How can a hoax be perpetuated for years, fooling hundreds of savvy and even cynical investors? How could a who’s who of experts lend their names to a “groundbreaking” technology that turned out to be a scam? Was it simply because everyone was afraid to state the obvious, or was it the desire to become rich and famous by being associated with the newest success story?
Back in 2003, Elizabeth Holmes was an ambitious 19-year-old dropout who had studied in Stanford University’s Department of Chemical Engineering. The charismatic young woman burst upon the high-tech scene with an invention that was bold and audacious, and it promised to transform the world of medicine by making blood tests obsolete. This technology, which she called Theranos, was rumored to revolutionize blood testing, enabling hundreds of blood tests to be run after a mere finger prick in the comfort of one’s home.
While existing technology needed one vial of blood for each diagnostic test conducted, Theranos boasted of performing over 240 tests, ranging from cholesterol levels to complex genetic analysis, with just a single pinprick’s worth of it.
When news of this new technology went public, it attracted a storm of attention in Silicon Valley and throughout the world. Before long, Elizabeth Holmes and her invention drew the interest of the powers that be in both the world of medicine and finance. The new company received billions of dollars in investments and was featured in all the major media outlets. But like the emperor who had no clothes, there was only one problem: few of the claims being made were true.
Unbelievably, Holmes and her staff managed to prolong the scam for 12 years, building a multibillion-dollar empire until the whole thing imploded spectacularly, bringing her and her company down.
The story of Elizabeth Holmes and Theranos is a fascinating tale of ambition and greed gone terribly wrong. How did the world’s youngest self-made female billionaire lose her empire in the blink of an eye? How did the woman once acclaimed as “the next Steve Jobs” find herself facing criminal charges and potentially decades in prison?
How did her technology, meant to revolutionize healthcare, potentially put millions of patients in danger? And most importantly, how could so many intelligent people have been taken for a ride?
In order to understand what happened, let’s start at the beginning.
A Compelling Story
Every startup has its own story in Silicon Valley, the birthplace of technology. Most of them are founded by charismatic people who come up with what they feel is the best thing since sliced bread, and they then try to convince deep-pocketed investors to share their vision. Everyone ignores the obvious—that the goal is to make money—and tries to focus on the human factor, claiming that the new company will transform countless lives for the better.
In reality, though, it’s all about the bottom line. The 50 square miles of Silicon Valley have more wealth than any place in human history.
Elizabeth Holmes may have been young and ambitious, but she was no fool. When she burst onto the scene in 2003, claiming to have used her college tuition to invent the next wonder technology, she had a lot going for her. She was unique because she was a woman in a highly competitive industry mostly inhabited by men. She was very persuasive, with an almost magnetic personality.
She quoted passages from Jane Austen and dressed like Steve Jobs, her role model, exclusively wearing black turtlenecks and quilted vests, regardless of the weather. She was an avowed workaholic who never took a vacation.
A strict vegetarian, Holmes stuck to a restricted diet of green juices (cucumber, parsley, kale, spinach, romaine lettuce and celery), which she drank at specific times of the day. And like Jobs, her company was her life. She rarely ever left the office, only going home to sleep. To celebrate her birthday, Holmes once held a party at Theranos headquarters with her employees.
She was confident, almost mesmerizingly so, as she explained her idea to well-heeled investors. But most importantly, her product had the potential to change the world.
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