The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Tue, 07 Apr 2026 11:32:15 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Theranos: The Limits of the “Fake It Till You Make It” Strategy – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Theranos: The Limits of the “Fake It Till You Make It” Strategy https://corpgov.law.harvard.edu/2022/01/30/theranos-the-limits-of-the-fake-it-till-you-make-it-strategy/?utm_source=rss&utm_medium=rss&utm_campaign=theranos-the-limits-of-the-fake-it-till-you-make-it-strategy https://corpgov.law.harvard.edu/2022/01/30/theranos-the-limits-of-the-fake-it-till-you-make-it-strategy/#comments Sun, 30 Jan 2022 15:25:55 +0000 https://corpgov.law.harvard.edu/?p=142841?d=20220130102555EST Posted by Carrie H. Cohen, James M. Koukios, and Christine Y. Wong, Morrison & Foerster LLP, on Sunday, January 30, 2022
Editor's Note:

Carrie H. Cohen, James M. Koukios, and Christine Y. Wong are partners at Morrison & Foerster LLP. This post is based on a Morrison & Foerster memorandum by Ms. Cohen, Mr. Koukios, Ms. Wong, Sophie H. Cash, and Rachael Hanna.

In a case that tested the limits of the “fake it till you make it” approach to a startup business, on January 3, 2022, a jury in the U.S. District Court for the Northern District of California convicted Elizabeth Holmes, founder and former CEO of now-defunct Theranos Inc., on one count of conspiracy to commit wire fraud and three counts of wire fraud against Theranos investors. Each count carries a maximum sentence of 20 years in prison. The jury failed to reach a verdict on three additional counts of wire fraud against Theranos investors and found Holmes not guilty on the multiple counts of conspiracy and wire fraud against Theranos patients.

The trial, which lasted for 14 weeks, called into question more than just Holmes’ questionable business practices and investment solicitation; it was arguably a referendum on “fake it till you make it” practices, such as intentionally overstating, and thereby misrepresenting, a fledgling company’s current capabilities, success, or profitability, while banking on the notion that its aspirations will eventually follow the desired trajectory and become a reality. The case also highlighted the importance of investors doing adequate due diligence.

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