Elizabeth Holmes and SBF exemplify dangers of insufficient oversight
Friday's sentencing of Elizabeth Holmes serves as a reminder of the danger of showing blind faith in promising business leaders with inadequate oversight.
Why it matters: The demise of Holmes — the disgraced leader of once-heralded blood-testing startup Theranos — and this month's implosion of FTX illustrate the real-world consequences of giving even the most captivating leaders too much leeway to do their own thing.
Threat level: Absolute power has been a recurring formula for a rapid rise — and a rapid fall — in the business world.
- Holmes famously arranged for a Theranos board with little scientific expertise, making it easy for the company to mislead investors and customers on the progress of its rapid-testing technology.
- Sam Bankman-Fried appears to have had little oversight at FTX as he led his crypto exchange into a series of disastrous and potentially fraudulent maneuvers that've led to its collapse.
In all, big-name investors lost more than $600 million in missing the red flags at Holmes' Theranos. And investors ordered to “support and observe” Bankman-Fried are set to lose close to $2 billion in FTX.
The bottom line: "No one always makes the good judgment," Charles Elson, founding director of the University of Delaware's Weinberg Center for Corporate Governance, tells Axios. "That’s why you need a good board, a good adviser or a good spouse to say, 'Hey, what are you doing?'"