Theranos Business Relations With Government

Notably, governments are highly involved in their nation’s market economy, a phenomenon that can be perceived as either reinforcing the interests of the public or private sector. A government’s regulations can either be a public interest approach or a private interest approach, thus determining which segment between both them benefits more. This essay expounds on John Carreyrou’s book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup”. His book elaborates on the peak and fall of Theranos, a healthcare technology firm established by Elisabeth Holmes in 2003; Holmes was only 19 years old when she founded this company. This essay evaluates the unique relationship between the US government and private companies through the case study of Theranos that depicts the involvement of strong women like Holmes in Silicon Valley.

Based on this book, Joe Biden endorsed Holmes as a heroic female CEO during his time as US Deputy President. Also, during Hillary Clinton’s US Presidential elections in 2016, she endorsed Holmes illustrating the impact governments have on reinforcing private companies (Carreyrou 2019). Typically, governments get involved in their market economy to facilitate equity, increase efficiency, foster macro-economic stability, and provide infrastructure and growth. These endorsements came when Holmes’ company, Theranos, was at its worst since it had been accused of failing to meet its promises.

As a healthcare-tech company, Theranos had promised to restructure how blood tests were carried out. Specifically, it would establish a novel technology that would foster for assessment of numerous blood tests using only one drop of blood rather than a whole test tube as it was initially (Carreyrou 2019). However, its scientists had warned the company’s management of the consequences of their practices, thus advocating for a change of plans. The need for change was propelled by the inability of the company’s blood tests to yield consistent results due to relying on insufficient amounts of blood (Carreyrou 2019). The primary concern regarding this case shows that the company managed to provide blood tests to patients despite their research not being peer-reviewed.

According to the concern above, it is explicit that the Theranos case better reinforces the private interest theory of regulation rather than the public interest theory of regulation. This claim can be justified because Theranos operated regardless of its techniques not being peer-reviewed by the scientific community (Carreyrou 2019). As a result, only its management and employees benefited at the expense of the general public. If this case had depicted a public interest theory of regulation, it would be structured to facilitate the general public’s wellbeing instead of a small group of people. However, this case can operate under a private interest theory of regulation because its CEO is female, motivating other women to join the tech world, thus empowering women like Holmes.

Regulating private companies can be somehow challenging, especially if one would base their inspiration on available theories. For instance, Adam Smith’s theory of moral sentiments suggests that free markets should be empowered to regulate themselves through supply and demand, competition, and self-interest. Based on this theory, the government should not interfere with the operations of private companies. However, if companies like Theranos exist, they should be eradicated through the competition since clients will go for the best products and services in the market. In addition, Alexander Hamilton’s aspirations for the nation to move towards industrialization other than agriculture also supports Holmes’ operations in the tech world. Besides, it is through trial and error that progress occurs. Nonetheless, by enacting strict measures for companies to operate, they may be discouraged from existence hence slowing down innovations. However, the government should enact measures that analyze companies’ potential harm to the environment and consumers before legitimizing their practices.

Considering the harms that may arise from empowering private companies excessively, a hands-on approach would come in handy in regulating their activities. Inevitably, companies must be monitored to ascertain that they have the public’s best interests at heart. Besides, private companies are primarily motivated by the desire to maximize profits (Carreyrou 2019). As a result, a hands-on approach is essential in ensuring that they do not harm their consumers in the process. Through this approach, the government can confirm that companies adhere to all required regulations to deter companies like Theranos from operating despite failing to meet all the requirements.

Based on the analysis above, it is clear that government has a delicate role in determining the welfare of both the private and public sectors. Ideally, the US government’s goal is to encourage innovation, especially by empowering women, as seen with Theranos company. However, some approaches regarding private corporations may subject consumers to enormous harm, thus rendering such practices detrimental to the larger public. Therefore, a hands-on approach is highly substantial in ensuring that the government has total control of its private organizations in ensuring that they abide by the set standards of operations. However, this does not mean that the government should interfere excessively in companies’ dealings; instead, it should only engage when there is probable cause to confirm that the public may be harmed.


Carreyrou, John. 2019. Bad Blood: Secrets And Lies In A Silicon Valley Startup. London: Pan Macmillan.

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