Richard Bowen

  • Home
  • About
  • Speaking
  • Videos
  • Media/Press
  • Testimonials
  • Blog
  • Contact
  • +1-214-604-5492

February 27, 2020 By Richard Bowen

Life on the Fast Track

Photo of Elizabeth Holmes wearing a blazer and collared shirt.
Elizabeth Holmes, Theranos press kit photo. Courtesy of Wikipedia under the Creative Commons Attribution-ShareAlike 4.0 License.

Elizabeth Holmes dropped out of Stanford at age 19 to start a new career. She founded Theranos, which was a privately held health technology corporation initially touted as a breakthrough technology company in the blood-testing market.

The money and glory were huge. In a few short years, Ms. Holmes grew the company to a valuation of $9 billion. Ms. Holmes was touted as the next Steve Jobs or Bill Gates.

Theranos claimed its technology was revolutionary and that its tests required only about 1/100 to 1/1,000 of the amount of blood ordinarily needed for tests and cost far less than existing tests on the market. There were plans for Theranos wellness centers in Walgreens.

However, eventually, numerous shortcomings and inaccuracies in its technology led to charges by the U.S. Attorney for the Northern District of California on wire fraud and conspiracy charges against Ms. Holmes and former company president Ramesh “Sunny” Balwani. The trial is presently scheduled to begin in August 2020. Ms. Holmes may be faced with up to twenty years imprisonment.

Photo of Elizabeth Holmes listening to a speaker in a crowd.
Elizabeth Holmes, the chief executive officer and founder of Theranos, a health care technology company, listens as Deputy Secretary of Defense Ash Carter speaks at Stanford University in Palo Alto, Calif., April 17, 2013. DoD photo by Glenn Fawcett.

So how did an American dream fall apart? It had major talent on its team; managers formerly with IBM and Panasonic; and stellar board members, including former secretary of state, George Shultz, Donald L. Lucas, who had helped take Oracle to the top, and Channing Robertson, the associate dean of Stanford’s School of Engineering.

By its third year in business, it had a valuation of $165,000,000. Pharmaceutical companies were eager to use the company’s blood-testing systems to monitor patients’ responses to new drugs. There was a definite need and the market for the product was huge.

The stakes were high and unfortunately, the company faked results in order to bring investors on board and get contracts. Theranos 1.0, the blood testing system, didn’t always work, so some of the technicians involved, with Ms. Holmes blessing, faked results to wow potential investors and get the big contracts.

Theranos was a house of cards that eventually fell. In 2015, medical research professors John Ioannidis and Eleftherios Diamandis, and investigative reporter John Carreyrou of The Wall Street Journal, started questioning the validity of Theranos’ technology.

Theranos was bombarded on all sides with legal and commercial challenges from medical authorities, investors, the U.S. Securities and Exchange Commission (SEC), Centers for Medicare and Medicaid Services (CMS), state attorneys general, former business partners, patients, and others. In September 2018, the company ceased operations.

Theranos and Elizabeth Holmes, once the darlings of Silicon Valley, had a reported a $9 billion valuation and employed hundreds of workers who bought into its mission to create a cheaper and more efficient alternative to traditional blood testing methods.

Theranos logo

However, in the company itself, an atmosphere of fear, lies and retribution prevailed. There were constant firings, threats toward employees who said anything about the company, and verbal harassment. People were afraid and guilt-ridden as many knew the claims Theranos made were invalid.

And eventually, two former employees blew the whistle. Erika Cheung tipped off the Centers for Medicare and Medicaid Services and Tyler Shultz, an ex-research engineer and the grandson of Theranos board member George Shultz, were instrumental in helping Wall Street Journal investigative reporter John Carreyrou expose the company.

Good news from a nightmare

What became a nightmare for many at the core of the company finally imploded. However, as a result of the implosion, there is also good news. Ms. Cheung and Tyler Schulz have started an organization called Ethics in Entrepreneurship. Its purpose, to help other entrepreneurs from falling to the same fate that befell Theranos employees.

Ethics in Entrepreneurship is presently seeking non-profit status in the U.S. and Hong Kong. The founders want to facilitate conversation about ethical practices as a norm in the startup world. Its plans involve connecting early-stage entrepreneurs to ethicists, seasoned entrepreneurs, and other relevant industry experts to guide on how to make ethical decisions when building a company. It also plans to make available tools and frameworks for ethical decisions that benefit businesses, employees and consumers.

As Ms. Cheung told CNN Business, “There were so many instances, even for someone like Elizabeth Holmes, to turn back and say, ‘I’m taking things a little too far here,’ … She had many opportunities to do so… I do think entrepreneurship can empower people and empower society, but we also have to not let things escalate to this degree.”

Ms. Cheung and Mr. Shultz shared some of the lessons they learned from working in a culture of fear and secrecy at the Manova Global Summit on the Future of Health in Minneapolis. Tyler Shultz recalled, “you weren’t supposed to talk to other people at Theranos about what you were doing.”

They both agree that there should be a way within the investment landscape to prevent an unethical situation from following the Theranos path and going too far.

