In 2014, Theranos, the blood testing
start-up was one of the most highly rated unicorn firms in Silicon Valley,
valued at nine billion dollars and Elizabeth Holmes, the founder, who had
been compared to Steve Jobs who's one of the world's youngest self-made
billionaires. Fast forward six years and Holmes is now awaiting trial and faces
up to 20 years in prison for the fraudulent cover-up of Thernos'
inaccurate technology which has led to the firm shuttering its testing
centers altogether. But how did one of the most exciting and revolutionary bug
businesses turn into a bloodbath? Here's How It Happened. With the help of one of
her professors at Stanford Channing Robertson who would later
become the company's first board member Holmes founded Real Time Cures, later
changing the name to Theranos. The concept of the business was fairly simple.
The firm would design devices called nanotainers that could
administer medication, monitor patients' blood, and change the dosage of any
required medicine all while using around 1% of the blood required by the current
devices on the market, the equivalent of a finger pinprick amount. The technology
had numerous upsides, including being able to detect cancer and high
cholesterol at an early stage, as well as improving the efficiency and difficulty
of blood tests. Holmes soon dropped out of college and began working on the
business full-time and as she did, she began dating the Theranos president
and COO Sunny Balwani who became Holmes' number two and was described
as a bully and an enforcer. Similar to Theranos, it didn't end well, with
the couple breaking up and Balwani being pushed out of the company in 2016. Holmes quickly began raising money for Theranos and they even attracted
attention from investors such as the Oracle founder Larry Ellison.
By 2010, they'd reached unicorn status at a billion dollars but Holmes would only
accept the investments on the condition that she didn't have to show the
investors how the technology worked and that she had the final say with every
decision that the company would make. Holmes takes secrecy very seriously and
has even taken some former Thernos employees to caught for misusing company
secrets, so she really has gone full circle over the last five years, from
being one of the youngest self-made billionaires in the world to hitting
rock bottom and facing jail time. Holmes was often mentioned in the same sentence
as Steve Jobs, another individual who took secrecy very seriously.
Holmes herself even started to dress like Jobs, wearing black turtlenecks and
copied the former Apple CEO by never taking time off work. Their work ethic is
certainly similar, although Holmes perhaps took it too far,
tracking when her employees arrived and left to see if they were working as hard
as she was, and they rarely were. Rumour has it that Holmes' secrecy often has
many levels including her uncharacteristically deep voice with
former Theranos employees suggesting that after a few drinks, her voice would be a
lot higher as she fell out of character. Secrecy was commonplace at the firm with
all visitors required to sign NDA's as well as being escorted by security at all times throughout the building, even in the bathroom. She also had bodyguards drive her around
in a blacked-out Audi and bulletproof glass in her office,
evidently nervous that someone was watching and almost looking to expose her.
Despite a lack of confidence from the Theranos board in 2008 who
sought someone with more experience to be CEO, Holmes truly became the face of
the company as she often appeared on magazine covers gave public speeches and
appeared on panels alongside other well-known faces including Alibaba
founder Jack Ma as well as Bill Clinton. Holmes managed to secure funding from
hospitals, clinics, as well as supermarkets, who agreed to testing
centers in the stores. She also hired her brother Christian who had no scientific
or medical background but rather read up about sports and hired his former Duke
frat brothers to join the firm dubbed the Therabros.
The turning point for the company came when chief scientist for Theranos,
Ian Gibbons, suggested that the tests weren't ready for the public and that
there were a number of inaccuracies, often complaining about the technology
and he was fired in 2010. Ian sadly died of suicide in 2013 just before he
was due to testify against the firm in court. The response from Thernos, an email from a Theronos lawyer requesting that his
wife return his company laptop and any confidential information he might have had.
The technology had also never been submitted for peer review in medical
journals and Holmes' comments surrounding the key details were always
comically vague. The Wall Street Journal then wrote an article outlining the struggles and exaggerated capabilities of its technology. Their blood testing
machine, Edison, was unable to give accurate results so they were actually using
traditional machines used by other companies, making their USP redundant.
In 2016, the FDA, Medicare and the SEC were all investigating Theranos and found
that the firm was creating immediate jeopardy to patient health and safety, as
well as mishandling complaints, failing to audit suppliers and that
the design had not been properly tested. In July 2016, Holmes was banned from lab
testing for two years and by October, Theranos had closed their labs and
wellness centers and deals with Walgreens Boots and Safeway fizzled out.
Partner Fund Management, one of Theranos' largest investors, accused the
firm of securities fraud for lying about their technology in order to receive
over 700 million dollars in investments. In 2018, both Holmes and Balwani were
charged with 'Massive Fraud' by the SEC with Holmes paying a five hundred thousand
dollar fine and returning 19 million shares of stock. She's also serving a
10-year ban on being a director of a publicly traded company. The firm was
then shut down in September of 2018 reportedly with the final resources
being used to repay its creditors. Alongside her federal trial, which may
see her pay 2.7 million dollars in fines and spend 20 years in prison, Holmes also
has a number of civil lawsuits to deal with, from inaccurate blood tests.
What's more, is that the lawyers representing Holmes said that they haven't been paid
for over a year and were removing themselves from her
legal team. The Theranos story has been well documented in other films and books
such as Bad Blood, the Inventor and the Dropout and will likely add a film to
that list with Jennifer Lawrence rumored to be the star of Holmes' downfall. That's How It Happened. Please like and subscribe to the channel
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