Outright fraud, such as the SEC's charge that Theranos claimed annual revenues of $100,000,000 when the actual figure was around $100,000, is the simplest issue to address. In this essay, I'll examine four of the core key criticisms of Theranos, and the lessons we can learn about responsible blitzscaling.

The Theranos story came to light thanks to the investigative reporting of the Wall Street Journal's John Carreyrou, which he detailed in his book on Theranos, Bad Blood: Secrets and Lies in a Silicon Valley Startup. But examining the claims about the company's alleged misbehavior (and the world's reactions to that behavior) sheds important light on the broader question of what risks are and are not ethical to take while blitzscaling. The courts will resolve the legal issues. Instead, we should learn from Theranos by adding this essay to the video.

Holmes has also been indicted on federal wire fraud charges.ĭue to these developments, some have suggested taking down the video of Elizabeth Holmes' visit to our class. In an SEC settlement in 2018, Holmes paid a $500,000 fine and relinquished control of the company, though neither she nor the company admitted or denied the SEC's allegations. Since then, both company and entrepreneur have received sharp criticism for alleged fraud. Theranos founder and then CEO Elizabeth Holmes spoke to our Stanford class in 2015. I explore these themes in the “Technology-enabled Blitzscaling” class at Stanford University, in my Masters of Scale podcast, and in my upcoming book, Blitzscaling, co-authored by Chris Yeh. But in winner-take-most or winner-take-all markets, the biggest risk is allowing a competitor to reach market-dominant scale first. Blitzscaling is risky because it involves committing massive resources while the outcome is far from certain. Blitzscaling - pursuing rapid growth by prioritizing speed over efficiency in the face of uncertainty - is the primary way to turn startups into world-changing companies like Amazon, Facebook, and Google.

Blitzscaling stanford