Published on April 13, 2022, at 8:25 p.m.
by Madison Traughber.
Silicon Valley, located in the southern San Francisco Bay Area of California, is well-known for being home to numerous startup and technology companies. One of those companies is Theranos, founded in 2003 by Stanford dropout Elizabeth Holmes. Holmes was later found guilty of defrauding Theranos’ investors out of hundreds of millions of dollars.
Christina Perez, a Silicon Valley native and associate financial analyst at New Relic, offered insight on startup culture.
“Startup culture in tech here is super intense and cutthroat,” Perez explained. “Not only are companies vying for funds from investors and venture capitalists, but they are also trying to beat their competition and be the first ones with a successful product. Because of the nature of this environment, there is definitely a ‘fake it til you make it’ mentality, which sometimes lends itself to unethical business practices, as seen in Theranos.”
Theranos, worth $9 billion at one point, quickly rose in popularity by promoting a medical device, the Edison machine, which was supposed to revolutionize the future of blood testing. Holmes’ ambitious idea was to run medical tests off of a single drop of blood.
Just as fast as Theranos rose to success, it all quickly came crashing down. Holmes’ famous line changed from “a single drop of blood” across all promotional campaigns for the product to “I don’t know” in deposition tapes.
When asked to provide her perspective on the Theranos situation, Leona Marlene, a former Theranos employee who is now an owned media expert and travel blogger, provided the following statement: “I’ve been sharing my experience of working at Theranos to show young people in the workforce who experience a toxic work culture that it doesn’t have to be like that. I want anyone who can [relate] to know that there are incredible people out there who run companies that will empower you to thrive. I have created a freedom-based, digital nomad lifestyle while working for amazing people. If you are struggling in a toxic workplace environment, set boundaries to protect your physical and mental health, and know that you have the choice to leave.”
She was featured countless times in the media, even securing earned media on the cover of Forbes magazine in her signature black turtleneck modeled after Steve Jobs’ classic look. Intense media attention wasn’t Holmes’ only PR misstep.
PR ethics lessons with Theranos’ board of directors
Holmes’ focus was never on developing her product. Instead, she was focused on securing earned media coverage, developing her personal brand image, and selecting a board of directors with impeccable backgrounds to build and maintain key relationships. Almost no health care professionals resided on the board, but an astounding number of politicians and government officials claimed a spot.
PR professionals should always take precautions when it comes to the board of directors for any company.
Dr. Karla Gower, an expert on PR law and ethics, said that “public relations professionals should review the board membership for expertise and diverse skills/perspectives. If the board membership seems to lack expertise, as it appeared to be in the Theranos case, then a conversation should be had with the chairman of the board to make the individual aware of the issue and help the individual make necessary corrections to the board makeup.”
Dr. Gower also advises scrutiny of the internal communications of boards of directors. “The other thing that public relations professionals should be looking for is open discussion during board meetings,” Gower noted. “One of the issues with Theranos is that Holmes would not allow for there to be dissent among the board members. She shut people down and fired two employees who apparently voiced concerns about the operation to one of the board members. That should be a huge red flag!”
The Elizabeth Holmes Theranos case is immensely popular after her trial, garnering earned media attention on the new Hulu show “The Dropout.”
According to Perez, “Theranos serves as a cautionary tale to Silicon Valley, but Silicon Valley culture won’t change overnight. There have been companies before Theranos like Solyndra that have ended the same way, and Silicon Valley still operates the same way and with the same mentality.”
PR code of ethics
Building and maintaining relationships in the PR industry relies on trust and core values. PR professionals should follow the core values outlined in PRSA’s code of ethics. These values set the industry standard for PR professionals and are essential to the integrity of public relations as a whole.