Will Elizabeth Holmes’ conviction sober up Silicon Valley?

Theranos chief executive Elizabeth Holmes gestures as she speaks at a Wall Street Journal technology conference in Laguna Beach, California on October 21, 2015. (AFP)
1 / 2
Theranos chief executive Elizabeth Holmes gestures as she speaks at a Wall Street Journal technology conference in Laguna Beach, California on October 21, 2015. (AFP)
Will Elizabeth Holmes’ conviction sober up Silicon Valley?
2 / 2
Elizabeth Holmes walks into the United States Federal Courthouse in San Jose, Calif., Tuesday, Aug. 31, 2021. (AP)
Short Url
Updated 05 January 2022

Will Elizabeth Holmes’ conviction sober up Silicon Valley?

Theranos chief executive Elizabeth Holmes gestures as she speaks at a Wall Street Journal technology conference in Laguna Beach, California on October 21, 2015. (AFP)
  • 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

SAN JOSE, California: 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.
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.”
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.
As soon as Holmes was indicted in 2018, the US 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.”
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 US 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.
Holmes also wooed a well-connected board that included two former US 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.
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 US 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.”


King Abdulaziz Port welcomes first ever Grimaldi car carrier

King Abdulaziz Port welcomes first ever Grimaldi car carrier
Updated 30 sec ago

King Abdulaziz Port welcomes first ever Grimaldi car carrier

King Abdulaziz Port welcomes first ever Grimaldi car carrier

RIYADH: The Saudi Ports Authority, or Mawani, has announced the arrival of MSC Cristiana, a 4,250-vehicle car carrier owned by automobile shipping giant Grimaldi Group, at Dammam’s King Abdulaziz Port from the Chinese port of MCID.

With major shipping lines sailing toward Saudi waters, the national maritime regulator has scaled yet another milestone as it looks to boost the Kingdom’s liner connectivity with the rest of the world. It also seeks to reinforce its presence as a competitive force on the global scale while bolstering national economic growth and foreign trade in line with the objectives of the National Transport and Logistics Strategy.

King Abdulaziz Port is a highly rated trade and investment hub in the Arabian Gulf, thanks to its close proximity to Jubail’s ports and industrial complex as well as its rail linkages to Riyadh Dry Port and the Saudi railway network.

With its suite of world-class operating capabilities and best-in-class infrastructure, which includes 43 berths, the port was ranked 14th in the World Bank’s Container Port Performance Index for 2021.

The port has recently added a series of new shipping services to its roster, including the Jebel Ali Bahrain Shuwaikh Service by the Emirates Shipping Line, the Far East to Middle East service by Sea Lead Shipping in partnership with Saudi Global Ports, and the Gulf-India Express 2 service by Aladin Express. These are in addition to the latest expansion of the Gulf China Service by Pacific International Lines through the introduction of Shanghai and Singapore as new ports of call.

The shipping services lend their part in enabling a greater market capture of the regional maritime freight market while at the same time positioning King Abdulaziz Port as a global destination.


TASI closes on a positive note, gains 144 points

TASI closes on a positive note, gains 144 points
Updated 30 November 2022

TASI closes on a positive note, gains 144 points

TASI closes on a positive note, gains 144 points

RIYADH: Saudi Arabia’s benchmark index gained ground on Wednesday, with 148 of the 219 listed companies closing higher as investors came in droves to kick-start a bull run.

The Tadawul All Share Index added 142 points to close at 10,896.91, while the parallel market Nomu soared 473 points to finish at 18,866.

The total trading turnover closed at SR8 billion ($2.13 billion), an encouraging figure from the SR2.58 billion clocked on Sunday.

Saudi utility major ACWA Power announced that it signed a power purchase agreement with the Water and Electricity Holding Co. to develop the largest solar photovoltaic plant in the Middle East.

Based in Makkah, the 2,060-megawatt project will be ready by the fourth quarter of 2025 and is expected to power 350,000 homes.

The news led to a flurry among investors to purchase the shares, leading to a 4.32 percent increase in share price while closing at SR140.20.

