Today’s Esquire editor Aron Sulman discusses how Elizabeth Holmes verdict might impact the startup sector on FOX Business Tonight.
Elizabeth Holmes and Sam Bankman Fried are two former wonderkids, whose names will be recalled for scandal. How did they get from being rising stars to falling stars?
According to one executive coach, the fluidity of technology startups and the inexperienced young entrepreneurs increase the risk of poor decision-making.
Leaders today face a multitude of challenges and a changing environment. It can be lonely at the top. Young leaders are often too busy learning in real-time, which leaves little time for them to reflect on their decisions.” Nick Goldberg, CEO of EZRA (a virtual leadership coach firm), says this.
FOX Business’ Goldberg said that the startup scene has been “like a Wild West” for many years, which allows some people to make the most of certain situations.
Elizabeth Holmes, former chief executive of Theranos, speaks at a Wall Street Journal technology conference held in Laguna Beach, California on October 21, 2015. (Glenn Chapman/AFP via Getty Images / Getty Images
Holmes was just 19 when she left Stanford University to open Theranos, which is a blood-testing business. The idea of testing for medical conditions with a few drops blood became a $9 billion business.
When Bankman-Fried co-founded FTX, he was 26. Before he co-founded FTX, he worked previously on Wall Street. After the company raised $400 million in its initial funding round, investors valued the crypto exchange as $8 billion.
Sam Bankman-Fried, the founder and former chief executive of FTX, spoke at the Institute of International Finance annual member meeting in Washington, D.C., Oct. 13, 2022. (Ting Shen/Bloomberg via Getty Images/Getty Images
“What it really boils down to is power.”
Both cases received a lot of attention. Goldberg said that business leaders are not immune to unethical behavior.
Goldberg stated that power is what this all boils down to. The reality is that anyone can bend or break the rules in any occupation. Bad actors can have a much wider and more devastating impact on people in positions of power or leadership.
Both Theranos as well as FTX appear to have had power issues.
In a 2019 expose by Vanity Fair, Holmes was reported to have flown cross-country in first class, and then she was chauffeured to a breeder to purchase a puppy, aged nine weeks. Holmes was also accompanied by drivers and a publicist, as well as personal assistants and security.
John Ray, FTX Trading CEO, stated in court documents that he has never seen such a complete failure of corporate control at FTX since he took over from Bankman Fried.
This situation is unimaginable, from compromised systems integrity to faulty regulatory oversight overseas, to the concentration and control in the hands a small number of inexperienced, unsophisticated, and potentially compromised individuals.
Being ethical and compassionate
Courtroom drawing of Elizabeth Holmes, November 18, 2022. (Vicki Behringer)
Goldberg stated that executive coaching allows business leaders to take a step back and evaluate the decisions they make. His company has assisted more than 30,000 people in 91 countries to improve their performance, retention, and promotion rates.
He stated that executive coaching is as much about personal growth as it was about business results.
He explained to FOX Business that by connecting leaders with coaches early, they are learning not only how to lead but also how to lead ethically.
Following her January conviction for four counts wire fraud and conspiracy, Holmes was sentenced at 135 months imprisonment. Prosecutors claimed that Holmes lied to investors between 2010 and 2015, promising Theranos’ technology would run multiple tests with one drop of blood taken from a finger prick.
Bankman-Fried was accused of using secretly $10 billion in customer funds to support his trading business. Client funds worth at least $1 billion are believed to be missing.
Goldberg stated that the worst players in the startup industry will vanish as the industry matures, and regulation catches up to what’s really going on now.
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Goldberg believes that society must change.
He says that for a long time our society has been rewarded for being greedy or putting profit before all else. But, he believes that this is beginning to change, and that’s a good thing.
He believes that this can be achieved without compromising the innovation and agility that make young tech entrepreneurs so successful.
He says, “This is where coaching can really be leveraged to build the foundational skill and integrity leaders need in order to minimize poor behavior or leadership choices.”
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EZRA was established in 2019 to be an incubator within the LHH ecosystem. LHH, a talent solutions provider, is a global business unit within the Adecco Group.