The rise and fall of Elizabeth Holmes
She was sold to the public as the next Steve Jobs. Then the lies started to unravel.
The sight of Elizabeth Holmes today is a far-cry from the image that has been held up of her since the beginning of her career. Gone is the façade of an ultra-successful businesswoman and technological genius pushed by countless PR campaigns, cover stories and in-depth profiles in magazines like Forbes and Fortune. The fresh-faced teenaged enthusiasm which propelled her into the spotlight has been tempered by maternal instincts, as Holmes now tends to a newborn son rather than vials filled with blood. Even her trademark black turtlenecks, an homage to her idol Steve Jobs, have been retired in place of traditional blazers and power polos.
Instead of standing at the helm of a boardroom filled with men, Ms. Holmes now stands in court accused of defrauding investors and patients of millions of dollars through her blood-testing company Theranos. The United States government claims that she knowingly wooed investors with a product that she knew was faulty and entirely incapable of doing the things she claimed it could. She faces up to twenty years in prison if found guilty.
The story of Theranos (an amalgamation of the words “therapy” and “diagnosis”) is an epic saga which spans almost two decades. From its inception in 2003, Ms. Holmes as its 19-year-old founder was lauded as the next star CEO — a revolutionary that only comes along once in the bluest of moons. Her unquenchable thirst to succeed seemed destined to push her among the greats like Bill Gates and many women held her up as a role model for young girls everywhere. At its zenith, the company was valued at almost 10 billion dollars.
However, following many twists in the tale, Theranos would ultimately close its doors for the last time in 2018. The notion of leaving behind an enviable legacy had evaporated. Instead, Theranos left behind out-of-pocket investors, bewildered employees and traumatised patients. From industry darling to in-debt disaster, Theranos’ failure would come to symbolise the smoke and mirrors playing field of Silicon Valley — where if something is too good to be true, it most likely is.
Stanford’s Unicorn Start-Up
The backbone of Theranos, the thing which propped the entire company up and painted a rosy picture for investors, was the ‘world-changing’ technology that Ms. Holmes claimed to have created. After dropping out of the prestigious Stanford University, a teenage Holmes founded Theranos with the promise of revolutionising lab testing forever.
Her pitch? That Theranos, unlike its competitors, could run hundreds of blood tests on its device using only a single drop of blood. Gone were the days of drawing vial after vial of blood to test for illnesses like cancer, HIV and diabetes; no more big scary needles, Ms. Holmes claimed. Instead, blood would be taken using only a pin-prick and analysed by a Theranos ‘biochip’, which would allow multiple tests to be run simultaneously using the same tiny sample. Her professors from Stanford objected to her idea, deeming it a scientific impossibility and professed Elizabeth did not have enough experience to take on such a sensitive project. However, Ms. Holmes pushed on regardless and began seeking out investors.
It didn’t take long to hook some big fish. She captivated wealthy individuals seeking the next big thing with a dazzling power of persuasion. The most well-known early investor was Rupert Murdoch, CEO of media giant NewsCorp, who put in almost $6 million in 2005 then pumped hundreds of millions of dollars into the company in later years. The profile of subsequent investors would only grow, like Oracle founder Larry Ellison and eventually the nationwide pharmacy chain Walgreens. Board members included former Secretaries of State George Shultz and Henry Kissinger, and added even more shine to Theranos’ already-glowing profile.
It wasn’t until around 2013 that Theranos’ work became more publicised. A ground-breaking partnership with Walgreens saw Theranos’ ‘Edison’ devices — named after the famed American pioneer of electricity — rolled out to forty stores across Arizona and California. A similar deal with Walgreens’ competitor Safeway had been engineered in 2012, with the company investing over $350 million to retroactively fit their 800 stores with Theranos technology. Reservations expressed regarding the technology by Walgreens’ chief scientific officer went unheeded by the pharmacy giant, and plans to expand Theranos’ testing capabilities nationwide were discussed.
It was at this time that Elizabeth Holmes completed her evolution into a media darling. PR campaigns were the lifeblood of keeping Theranos afloat, attracting curious investors who hoped to cash in on the next big company out of Silicon Valley. She recorded TED Talks, accepted awards and was featured in almost every mainstream publication in the United States. From TIME to The New Yorker, the story of Holmes’ success was inescapable.
The Lie Unfurls
But it would not be long before the mirage of Theranos’ success would begin to dissipate. The window-dressing and outward vision of changing the world would peel back to reveal a company that was rotten to the core.
The ‘revolutionary’ technology at the heart of Theranos’ vision was, in fact, a fraud. In stark opposition to Holmes’ claims that her Edison device could run hundreds of test and detect a spectrum of diseases, Theranos’ creation was only capable of running a scant number of tests — and results were often wildly inaccurate. These poor quality readings resulted in multiple cases of misdiagnosis in patients, with some being told by their doctors that they had miscarried or contracted HIV based on the incorrect results from Theranos’ devices.
Affected patients and medical professionals complained to Theranos’ customer care in their hundreds, accusing the company of negligence, but little action was taken to investigate or right these wrongs. Investors like Walgreens and Safeway questioned the company’s competency following a number of missed deadlines and questionable test results, ultimately leading to the Safeway deal to collapse in 2015.
Despite the obvious flaws with the device, Ms. Holmes continued marketing it to potential investors. She invited them to get their blood tested on the device at the company’s headquarters in San Francisco. But even these meetings were laced with stark deception regarding the Edison’s capabilities.
