How Did Theranos Turn Out To Be A Bubble?
Here are the early signs that Theranos was a bubble that was eventually going to pop…
The blood testing market is $51.5 billion industry (1). With new innovative products being launched every year to reduce its cost and to help make the process more simple.
Elizabeth Holmes who was the CEO of Theranos who wanted to revolutionize the medical industry by creating a new method for blood testing for medical diagnosis.
Although her idea would be very hard to bring into reality, Elizabeth was eager enough to get her idea to the market in order to revolutionize the medical field.
Now, as you read this answer you may have this perception of Elizabeth Holmes as a person who was in it for a quick buck.
Elizabeth may have done it for her own personal needs, but what remains true is Elizabeth had intentions of building an a legitimate product that could have had a major impact.
It just didn’t turn out the way it was intended…
With that being said, I want to show you 5 early signs of skepticism that may have lead to the bubble pop…
1. Elizabeth Holmes was a dropout at Stanford University in her first year of Chemical Engineering. She had no medical background or any background in science besides a few basic courses.
2. When building her company, Elizabeth Holmes never brought on any science professionals or medical doctors to be a part of her board.
3. Everyone who invested in her firm were investors that knew very little to nothing about her technology, medical science, or had any background in science.
4. Anyone who confronted Elizabeth Holmes in the company was immediately fired or given a warning signs. Especially people who saw what was happening.
5. Almost everything, including medical results, and real data was kept hidden as much as possible.
Now, I want you to remember these five points as you continue reading…
Elizabeth Holmes was put on the spotlight as a “Steve Jobs” like character, who was seen as the next icon in Silicon Valley.
Her hype and huge perception had everyone digging into her company either wanting to invest and/or to become a part of it. On the other hand there was many who thought the company was more like a scam with false promises.
Now let me ask you this…
Imagine investing in a biotechnology company with business partners and board members with little to no medical or science background.
How skeptical would you be?
When building a software company, or a marketing agency you might not need schooling, but when you are building a company that could literally harm the lives of many, this is a huge red flag.
Here’s what happened…
Elizabeth Holmes trapped herself in a web of lies by making false promises and misleading claims.
She also showed signs of Cluster B mental disorder.
Elizabeth was charismatic and intelligent, but was also a compulsive liar and demonstrated lack of empathy for the lives she endangered (according to research).
The Theranos Bubble was like any bubble. It was built on hype and emotions.
She played a very risky game and thought she could get away with it.
And it’s not to say she didn’t want the product to work, but she may have been bought out by her own hype and would do anything to keep the company afloat.
Whether that is lying to create more hype or seeking more capital to keep the company growing.
It would be hard for anyone to come out with the truth at this point, and she pretty much trapped herself from the years of lies.
At this point she probably felt that she should continue building her company and hopefully something will come out of it… but of course it didn’t!
So what ended up happening is she took the short-route to success rather than the long-route, and as a result the Theranos hype bubble popped.
According to research Elizabeth is now she is being sued by the SEC for fraud, and apparently there’s rumors that she is starting a brand new company??
What are your personal thoughts on this?
Share your thoughts in the comment section below for others to see!
Sachin Kaushal — Business Blogger
P.S. Elizabeth Holmes went from having the passion to build a new form of blood diagnosis to being influenced by her own hype which eventually got herself trapped.
As a result her company from a $9 billion valuation to being sued by the SEC for fraud and the Theranos Hype Bubble was popped!