Over the holidays I read the fascinating book “Bad Blood,” a New York Times best-seller about the rise and fall of Theranos and its founder Elizabeth Holmes, written by Wall Street Journal reporter John Carreyrou.
At the height of her company’s rise, Holmes was worth more than $5 billion. She was a superstar: An attractive young woman in male-dominated Silicon Valley. She was all over the TV and media, including being featured on the covers of Forbes, Inc., Fortune and a host of other publications.
However, Theranos, which promised to deliver technology that would radically change the way blood tests are administered and read, turned out to be largely a fraud. Holmes and her partner misled investors, lied to inspectors, faked test results, fired employees who questioned her and generally created a company that was run like a dictatorship by someone who relished power and fame over truth and reality. The book is a great read and a cautionary tale about how easily some very smart people can be fooled when they want to believe something badly enough and allow themselves to be mesmerized by a cult-like personality who has no problem issuing outright lies and deceit (former Secretaries of State George Schultz and Henry Kissinger, lawyer David Boies and General James Mattis were all on the Theranos board).
What really interested me about the book and Holmes is that there are some really big parallels to the marijuana business and today’s political scene. For example, the legal marijuana industry is no different than any other: Real value is created by people with great ideas as well as great leadership, integrity and management skills. All too often over the last five years, I’ve heard outrageous claims made by cannabis entrepreneurs looking for investors. Oftentimes, the investor deck they present is nothing more than a pie-in-the-sky collection of numbers assembled to look impressive but lacking any realistic research from seasoned professionals with a solid business background.
In other words, I’ve seen a lot of mini-Theranos companies that are big on hype, but short on fundamentals and a proven track record.
The other thing about the Theranos story that struck me is the similarity between its leader’s behavior and our current president. Both individuals have no problem issuing brazen lies targeted at folks they know are susceptible. In “Bad Blood,” Schultz was often portrayed as a well-meaning, but hopelessly mesmerized board member who refused to believe Holmes was a liar and that he’d been misled. Despite a mountain of evidence that clearly pointed to fraud — some of it coming from his own family members — Schultz continued to believe in Holmes and refused to accept the obvious. Investors, including Schultz and his family, lost hundreds of millions of dollars in the end.
Trump and Holmes both work the same way but target different demographics: Holmes worked the educated Silicon Valley crowd who saw an opportunity to make millions by investing in Theranos. Greed, deceit and a cult-of-personality caused normally cautious people to ignore obvious danger signs. With Trump, the target audience is almost the diametric opposite: His believers are undereducated, ordinary Americans who want better jobs and a good economy. Trump knows how to work his lies as effectively as Holmes worked hers. It may sound crazy to some of us, but a draft-dodging, tax-evading billionaire, who made his money importing foreign steel while stiffing American workers, continues to have blue-collar support even though his tax cut for the wealthy just raised the debt by $1 trillion while ordinary American workers continue to see declines in their real wages.