Elizabeth Holmes was featured on the cover page of Forbes; she was touted as the youngest and only female self-made billionaire because her company, Theranos, was valued at $8 billion and she owned at least half the equity in her company. A Stanford drop-out at the age of 19, with a penchant for wearing black turtlenecks, Holmes was seen as another hero in the line of Silicon Valley titans aspiring to change the World for good. Her hopes for changing the World were genuine: the only problem was she was not able to translate her vision into reality.
Holmes had a childhood paranoia from needles. She claims this is what made her invent a revolutionary way of drawing out blood from patients and testing, then producing reports for patients within 15 minutes in a machine she and her second in command, Ramesh Balwani, dubbed as the “Edison”. Instead of drawing out blood from patients’ veins as is customarily done, they would prick patients’ index figures for a very miniscule sample of the blood.
Whistle blowers from inside the company later claimed that this sample was way too small to generate any results. In fact, this sample was diluted which compromised its purity and whatever results Edison gave were erroneous. There are countless stories of patients who went to one of Theranos’ stores within Wall Greens for a fast, inexpensive test only to find out that the amount of potassium indicated in their blood would mean they have to be dead or find out that they had an array of illnesses like diabetes – which after being tested for in a proper hospital turned out to be false flags.
It is surprising how Holmes was able to maintain this charade not only in front of investors and patients but also dupe the Food and Drug Administration into believing that her lab tests were authentic. Again, according to former employees, the company under strict instructions from the COO – Ramesh Balwani – would send test samples to the FDA using commercially available test machines from Siemens and other companies instead of using their own Edisons.
No one would have been any wiser for this if it had not been for the Director of Labs – Adam Rosendorff – coming out and leaking information he had to the Wall Street Journal, whose own proprietor, Rupert Murdoch, was an early-stage investor in Theranos. This beggars the question: why did such well-renowned names and well-connected families desperately want to invest in Theranos whose technology was shrouded in mystery and where a little investigation would have revealed that its claims were bogus?
The answer lies in Holmes’ personality. She was certainly charismatic but more in a dorkish manner rather typical of Silicon Valley. Once when a Wall Greens nurse practitioner questioned her early in 2010 about the validity of her claims and the fact that her proposed tests and device could be dangerous for the wider public, she quipped: “They don’t put pretty people like me in jail…” This quote helps us understand how and why she was able to peddle a product which existed only in the figment of her imagination.
Maybe Holmes did want to create a testing device which would be fast and cheap and tell patients their ailments within minutes. Maybe, she was inspired by stories of entrepreneurs like Bill Gates who sold software to a company before having made Microsoft or by Phil Knight who sold orders for his sports shoes in Japan before he started making Nikes. In both these cases however, the entrepreneurs delivered. Elizabeth Holmes and her lover, the COO Balwani, failed to deliver and lacked the courage to tell their investors and patients that they sold a pack of lies to them.
The problem lies not only with her but the mainstream media which hyped her up as the only female self-made billionaire without doing an in-depth study of her or of her firm. The same media also gave undeserved attention to SBF of FTX fame. Both these business “geniuses” were able to grow so fast because they had social proof working in their favour. The very media, which we would expect to act as the fourth estate and keep a check on wayward characters and actors, propelled Holmes and SBF forward. If it were not for mainstream media, Holmes would not have had the credibility to raise over $700 million from investors.