Imagine That, Who’d a Thunk It?

I just returned home and I saw a note in my inbox from a friend telling me that Susan Holmes and her former COO were just indicted this evening by a federal grand jury on charges of fraud. e.g., nine counts of wire fraud and two counts of conspiracy.

The reason why this is meaningful too me, in ways many may not fully appreciate, is because it was nearly two years ago to the day I wrote the following article with the headline: “Theranos: Unicorn Valley’s Madoff Moment”

That article and headline caused quite the stir in The Valley aficionado set, resulting in quite the cat-calls directed squarely at yours truly. The headline and what it conveyed at the time was seen as blasphemy, but what really seemed to get under the skin of this crowd was when I dared say the following. To wit:

“Theranos™, in my opinion, has many of the same overtones for what transpired during, as well as, in the aftermath of the Madoff scandal. And the residual implications are not only yet to be seen. The consequences that are about to reverberate are going to bring forth reckonings many believed would never come. At least that is – before they could IPO, cash out and avoid it themselves. But if 2016 is any clue? Avoiding might no longer be an option.

In “The Valley” the last 7 or 8 years has seen a morphing of true business fundamentals into a place of pure financially adulterated fantasy.

Here is where the story changed from “Something built that customers love and will pay for,” into “Build something that can give the allusion VC’s want to see and hear so they can pay for the right to then sell that illusion to Wall Street and we all get rich.” True business metrics or morals be damned. (for a reminder about morals just enter “Secret” into your search engine of choice.)”

This was reacted to across the mainstream business/financial media, as well as the Valley proper, as if I just insulted someone’s mother. The backlash was palpable. (See Tim Draper for clues)

And now, nearly two years to the day, it’s official – she’s now officially charged.

One has to remember, up and almost until the day it all finally came crashing down, the mainstream business/financial media was still fawning over her and her company. (ZH has a great list at the bottom of their article)

As bad as Ms. Holmes appears to now be, the issue I feel no one is truly understanding is this: In my opinion – she’s not a “sociopathic tendencies” outlier. She’s just one of the visible symptoms permeating through the entire unicorn cabal. And if we ever do get a downdraft? It will be the equivalent of throwing on the light switch to suddenly realize – there was far more than just the one you originally caught.

© 2018 Mark St.Cyr