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How Holmes' Conviction Could Affect Silicon Valley

The fraud conviction of former Theranos CEO Elizabeth Holmes could do more than just send a once-celebrated ex-billionaire to prison. In theory, it could also deliver a sobering message to a Silicon Valley culture that often gets lost in its own hubris, but that’s not very likely, the Associated Press reports. For that change to happen, entrepreneurs would have to dial down their own hype, which could mean losing investors to louder startups with fewer qualms. Venture capitalists and other startup investors — always on the lookout for the next big windfall — would need to get much more skeptical about the ambitious pitches they’re hearing, despite the Valley’s decades-long habit of throwing money at a variety of sketchy startup ideas. “I think it will generate some more caution among entrepreneurs, but for the most part, human nature being what it is, there is still going to be a tendency to exaggerate, especially when you know you might not get funded if you don’t,” said Richard Greenfield, a lawyer for investors in startups.

Holmes got slapped down hard for going overboard with her relentless sales pitch while running Theranos, a blood-testing startup she founded as a 19-year-old college dropout in 2002. A jury found her guilty on Monday of duping investors into believing that Theranos had developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood. The trial also laid bare the pitfalls of one of the moves of Silicon Valley entrepreneurs — conveying a boundless optimism regardless of whether it’s warranted, known as “fake it ‘til you make it.” That ethos helped hatch groundbreaking companies such as Google, Netflix, Facebook, and Apple.


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