Saudi Arabian food delivery app Jahez announced a share purchase agreement to acquire 134,620 shares in The Chefz SPV Ltd., representing a 100 percent stake, for SR325 million. The share price closed 12 points higher to SR602.

Saudi Telecom Co. revealed the repurchase of 11.59 million shares for SR453 million at an average price of SR39.16 to facilitate its employee stock incentive plan. The stock opened at SR38.10 and closed at SR38.45, up 1.1 percent.

The stock exchange also witnessed a slew of dividends and bonus shares that steamed up the market.

Healthcare player Al Hammadi Holding on Tuesday recommended a 3.5 percent cash dividend of SR0.35 per share for the fourth quarter this year, amounting to a total of SR56 million. Its share barely inched up to close at SR42.

Nafiyat Finance Co. also recommended a 20 percent increase in capital through a bonus issue of one-for-five shares, leading to a marginal increase in its share price, which closed at SR20.70.

International Human Resources Co.’s shareholders approved a recommendation to distribute cash dividends at 7.5 percent of the company’s capital, or SR0.75 per share, for the first half of 2022. The share price gained 3 percent to close at SR64.

The topmost grosser of the day was Dallah Healthcare Co., with its share price increasing 9.8 percent to end at SR173.60.

Other companies reigning the market included the National Company for Learning and Education, Amlak International for Real Estate Finance Co., Arabian Internet and Communications Services Co. and Almasane Alkobra Mining Co, which clocked on average a 7.54 percent increase.

The top losers were Tourism Enterprise Co., Jadwa REIT Saudi Fund, Riyad REIT Fund, Yanbu Cement Co. and Ash-Sharqiyah Development Co.


Middle East carriers see 15% fall in air cargo volumes in October: IATA

Middle East carriers see 15% fall in air cargo volumes in October: IATA
Updated 30 November 2022

Middle East carriers see 15% fall in air cargo volumes in October: IATA

Middle East carriers see 15% fall in air cargo volumes in October: IATA

RIYADH: Economic headwinds across the globe continued to affect air cargo demand in October, as Middle Eastern carriers witnessed a 15 percent fall in air cargo volumes compared to the same period last year, according to the International Air Transport Association.

The October report from the organization, which represents some 290 airlines comprising 83 percent of global air traffic, revealed the impact of the economic headwinds on the aviation sector could even follow into 2023.

“Air cargo continues to demonstrate resilience as headwinds persist. Cargo demand in October — while tracking below the exceptional performance of October 2021 — saw a 3.5 percent increase in demand compared to September. This indicates that the year-end will still bring a traditional peak-season boost despite economic uncertainties,” said IATA’s Director General Willie Walsh. 

He added: “As 2022 closes out it appears that the current economic uncertainties will follow into the New Year and need continued close monitoring.” 

In October 2022, air cargo volumes in Asia-Pacific airlines decreased by 14.7 percent compared to the same month in 2021. 

The report noted that the fall of air cargo volumes in the Asia Pacific was impacted by conflict in Europe, and lower levels of trade and manufacturing activity due to omicron-related restrictions in China

North American carriers posted an 8.6 percent decrease in cargo volumes in October 2022, while European carriers saw an 18.8 percent decrease compared to the same month last year, primarily due to the war in Ukraine and high inflation levels. 

Latin American and African carriers also witnessed a fall in cargo volumes by 1.4 percent and 8.3 percent over the same period.

The report also suggested that the global demand for air cargo measured in cargo ton-kilometers fell 13.6 percent in October 2022 from the same month last year. 

“Capacity was 0.6 percent below October 2021. This was the first year-on-year contraction since April 2022, however, month-on-month capacity increased by 2.4 percent in preparation for the year-end peak season,” said IATA in the report. 

International cargo capacity grew 2.4 percent in October 2022, compared to the same month in the previous year. 


Saudi PIF secures record-breaking $17bn seven-year senior unsecured term loan

Saudi PIF secures record-breaking $17bn seven-year senior unsecured term loan
Updated 30 November 2022

Saudi PIF secures record-breaking $17bn seven-year senior unsecured term loan

Saudi PIF secures record-breaking $17bn seven-year senior unsecured term loan

RIYADH: Saudi Arabia’s Public Investment Fund has announced that it has secured a new $17 billion seven-year senior unsecured term loan, according to a statement.

