On the 4th of January Elizabeth Holmes, female founder of the company Theranos was found guilty of defrauding her investors millions. The story is sensational. Brilliant wiz kid tricks the start-up world into giving her millions for technology that was not proven, validated, or even evidenced. A modern emperor's new clothes. The fact that this founder was able to pull off such a huge lie for so long makes this story interesting. That one of the prized silicon valley health unicorns was a huge fake is also interesting. But then there is also the fact that it was all done by a female founder. And that is where the questions about how we move forward turn from interesting to frustrating. The story of Theranos' failure should focus on the horrible practices of the business and the lies at the core of it. Not the fact it was run by a woman.
As founders of a new Health Startup, Rose and I were asked to comment on the story. The fact that we are also two blonde female founders does make it a bit close to home and we were keen to contribute to the larger conversation about what this trial means for the digital health sector and the possible impact on female founders. A bit of what we shared was published in an article on the topic for Insider Health Startup Founders Say They Are Asked About Elizabeth Holmes (businessinsider.com). But there was a lot we shared that did not make the edit. Here is our uncut response.
Are you concerned about Holmes casting a shadow over genuine breakthroughs in health?
That is a really interesting question. I would hope that the case does not put investors off investing in genuine breakthroughs. However, I do hope it inspires investors to take a more careful look at health innovation. There have been a lot of startups and innovations in the health space that have not been well regulated enough, with people asking questions about the quality, validity, and real world user impact. It is important to remember that Theranos and Elizabeth Holmes were able to spin out of control as they did because of a lack of validation and quality control. People were so caught up in the promise of a "unicorn" breakthrough they didn't ask the tough questions. We shouldn't be playing it fast and loose with something as critically important as people's health.
We think it's actually a good thing if the medical technology sector is held up to a higher level of scrutiny. The world needs medical innovation that works for real people, not just investors.
With Sophia Health, we are working hard to build both formal validation and more informal user feedback. It's almost opposite to the approach Holmes took. Instead of trying to hide things away, we are making things as open as possible. Inviting in collaboration, sharing our processes, and welcoming input from both the medical community and women who will use our services. Hopefully, this level of transparency will help set us out as a very different type of company from Thanos and very different founders from Holmes.
Could this damage the trust investors have in what you are trying to accomplish with Sophia Health?
It's important to also clarify that there are different types of digital health innovation. There are the medical breakthroughs in areas like genetics, testing, AI, and pharmaceuticals that Holmes worked in. This is a space of big risk but also big potential payoffs. I think any place that is so risky will always be a hard place for anyone to stand out. The level of research and R&D alone, means you need a huge amount of investment and belief in your idea. This area was always hard to fund, especially for women who only get a small percentage of the investment that male founders get. This area will continue to be challenging for female investors, not because of Holmes, but because it's a high risk, high reward area and the existing biases around female founders.
But there is also the digital health space around improving services and filling a need. For women's health and "femtech" specifically, this is an area expected to see drastic growth in the next few years. There are currently over 200 start-ups in this space, many of which are run by women. And the sector itself is estimated to grow to over $60b by 2027 (https://analytics.dkv.global/FemTech/FemTech-Industry-2021-Report.pdf).
This is the space Sophia Health is launching into. There are huge known women’s health issues, but so far technology hasn’t stepped up to help. That’s where we hope to bring something new to the market. It isn’t some mystical save all pill or all singing and dancing blood test. It’s using existing technology in a new way to tackle women's health issues that have been ignored for 1000’s of years. This does not require investors to take a huge leap of faith into an unknown technology or scientific breakthrough, it asks them to believe that there is a need we can meet in a new way using existing technology.
Could this be yet another hurdle for women founders to overcome?
Male entrepreneurs do not face harder scrutiny when high profile male led startups fail. Investors know it has more to do with the individual founders and the company idea, not the gender of the founder. I hope (maybe idealistically) the same will happen with the Theranos story. Investors will recognise that the issue was with Elizabeth Holmes and all the lies she told. This was a highly intelligent person acting badly, not a gender issue.
And if we do face more hurdles, well I think we will take them in our stride. Personally, I have found that female entrepreneurs are a pretty resilient and determined bunch. Many have overcome huge obstacles to get where they are, from blatant gender discrimination to the ever present impact of hidden biases. Female founders are already less likely to get investment, get lower amounts of investment, and have struggled to get taken as seriously within the tech space. However, all of that adversity has made us strong and given us the ability to push past new challenges thrown in our way.