The Rise And Fall Of Elizabeth Holmes With Theranos
Elizabeth Holmes promised that she was developing technology to change the world when her promise was half-truths and a ton of lies.
Holmes had high-profile business connections being the daughter of Christian Holmes IV, the vice president of the American energy company Enron in the 1980s. Reports indicate Holmes started her first business venture in high school selling C/C++ compliers to Chinese universities. C++compliers are utility programs that extracts code and transform it into executable machine code files.
By 2001 Holmes applies for Stanford University to study chemical engineering and by 2003 she files her first patent application for an oral drug delivery patch. By 2004, Holmes dropped out of Stanford to start a consumer healthcare technology company known as Real Time Cures but was later rebranded as Theranos.
After forming Theranos, Holmes started a venture to create a device that can perform blood tests using the smallest amount collected possible using 1/100th to 1/1,000th. This blood testing machine was the only one of its kind having the capability to perform 30 lab tests using a tiny drop of blood through a finger prick.
Holmes presented her idea to some of her peers and professors that concluded that this was an impossible feat to achieve. As they say in silicone valley ‘impossible is nothing’ and by December, Holmes raised over $600 million through investments despite the lack of evidence of how the technology would work.
By 2010, Theranos raised $92 million in venture capital funding but faced one problem of the technology not working. In 2011, Holmes was introduced to the former secretary of state George Shultz and two hours after the meeting Schultz was appointed a seat on the board of directors.
Theranos built their reputation with one of the most illustrious board of directors in history and the company spent the next two years developing the revolutionary healthcare testing device. During these two years Theranos tried to keep their progress under wraps not featuring a website or any press releases on their development phases creating the first-edition Edison machine. The Edison machine analyzes blood from the nano-vessel that collects a small sample of blood.
In September 2013, Theranos announced their partnership with the nationwide drug store chain Walgreens to put in over 40 stores across Arizona and by 2014 Theranos has a $9 billion valuation with over $400 million invested in venture capital. Theranos also made deals with Capital Blue Cross, Cleveland Clinic, and Amiri Health to use their products.
Holmes was starting to get recognized as one of the leading women in business appearing on the cover of several publications praising her innovation and was declared the world’s youngest self-made billionaire. Shortly after, Holmes is appointed by then-U.S. president Barack Obama as the presidential ambassador for global entrepreneurship.
By 2015, The Wall Street Journal published a problematic article for Theranos saying, “Holme’s blood-testing ambition has collided with technical problems.” The article exposed Theranos claiming that they Edison analysis machine wasn’t giving accurate results and revealed that Theranos was using commercially available machines to conduct their testing.
Holmes went onto publicly deny these claims until problems bubbled to the surface in 2016 when the Center for Medicare and Medicaid Services banned Holmes from owning or operating a lab for two years. This decision was made following a report indicating irregularities in Theranos staff and facilities resulting in Walgreens cutting ties from Theranos seeking$140 million in damages.
Theranos was also ordered by the FDA to stop using their capillary tube nano device to collect blood being one of the core inventions from the company. By 2017, the state of Arizona settled with Theranos for claims of consumer fraud for $4.9 million.
In March 2018, Holmes settles with the SCC for charges of fraud as Theranos claimed they had a $100 million in revenue in 2014 but it was uncovered they only had $100,000 in revenue. Holmes escaped jail time but gave up her stake of 18.9 million shares obtained by fraudulent means, she also had to pay a $500,000 fine and was barred from serving as a director or officer ofa public company for 10 years.
Shortly after settling with the SCC, Holmes and the former COO and president of Theranos Ramesh "Sunny" Balwani were indicted on10 counts of wire fraud and two counts of conspiracy to commit wire fraud. Protectors of the case accused Holmes and Balwani of running two criminal schemes; one to defraud investors and one to defraud doctors and patients.
Both defendants pled not guilty to the charges and are facing a maximum sentence of 20 years if convicted. Reports indicate Holmes is preparing to mount a mental health defense and court filings show that she will be defending herself. The opening statements of the trial start September 8 and the trial will proceed for 13 weeks.