That's not strictly true, the board composition was far more traditional prior to 2013, a lot of these government guys came on at that point. From the wikipedia article:
In July 2013, the composition of the Theranos board of directors changed markedly, with departure of Channing Robertson (emeritus professor, chemical engineering, Stanford University),[39] experienced pharma and biotech executive Robert B. Shapiro (former chairman/CEO of the Pharmacia, Monsanto, and G.D. Searle group of companies), and financier Pete Thomas (principal, ATA Ventures).[6][38] Remaining from the original board were Theranos President and COO Ramesh "Sunny" Balwani and former Secretary of State George Shultz;
Since its incorporation in 2003, Holmes has been the company's chief executive officer. She recruited Channing Robertson, a chemical-engineering professor at Stanford, to be a technical advisor and the company's first board member during its early years. Sunny Balwani, a software engineer Holmes had met during high school, joined the company as its president and chief operating officer in 2009.[54] In July 2011, Holmes was introduced to former Secretary of State George Shultz, who joined the Theranos board of directors that same month.[55] Over the next three years, Shultz helped to introduce almost all the outside directors on the "all-star board," which included William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman of the board and former CEO at Bechtel Group).[55][56][57] The board was criticized for consisting "mainly of directors with diplomatic or military backgrounds."[11]
As of May 2016, the Theranos board of directors were:[64]
Elizabeth Holmes, Founder and CEO
Riley Bechtel, former Bechtel Group CEO
David Boies, a founder and the chairman of Boies Schiller & Flexner
William Foege, former director U.S. Centers for Disease Control and Prevention
Richard Kovacevich, former Wells Fargo CEO and chairman
James Mattis, retired USMC General
Fabrizio Bonanni, former executive vice president of Amgen
It's almost as if they intentionally stacked it with senators, govenrnment, and military guys. This is not a typical board, especially for a medical company.
The more I read about theranos the more apparent it is that there is something fundamentally wrong with it's core goals, leadership and technology. One easily identifiable red flag is the composition of its board. It's nearly all ex-military and government officials not veteran entrepreneurs and technologists. Just to name a few: George Shultz (former Secretary of State), Sam Nunn and Bill Frist (former U.S. Senators), James Mattis (General, USMC, retired) and Gary Roughead (Admiral, USN, retired) Henry Kissinger (former Secretary of State), William Perry (former Secretary of Defense)
I guess Fortress thinks they can get a return on the assets, whatever they are. Could be a power play too, if you look at Theranos board there are a surprising amount of political players which could be advantageous for the SoftBank-owned Fortress.
In discussion on other HN threads, some commenters suggested that the board was composed that way to grease the wheels of a DoD acquisition of the company's "tech". As OP put it [https://news.ycombinator.com/item?id=11403165]:
John the more I think about Theranos the more I think this “mess” is actually deliberate. Looking at the history of Theranos and the composition of the board it appears Theranos was designed from early on as a vehicle to defrauded the US military.
The plan appeared to be to use their connection and access to some rather “helpful” high brass to offload the technology for billions and then later sweep the fact that it didn’t work under the rug (this tactic has worked fabulously for the last 20 years). Avoid the FDA altogether.
Who would have noticed another $10 billion misspent on some wizz-bang technology given the $100s billions lost in other frauds? When the wheels fell of this plan (some underling didn’t play along) the idea seems to be to blame the scientists and say “we were misled”. They might be evil, but they don’t appear to be stupid.
Yes. Up until a few weeks ago, Theranos's board consisted of mostly ex-Pentagon and ex-Senators and such types [0]. Theranos did not have a medical advisory board until about a month ago, apparently.
Contrast with Elon Musk and SpaceX. One of Musk's first hires/co-founders for SpaceX was Tom Mueller, who at the time was already widely regarded as one of the best rocket engine designers in the world [1].
Does the composition of Theranos' board strike anyone else as very weird? It seems much more like the board of a foreign policy think thank than a biotech start up. There are three former cabinet secretaries (state and defense), two former very senior military officers, two former senators (one regarded as a foreign policy expert), a bigshot DC lawyer, and the former CEOs of Bechtel and Wells Fargo. The only physicians are former Senator Frist and a very credentialed epidemiologist, but it's not clear to me that either would have much knowledge about laboratory testing.
I'm really curious what the rationale for this board composition is. [Edit: I'm curious if this is connected to Holmes' father's experience in the foreign policy establishment]
An interesting side note about this story is the homogeneity and lack of relevant background among Theranos's board of directors. All the outside directors were white, prestigious (former generals, senators, cabinet secretaries, etc) and relatively old. Research shows that homogenous groups are less likely to challenge each other.
My coauthor and I wrote about this in our book Meltdown (Published by Penguin Press in in March). We drew on Carreyrou's excellent reporting and some pretty interesting research about how team diversity affects decision making.
Only Theranos insiders know if their technology is actually worth anything. But supposing it is, I do think there is a narrow path to success with a new CEO and a cultural reboot (including publishing their work this time). That said, there are external factors (e.g., regulators, legitation) that could sink them regardless of the best efforts of a new management team.
The need to clean house at the top to have any chance seems so obvious that I'm surprised the board hasn't resigned yet. I suppose they are giving Holmes the benefit of the doubt to come up with her own turn around plan first.
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