The fear of needles made a young Elizabeth Holmes think of a better way to perform blood tests. So, with that goal in mind and just 19 years old, he dropped out of Chemical Engineering at Stanford in 2003 and founded his startup called Theranos.
The company wanted to develop innovative technology that could diagnose hundreds of diseases, such as cancer and diabetes, with a finger prick and only a few drops of blood.
The rise of Theranos and Holmes
In September 2009, Ramesh “Sunny” Balwani joined as Holmes’s right-hand man and president of Theranos, who was about 20 years her senior. They met in 2002 on a trip to Beijing for Stanford University.
In September 2013, a decade after founding Theranos, Holmes decided to make it known. The idea of the company was attractive, so it caught the attention of several investors, in addition to a board of well-known political figures and key retail partners, who offered hundreds of millions of dollars for the startup.
Holmes is said to be self-confident and able to present her ideas convincingly, creating the illusion that her technology would revolutionize the world. That is why in Silicon Valley it was accepted, where it was common to be attracted to avant-garde ideas regardless of whether the technology is consistent.
One of the partners was Walgreens, a company that announced a long-term partnership with Theranos. At that same time, his first wellness center location opened at a Walgreens location in Palo Alto. There consumers could access the Theranos blood test.
As of December 2014, Theranos has raised more than $ 400 million, according to The New Yorker. In addition, another investor joined the project: Oracle’s Larry Ellison.
In 2015, Elizabeth Holmes was listed as the “world’s youngest self-made billionaire” by magazine. Forbes, after Theranos was valued at $ 9 billion. She was also said to be the next Steve Jobs, and she was ranked sixth on the list of America’s richest U-40 entrepreneurs.
Indeed, the idea behind Theranos was interesting, but the problem was that, together with the company, Holmes could not make it work. And to hide it, he went to the commonplace of the “secret recipe”, which was understandable to the rest because companies used it as a resource to prevent ideas from being copied.
When investors, media, and politicians asked for previews, demos, or explanations of how it worked, the Theranos people said it was such a protected technology that they couldn’t even test or analyze it. The spectators had no choice but to trust; no one questioned the sayings. In addition, the secrecy generated more expectation.
In July 2015, the United States Food and Drug Administration (FDA) authorized Theranos to use its proprietary tiny blood collection vials to perform a blood test. With a finger prick, the goal was to detect herpes simplex virus 1. It was the first and only approval for a diagnostic test.
The end of the dream
So far, everything was going well. But in October 2015, an investigation by the The Wall Street Journal by John Carreyrou revealed the holes in Theranos testing and technology. That was the beginning of the end for Holmes, who had built a company on bogus scientific advances.
Carreyrou found that Theranos blood testing machine, called Edison, could not give accurate results, so the company was testing its samples through the same machines used by traditional blood testing companies.
Holmes came out in defense of his “technology”, but that was not enough. In July 2016, he was banned from the lab testing industry for two years, and by October Theranos had already shut down its lab and wellness centers.
After the collapse of the company, former Theranos employees spoke of intense pressure to withdraw negative public comments or remain silent altogether. The firm hired aggressive, expensive, and very active attorneys to protect Theranos’s reputation.
In 2018 Holmes was accused of participating in a multi-million dollar fraud scheme alongside Balwani, the former COO of Theranos, with whom she was romantically involved in her youth. Following this, Holmes stepped down as CEO and the company closed operations entirely.
In addition to the criminal case, Holmes has also been involved in a number of civil lawsuits, including one in Arizona filed by former Theranos patients, as they received inaccurate blood tests. The attorneys representing her in the Arizona case said in late 2019 that they had not been paid for more than a year, so they asked to be removed from the former CEO’s legal team.
At age 37, Holmes currently faces 12 counts (two of conspiracy to commit wire fraud and 10 counts of wire fraud). He faces up to 20 years in prison and a $ 250,000 fine for misleading investors, doctors and patients between 2010 and 2016.
Both Holmes and Balwani have pleaded not guilty and are being tried separately. Holmes’s trial is in progress, while Balwani’s trial is scheduled to begin in January 2022.