The loan is the largest-of-its-kind general corporate purpose loan worldwide and was twice oversubscribed.

The new loan falls in line with the sovereign wealth fund’s strategy of diversifying its funding sources in an attempt to prompt effective investment in the Kingdom and globally.

The new loan also aligns well with the PIF’s medium-term capital raising strategy as well as its 2022 Annual Capital Raising Plan.

“It is a significant achievement for PIF, raising a record-sized term facility in the longest tenor ever for a loan of its size that is subscribed to by an unprecedentedly diversified number of lenders. PIF will continue to explore a variety of debt funding sources as it delivers on its strategic objectives,” said Head of Global Capital Finance Division at PIF Fahad AlSaif in a statement.

The PIF’s $11 billion five-year loan which was arranged back in 2018 is set to be repaid early, the statement disclosed.

While the new transaction recorded the support of 25 financial institutions across Europe, America, the Middle East, and Asia, the $11 billion loan of 2018 was supported by just 15 financial institutions.

In February 2022, the PIF received strong international credit ratings from US credit firm Moody’s as well as US finance and insurance company Fitch, reflecting the creditworthiness and quality of the sovereign wealth fund’s investments.


Saudi airports focus on sustainability through infrastructure projects: Leading official

Saudi airports focus on sustainability through infrastructure projects: Leading official
Updated 30 November 2022

Saudi airports focus on sustainability through infrastructure projects: Leading official

Saudi airports focus on sustainability through infrastructure projects: Leading official

RIYADH: The aviation sector in Saudi Arabia is pushing toward a sustainable model by building infrastructure for the future to deliver a seamless passenger experience, according to Abdulaziz Al-Duailej, president of the Kingdom's General Authority of Civil Aviation.

Picking up the threads from the universal pandemic that marred the airline industry, the sector is bolstering the infrastructure by addressing core issues such as staff shortage, health mandates and climate change concerns. 

Fresh from the pandemic, the industry had to endure a hiring process that took almost 16 weeks from recruiting a skilled worker to finally deploying him or her to the job, leading to a clogged supply of staff members in the airports. The situation, however, is fast changing. 

“We tried to support the airports by accelerating the training, certification and security clearance of the ground handlers and other players of the ecosystem through digitization programs that have minimized the process,” said Al-Duailej, while speaking at the World Travel and Tourism Global Summit in Riyadh. 

The aviation authority last month also submitted the ‘Harmonizing Air Travel' policy guidelines to the UN’s International Civil Aviation Organization Council for its approval, encouraging the use of a unified health document that could alleviate traveler concerns that global travelers encountered during the universal pandemic. 

There is also a concerted effort in the Saudi aviation sector to cut the dwell time or time passengers spend in the airport before boarding their flights. 

NEOM Airport, for instance, is working toward developing a high-speed “green” rail system that will transfer air travelers to the city without the need of even finding a parked vehicle, meaning there will be no parking at the NEOM airport. 

“Instead of focusing necessarily on the airport and being a destination, we want to facilitate getting you into the city as fast as we can,” said John Selden, CEO of NEOM Airport. 

The airport is also considering using electric vertical take-off and landing aircraft, or EVTOL, to expedite the mobility of incoming passengers. 

“The last two years were incredibly tough for the industry. The check-in process, which usually takes five minutes, took 20 minutes per passenger. We need to find a way to put all the passenger touchpoints together to make travel seamless,” said Luis Felipe de Oliveira, director-general of the Airports Council International, while speaking at the event. 

Airports are also toying with the idea of running the infrastructure to support sustainability, which includes 100 percent green or battery-powered equipment throughout the airport expanse. 

“We need to have systems where passengers don’t leave gates, and we don’t burn fuel on taxiways until we are ready for take-off. We don’t need a queue at the end of the runway,” said Pagano while sharing his vision of a green hydrogen-fueled ecosystem that will power the airports of the future.