The rise and fall of an entrepreneur came this week in the form of a conviction of fraud in a US court.
Elizabeth Holmes was no ordinary entrepreneur.
Billed as the female Steve Jobs and profiled by business magazines as an entrepreneur with tremendous potential, young Holmes came into the limelight with what she called a scientific breakthrough for blood testing.
Her innovative machine, named the Edison machine, made by her company Theranos, was going to change the world when it came to running blood tests. Or so she said.
What she didn’t tell the world was that the machine was nothing like what she promised, was faulty and could not deliver the kind of blood tests she promised it could.
The good news for her was the tremendous interest – and the funding she and her company generated, with many global investors. In 2010, Theranos was valued at US$ 01 billion, with over 45 million USD funding received.
The rise and fall of an entrepreneur came slowly but swiftly.
Today, none it stands as she faces disgraced and convicted – yet her story, one of power and innovation, stands at testimony to what entrepreneurship is capable of. And what pitfalls we as entrepreneurs must avoid, however easy or inviting as they may seem.
Elizabeth Holmes was no fool – she was very talented having dropped out of Stanford early to fulfil her dream of launching the Edison machine. Yet, there were many areas in which she lacked woefully, leading to her ultimate downfall.
What lessons can we learn from her?
Too much too soon is still a bad combination –
When Elizabeth Holmes announced her breakthrough machine, no one knew that she had not worked it out adequately enough to run tests successfully. She announced what was then a half way concept and the world, eager to embrace new concepts, bought the hype. So did the investors.
Rushing into a business or an idea is never a good beginning.
In the good old days, without access to technology, it took a long time to plan and set up a business, which gave it time to experiment with formulas – from customer base targeted to the actual products.
But in today’s instant climate, a business can be started in next to no time without much of an effort. While this could be a good thing, rushing into something without thinking it through or as in this case, without doing proper research and testing, it can spell disaster.
Elizabeth knew she could attract funding even though the machine wasn’t yet fully developed – she went in with that mindset rather than ensuring her product met the standards expected.
Make sure your business is ready on all fronts –
Theranos was pitching funding and potential investors but wasn’t ready with all systems go.
It was risky from the start to conceal a half developed machine and announce to the world that everything was on track.
It is always a good idea to ensure all systems are ready to roll before going into setting up.
In the end, the fluff and the fawning disappeared – as I did for her – when you cannot or don’t deliver what you promised.
Elizabeth Holmes and Theranos is a classic example of doing entrepreneurship wrong. She had the idea and the concept worked out but sought funding and greed over building a great business.
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