In 2015, Forbes named the Silicon Valley entrepreneur Elizabeth Holmes “the youngest and wealthiest self-made female billionaire in America.” Holmes was the founder and CEO of Theranos, a blood testing startup valued at $9 billion. By the end of that year, however, The Wall Street Journal revealed that the revolutionary technology on which the company was based did not work, and that Holmes was a con artist who had run a multi-million dollar scheme to defraud investors.
THE EDISON
Holmes dropped out of Stanford University at the age of nineteen, claiming to have invented a sophisticated machine that acted like an entire laboratory in a box. She said it could run a multiplicity of blood tests with just a few drops of blood extracted with a pinprick. These accessible tests would cost ordinary Americans much less than usual, and serious illnesses could be diagnosed earlier, saving lives. She founded Theranos to develop the prototype that she called the Edison.
Holmes had no scientific or business background and many medical experts laughed off the idea. Others, however, were so impressed that they compared Holmes to Steve Jobs, and even Archimedes and Beethoven. Holmes received $700 million in funding from titans such as media magnate Rupert Murdoch, and many famous people joined her board of directors.
CHEAP AND EASY
As Holmes’ credibility grew, so did her claims of revolution and disruption, while details about the machine were guarded as a trade secret. Her TED talk went viral, and she featured on the cover of Fortune and in a profile in The New Yorker. US retail giants Walgreens paid $140 million for a partnership deal with Theranos to offer cheap and easy blood tests in all of its stores.
PARANOIA
Meanwhile at Theranos, paranoia and chaos reigned. Edison did not work. With blood and needles involved, testing it was messy and dangerous. Results came back inaccurate, putting lives at risk. Employees who expressed concern were threatened with legal action, and while they raced to meet Holmes’ claims, blood was tested the usual way using equipment from the German company Siemens.
FAKE IT UNTIL...
In 2015, journalist John Carreyrou received a tip-off from a former Theranos employee that the company had never managed to build the revolutionary technology it had claimed to. Holmes had also exaggerated or lied about the company’s financial performance and alleged agreements with the US military. Federal investigations followed.
In 2022 Holmes was acquitted of defrauding patients, but she was convicted of defrauding investors. Sentenced to serve over eleven years, she has managed to have her sentence reduced by over two years.