When the World Falls Into the Flames We Will Rise Again
Elizabeth Anne Holmes is the tech superstar that almost was. Her public profile and the value of her health technology company, Theranos, skyrocketed based on the promise of quantum technology capable of evaluating a single drop of blood.
Smashing printing and wealthy investors helped position Theranos as a potential game changer in the medical and tech industries — until it all came crashing down. Theranos has now been dissolved, and Holmes faces an impending court date for fraud in 2020. Did everything somehow get horribly wrong, or was Holmes a fraud from the first? Let's take a look at the facts leading up to her rise and autumn.
Built-in to Succeed
Elizabeth Holmes was born in Washington D.C. in 1984. Her parents were successful, career-oriented individuals who likely had like hopes for their daughter. Her father, Christian Rasmus Holmes IV, was an executive at Enron, a huge company that complanate in 2001 after an accounting scandal price its shareholders billions of dollars. (Anyone meet the irony?) He too worked equally an executive for the United states Trade and Development Agency, the EPA and other government organizations.
Her mother, Noel Holmes, worked in foreign policy and defense force. Holmes' early on exposure to regime turned out to be beneficial when she launched her first company.
Holmes' involvement in engineering began when she was a high schoolhouse student in Houston, Texas. As a teenager, the future tech entrepreneur worked with a tutor in Standard mandarin Chinese and attended a summer linguistic communication program at Stanford Academy in California.
She eventually enrolled at Stanford every bit a total-time student studying chemic engineering, and she worked as a lab assistant and researcher for the School of Technology. In addition to her work at Stanford, she participated in genome research at an constitute based in Singapore. Information technology was there that she gained feel collecting blood samples.
Engineering School Dropout
In 2004, Holmes decided she had learned all she could from Stanford. She dropped out of schoolhouse and used her tuition money to outset a tech company that focused on consumer healthcare. The company, Real-Time Cures, was founded in Palo Alto, California, that year.
Holmes confessed to fearing needles, and she claimed that fear inspired her to develop a method for performing multiple tests from a single drop of blood. Her professors doubted this was possible, but Holmes convinced her quondam advisor in the School of Engineering to back her.
The Nascency of Theranos
After in 2004, Holmes changed the name of her company to Theranos, a name now permanently rooted in scandal. The proper noun came from combining "therapy" and "diagnosis" to grade a whole new word. Holmes rented out the basement of a group college house to fix up her new company.
She hired the starting time Theranos employee and welcomed the company's outset shareholder, Channing Robertson, her engineering science counselor from Stanford. Robertson introduced Holmes to venture capitalists who had money and expertise in helping immature startups. Evidently, Holmes' business plan wasn't thoroughly scrutinized early on, and that prepare the stage for future trouble.
The Sincerest Form of Flattery
Some of Holmes' colleagues claim she put on a good deed near of the fourth dimension. Her speaking voice was low, at-home and sounded like the phonation of dominance, only some claim that was always faux. On the other hand, her family members insist her natural speaking voice is truly a deeper alto, and her tone wasn't deliberately designed to hibernate deception.
Holmes likewise greatly admired Apple tree co-founder Steve Jobs, and she oft imitated his fashion sense by wearing black turtleneck sweaters to public events. She started to see herself as a visionary tech entrepreneur, and she sold that image to investors to fund her visitor.
Fearfulness of Needles
Co-ordinate to Holmes, her fear of needles inspired her to beginning the visitor. The applied science she claimed to invent would take eliminated the need for needles and syringes to collect claret samples for testing. In fact, Holmes claimed her blood testing applied science only required a single drop of blood.
She besides claimed the blood testing machine would be portable and easy to use and would eventually be sold for domicile and battlefield use. She promised it would revolutionize the medical industry and potentially relieve thousands of lives.
Star Power Board of Directors
Former Secretarial assistant of State George Shultz joined the Theranos board of directors in 2011. It only took two hours for Holmes to convince Shultz that her visitor was about to revolutionize the dwelling house healthcare manufacture. The previous yr, she had accumulated close to $100 million in venture capital letter.
