Image source: Revista Galileu
As Theranos’ case is advancing to a new phase in court, and after reading the very well researched book “Bad Blood: Secrets and Lies in a Silicon Valley Startup” from John Carreyrou, I think there are two lessons that could be helpful from the Latin America biotech standpoint.
As venture capital investment is growing fast in the region, more startups are willing to get funding for their companies, and this competition certainly involves well-crafted presentations, good pitches and plans, but there is a clear line between nice phrasing or an optimistic scenario vs selling something that is directly not true or not validated. Let me put it this way: Marketing is not lying, and hockey stick cash flows will show unreal very quick, with an important loss of credibility and leaving behind good projects that were solidly grounded. Along with VC growth, thorough due-diligences are required, and legal responsibility must be seriously pursued.
One additional point that seems to be a signal of something to pay attention is the extreme secrecy. There are appropriate ways to protect industrial secrets and intellectual property. If the people that ask questions, in many cases the right ones, were immediately dismissed, something should smell strange. At the end of the day, it goes back to a basic principle: validation through scientific method is a necessary condition for a technological claim to be real, especially if we are talking about human diagnostics.
Culture eats strategy for breakfast
Somehow Peter Drucker´s phrase resonates in this case, but for Theranos as what shouldn’t be done if you want to create a shared, human, innovation nurturing culture. The strict pyramidal power and communication structure that was in place, and that still is in the culture of some Latin-American companies and managers, could be dangerous if someone uses his or her power aggressively and arbitrarily. In Theranos this was reflected in high turnover rates, stress and even the suicide of Dr. Ian Channing. And if we go one step further, and think of the customers and their health, there seems to be no real concern for them, some reported serious issues because of Theranos’ wrong diagnostics.
Theranos’ funding was at astronomical distance from regional startups, but lessons from success and failure in much bigger and mature markets can be learned.
Author: Tomás Mardones