the Elizabeth Holmes fraud trial, who founded the failed blood testing startup Theranos, is having a lot of ramifications for Silicon Valley.
Their rise and fall has been seen as the ultimate test of Silicon Valley’s fake-it-til-you-make-it culture. With some trending startups, it’s not uncommon for founders to inflate their earnings or hype their company’s products to raise money and do business, even when their products may not do quite what was advertised, Margaret O ‘said Mara, a University of Washington professor who wrote a book on the history of Silicon Valley.
Ms. Holmes also shrouded herself in the mythology of the tech industry. The dropout from Stanford University styled after the late Apple co-founder Steve Jobs, headquartered in Palo Alto, California, and benefited from acclaimed media.
The outcome of the trial of Ms. Holmes could be a referendum on this behavior, lawyers and others said. If Ms. Holmes is found guilty, start-up entrepreneurs could be more cautious with the claims they make against investors and partners, knowing they could be charged with fraud, said Neama Rahmani, president of the West Coast Trial Lawyers and former federal prosecutor.
But an “innocent verdict will justify a Silicon Valley culture celebrating aggressive innovation at the expense of the whole and whole truth,” said Jeffrey M. Cohen, associate professor at Boston College Law School.
Still, some in Silicon Valley have resisted the idea that Ms. Holmes and Theranos represented the typical start-up. That’s because Ms. Holmes raised most of her money from investment firms that represented wealthy families, rather than traditional venture capital firms, which generally invest in fast-growing tech startups. Ms. Holmes also built medical equipment, not software like many other start-ups.
Because of this, Ms. O’Mara said, some Silicon Valley insiders may dismiss the significance of the finding.