The company operated in total secrecy but still created a fizz that extended well across the tech world. Information technology didn't even have a website until 2013. This did lilliputian to deter investors from giving Holmes money or the media from giving the company printing coverage.
Walgreens Deal or No Deal
In 2010, Theranos announced a partnership with Walgreens, the 2d-largest pharmacy chain in the U.s.. The deal with the giant retailer allowed Theranos to open up blood sample collection centers within store locations throughout the U.S.
The chemist's concatenation saw great value in offering single-prick claret sample technology to its large customer base. Unfortunately, Walgreens somewhen learned the truth virtually the false promises and deceptive practices of Elizabeth Holmes, the pharmaceutical behemothic terminated the partnership five years later. The two companies battled it out in court for several years before reaching a settlement.
Stealth Mode
Theranos and CEO Elizabeth Holmes operated in stealth fashion. Besides not having a website, the visitor didn't outcome a unmarried printing release until 2013. The general public knew very little about the company. Despite this, Holmes was able to generate a lot of press in high profile publications like Forbes and Wired.
Holmes likewise got fiscal bankroll from high-powered investors, netting Theranos millions in funding. Picayune attention was paid to progress toward the actual results promised by Holmes. That eventually proved to be an embarrassing oversight.
A Rising Star
Holmes became a media darling in 2014. She appeared on the covers of Inc., Fortune, Forbes and T Magazine. Forbes recognized her equally the world'due south youngest self-made female billionaire. The magazine also ranked her at number 110 on its "Forbes 400" that twelvemonth.
By that point, Theranos was valued at $9 billion and had $400 1000000 available in venture capital. The media and investors all seemed willing to believe in the promises made by Holmes to revolutionize the medical and tech industries. Their failure to perform due diligence had dire consequences starting in 2015.
Patents Pending
By the finish of 2014, Elizabeth Holmes had her name on 18 patents in the U.S. and 66 strange patents. By 2015, she had secured deals with Capital BlueCross, Cleveland Clinic and AmeriHealth Caritas. These deals allowed them to use the medical testing technology developed by Theranos.
Things were happening quickly for Holmes and Theranos, and it seemed like nothing could end their meteoric rising. The fact that few results were available and no public accounting audits had been performed on the company'due south value did picayune to deter investors or the media.
The Beginning of the Stop
A announcer for The Wall Street Journal, John Carreyrou, began digging into Theranos after receiving a tip. A medical expert contacted Carreyrou to inform him there was something fishy nearly the company's claret testing technology.
Carreyrou contacted former employees and gained access to company documents that told a very unlike story than the ane Holmes was telling the board of directors and the public. He worked in hugger-mugger, just give-and-take of his pending commodity eventually got back to Holmes. She was less than pleased and used her lawyers to endeavour and prevent its publication.
Bad Press
To say Holmes wasn't happy with the impending story would be a huge understatement. Her lawyers threatened legal activity against Carreyrou and his sources, but that did not finish the story. The Wall Street Journal published the truth in October 2015.
The article dropped a flop on investors and company executives, to say the to the lowest degree. In his article, Carreyrou claimed that Holmes's blood testing applied science was inaccurate, and the company actually used other testing machines to provide the results it passed off equally its own. More bad press soon followed.
Damage Control
Holmes went on the defensive and appeared on television set to abnegate the claims made in the bombshell article. Insisting that she was on course to change the world, Holmes promised to publish the visitor'due south data on the accurateness of its blood sample tests.
Despite efforts to control the damage caused by the article — and her own efforts to gratify the growingly skeptical public — things were non looking good for Theranos. Several government agencies launched investigations into the company's testing practices and financial dealings. Holmes started to feel the pressure just publicly maintained the facade.
Banned!
In Jan 2016, the Centers for Medicare and Medicaid Services inspected one of the Theranos labs in Newark, California. They plant irregularities that raised alarms and compelled them to outcome a warning to Holmes to take care of the problems found during their inspection.
