The Rise and Fall of Elizabeth Holmes, the Blood Baroness of Silicon Valley
Last month, Business Insider claimed that Elizabeth Holmes, the disraced former CEO of failed blood testing start-up Theranos, was seeking Silicon Valley investors for a new project. No word was given on what this mystery new start-up would involve or if anyone had been bonkers enough to give Holmes any money, but her continuing attempts to build herself up as her generation’s Steve Jobs has proven fascinating and infuriating in equal measure.
Only a few years ago, Holmes was a messianic figure in both Silicon Valley and the wider world, one with a life story too tantalizing to ignore: The Stanford drop-out who started a company at the age of 19 with the revolutionary aim of reinventing the medical industry; the wunderkind in black turtlenecks who promised to completely change how blood testing is done for billions of people; the genius inventor of a mysterious black box that could perform hundreds of tests from drops of blood rather than the usual vials. In 2015, Forbes declared her to be the youngest and wealthiest self-made female billionaire in America, valuing her company Theranos at $9 billion. The following year, they revised her net worth to zero.
If you’ve read Bad Blood: Secrets and Lies in a Silicon Valley Startup by Pulitzer Prize-winning journalist John Carreyrou, none of this will be new to you. The story of Holmes is Silicon Valley in a nutshell: A world of smoke and mirrors where faking it until you make it is encouraged and billion dollar valuations are given based on sheer luck. The world was hungry for Holmes and the idea of that lone female figure amid a sea of dudes, the woman who could play with the big boys and make just as much money as they did. There hadn’t been one before, and this one played straight from the Steve Jobs handbook.
Originally, after dropping out of Stanford, Holmes’s first idea for ‘democratizing healthcare’ was a drug-delivery patch that patients could wear that would monitor their conditions and deliver drugs as required. While she did file a patent application for this, the idea was basically science-fiction and never went beyond that. She then turned her focus to blood testing, and pitched her idea for what would become the central icon of Theranos. Despite multiple medical professors and scientists explaining that it would be near impossible for her to do what she was claiming could be done, Holmes, who had one semester of chemical engineering under her belt, soldiered through with her vision.
Despite very little in terms of tangible results or even promises, Theranos managed to raise an incredible amount of money from venture capitalists and investors. By December 2004, Theranos had raised around $6 million, and by 2010, that number was over $90 million. She also began to accrue a murderers’ row of board members, taken from the worlds of business and politics, from former Secretaries of State George Schultz and Henry Kissinger to former Wells Fargo Chairman Richard Kovacevich to lawyer David Boies (who also represented Harvey Weinstein after his downfall). Notably absent from this board were medical engineers, chemists, scientists, or anyone with an iota of knowledge of blood testing.
In 2013, Theranos announced a partnership with Walgreens to launch in-store blood sample collection centres. For those who wanted quick results without all the needles, patients could pop into a Walgreens, have a few drops of blood taken from their fingers, then receive results on whatever blood tests they wanted in a few short days. If it worked, it would be revolutionary. But of course, it didn’t work. Indeed, by the time Theranos and Holmes started sending their magical black boxes, known as Edison Machines, out to Walgreens, they were only able to perform a tiny fraction of promised tests, and they didn’t do that very reliably either.
The elusive Edison Machine was the heart of Theranos, the magical tool that would make access to healthcare quicker and more affordable than ever. Because Theranos was not a public company, they didn’t need to release any information on how said machine worked. They also never submitted any papers to medical or scientific journals on their research, which raised many an eyebrow in both the worlds of chemistry and medicine. Indeed, one of my best friends, who is doing a PhD in chemistry, told me this woman was ‘a total bullsh*tter’ when I informed her of Holmes’s claims. The lack of data in peer-reviewed journals was justified by Theranos as a necessity for them to keep the secrets of their tech safe. You can maybe get away with this if you’re making an app that’ll help you remember when to take your medication. You can’t do this when you’re supposed to be providing the medicine itself.
Theranos got away with it for so long in part because they operated as a Silicon Valley start-up and not a medical one. They wanted to be Apple, as evidenced by Holmes’s turtlenecks and her request that an Apple flag be flown at half-mast at Theranos HQ when Jobs died. John Carreyrou writes in Bad Blood about Holmes’s obsession with the Apple aesthetic and how much she wanted it for the Edison Machine, a detail that often seemed to matter more than whether they actually worked. They even hired people from Apple to help with such concerns, but they didn’t stick around for long. Carreyrou’s book documents multiple cases of staff dissatisfaction with lack of progress and the growing subterfuge encouraged by Holmes and her COO Sunny Balwani (at the time, Holmes and Balwani, 19 years her senior, were dating, but this was not known to the company at the time).