For example, if someone was personally profiteering or committing egregious actions, there could be a system in place for investors to pull back money. “There needs to be ways to keep people accountable, to nudge them to good behavior,” Ms. Cheung said.

You need the right people asking the right questions…
~Erika Cheung

Mr. Shultz advocates creating a culture of healthy disagreement. One of his primary missions is to establish a culture in which people can disagree — even with the boss.

Ms. Cheung advocates having an ethics hotline. “But the biggest one is, do you have a way for employees to report problems? Are the right mechanisms in place to compile evidence, and is there investigation and follow up?”

While vanity boards are popular in Silicon Valley, but especially in a highly regulated space like health care, Ms. Cheung says, “You need the right people asking the right questions… Be proactive: Think about the impacts a startup will have on customers, investors, employees and society. It’s better to think about these ethical issues early in the process, rather than reactively.”

The two are impassioned about the impact the new organization can have. “We’re all here because we want to make an impact and we want to do good and we have good intentions but making sure you have that strong vision and figuring out how to maintain that…” is challenging, Ms. Cheung said. “You have to figure out how to stick to those morals and standards and values despite the chaos.”

The Theranos story reads like a lurid paperback trash novel. Unfortunately, it’s a true story, complete with suicide, breakdowns, tough attorney threats toward employees and a disintegration in ethics and morals.

We need more young people standing up to these abuses of power and greed. I applaud Ms. Cheung and Mr. Shultz for taking strong steps to help young entrepreneurs step out on the right foot.

The startup world will be watching them.

Corruption Doesn’t Live Here Anymore!
What Do We Need To Do To Increase Accountability?

Tagged With: ethical leadership, Ethics

Ethics on your mind? Subscribe to my ezine to get my latest article delivered right to your inbox. Click Here to Subscribe

Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

Related Posts

  • Ethics in the Last and Next Financial CrisisEthics in the Last and Next Financial Crisis
  • Citigroup to Facebook, it’s about powerCitigroup to Facebook, it’s about power
  • Transparency and Ethics in IrelandTransparency and Ethics in Ireland
  • The Fall of an American IconThe Fall of an American Icon

What People Are Saying About Richard M. Bowen

William D. Cohan"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst."

~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
https://richardmbowen.com/testimonials/2556/

Eileen McDonnell"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger."

~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
2015-02-13T19:51:19-06:00
"Richard Bowen reinforced my motto that "there is no right way to do a wrong thing.” Long after his presentation, the conversation has continued about personal responsibility and the courage to challenge things that appear to be wrong. We encourage this dialog and rely on it to help make our business stronger." ~ Eileen McDonnell, Chairman, CEO, & President, Penn Mutual
https://richardmbowen.com/testimonials/711/

Ben Stein"Richard Bowen, you are a star and a hero."

~ Ben Stein, Economist and Political Commentator
2015-02-13T19:50:26-06:00
"Richard Bowen, you are a star and a hero." ~ Ben Stein, Economist and Political Commentator
https://richardmbowen.com/testimonials/712/

Jim Farrell"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership."

~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
2014-12-28T19:48:17-06:00
"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
https://richardmbowen.com/testimonials/532/

Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
2014-12-28T19:48:06-06:00
"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
https://richardmbowen.com/testimonials/533/

Betty Garrett"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!"

~ Betty Garrett, Garrett Speakers International
2014-12-28T19:47:50-06:00
"Richard Bowen is a dynamic, entertaining speaker and story-teller - a CPA with a great personality!" ~ Betty Garrett, Garrett Speakers International
https://richardmbowen.com/testimonials/531/

fred-timmons"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences."

~ Fred Timmons, Chairman of The Texas Society of CPA's
2014-12-28T19:47:22-06:00
"I believe Richard Bowen is the only keynote speaker to ever receive a standing ovation from the Texas Society of CPA’s at any of its annual conferences." ~ Fred Timmons, Chairman of The Texas Society of CPA's
https://richardmbowen.com/testimonials/530/

Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

Want to Hire Richard?

Watch Richard

See What Clients are Saying

About Richard

Recent Posts

  • Americans Who Tell the Truth, Speaking Truth to Youth Video Series
  • Ethics in the Last and Next Financial Crisis
  • Speaking on Resisting Corporate Corruption
  • The Importance of Corporate Culture
  • Brigham Young University Students Understand the Importance of Ethics in Business

Categories

  • Business Ethics
  • Congress
  • Corporate Debt
  • Corruption
  • Ethical Leadership
  • Financial Crime
  • Financial Crisis
  • Financial Crisis of 2008
  • Holiday
  • International
  • Mortgage Lending
  • Mortgage Meltdown
  • Relationships
  • Speaking
  • Texas Politics
  • The Fed
  • Too Big To Fail
  • Uncategorized
  • Updates
  • Wall Street
  • Whistle Blowers

About Richard

Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

Read more

Connect with Richard

  Facebook   Twitter   Linked   YouTube

Contact Us

Phone: +1-214-604-5492

Email: Richard@RichardMBowen.com

Contact Richard

Copyright 2021© 2022 · Richard M. Bowen | ALL RIGHTS RESERVED.

X
Sign up to receive my blog posts via email!
Subscribe >>