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A company in a traditional sector like pharmaceuticals can avoid the pitfalls experienced by Theranos by ensuring transparency in their operations and maintaining good corporate governance. They should avoid making bold claims that cannot be substantiated and ensure that their products are thoroughly tested and reliable before they are marketed. It's also crucial to have experienced leadership and to take concerns raised by employees seriously. Revenue projections should be realistic and not overly optimistic. Lastly, they should not defraud investors by providing false information.
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Learn why and how a $9 billion dollar company vanished in a few weeks. The story of Theranos is the Silicon Valley equivalent of the Enron scandal rep...
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Todd Surdey, a Theranos sales executive, realized that the company's revenue projections were wildly optimistic. Each contract with a pharmaceutical company was contingent on Theranos proving that its blood analysis system worked. Worse, the devices often malfunctioned. During a demo for Novartis, all three Edison readers displayed error messages. He took his concerns to Don Lucas saying that the revenue projections were vastly exaggerated given the unreliable state of the Theranos product. This time Don took the complaint seriously. He convened an emergency meeting and Elizabeth was asked to wait outside. The board decided that Elizabeth was too inexperienced to head the company and decided to make her step down. When Elizabeth was called in to be informed, she agreed that there were shortcomings and promised to correct them. In the course of the next two hours, she managed to win back the confidence of the board, in a manner that even experienced CEOs would have found hard to pull of...
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