When we think of technology companies like Apple or Google that have emerged from Silicon Valley, we normally associate them with huge financial success. Of course, not all start-ups succeed. Last year saw the release of two fascinating documentaries that chronicled the rise and precipitous fall of a pair of high-tech firms, both of which promised the Next Big Thing. General Magic tells the story of a company that spun out from Apple in 1990 with an audacious vision to develop the smartphone, while The Inventor: Out for Blood in Silicon Valley documents the travails of Elizabeth Holmes and her company Theranos.
In 1989, Marc Porat, the charismatic co-founder of General Magic, had the idea for a hand-held device that would incorporate a number of functions, including a phone, messaging, note-taking and gaming. He convinced Apple’s CEO John Sculley to back the project, writing: “A tiny computer, a phone, a very personal object. It must be beautiful. Once you use it, you won’t be able to live without it.”
General Magic persuaded the world’s largest electronics firms such as Sony, Philips, Motorola and AT&T to invest, creating significant expectation. Despite an initial public offering (IPO) in 1995 that raised almost $100 million, the company struggled to bring its product to market. And when it did, sales were virtually non-existent. As the documentary revealed, their smartphone was a decade too early, created for an interconnected information age that did not yet exist. Despite being liquidated in 2004, the company’s employees went on to create ground-breaking products – including the iPhone – for other companies.
As a 19-year-old undergraduate engineering student at Stanford University in 2003, Elizabeth Holmes (seen right) had a vision for developing a revolutionary blood testing system that could diagnose many diseases – including breast cancer – using a small volume of blood from a fingerprick. She dropped out of Stanford and launched Theranos, raising over $90 million in venture capital over the following six years. By 2014 the company had a valuation of $9 billion and Holmes – who held 50% of the shares – was hailed as the youngest self-made female billionaire in America. There was just one problem: her blood-testing system called Edison did not work.
As the documentary explained, John Carreyrou, an investigative journalist at The Wall Street Journal, broke the story, revealing that Holmes misrepresented the capabilities of Edison and misled investors. Sadly, she now faces a fraud trial in 2020 and the prospect of a lengthy jail term. Perhaps, in time, we will see a device that realises Holmes’s dream.