On July 7, 2016, Theranos CEO Elizabeth Holmes was barred from owning or running a laboratory for two years. Theranos also had its licence to operate its laboratory in California revoked.
This highly consequential decision by the US government regulator, hot on the heels of Forbes’ downgrade of Theranos’ valuation from $9 billion to $800 million and Ms Holmes’ own net worth to zero, should come as no surprise. The company has been struggling to maintain its credibility since October 2015, when its practices and technology was first brought into question by the WSJ.
As Ms Holmes’ problems mounted, she famously paraphrased Gandhi by saying, “First they think you’re crazy, then they fight you, and then all of the sudden you change the world.”
It seems not that long ago that Theranos was held up as the shining example of a hardware startup taking on a big, established industry. It’s the latest in a series of high profile hardware startup failures that includes Coolest Cooler, Zano, Makerbot, Pirate 3D, Novelsys and Better Place. There are many others. Too many to mention in one article.
Meanwhile, Silicon Valley is scrambling to learn the lessons from the failure of Theranos.
But why look into failures?
Surely there are many more success stories like Tesla, Xiaomi, and Raspberry Pi that one can rather strive to emulate?
Not so simple!
Reason being that when it comes to hardware startups, the challenges seems to be remarkably similar; for failed companies and successful ones alike. Not just that, it transcends geography and industries.
Unfortunately, mistakes tend to only reveal themselves after a startup fails, so those are the best places to look in order dissect, learn from them, and create future success.
Additionally, it’s cheaper and more efficient to learn from others’ mistakes, although it’s much more effective to learn from our own.
“At some point, everything’s gonna go South on you. You’re going to say ‘This is it… this is how I end.’ Now, you can either accept that, or you can get to work. You solve one problem, and then you solve the next problem, and the next, and if you solve enough problems, you get to go home.” – Mark Watney (as played by Matt Damon in the movie The Martian)
Not all failures are created equal
Prof. Amy C. Edmondson from Harvard Business School wrote an article in 2011 that asserts not all failures are equal. She splits them up into three categories:
Without further delay, here are the 5 reasons hardware startups fail, in no particular order.
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