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29 Oct 2015 By Richard Beales

Theranos is all about making blood tests simple. But the 12-year-old Silicon Valley firm led by Elizabeth Holmes is making its own governance more complicated. The private company, ostensibly worth $9 billion or more, has suddenly sprouted three boards, up from one.

Bounced from the newly streamlined board are wise men like former U.S. Secretaries of State George Shultz and Henry Kissinger. They’re on a so-called board of counselors. There’s also a new four-member medical board.

The company says the changes were made in July, though they weren’t reflected on its website as recently as Tuesday. The medical board, which adds fresh healthcare expertise, looks like a sensible addition. The purpose of distinguishing between the now five directors and the larger group of counselors, many veterans of government and the military, is less clear.

As a private entity, of course, Theranos needn’t have governance – or make disclosures – of the kind required of a public company. But given the unfavorable media scrutiny of its technological claims in the last few weeks, which Holmes has begun to address with additional data, it’s an odd time to muddy the question of accountability (or to reveal that it was muddied three months ago).

It’s also odd that no directors represent major investors at a company with more than $400 million in funding. That could change. The Wall Street Journal reported on Oct. 28 that Theranos may have recently tried to raise more cash, though its response to the newspaper suggested otherwise.

Maybe investors simply leave everything up to Holmes, who has run the company with single-minded intensity since dropping out of Stanford University at the age of 19 to start it. Founders and early investors sometimes get super-voting shares, typically with 10 votes to other holders’ one. Holmes, though, owns shares carrying 100 votes each, according to an Oct. 29 report in The Information, which cited research firm PitchBook.

If that’s correct, what any member of any Theranos board thinks may not matter much. It’s all just advice that Holmes, with that kind of control, is free to take or leave.


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