Elizabeth Holmes and Sam Bankman-Fried are two former wunderkinds whose names will be remembered for scandal. How did they go from rising to fallen stars?
One business leader and authority on executive coaching says the fluid nature of technology startups, along with the inexperience of young entrepreneurs, increases the risk of bad decision-making.
“It’s lonely at the top, especially for leaders today who are facing a pile-on of challenges in a rapidly changing environment. This leaves little time for young leaders who are learning in real time to actually step back and reflect on the decisions they’re making,” says Nick Goldberg, founder and CEO of EZRA, a virtual leadership coaching firm.
Goldberg told FOX Business that the startup landscape has been “like the Wild West” for a long time, allowing some people to take advantage of situations.
Holmes was 19 years old when she dropped out of Stanford University to start Theranos, a blood-testing company. She grew the idea of using a few drops of blood to test for medical conditions into a $9 billion business.
Bankman-Fried was 26 when he co-founded FTX. He previously worked on Wall Street before founding Alameda Research and then started FTX. Investors valued the crypto exchange at $8 billion in January 2022 after the firm raised $400 million in its first funding round.
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Both cases attracted massive publicity. However, Goldberg says business leaders don’t have a monopoly on unethical behavior.
“What this really comes down to is power,” Goldberg said. “The reality is anyone in any occupation has the opportunity to bend or break the rules. The difference is when you’re talking about someone in a position of power or leadership in the public eye, the impact of bad actors is much broader and more destructive.”
Power appears to have been an issue at both Theranos and FTX.
For example, in a 2019 expose, Vanity Fair reported that Holmes flew cross-country on first class and was then chauffeured to a breeder to buy a 9-week-old puppy. She also had an entourage of security and personal assistants to go along with drivers and a publicist.
In a court document, FTX Trading CEO John Ray said he had never witnessed such a complete failure of corporate control as he’s seen at FTX since taking over from Bankman-Fried.
“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
Goldberg said executive coaching gives business leaders the space to step back and reflect on the decisions they are making. His firm has helped more than 30,000 leaders and teams in 91 countries quantifiably improve performance, employee retention and promotion rates.
He explained that executive coaching is focused as much on personal growth as it is on business outcomes.
“By connecting leaders to coaches early, they’re learning not just how to lead but how to lead ethically and compassionately,” he told FOX Business.
Holmes was sentenced to 135 months in prison following her conviction on four counts of wire fraud and conspiracy in January. Prosecutors said she lied to investors from 2010 to 2015 by promising Theranos’ technology could run many tests on one drop of blood from a finger prick.
Bankman-Fried has been accused of secretly using $10 billion in customer funds to prop up his trading business. At least $1 billion in client funds are thought to be missing.
Goldberg said the worst players in the startup space will disappear as the industry matures and regulation catches up with what’s actually going now.
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Goldberg also believes society needs to change.
“For a long time, our society has rewarded being cutthroat or putting profit above all else, but I think that’s starting to change and that’s a very good thing for everyone,” he says.
He believes this can be done without dampening the agility and innovation that makes young tech entrepreneurs so great.
“This is where we can really leverage coaching to build the foundational skills and integrity leaders need to minimize poor behavioral or leadership choices,” he says.
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EZRA was launched in 2019 as an incubator in the LHH ecosystem. Talent solutions provider LHH is a global business unit of the Adecco Group.
Source: https://finance.yahoo.com/news/elizabeth-holmes-sam-bankman-fried-070003145.html