Elizabeth Holmes and Theranos
Elizabeth Holmes is the founder and former CEO of Theranos (2003-2018), a company that created and distributed blood testing devices. The company boasted the ability to get results from very small amounts of blood, something that would be revolutionary in medical diagnostics.
Holmes grew up in Houston, Texas and studied chemical engineering at Stanford until she dropped out in 2003. Her peers and mentors at Stanford were weary of her inventions, claiming they were unrealistic. She noted in interviews that her idols were Steve Jobs and Thomas Edison, brilliant inventors that would “fake it ‘til they made it,” so she left school to create Real-Time Cures; which she later renamed Theranos, a blend of the words “therapy” and “diagnosis.” By the end of 2004, Holmes secured investors for her company and was the world’s youngest self-made billionaire by 2014. At its peak, Theranos was valued at $10 billion and had over $400 million in venture capital. Holmes’ sold her vision of having a new, revolutionary way to extract just drops of blood and test it immediately for illness and disease.
A machine called Edison was created to test blood samples in an automated way that took only minutes to complete. When she pitched the Edison to Walgreens, the machine was promised to take the place of a lab and could test blood for over 200 different illnesses in just minutes. Though she claimed the technology wasn’t there at the time of the pitch, she was confident that it could be done. Her team of engineers and chemists were not so confident as they tried to create a machine that many said was “physically impossible” to create. Most also felt it shouldn’t be pitched in theory until it was properly tested and analyzed. In 2013, Walgreens put the machines in their retail locations without testing them, which raised suspicion among physicians, but the public responded positively to having the opportunity to get lab testing without a doctor. Shortly after it’s release, the finger-prick test was only used for a small number of tests and most required the traditional, intravenous method which went against the company’s initial mission. Once the samples were collected, they were sent to the Theranos labs for testing rather than on the Edison machines. The tests were coming back inconclusive or incorrect on the Edison, but the technicians were told to deliver those results to patients. Many lab associates and engineers found this to be unethical and left the company.
In 2015, John Carreyrou, a Wall Street Journal writer, published an investigative piece about alleged inaccuracies in Theranos’ blood testing technology. He had received tips from whistleblowers that the company misrepresented the science and effectiveness of their products to investors. Theranos was also criticized for not having their devices peer reviewed and data collected by outside sources. The first whistleblower for these inaccuracies was Tyler Shultz, the grandson of Gregory Shultz, the former Secretary of State and a director of Theranos. Tyler brought his concerns to company management but decided to go public when he was ignored. As Tyler was speaking to press, a former lab employee, Erika Cheung, was also speaking to organizations that could investigate the labs further.
Throughout 2016, Theranos was investigated by various organizations and by April the company was officially investigated by federal prosecutors and the SEC for misleading investors and government officials about their technology. In May 2016, CMS investigated the labs and revoked their CLIA certificate and issued sanctions. By January 2017, Theranos had laid off almost half their staff and closed all blood testing facilities. The company was also forced to reimburse the hundreds of thousands of patients that used their testing.
Holmes fought all allegations publicly, but on June 15, 2018 Holmes and former Theranos president Ramesh “Sunny” Balwani were indicted on multiple counts of wire fraud and conspiracy to commit wire fraud. Theranos officially shut down on September 4, 2018, and Holmes’ trial is set to begin in August 2020.
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