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| Bad Blood about Theranos |
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| Smartest Guys in the room |
Having recently read Bad Blood (Theranos) and The Smartest Guys in the room (Enron) I was stuck by the similarity of the toxic workplaces that allowed these huge frauds to continue.
Enron used "creative" accounting and corrupt financial business practices to hide loses in the energy sector. Each quarter's results snowball on previous failures leading to a huge implosion in 2001
Theranos developed blood testing machine intended to replace the need for off-site blood tests using just a few drops of blood. The devices never worked reliably or accurately compared to established testing machines. As a silicon valley "Unicorn" this company burnt millions in start up finance.
Similarities
- Both companies were driven by charismatic characters with little grasp of the actual underlying science of the business.
- Both had "Bulldog" partners that bullied and coerced employees into compliance.
- Facts were hidden, one company used creative accounting methods to hide the real business financial facts, the other hid the miserable product performance from regulators and investors.
- Both companies prevented cross company employee engagement to prevent effective collaboration.
- Both companies had ineffective but high profile governance boards that were in thrall to the CEOs.
- Both company had highly paid employees who job description was vague and performance marginal.
- Original innovators leave in disgust or under a pretence cloud.
- Both companies had the internal culture of a cult. "All in or get out".
- Both companies valued long hours, apparent dedication over actual effective results.
- Both companies employed outside "consultants" to aid and abet the toxic business processes; Accountants in one case, Lawyers in the other.
- Whistleblowers were either ignored or legally threatened sued and silenced.
- Investors wanted to believe the "Too good to be true" story above the realities of market sense.
Loses
Enron -In excess of $70 Billion. A publicly listed company who's loses were spread across the regular stock market.
Theranos - In excess of $600 Million as well as 1000s of inaccurate blood test results leading to real medical harm. A private company who's loses hit a smaller group of private investors.
**Update March 2018 Ms Holmes and Balwani charged with fraud
**Update Oct 2020 Ms Holmes and Balwani to face jury trial.
**Update Oct 2020 Ms Holmes and Balwani to face jury trial.
1 comment:
What has "Tabuk Cleaning Company" got to do with the above ? Is that a horrible place to work Ahmed ?
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