In 2014, Theranos, the blood testing start-up was one of the most highly
rated unicorn firms in Silicon Valley, valued at nine billion dollars and
Elizabeth Holmes, the founder, who had been compared to Steve Jobs who's one of
the world's youngest self-made billionaires. Fast forward six years and
Holmes is now awaiting trial and faces up to 20 years in prison for the
fraudulent cover-up of Thernos' inaccurate technology which has led to
the firm shuttering its testing centers altogether. But how did one of
the most exciting and revolutionary bug businesses turn into a bloodbath?
Here's How It Happened.
With the help of one of her professors at Stanford
Channing Robertson who would later become the company's first board member
Holmes founded Real Time Cures, later changing the name to Theranos.
The concept of the business was fairly simple. The firm would design devices
called nanotainers that could administer medication, monitor patients' blood,
and change the dosage of any required medicine all while using around
1% of the blood required by the current devices on the market, the equivalent of
a finger pinprick amount. The technology had numerous upsides, including being
able to detect cancer and high cholesterol at an early stage, as well as
improving the efficiency and difficulty of blood tests. Holmes soon dropped out
of college and began working on the business full-time and as she did, she
began dating the Theranos president and COO Sunny Balwani who became
Holmes' number two and was described as a bully and an enforcer.
Similar to Theranos, it didn't end well, with the couple breaking up and Balwani being
pushed out of the company in 2016.
Holmes quickly began raising money for Theranos
and they even attracted attention from investors such as the
Oracle founder Larry Ellison. By 2010, they'd reached unicorn status at
a billion dollars but Holmes would only accept the investments on the condition
that she didn't have to show the investors how the technology worked and
that she had the final say with every decision that the company would make.
Holmes takes secrecy very seriously and has even taken some former Thernos
employees to caught for misusing company secrets, so she really has gone full
circle over the last five years, from being one of the youngest self-made
billionaires in the world to hitting rock bottom and facing jail time.
Holmes was often mentioned in the same sentence as Steve Jobs, another individual who
took secrecy very seriously. Holmes herself even started to dress
like Jobs, wearing black turtlenecks and copied the former Apple CEO by never
taking time off work. Their work ethic is certainly similar, although Holmes
perhaps took it too far, tracking when her employees arrived and
left to see if they were working as hard as she was, and they rarely were.
Rumour has it that Holmes' secrecy often has many levels including her
uncharacteristically deep voice with former Theranos employees suggesting that
after a few drinks, her voice would be a lot higher as she fell out of character.
Secrecy was commonplace at the firm with all visitors required to sign NDA's as
well as being escorted by security at all times throughout the building, even in the bathroom.
She also had bodyguards drive her around in a blacked-out Audi and
bulletproof glass in her office, evidently nervous that someone was
watching and almost looking to expose her. Despite a lack of confidence from
the Theranos board in 2008 who sought someone with more experience to
be CEO, Holmes truly became the face of the company as she often appeared on
magazine covers gave public speeches and appeared on panels alongside other
well-known faces including Alibaba founder Jack Ma as well as Bill Clinton.
Holmes managed to secure funding from hospitals, clinics, as well as
supermarkets, who agreed to testing centers in the stores. She also hired her
brother Christian who had no scientific or medical background but rather read up
about sports and hired his former Duke frat brothers to join the firm dubbed
the Therabros. The turning point for the company came
when chief scientist for Theranos, Ian Gibbons, suggested that the tests
weren't ready for the public and that there were a number of inaccuracies,
often complaining about the technology and he was fired in 2010.
Ian sadly died of suicide in 2013 just before he was due to testify against the firm in court.
The response from Thernos, an email from
a Theronos lawyer requesting that his wife return his company laptop and any
confidential information he might have had. The technology had also never been
submitted for peer review in medical journals and Holmes' comments
surrounding the key details were always comically vague.
The Wall Street Journal then wrote an article outlining the struggles and exaggerated capabilities
of its technology. Their blood testing machine, Edison, was unable to give
accurate results so they were actually using traditional machines used by other companies,
making their USP redundant. In 2016, the FDA, Medicare and the SEC were
all investigating Theranos and found that the firm was creating immediate
jeopardy to patient health and safety, as well as mishandling complaints,
failing to audit suppliers and that the design had not been properly tested.
In July 2016, Holmes was banned from lab testing for two years and by October,
Theranos had closed their labs and wellness centers and deals with
Walgreens Boots and Safeway fizzled out. Partner Fund Management, one of Theranos'
largest investors, accused the firm of securities fraud for lying about
their technology in order to receive over 700 million dollars in investments.
In 2018, both Holmes and Balwani were charged with 'Massive Fraud' by the SEC with
Holmes paying a five hundred thousand dollar fine and returning 19 million
shares of stock. She's also serving a 10-year ban on being a director of a
publicly traded company. The firm was then shut down in September of 2018
reportedly with the final resources being used to repay its creditors.
Alongside her federal trial, which may see her pay 2.7 million dollars in fines
and spend 20 years in prison, Holmes also has a number of civil lawsuits to deal with,
from inaccurate blood tests. What's more, is that the lawyers representing
Holmes said that they haven't been paid for over a year
and were removing themselves from her legal team. The Theranos story has been
well documented in other films and books such as Bad Blood, the Inventor
and the Dropout and will likely add a film to that list with Jennifer Lawrence rumored
to be the star of Holmes' downfall.
That's How It Happened.
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