Elizabeth Holmes, Theranos and the Myth of the Glamorous Entrepreneur
The hard truth about entrepreneurial flexibility and the pursuit of fame and fortune.
Lately, it seems everyone is talking about Theranos. The defunct health technology company was dissected in a book by John Carreyrou, an ABC News podcast and Nightline episode, and an HBO documentary. A film version is reportedly also in the works, starring Jennifer Lawrence as Elizabeth Holmes – the enigmatic founder now charged with fraud and facing up to 20 years in prison.
The story of Theranos is both fascinating and distressing. As the company reached a peak valuation of $9 billion, Holmes became an entrepreneurial celebrity. She was featured on magazine covers and lists of the world’s richest women. She was undeniably famous. The company’s rise and fall is a complex tale, but strip away the details and one theme becomes clear: our culture is obsessed with Silicon Valley.
In the early 2000s, founders like Mark Zuckerberg and Jeff Bezos stepped out from behind their computers and into the spotlight. Suddenly, entrepreneurship was cool and “employee-ship” began to get a bad rap. There was an emerging script -- especially among millennials -- that working for a company, versus building your own, meant you were dull and unmotivated.
Millions of people now dream of starting the next Facebook, Trello, or Airbnb. They imagine wealth, fame, freedom, and public esteem. Yet, selling your company for a billion dollars is the exception, not the rule. It happens to a select few startups, like Flipkart, Glassdoor, and Marketo. That’s why it’s time to talk about the real cost of entrepreneurship, and the dangers of mantras like “hustle until the haters ask if you’re hiring.”
The allure of a shiny startup dream.
Becoming an entrepreneur is not a misguided goal. Not in the least. I started my company, JotForm, 13 years ago after working for a New York-based media firm. Today, we serve 4.4 million users and employ more than 130 people. I have no regrets about my chosen path, but it’s simply one of many options.
At the same time, the dream of joining a great company or having an engaging, stable career as an employee isn’t silly, either. It definitely doesn’t mean you lack drive or imagination. My friend Sarah has worked at a leading tech company for over a decade. She began as a junior sales associate and worked her way up to an executive role.
Sarah earns well over six figures per year, enjoys her team, believes in the company’s mission, and has evenings, weekends, and paid vacation time to pursue her favorite sport: cycling. Sarah travels and earns impressive bonuses. Meanwhile, her more entrepreneurial peers spend all their “downtime” working. She respects their startup dreams, but she loves her job -- and her life.
Entrepreneurship isn’t always the key to happiness.
Clearly, not everyone has an employee experience like Sarah. Working a so-called 9-to-5 job is often draining, and many people are overworked and underpaid. One key difference between employees and entrepreneurs, however, is the emphasis on a final destination. Founders are often so obsessed with an end goal that they experience what psychologists call the “focusing illusion” -- a cognitive bias that over-emphasizes the effects of a future event.
The focusing illusion could also be called “I’ll be happy when…” It can lead us to pine for major changes, such as moving to a new city, starting a business, or even meeting “the one.” But as Amie M. Gordon writes in Psychology Today, “be careful when making life-altering decisions. Sure you can get a bigger house in another city, but if it means a longer commute, is it really worth it? Are you actually going to be happy moving to another state if it means leaving behind your family?”
When you believe that one change or accomplishment will transform your life into a fairy tale, that’s the focusing illusion at work. It’s closely related to the concept of “post-marathon syndrome.” This is a well-documented state of sadness, letdown, and aimlessness that surfaces after reaching a big goal, like running a marathon. I emphasize both cognitive biases because they’re natural human reactions. At one time or another, almost everyone has imagined that a brighter, happier life is just one raise or vacation away.
Deflating the myth of startup fame and fortune.
Entrepreneurs are especially prone to “I’ll be happy when” thinking. They tell themselves elaborate stories about what it will mean to run their own company -- until they actually live the life of a founder. Many also tell themselves that they’ll be happy when they achieve the mythical trappings of entrepreneurship, such as wealth, flexibility and fame.
Based on my own experience, these “prizes” are rarely achieved by starting a business. Let’s start with flexibility. Founders are typically responsible for managing, hiring, fundraising, strategizing -- and constant worrying. They might not punch the proverbial time clock, but many entrepreneurs work all the time. So much for flexibility.
Then there’s wealth. For every modest entrepreneurial success story, there are hundreds of thousands of failures that don’t make the news (Theranos notwithstanding). Business gurus often glamorize failure with quotes like “if you’re not failing, you’re not innovating,” but the reality is a major crash-and-burn is anything but poetic. Falling tens of thousands of dollars into debt can have devastating effects for years to come. In the startup world, too, I’d argue that accumulating wealth is the exception, not the rule.
According to a study from Career Explorer, the average U.S. entrepreneur earns roughly $5 an hour while they’re starting out. Established entrepreneurs earn $62 per hour. The first scenario would put you below the North American poverty line. The second provides good money, but to be clear, it’s not the fabled life of private jets and personal chauffeurs.
Finally, there’s the dream of notoriety. Entrepreneurs like Elon Musk and Arianna Huffington are household names, but most founders toil in the shadows -- and honestly, that’s not a bad place to be. Working quietly to pursue a harmonious passion -- the experience of feeling aligned, in control, and good about your work -- can give you more freedom to take risks and set the rules. For example, I choose to spend at least a few weeks every year picking olives with my family.
Choose your own adventure.
Starting a business isn’t for everyone. Just because it feels admirable or your friends talk ad nauseum about the “rise and grind” lifestyle, there are many different ways to pursue a lucrative and fulfilling career.
If you crave flexibility, you could work for a remote-friendly firm. If you seek wealth, you can make great money working in real estate, investment banking or many other professional fields. There’s nothing wrong with any of these targets but as Theranos and Holmes sharply illustrate, entrepreneurship isn’t the easiest way to achieve or to sustain them.
Before you start a business (or join a company, for that matter), it’s critical to know what truly makes you happy. If entrepreneurship is still the right choice, go for it. Be realistic about what fulfills you. Then, pursue it with a clear mind and steadfast determination.