Lessons to Learn From the Fall of Theranos // Law and Entrepreneurship // Blog Network // University of Notre Dame

This article points out 6 lessons entrepreneurs can learn from the fall of Theranos:

Entrepreneurs have to be honest to their advisers to actually benefit from their advice.
Be transparent in what your product can do and in what it can’t, especially to business partners.
Raising capital does not solve all of a company’s challenges.
Take proactively full responsibility of a failure.
Follow the lean-startup method (build, measure, learn) and admit to (and learn from) early failures to prevent later failures with devastating consequences.
Be careful when promoting your product in the public.

I think the article is correct in pointing out that there are several lessons both entrepreneurs and investors may learn from the Theranos debacle. But the fall of Theranos itself and the willingness of financiers to invest in it without seeing a full working prototype for years also indicates to me that at a certain point, it might become extremely difficult for all the involved parties to accept a complete failure of the project.

One thought on “Lessons to Learn From the Fall of Theranos”

Interesting article with some great advice! It is good advice for startups that honesty is the best way to ensure long-term success. Through misrepresentation, entrepreneurs can often get in over their head and ruin the business by not meeting expectations. However, in the case of entrepreneurs similar to Holmes I feel like this advice will be ignored. I believe her ego got in the way of the business and this resulted in over hyping a product that did not work. She was even told her product would not work and was unwilling to listen. They will continue to ignore criticism and failure because they are too infatuated with them self and belief of their ability to be a visionary. In this situation, I do not think there is a solution as these entrepreneurs feel like Holmes that the misrepresentation and/or fraud is necessary to achieve their vision. This is where securities laws and disclosure rules need to step in to protect investors.

Mark on April 4, 2018 at 9:24 pm said:

Interesting article with some great advice! It is good advice for startups that honesty is the best way to ensure long-term success. Through misrepresentation, entrepreneurs can often get in over their head and ruin the business by not meeting expectations. However, in the case of entrepreneurs similar to Holmes I feel like this advice will be ignored. I believe her ego got in the way of the business and this resulted in over hyping a product that did not work. She was even told her product would not work and was unwilling to listen. They will continue to ignore criticism and failure because they are too infatuated with them self and belief of their ability to be a visionary. In this situation, I do not think there is a solution as these entrepreneurs feel like Holmes that the misrepresentation and/or fraud is necessary to achieve their vision. This is where securities laws and disclosure rules need to step in to protect investors.