Accelerating Performance

CHAPTER 13The Board as Catalyst

The board of a high-profile U.S. company contained a Who’s Who of distinguished leaders, including former secretaries of state, senators, generals, admirals, and a defense secretary. But the board became the subject of the sort of nightmare story in Forbes magazine that no director ever wants to see. The headline on April 27, 2016, decreed a “crisis,” followed by the question: “Where was the board?”¹

The company is Theranos, which promised to revolutionize blood testing by requiring only a few drops of blood from patients rather than a full vial and which raised capital at a valuation as high as $9 billion—but which never actually got its technology to work.

Fitting with tradition in Silicon Valley, the company had a great “creation myth”: The founder, Elizabeth Holmes, had a fear of having her blood taken in the doctor’s office and found a solution, so she dropped out of Stanford at age 19 to start Theranos. As the company’s valuation in private markets soared, her 50 percent ownership stake made her the richest self-made woman in the world. She heightened the mythmaking by adopting a sort of uniform, always wearing black turtlenecks and deliberately drawing comparisons to Steve Jobs and his closetful of black mock turtlenecks. She declined to describe in any detail how the Theranos technology worked, saying that she didn’t want to tip off competitors about her breakthrough. But she assured the world that great progress was being made on commercializing ...