In 2014, a healthcare company ,Theranos rose to an incredible value of $9 billion, making its founder Elizabeth Holmes the youngest self-made female billionaire. She instantly became an icon throughout the world. However, soon afterwards, the company crumbled down to ashes, what exactly happened?
Founding of Theranos:
Let us start by knowing about how the company was founded. Ever since childhood, Holmes was very adamant on becoming a billionaire. She even drew detailed engineering drawings at the mere age of 7. During high school, she achieved high grades throughout and even sold C++ compilers to fellow students which she designed herself. All the hard work and determination finally paid off when she got accepted at Stanford University. Over there, she approached one of her professors with a marvelous idea during her sophomore year. Her plan was to produce and use medical devices which could use only a finger prick and small sample of blood to test for various conditions. The idea was inspired by her fear of needles. The professor responded by saying that this idea of hers – albeit an extraordinary one – was not really feasible. However, Holmes was not discouraged. She started to reach out to investors nonetheless and slowly managed to convince many of them. Soon afterwards, Theranos was founded and it began operations in 2003.
The company developed into one of the flourishing start-ups of Silicon Valley. Holmes started getting recognition as an absolute genius. In 2014, Theranos reached its peak when it became valued at a whopping net worth of $9 billion. Holmes continued to gain more recognition, and ended up being featured at the cover of the Fortune Magazine. In the magazine , she claimed that Theranos had now “offered more than 200 tests and was ramping up to more than 1,000”.
Despite Theranos’s astounding success, facts about its unethical practices and faulty medical devices slowly started coming out into limelight. In 2006, the CFO of Theranos, Henry Mosley, revealed his concerns about the authenticity of the medical devices and the integrity of the company. He was subsequently fired. Then, the chief scientist of Theranos, Ian Gibbons, was also concerned about the complications of the blood-testing devices. Unfortunately, he died soon therefore, he could not take any further actions.
Things started to get really heated up when a Wall Street Journalist, John Carreyrou, started investigating Theranos. Soon, his much-awaited investigation report came out, which revealed the dark side of Theranos. The report stated how Theranos deceived customers about its blood testing devices accuracy and methodology. This created a massive uproar of people against Theranos and Holmes.
Following this scandal, investors started leaving and collaborations were ended. Meanwhile, Holmes kept on defending her company. However, things got worst after each passing day. FDA’s visit to the Theranos’s lab revealed that they were selling faulty medical devices, and another regulator, CMS found that the devices were not even safe for patients. Eventually, lawsuits started accumulating from various stakeholders including Securities Exchange Commission (SEC) subsequently charged Holmes with ‘massive fraud’. This was the last nail in coffin for the company and Holmes.
In 2018, the company informed its shareholders that it was shutting down and liquidating its assets. Thus, the journey of Theranos came to an end.
Holmes is now awaiting to face her trial in 2021 after the pandemic situation eases. If convicted, she could face up to 20 years behind bars. A movie called ‘Bad Blood’ is also being produced, highlighting the rise and fall of Theranos. Jennifer Lawrence is set to star as Elizabeth Holmes.
Written by: Uzma Islam