An entirely fake lab was created for showing investors and prominent visitors, while the actual blood testing was done in another lab, mostly using machines bought from Siemens. Even relatively simple tests proved unreliable with this method because they required the tiny blood sample to be repeatedly diluted, which adds probability of error to the process. Yet Theranos continued to process patients, even as the data endlessly failed them. By this point in time, Walgreens customers were receiving results that were questionable at best and outright dangerous at worst. One former Theranos customer, Sherry Acker, told ABC News about the results she received that said her Estradiol numbers were dramatically up, suggesting her cancer had returned. It wasn’t until she saw another doctor and had traditional blood testing that her fears were alleviated.
Theranos worked overtime to hide the truth from the world, but they were aided in their deceit by an incredibly compliant media that swallowed Holmes’s tech fairy-tale without question. Holmes made the covers of Inc., Forbes, and The New York Times Style Magazine, and won awards for her fearless female fight. She gave TED Talks, she sat on panels with Bill Clinton, she did endless photo-shoots in that black turtleneck and had business reporters at CNBC hail her as a hero. Even more skeptical reporting only vaguely touched on the fact that nobody knew how these Edison Machines worked or that the medical community had concerns about their methods. There was just too much hunger for this ‘new kind of billionaire’, one whose desires seemed so altruistic.
That soon changed when an employee turned whistle-blower. Tyler Shultz, the grandson of George Shultz, went to work at Theranos and quickly realized something wasn’t right. He wasn’t the only one at Theranos who knew things were going wrong, and he wasn’t the first to try and bring up the topic with Holmes and Balwani, but he did make the move to alert outside forces. He sent a complaint to regulators about the company potentially manipulating its quality-control checks, then he spoke to John Carreyrou, who had been reporting on Theranos. He was one of the few reporters doing the real ground-work on digging into Theranos’s promises. When Holmes found out about this, she sent David Boies to threaten to sue the Shultz family. During all this, Tyler’s grandfather stayed loyal to Holmes, claiming he’d seen the tech first-hand and believed in her vision. Carreyrou writes that he suspected Theranos of placing himself and Tyler Shultz ‘under continuous surveillance for a year.’ Holmes even tried to go to Carreyou’s boss at the Wall Street Journal, a certain Mr. Rupert Murdoch, to get him to kill any further Theranos stories. Murdoch, who had invested around $100 million in Theranos, refused.
By October 2015, Carreyrou’s articles had revealed that the Edison Machines gave inaccurate results and that they weren’t even used for most of the tests. Finally, the rest of the media was ready to report the story properly. Holmes appeared on CNBC’s Mad Money, the bastion of financial reporting, to defend herself by claiming, ‘This is what happens when you work to change things, first they think you’re crazy, then they fight you, and then all of a sudden you change the world.’ Ha. The following January, the Centers for Medicare and Medicaid Services sent a warning letter to Theranos after an inspection of one of their labs revealed massive irregularities. They proposed a two-year ban on Holmes from owning and operating a lab. Then Holmes went on the apology tour, claiming on NBC’s Today that she was ‘devastated’ to have not discovered these problems sooner. In 2017, the State of Arizona filed suit against Theranos over the faulty blood tests allegedly sold to over 1.5 million state residents.
In March 2018, Holmes settled a lawsuit with the SEC over charges of fraud relating to their false claim that Theranos technology was being used by the Department of Defense in combat situations. They also claimed to have a $100 million stream of revenue in 2014. In reality, it was about $100,000. On September 5th of last year, the company announced that it had begun the process of formally dissolving, with remaining cash and assets to be distributed to its creditors. Last June, criminal charges were mounted against Holmes and Balwani on counts of wire fraud and conspiracy to commit wire fraud.
A documentary on Holmes and Theranos premiered at Sundance this year, directed by Alex Gibney. Carreyrou’s book is being turned into a movie, to be directed by Adam McKay with Jennifer Lawrence in the lead as Holmes. ABC News are currently producing a podcast and documentary about Holmes called The Dropout.
In this weird age of scammers, where such figures are frequently posited as aspirational figures - think Anna Delvey and the Fyre Festival before we all realized how dark that really got - Holmes hasn’t received such a historical rewrite. That’s for the best, of course, but it wouldn’t have been all that shocking if someone had seen the amount of money she’d scammed out of rich old white men and decided such an endeavour was worthy. For me, Holmes is genuinely a despicable person, a huckster whose only true skills were in replicating old narratives and spinning endless streams of bullsh*t, one who offered false hope and threatened anyone who tried to claim otherwise. She seemed to believe that having a good story was more important than a good idea or the skills to back it up. The fetishizing of Silicon Valley as the epicentre of innovation in our culture helped her enormously as well. Steve Jobs and Elon Musk are the go-to messiahs of our future, never mind all the union busting and love of quackery and the countless underpaid grunts who do all the real work behind the scenes. The lie was enticing enough, as it so often is. Think about how long it took for people to see Lance Armstrong’s deceit for what it was.
Holmes is continuing her hunt for new investors. The black turtlenecks, however, have been retired.
Header Image Source: Flickr @ United States Government Work
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