Former employees of Theranos testified to investigators that visiting investors would have their blood drawn before being taken out to lunch. Instead of being run through the Edison device as implied, the investors’ blood was in fact tested by hand in a laboratory in the basement of the building. Results of the tests would be delivered to investors after they returned, framed as having come directly from the Edison device. Later investors were reportedly not even allowed to see the device in person, as the shroud of secrecy around the company became thicker.
Theranos pulled a similar trick for almost all the blood tests it carried out, running them through machines made by competitors like Siemens instead of its own device. In direct opposition to Theranos’ key advertising, most patients tested in Walgreens stores had their blood taken using the traditional venous draw technique instead of the company’s touted finger-prick method. These facts, exposed by John Carreyrou of the Wall Street Journal, increased pressure on Theranos to prove that its own technology was legitimate. Disgruntled employees spoke to journalists and described a toxic work culture at Theranos, paired with a disregard for patient safety.
Holmes did what she had always done when faced with scrutiny: appeared on national television to fight back. “This is what happens when you work to change things,” she told NBC’s Mad Money following the Wall Street Journal article. “First they think you’re crazy, then they fight you; then all of a sudden you change the world.”
However, Ms. Holmes’ media blitz wasn’t enough to turn the tides for Theranos. After a number of legal threats and attempts by the company to silence the whistleblowers failed, Walgreens ultimately suspended plans to roll-out the machines to other stores in 2016, pending further investigation.
The U.S. Securities and Exchange Commission subsequently investigated Theranos for misleading investors and the government about its technology. In taped depositions, Ms. Holmes can be heard answering “I don’t know” or “I’m unsure” over 600 times to simple questions regarding the company’s finances and testing capabilities. Evidence showed that Theranos had voided over two years of inaccurate test results from the Edison database, skewing the overall perception of the device’s accuracy.
Following the collapse of the Walgreens deal, the pharmacy giant sued Theranos alongside a number of other entities through til 2018. In financial dire straits, Theranos reached settlements with many of the claimants and began shedding employees, dropping from 800 at its peak to a mere 25 by 2018 in order to avoid bankruptcy.
However, the SEC charged both Elizabeth Holmes and former Theranos president Ramesh “Sunny” Balwani with running an “elaborate, years-long” scam which “deceived investors into believing that its key product… could conduct comprehensive blood tests from finger drops of blood.” Further charges of wire fraud followed, in a case which alleges that both Holmes and Balwani were fully aware of the technology’s problems but persisted in marketing it to investors and medical companies despite the dangers.
What Next?
That brings us back to today: Ms. Holmes’ trial is already underway in San Jose, California, with that of Mr. Balwani expected to begin early next year. If found guilty, both Holmes and Balwani face up to 20 years in prison for their roles in the meteoric rise and disastrous fall of Theranos.
Some may see Elizabeth Holmes as a reckless narcissist that pushed the moral boundaries (even those of Silicon Valley) to their extremes in her pursuit of fame and fortune. Others may see a woman with a dream trapped in an industry dominated by men, scared of failing or admitting her faults until it was too late. Regardless, a jury of twelve will decide Ms. Holmes’ fate, and whether she must reflect on her past from the comfort of her California mansion or behind the bars of a state penitentiary.
So what can be learned from this saga of lies? Are there any warnings that future start-ups can heed? Modesty is perhaps one trait that should be exercised in the cut-throat California tech desert. Ms. Holmes’ own expectations of her device seemed to fly in the face of established science; the repeated warnings from her own college professors that she was not experienced enough in chemical engineering to create such a product fell on deaf ears. So strong was her persistence that even as Theranos collapsed around her, Ms. Holmes still attended conferences and spoke glowingly of the company’s technology and vision for the future — a fact which has bewildered onlookers and followers of the case.
In Silicon Valley, its not hard to imagine a potent fake-it-until-you-make-it type of atmosphere pervading the tech Mecca. It is unclear, however, whether Ms. Holmes sincerely believed that her product would eventually work or whether she was instead motivated by the wealth and prestige she could accrue by continuing the illusion of success. Text messages between Ms. Holmes and Mr. Balwani seem to half-acknowledge the problems with Theranos’ primary technology, but the onus falls on the prosecution to prove the existence of malicious intent beyond a reasonable doubt.
Ms. Holmes’ defence team will also have a difficult task trying to prove that she was not interested in making a fortune — they argue that she was genuinely hoping to change the world. In a video profile for Glamour magazine, Holmes told an audience: “Our dream for Theranos is that every single day, someone’s life is better because they can afford access to health information they couldn’t afford before.” This was not an unusual statement for Holmes to make — virtually all of her public speeches feature lengthy soliloquies in which she professes an unwavering desire to provide useful health information to as many people as possible.
However, a laundry list of luxury expenses billed to Theranos accounts and testimony from the company’s financial manager might be likely to tilt the battle to prove Holmes’ authenticity more uphill than it already it is. Invoices for private jets and high-end shopping purchases now act as a paper trail which show that Ms. Holmes lived a lavish lifestyle at the expense of her company and investors; a fact which may turn members of the jury against her.
In her TEDMED talk, Elizabeth Holmes explained that Theranos had been inspired by the death of her uncle. She tells the audience in her trademark low voice that from the ashes of her grief, she wanted to create something that would do the world a lot of good. Now, Theranos lies in ruins: a fever dream of failed tests, fraud charges and false legacies.
In 2014, Holmes promised “a world in which no one ever has to say goodbye too soon.” She stoked hope in millions of people in need of reliable and affordable healthcare that things were about to change. That promise was perhaps her biggest crime of all.
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