Hubris at work and how not to run a business

This Yahoo news articlethe-fdas-notes-from-its-visit-to-theranos-labs-dont-look-good.jpg caught my eye this morning when i were busy browsing through my FB-feed. I’ve personally never heard of Theranos or Elizabeth Holmes, but when the article mentions someone running a 9 billion USD valuation into the ground it piques my interest. This is apparently some next level stuff, and the article goes on to say what you should do if you also want to travel the same path of failure. What really caught my attention was this however:

“Ensure that none of the investors who pumped more than $750 million into your company are actually on your board of directors. Instead, stack the board with insiders and retired big-name politicians and administrators who have no real vested interest in the company.”

My feeling is that if this board would have been constructed as per sound corporate governance practices this would never had happened. This is a very basic principle in my mind; if you have no skin in the game you will not make an optimal director. You want the individuals watching your sheep from the wolf to ideally have a lamb of their own, right? The same thing should apply here.