I’m sure I’m not alone in having followed the spectacular fall of Theranos over the past year.  Elizabeth Holmes was a fairytale come to life – and now, the main question seems to be whether she intentionally defrauded her investors and the public, or whether she was simply in denial about the limitations of her technology.

(I personally don’t see the two as mutually exclusive – many fraudsters lie in the expectation that they can soon turn things around and no one will be any the wiser.  In this case, there’s just too much evidence that Holmes was consciously evasive when questioned about her technology for me to believe that she wasn’t intentionally misleading people)

It’s probably too tempting to try to draw lessons from the Theranos debacle, but there are some interesting issues it raises.

First, I wonder whether Theranos is an argument for or against initiatives like the JOBS Act that make it easier for companies to raise large amounts of capital without holding an IPO.

On the one hand, because Theranos never went public, the fallout was contained; we haven’t seen the spectre of thousands of retail investors directly or indirectly losing their pensions.

On the other hand, Theranos illustrates exactly why we subject companies to the IPO process.  There were, apparently, plenty of red flags right from the beginning, which caused the most savvy venture capitalists to steer clear of it.   If the company had been forced to file an S-1 and subject it to general scrutiny, the problems might have been uncovered a lot sooner, and a lot of the damage prevented.  If the company had been forced to file an S-1 before raising such large amounts of capital, it probably never would have raised the capital at all.

If nothing else, then, Theranos highlights the inadequacy of the accredited investor definition.

The second aspect of Theranos that I find fascinating is that a young woman was able to pull off this kind of fraud.  It’s no secret that women in general have a hard time raising start up capital; in general, it’s the province of white men – relying on a pedigree and an image – to bewitch investors so thoroughly.  Yet somehow Elizabeth Holmes was able to sell a convincing story built on technobabble and a romantic story.  It’s almost heartening, in a dark sort of way – how far we’ve come! – but more seriously, I worry that Holmes will now serve as a cautionary tale for investors considering companies helmed by women.

With all that said, I’m filled with glee at the prospect of the movie – which apparently will star Jennifer Lawrence, under the direction of Adam McKay (who also directed The Big Short).  That’s going to be a hoot!