“It is blood alone which moves the wheels of history”.
Theranos founder and CEO Elizabeth Holmes tried to bring truth to this statement with a single drop of blood but failed disgracefully. Founded in 2003, Theranos was an American company that was a portmanteau of ‘therapy’ and ‘diagnosis'. They claimed to have revolutionized medical technology by developing blood tests that, in contrast to the traditional approach, needed only a few drops of blood to attain results. The then 19-year-old Elizabeth Holmes was the youngest self-made female billionaire at one point in time. She studied Chemical Engineering at Stanford for a year before dropping out and joining the ranks of several other Silicon Valley dropouts.
Theranos proposed that with their blood tests, all patients would have to do is prick their fingertips and collect their blood in a tiny cartridge. After this step, they had to insert the sample into their patented machine named Edison. It would run the tests on the spot and beam data to a lab via the internet, where professionals would evaluate the results and provide a report back. They promised over 240 tests at significantly lower costs.
Professors at Stanford speculated Holmes' theory was unrealistic in its early stages. However, she did persuade the dean of the School of Engineering, Channing Robertson, to support her vision, and he eventually became the company's first board member and introduced her to venture capitalists. Theranos' board of directors had extremely powerful and influential politicians and military advisers on board. It included big names like former US Secretaries of State Henry Kissinger and George Shultz, as well as former Secretary of Defence William Perry, none of whom were healthcare professionals. Businessman Sunny Balwani joined Theranos as President and Chief Operating Officer in September 2009. Holmes and Balwani later signed deals with Walgreens and Safeway to run blood tests on Theranos' equipment.
By the end of 2010, Theranos had raised over $92 million in venture capital and, was valued at $9 billion at its peak. Holmes garnered worldwide praise; by 2015, Forbes had named her the youngest and wealthiest self-made female billionaire in America, as well as one of TIME Magazine's Most Influential People in the World.
Despite the money and fame, the Theranos devices never ended up working. Theranos frequently used third-party equipment for testing, and the few tests they conducted on the Edison produced highly inaccurate results. Employees who sensed trouble brewing were hushed by their nondisclosure agreements and threatened with legal action. The mechanisms of the devices were fiercely guarded secrets to the public.
The Theranos Whistle-blower Tyler Shultz, the grandson of board member George Shultz, instigated the downfall and public exposure of the vile multi-billion-dollar fraud scheme. He reached out to John Carreyrou, a Pulitzer Prize-winning Wall Street Journal reporter, who later published an article exposing the many seismic failures of Theranos. The situation quickly escalated and became the topic of the hour, provoking multiple investigations, eventually leading up to the entire house of cards collapsing.
Theranos has now been liquidated, resulting in a loss of over $600 million. Elizabeth Holmes and Sunny Balwani have been charged with conspiracy to commit wire fraud and are awaiting trial.