Governance basics for the physician-scientist considering business ventures. Lessons from Theranos

The prospect of an innovative laboratory device capable of an array of testing from a tiny amount of blood caught the intense attention of both the medical and investment community. The device, however, was never properly validated, with several false and misleading claims made by its founder. This venture in the business of science went very badly for the firm Theranos with ensuing criminal convictions. Using public domain reports from trial testimony provided a unique opportunity to distill facts for key learnings for future stakeholders in the business of science. Several lessons related to basic governance unfolded during the trial’s testimony and are the basis for this brief case study. These include (1) a board make-up that had a suboptimal understanding of the technology, (2) advisors that did not sufficiently engage, (3) management/employee trust was tarnished and (4) investors failing to perform optimal diligence prior to funding. These lessons are particularly important for the physician-scientist and health executive who may find themselves at the interface of health and commerce. Points to consider in such ventures are discussed toward fostering the avoidance of these breakdowns.