the building.
The question is, how exactly is that going to happen?
Holmes, who founded Theranos at 19, has controlling interest in the Palo Alto company. If she resigns voluntarily, that would be telling. It would be an admission that she owns up to her role in this fiasco, instead of continuing to live in some fantasy land where she can make everything right without having to deal with the consequences of her actions.
I seriously doubt if her hand-picked board of directors is up to the task of mounting a coup. So it probably does come down to federal regulators resisting appeals, standing by their sanctions and somehow removing her from the company.
In a strange twist, Holmes apparently deeply admired Jobs and kept a picture of him on her desk. According to the Wall Street Journal, that was the source of her all black uniform and Theranos’ almost cult-like veil of secrecy. Venture capitalist and early Theranos investor Tim Draper apparently likened Holmes to Jobs. I don’t think that was by coincidence, but by design. Holmes’ design.
It’s hard to miss the irony. Modeling herself after Jobs became a self-fulfilling prophecy that brought the same fate he endured down upon her. And the only chance this story has of a happy ending – either for Theranos or for Holmes – is if she suffers that same humiliating defeat. That’s what it usually takes to someday wake up and gain some perspective.
Until then, don’t expect Holmes to voluntarily step down. As with the young Steve Jobs, she simply doesn’t realize that her and her company’s best days may lie ahead of them … but only if she takes her medicine.