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The Ego of Elizabeth Holmes—A Cautionary Tale

One of the hottest books of 2018 is Bad Blood by John Carreyrou. Carreyrou, a Wall Street Journal investigative reporter, broke the incredible story of the corrupt Silicon Valley startup Theranos, whose CEO Elizabeth Holmes and COO Sunny Balwani were indicted earlier this year for defrauding investors, doctors, and patients with their supposedly innovative blood-testing technology. Just a few years before the fraud came to light, Elizabeth Holmes was on the cover of nearly every financial publication. She was lauded as the next Steve Jobs, a college dropout who had become the wealthiest self-made female billionaire. Unfortunately, Theranos disintegrated like a sand castle.

Many powerful leaders have been felled by their egos, and Elizabeth Holmes was no exception. Her hubris can serve as a warning for anyone who wants to be a good leader.

1. Don’t believe your own press—know and accept your limitations.

Elizabeth was in many ways brilliant, but she dropped out of Stanford University at age 19. Realistically, she had no training in producing biotech devices or in medicine. Yet somehow she convinced herself and her investors to trust her when she said she could perform 800 tests from a single drop of blood.

2. Surround yourself with people who challenge you.

It can be tempting to hire yes-men and yes-women, but it’s detrimental to your success. You need people to push back on your vision to make sure it’s sound. Elizabeth hired her boyfriend as COO and her brother and his fraternity friends to play major roles in Theranos. Even worse, she promptly fired anyone who dared to ask why devices weren’t working or how come the blood tests were so inaccurate.

3. It’s better to be loved than feared.

Sure, if you are actually a Renaissance-era tyrant, maybe fear goes further. But if you are trying to lead a company in a modern-day society, rule by fear is wrong and counterproductive. Theranos bred such a culture of fear that people quit rather than share any misgivings, which meant that problems with the devices and the testing were not uncovered until after much harm had been done.

Elizabeth Holmes could have been a successful CEO. She was smart, charismatic, determined, hard-working, and innovative. But her ego superseded all of her strengths and left her company in shambles, her investors with tremendous losses, and Elizabeth herself facing up to 20 years in prison. Don’t let an unchecked ego destroy your future.

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