The CMS found that Theranos had failed to act on their warning by the March 2022 borderline. As a upshot, the agency imposed a ban on the company, preventing them from owning or operating a lab for ii years. Again, Holmes promised fast activeness to prepare the problem.
More Trouble for Holmes
The CMS ban preventing Theranos from operating for two years wasn't the only punishment handed out in 2016. The bureau also banned Holmes from operating a blood testing service, also for a term of two years.
Theranos appealed the ban to the U.Due south. Department of Health and Human Services, merely the damage was done. Walgreens terminated its partnership with Theranos and closed the in-shop blood centers. Banning a blood testing visitor from testing blood was apparently a decease accident.
Partnerships Crumbled
Walgreens wasn't the only retailer who reversed grade on Theranos when word got out about the company's shady testing practices. Safeway was an early partner who put a huge clamper of capital into offering blood tests in locations throughout the United States. The visitor spent $350 million to open these centers in 800 stores.
What both parties in one case viewed as a mutually beneficial relationship ended later three years when Theranos missed deadline after deadline for cleaning upwards its deed. Safeway wasn't the final visitor to bail on the struggling tech company.
More than Relationships Soured
Corporate partner Walgreens investigated deceptive practices on the part of Holmes and Theranos. In particular, Theranos claimed its blood tests were used on trial patients for drug companies Pfizer and GlaxoSmithKline. This was pure puffery, and no such projects existed.
As a result, Walgreens didn't just pull out of its deal with Theranos. It sued the company in federal courtroom. The alienation of contract suit was filed in Delaware and sought $140 million in damages. According to a report given to Theranos investors in 2017, the accommodate was settled for less than $30 million.
Skillful News from the FDA
Despite these setbacks and other clear alarm signs about the visitor, Theranos continued to partner with other companies to provide blood testing technology. In 2015, the Cleveland Clinic partnered with Theranos to allow the med tech company to exam in their labs.
As a issue, Theranos provided lab work for two insurance companies in Pennsylvania: AmeriHealth Caritas and Capital BlueCross. More good news came when the Food and Drug Administration gave its blessing for a fingerstick device that would test claret samples for herpes simplex virus.
The Walls Started Endmost In
Despite some small successes in 2015, the company'southward troubles began to snowball rather speedily. Criminal investigations were soon underway at both the U.S. Attorney'southward Office for the Northern Commune of California and the U.S. Securities and Exchange Commission to look into the company'southward practices.
The FBI also reportedly started keeping a close eye on Theranos. By 2017, the company'southward shareholders were thoroughly spooked. The following year, Holmes settled a lawsuit that charged her with fraud. The walls were starting to close in, but she never wavered in her defense of her technology.
More Lawsuits
The SEC lawsuit filed in 2022 was the most aggressive legal action confronting Theranos and Holmes upwardly to that signal. The commission declared that Theranos made claims near its medical engineering science that were demonstrably false. The suit also declared that Theranos misled its shareholders when it claimed to have brought in $100 one thousand thousand in revenue in 2014.
In fact, the company had made a meager $100,000. As a result of the adjust settlement, Holmes lost voting control of the visitor she had founded. She was also fined one-half a million dollars and banned from holding any officer position in a publicly traded company.
More Bad News
In 2016, as a event of mounting legal troubles, Theranos began eliminating staff. In October of that year, the visitor fired 350 people. Early in 2017, it fired some other 155 employees, followed by more than 100 the next year.
By the terminate of the summertime of 2018, most the entire staff — once numbering more than 800 — was gone, and the company announced plans to dissolve. Whatever remaining assets were doled out to creditors, just at that place wasn't much left. The one time-promising company was all but expressionless.
Law-breaking Doesn't Pay
In 2018, an investigation launched more than ii years prior by the U.S. Attorney'southward Office in San Francisco led to an indictment. Both Holmes and Theranos COO Ramesh Balwani were indicted on ix counts of conspiracy-related charges.
