One of the differences between the World of Public Companies and the World of Unicorns – and there are many differences – is that in the first, companies that sell shares to the public have to be candid and tell the truth or face potential action from the SEC. In second, the mandate to be truthful is less clear and less rigorously enforced.
Such is the case with Theranos, the private laboratory company that once promised to do comprehensive lab tests from a single prick of blood from your finger. The hype got ahead of reality.
We at Fortune did our part to contribute to that hype. We were the first magazine to put Theranos CEO Elizabeth Holmes on the cover. Subsequently, the newly minted billionaire graced the cover of virtually every business magazine. She spoke at several Fortune conferences (see the video clip here), and even made our Businessperson of the Year list in 2014.
Now, of course, we know that Theranos has suspended finger prick tests, awaiting approval from the FDA, and moreover was never offering the 200 finger prick tests that we referred to high up in our June 2014 cover story, but rather a significantly smaller number.
How did Fortune make such an error? Roger Parloff, the reporter who wrote the original story, has now gone back and painstakingly tried to recreate the conversations and communications that led to that claim in our story. He takes himself to task for not demanding more clarification to cloudy answers, but in the end also concludes that he was misled. His new story, which you can read here, provides an unusual peek behind the scenes of the sometimes messy process of journalism.
When Fortune published our original story in June 2014, Theranos never complained about our claim that it was conducting 200 laboratory tests using its proprietary finger prick technology. After Parloff’s story was posted yesterday, Theranos was quick to respond, claiming the company had never misled Fortune. We stand by the story.
I have had the opportunity to spend a fair amount time with Ms. Holmes in the last year, and to visit her facilities in Palo Alto. I also interviewed her at the Fortune Global Forum last month. She is clearly an extraordinary woman, and her vision for remaking the health care system and empowering consumers is powerful and sincere. I do not believe she ever set out with the intent to mislead – she is not Martin Shkreli.
But I do believe Holmes and Theranos have been less than candid with the public and with the medical community about what they can and can’t, and are and aren’t, doing. If Theranos is ever going to make it out of the Unicorn forest, it needs to hold itself to a different standard.
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