From Time’s – The 100 Most Influential People to Jail, Who is Elizabeth Holmes?

This is the fascinating story of Elizabeth Holmes & her company Theranos, a Silicon Valley startup that professed to produce a medical diagnostic device, which would test for more than 200 conditions with just a small prick of blood. Such was the charisma of Elizabeth Holmes that she was featured on covers of magazines like Fortune, and Forbes, and was on 2015 Time magazine’s – 100 most influential people, no less. She was on panels along with the likes of former president Bill Clinton and then vice president Joe Biden visited her lab in Palo Alto and called her an “inspiration”.

So what happened?

In 2003, 19-year-old, Elizabeth Holmes dropped out of Stanford after just a year of studying chemical engineering. Her initial plan was to develop an arm patch that could scan wearers for infectious diseases and release antibiotics for the same. That product never saw the light of day. From this the idea of Theranos was born.

Holmes had a childhood dream of wanting to discover something “mankind didn’t know was possible to do” and her company Theranos planned to do just that, produced a small device – named “Edison”, the size of a personal computer, whereby patients would hand over a few drops of blood via a specially designed blood collection pen to look for markers of cholesterol, diabetes, cancer, and a range of other diseases. Theranos via Edison promised to make blood tests easier, faster, and cheaper.

She convinced her Stanford professor, Channing Robertson, of her idea and recruited him as the first board member. Robertson put Holmes in touch with venture capitalists and she had raised $6 million in capital by the end of 2004 & started Theranos.

Holmes entered the limelight in 2013 and quickly turned into a media star, the aura of mesmerizing mystery surrounding Theranos would persist until the company’s fall. Her personality was magnetic and is said to have been a big fan of Steve Jobs, Apple founder. She hired Apple designers for the product design of the laboratory’s “Edison” device and she soon appeared wearing only black turtlenecks. Holmes also spoke with a deeper fake voice to gain credibility and respect.

Holmes hired Ramesh “Sunny” Balwani who is an important part of the story to join Theranos in 2009. He was the COO and took care of the day-to-day business but had no knowledge of biomedicine and had never worked in a tech start-up. He did not understand the processes and technologies in the lab but controlled employees through his fiery temper… As is the practice initially, the company operated in “stealth mode” without a corporate website or press releases for almost a decade.

In 2015, the company entered into a partnership with the US drugstore chain “Walgreens” whereby the company’s tests would be offered in more than 40 shops. Holmes promised that Theranos blood tests would soon be available within 5 miles of every American household.

Unfortunately, the company’s device did not work. It threw up wrong results and simply could not run the tests it claimed. The company bought testing machines from companies like Siemens and ran tests through them. Employees who drew attention to the problems in Theranos testing were ignored, pressured, or eventually fired. They were harassed and inundated with nondisclosure agreements. Such was the hype around the company, that the possibility of lies or fraud was not even considered.

It all came to light when a whistleblower Tyler Shultz contacted a Wall Street Journal reporter John Carreyrou, who ran an expose article in 2015. Another employee names Erika Cheung complained to the regulatory agency CMS, Centre for Medicare & Medical Services.

It was evident that Elizabeth Holmes along with Sunny Balwani had systematically lied to investors, customers, employees, media, and anyone or everyone they had connected with. Her claims that her product was duly approved by the FDA and WHO were false, as also her claim that her tests were being used by The US military in their medivac helicopters was a fabrication.

If you watch her media interviews, she had a demonic passion and belief in her product, it was hard not to fall for her charm. It was right out of the Silicon Valley playbook. A young, brash, ambitious dropout, who is out to change the world like so many of her predecessors, it was easy to fall in love with her.

Investors probably viewed her as similar to other brilliant genius dropouts aka  Bill Gates, who left Harvard to found Microsoft with his childhood friend Paul Allen—a Washington State University dropout. Before Uber, Travis Kalanick abandoned UCLA to launch search-engine and file-sharing companies. Mark Zuckerberg famously started Facebook in his Harvard dorm room. The list goes on: Steve Jobs (Apple), Jack Dorsey and Ev Williams (Twitter), Michael Dell (Dell), Larry Ellison (Oracle), Daniel Ek (Spotify), Jan Koum (WhatsApp), and Arash Ferdowsi (Dropbox).

Fake it till you make it is an accepted mantra for startup founders. The tech founders are expected to be overoptimistic and overconfident and somewhat naïve in their mission to change the world. Early investors skipped due diligence on Theranos and amplified ideas in their quest to be a part of the next big thing. This may be acceptable in tech & Private Equity money is theirs to lose, playing with people’s health and lives is an egregious crime everywhere.

In 2018, a lawsuit was filed against Elizabeth Holmes along with Sunny Balwani by the U.S. Securities and Exchange Commission. (SEC). On Nov 22, she was convicted and sentenced to 11 years, and 3 months in jail. Sunny Balwani with whom Holmes had a secret relationship was tried separately and got a 13-year sentence.

The Theranos saga has been the subject of a book written by the Wall Street Journal author, John Carreyou – “Bad Blood: Secrets and Lies in a Silicon Valley Startup”, a podcast – The dropout, an HBO documentary – The Inventor: Out For Blood In Silicon Valley and an award-winning Hulu Series, named The dropout.

The story of Elizabeth Holmes is no doubt interesting but the unbelievable twist is after her company was shut down by the regulators she found love. She married Billy Evans a San Diego-based Hotel heir in 2019, had a baby, and has another on the way.

Her Charms are still alive. 🙂