Theranos Founder Elizabeth Holmes Is on Trial. Silicon Valley Is Watching

Jurors were also asked if they had been exposed to domestic abuse, as the defense plans to argue that Holmes was subjected to “a decade-long campaign of psychological abuse” by Balwani. (Balwani has denied any allegations of abuse. He has also been charged with fraud, and has also pleaded not guilty. His trial is set to begin in January.) About half of the jury pool raised their hands, according to The New York Times

Holmes was just 19, a sophomore at Stanford, when she started Theranos in 2003. Fearful of needles, she came up with an idea for a medical device that could run multiple tests on a single drop of blood. She relied on other successful founders as a template, down to her exaggerated voice and Steve Jobs–inspired uniform. Silicon Valley has long rewarded founders who oversell their ideas and make deals on potential rather than prototypes—that’s how most of the Valley’s most powerful companies were created.

As the trial approached, some in Silicon Valley rejected the view of Holmes as an archetype. “Journalists like to present Theranos as typical of Silicon Valley, but people like Elizabeth Holmes are actually much rarer there than in the rest of the business world, or in politics,” Paul Graham, the founder of Y Combinator, tweeted last week. Scott Kupor, a managing partner at Andreessen Horowitz, tweeted that it was “silly” to suggest that Silicon Valley’s culture was on trial with the Holmes case. “(Alleged) fraud is not the same as willful suspension of disbelief when you have full access to the data and teams required to perform diligence.”

If Holmes isn’t indicative of the tech industry, then she at least falls into a category of tech founders who have allegedly run their startups afoul of the law. Manish Lachwani, the cofounder of Headspin, was charged with wire and securities fraud last month. In the past few years, the CEOs of Trustify and Quintillion were each sentenced to prison for fraud; the CEO of Zenefits reached a settlement with the SEC over accusations that the startup misled investors. Last September, the CEO of NS8 was arrested on fraud charges. (He has pleaded not guilty.)

Over the next few months, Holmes’ defense will argue that every tech company goes through a cycle of trying, failing, trying, and failing more, before finally becoming great. Theranos, they will say, was simply in one of those middle stages, caught between vision and execution. “Failure is not a crime,” said Lance Wade, who is representing Holmes, in his opening statement. “Trying your hardest and coming up short is not a crime.”

The outcome of Holmes’ trial will set straight what the industry tolerates as “trying your hardest,” and what it considers deceit. Whichever way the jury decides, Silicon Valley will be watching.

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