The fraud conviction of former Theranos CEO Elizabeth Holmes could do more than just send a once-celebrated ex-billionaire to prison. In theory, it could also deliver a sobering message to a Silicon Valley culture that often gets lost in its own hubris and swagger.

Will it? Don't hold your breath.

Elizabeth Holmes walks into federal court in San Jose, Calif., Monday, Jan. 3, 2022. (AP Photo/Nic Coury)

For that change to happen, entrepreneurs would have to dial down their own hype, which could mean losing potential investors to louder startups with fewer qualms. Meanwhile, venture capitalists and other startup investors — always on the lookout for the next big windfall — would need to get a lot more skeptical about the ambitious pitches they're hearing, despite the Valley's decades-long habit of throwing money at a variety of sketchy startup ideas. Most fail, but the rare successes can more than make up for a passel of losers.

"I think it will generate some more caution among entrepreneurs, but for the most part, human nature being what it is, there is still going to be a tendency to exaggerate, especially when you know you might not get funded if you don't," said Richard Greenfield, a lawyer who represents investors in startups.

"And I don't think it will change many investors' attitudes," he added. "People are still going to want to reach for the moon."

Elizabeth Holmes, center, leaves federal court after the verdict in San Jose, Calif., Monday, Jan. 3, 2022. (AP Photo/Nic Coury)

Holmes got slapped down hard for going overboard with her relentless sales pitch while running Theranos, a blood-testing startup she founded as a 19-year-olld college dropout in 2002.

A jury found her guilty on Monday of duping investors into believing that Theranos had developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood. She could face up to 20 years in prison for each of those four convictions, although legal experts say she is unlikely to receive the maximum sentence. The jury also acquitted Holmes of four felony charges accusing her of trying to defraud patients that paid for Theranos blood tests.


Federal prosecutors depicted Holmes as a charlatan obsessed with fame and fortune. In seven days on the witness stand, she cast herself as a visionary trailblazer in male-dominated Silicon Valley who was also a young woman emotionally and sexually abused by her former lover and business partner, Sunny Balwani.

The trial also laid bare the pitfalls of one of the go-to moves of Silicon Valley entrepreneurs — conveying a boundless optimism regardless of whether it’s warranted, known as "fake it ‘til you make it." That ethos helped hatch groundbreaking companies such as Google, Netflix, Facebook, and Apple — the latter co-founded by one of Holmes’ heroes, Steve Jobs.

Elizabeth Holmes, center, enters federal court in San Jose, Calif., Monday, Jan. 3, 2022. (AP Photo/Nic Coury)

As soon as Holmes was indicted in 2018, the U.S. Justice Department made it clear they hoped to use her case as a prod that would jolt Silicon Valley — not to mention Big Tech companies that continue to extend their dominance in everyday life — back to reality.

"They wanted to send a message," said Carl Tobias, a law professor at the University of Richmond who followed the Holmes trial. "Now we shall see whether it's enough to change some of the risky behavior we have been seeing for years."

Few expect the Holmes conviction to lower the wattage on the brash promises and bold exaggerations that have become a routine part of the tech industry’s innovation hustle.

The Holmes verdict "will send a message to CEOs that there are consequences in overstepping the bounds," suggested Ellen Kreitzberg, a Santa Clara University law professor who attended the trial. On the other hand, she said, "investors are still going to want to make more money on a promising idea. They will always go in for the golden ring."

Elizabeth Holmes, center, walks to federal court in San Jose, Calif., Monday, Jan. 3, 2022. (AP Photo/Nic Coury)

The bold dream Holmes pursued when she founded Theranos had become a nightmare by the time she was indicted on felony charges in 2018.

She set out to create a less painful, more convenient and cheaper way to scan for hundreds of diseases and other health problems using just a few drops of blood instead of filling vials with blood for each test. She aimed to upend an industry dominated by giant testing companies such as Quest Diagnostics and Labcorp, starting with setting up "mini-labs" in Walgreens and Safeway stores across the U.S. that would use a small Theranos device called the Edison to run faster, less intrusive blood tests.


The concept — and the way Holmes presented it — enthralled wealthy investors eager to buy an early stake in a game-changing company. It helped Theranos raise more than $900 million from savvy billionaires such as media mogul Rupert Murdoch and software magnate Larry Ellison, as well as well-to-do families such as the Waltons of Walmart and the DeVos clan behind Amway.

"Some people like to throw money at things and have too much unfounded optimism, and Elizabeth Holmes took full advantage of that," Greenfield said.

Elizabeth Holmes, center, leaves federal court in San Jose, Calif., Monday, Jan. 3, 2022.  The jury weighing fraud charges against the former Theranos CEO on Monday informed the judge they are deadlocked on three of the 11 counts she faces.(AP Photo/Nic Coury)

Holmes also wooed a well-connected board that included two former U.S. secretaries of state, Henry Kissinger and the late George Shultz: two former secretaries of defense, Gen. James Mattis and William Perry; former Sen. Sam Nunn; and former Wells Fargo CEO Richard Kovacevich. She charmed former President Bill Clinton in an on-stage presentation and impressed then-Vice President Joe Biden, who effusively praised her during a 2015 tour of a Theranos lab.

But investors and board members were both surprised to learn that Theranos’ blood-testing technology kept producing misleading results. Evidence showed that Theranos took great pains to conceal that fact, including forcing patients to undergo regular blood draws instead of the promised finger sticks and secretly testing those samples with conventional technology.

Elizabeth Holmes, center, leaves federal court in San Jose, Calif., Monday, Jan. 3, 2022. (AP Photo/Nic Coury)

Evidence presented at the trial also showed that Holmes lied about purported deals that Theranos had reached with big drug companies such as Pfizer and the U.S. military.

The deception backfired in 2015 after a series of explosive articles in The Wall Street Journal and a regulatory audit of Theranos uncovered potentially dangerous flaws in the company’s technology, leading to its eventual collapse.

During her testimony, Holmes occasionally expressed contrition for the way she handled a variety of issues. But she also often avoided answering pointed questions, saying she had forgotten the circumstance surrounding key events spotlighted by the prosecution. She insisted she never stopped believing that Theranos was on the verge of refining its technology.


"Let's face it: Silicon Valley is based on dreams," Greenfield said. "And you need people to keep stoking the fire to help keep those dreams alive."