They both pled non guilty to charges of wire fraud and conspiracy to commit wire fraud. The U.S. Attorney'due south Office also claimed the 2 defrauded investors, doctors and patients with bogus blood testing results. These allegations forced Homes to step downward as CEO, but she did not surrender her position as the board chair at this betoken.
Prison Terms Expect
Elizabeth Anne Holmes and Ramesh "Sunny" Balwani face up to 20 years in prison if institute guilty at their trial set for the summer of 2020. I possible defense the pair may consider, according to Bloomberg News, is to blame the media for their downfall.
As part of that defense, lawyers would likely argue that John Carreyrou's articles had a negative influence on the agencies investigating the case. Holmes' lawyers from a divide civil case asked the court to allow them to cease representation, claiming they hadn't been paid for their services.
Scamming the Rich
It'due south still a chip of a mystery how Elizabeth Holmes was able to convince investors to pony up a total of $700 million dollars to help fund her medical applied science visitor. She somehow pulled information technology off without ever providing them with financial statements verified by an outside accounting house.
Many of her investors certainly weren't novices and should take known better. At its peak, Theranos was valued at $nine billion, with the money coming from wealthy investors whose net worth exceeded $one billion, just information technology was all congenital on a series of lies.
Battleground Lies
The SEC alleges that Holmes and Balwani made many false claims to investors. It's hard to determine which lies were worse than others, but one particular claim stands out. Co-ordinate to the SEC, the two Theranos execs told investors the company'south claret testing technology was being used on the battlefields of Afghanistan.
Holmes and Balwani also claimed their testing was beingness used on MedEvac helicopters. As a result of this partnership with the U.Due south. military, the company was bringing in acquirement of more than $100 million. No such contract with the U.S. regime ever existed.
Heavy Hitters
Some of the early Theranos investors and lath members include well-known names in government and Silicon Valley. Henry Kissinger and George Shultz, both former Secretaries of State, served on the Theranos board. Former Secretary of Defense force James Mattis helped the company find investors. Oracle co-founder Larry Ellison, venture capitalist Tim Draper and media mogul Rupert Murdoch were also investors in Theranos.
With such a high-profile stable of backers, it's easy to see why the press fawned over Holmes and her miraculous new engineering science. In the stop, everyone failed to do their homework on Theranos.
How Did This Happen?
What led to massive deception on such a yard calibration? Why were otherwise savvy businesspeople and former government officials so hands convinced they were investing in a game-changing technology? Did glowing profiles of Holmes in publications like The Wall Street Journal, Wired and Fortune contribute to this charade?
With so few ultra-successful women in tech, were investors willing to forget the normal rules of business organization in favor of Elizabeth Holmes and her aggressive startup? The questions are endless. Enough of books and documentaries take been produced to examine what happened, simply the last chapter won't be written until the trial in 2020.
Edison Burns Out
Holmes' claims that her groundbreaking Edison claret testing machine could run multiple tests on one drop of blood were false. Ambitiously named for inventor Thomas Edison, Theranos spent millions developing it, merely it failed.
The "simulated it until you make it" business method Holmes used caught upwardly to her in the end. It'southward likely she believed the tech was possible and hoped to make it happen with the capital letter she raised — before anyone caught on to her scheme. When it didn't happen quickly, information technology turned into the ultimate Ponzi scheme.
The Final Chapter
The final outcome remains to be seen. Theranos is expressionless, but will Holmes go some other chance? It's likely she volition never escape the taint from this scandal, and she will probably spend years behind confined. Maybe she will be partially vindicated if someone actually invents technology to run multiple tests on a unmarried drib of claret.
Most experts doubt this is possible, merely other great inventors were doubted also. Regardless, the story of Elizabeth Holmes isn't quite over nonetheless.
Source: https://www.consumersearch.com/technology/elizabeth-holmes-fraud-rise-and-fall?utm_content=params%3Ao%3D740007%26ad%3DdirN%26qo%3DserpIndex
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