Elizabeth Holmes founded Theranos as a 19 year old Stanford dropout with the goal of revolutionizing healthcare through new blood testing technology. She had an ambitious vision of being able to test for hundreds of conditions from a single drop of blood. This article will explore how Theranos and Elizabeth Holmes were able to gain billions in funding and publicity despite not having technology that actually worked, and how they put real patients at risk by providing inaccurate test results.
Elizabeth Holmes Founds Theranos and Begins Raising Funds
As a child, Elizabeth Holmes expressed wanting to become a billionaire one day. She was driven by this singular goal of wealth and fame. After dropping out of Stanford at 19, Elizabeth founded the company Real-Time Cures, later changing the name to Theranos. The name aimed to combine “therapy” and “diagnosis”, representing Elizabeth’s vision for easier blood testing.
Despite not having a medical background, Elizabeth was able to raise an initial round of funding from her well-connected family to start developing the technology. She spoke passionately about ideas for blood testing devices that could provide faster, cheaper, easier diagnosis from a small blood sample. This vision attracted interest from investors, even though medical experts warned the idea may not actually be feasible.
The Edison Machine: A Flawed Prototype Used to Mislead Investors
By 2006, Theranos engineers had developed the prototype device called Edison. It was designed to test blood from a finger prick placed on a cartridge loaded into the machine. However, the device rarely worked and had a high error rate. Employees told Elizabeth it needed more development before use.
Desperate for funding, Elizabeth resorted to deceiving potential investors about the Edison’s capabilities. Blood samples were collected from investors but then secretly tested using other methods, fooling them into believing the Edison machine worked perfectly. This fraudulent demonstration convinced investors to pour millions more into Theranos.
Culture of Secrecy and Intimidation Under Elizabeth Holmes and Sunny Balwani
Elizabeth took extreme measures to prevent employees from speaking out about flaws in the technology. She hired her secret boyfriend Sunny Balwani as COO, who fostered a culture of fear through surveillance and intimidation of staff. Employees faced punitive measures if they raised concerns or questioned directives. Theranos was highly secretive, requiring strict non-disclosure agreements of anyone entering the building. This suppressed dissent and enabled ongoing deception.
Theranos Provides Faulty Blood Testing through Walgreens Partnership
In 2013, Theranos announced deals with Walgreens and Safeway to offer in-store blood testing. Despite the Edison’s unreliability, Elizabeth pushed forward, not wanting to lose the deals. She continued making excuses and assurances while stalling the in-store launch for 2 years. This bought time to raise another $400 million from investors excited by the retail deals.
When Theranos testing finally launched in Walgreens stores, it relied heavily on commercial lab equipment because of the Edison’s flaws. The tiny finger prick samples were diluted, shipped unreliable, and results took too long. But continued secrecy allowed Elizabeth to hide these shortcomings. Bad customer experiences and inaccurate results were inevitable outcomes of this risky deception.
The Public Failure and Collapse of Theranos
By 2014 Elizabeth Holmes had achieved fame and a $4.5 billion net worth based on flawed technology and deceptive claims. But behind the scenes, Theranos employees knew the technology didn’t work reliably. After whistleblowers spoke out, regulatory scrutiny followed, revealing just how extensively investors and patients had been lied to. Lawsuits and criminal charges resulted as Theranos collapsed. Elizabeth Holmes was found guilty of fraud in January 2022.
The Theranos story serves as a cautionary tale of how an obsession with fame and fortune can cause people to engage in massive deception,even when it puts innocent lives at risk. Elizabeth Holmes’ fraudulent claims show how the pursuit of self-interest above all else can lead ambitious people down a path of ethical erosion.