Theranos, MVPs and the Line Between Shortcuts and Fraud

By Amara Osei

According to the SEC, Theranos’s diagnostic could complete only a small number of laboratory tests, while most patient samples were processed using modified machines made by other companies. Theranos had told investors that its device could perform a full range of laboratory tests from a single drop of blood.

Soren Kaplan, a WSJ bestselling author, keynote speaker and leadership strategy advisor, uses that gap to mark the ethical boundary between a minimal viable product and fraud. His rule is direct: a prototype may promise a future capability, but it cannot misrepresent what works now.

Kaplan argues that nearly every early product uses shortcuts. He writes: “It’s smart to promote features to gauge interest before they actually exist.” A founder’s ultimate vision, he notes, can be years ahead of the release schedule.

What does the Elizabeth Holmes documentary show?

Kaplan says he watched You Can See Everything. The A24 documentary from Nathan Fielder and Lance Oppenheim follows Elizabeth Holmes beginning 34 days before she reports to federal prison.

Within that 34-day frame, Holmes continues to profess her innocence, Kaplan says, and talks openly about her desire to return to medical diagnostics. Kaplan uses the film to revisit the mismatch between Theranos’s investor claims and the SEC’s account of the device’s actual capabilities.

Kaplan’s warning gains specificity from the film’s 34-day countdown. In his account, Holmes still professes innocence and wants to re-enter medical diagnostics.

That framing places the burden on founders when they describe a prototype to customers and investors. If a promised feature remains simulated, the claim needs qualification; otherwise, the audience may reasonably treat the marketing language as a statement of present capability.

Where is the line between an MVP and fraud?

Manual work and simulated features can make early products scrappy, Kaplan says. For Kaplan, the ethical line depends on what customers and investors believe is working today.

Kaplan writes: “An MVP can be ready for sale. It can represent a vision of what’s possible or coming in the future through upgrades or software updates. But it can’t misrepresent its current capabilities.” The definition separates what a founder can sell now from what the product may become later.

For Kaplan, disclosure, not aspiration, separates those cases. Customers and investors must know which capability exists now and which depends on a later upgrade or update.

None of that makes every unfinished feature fraud. Kaplan’s MVP framework allows a product to be ready for sale while upgrades or software updates carry it toward the wider vision. It does not allow the gap between a demonstration and a working capability to vanish from the marketing claim.

What did Zappos do differently?

Kaplan cites Zappos’s 1999 test of online shoe buying. It photographed shoes in local stores and listed them on its website; after customers ordered, staff bought the shoes and shipped them.

On the facts Kaplan provides, each order produced real shoes rather than a simulated product. The company used manual fulfillment to test whether people would buy shoes online, turning a logistical shortcut into a way to establish demand.

That example gives founders a practical benchmark: manual work can support a real sale, while simulated features can cross into deception when a business presents them as working. The “MVP” label does not settle the issue if customers and investors believe a capability exists today.

The contrast with Theranos is direct. Under Kaplan’s account, Zappos delivered the merchandise customers ordered; the SEC said most Theranos patient samples were processed using machines made by other companies.

The operational contrast explains why Kaplan treats manual fulfillment and simulated features as different shortcuts. A manual process can still deliver what the customer ordered, while a substitute for the advertised technology can leave the central capability unproven.

What should founders disclose now?

For the next launch or fundraise, Kaplan’s test is exact: test demand without letting customers or investors mistake a future feature for a working one. Kaplan allows an upgrade roadmap to support the vision, but the present claim must withstand verification.