A “Bloody” Scandal- Elizabeth Holmes and a Fallen Unicorn

The Theranos story is nothing short of a drama script, although it is unique in a way as it unfolded all too quickly in the labyrinths of the cradle of innovation- Silicon Valley. This tale reveals the dangers of what happens when blinding ambitions are put up on pedestals worth billions of dollars. The result is almost always- a loss of ginormous amounts of wealth and severely bruised egos. There is a lot to learn from this billion-dollar story as it exposes, almost in a narcissistic way, the ideals that modern day society so obsessively chases. What is worrisome is that it almost might be a foreshadowing for what is yet to come as humans progress.

A Girl on a Mission

Elizabeth Holmes dropped out of Stanford Chemical Engineering when she was just 19, to start Theranos in 2003, which was expected to herald a revolution in the medical industry in the USA. Holmes had the vision to automate and miniaturise blood tests using microscopic blood volumes and delivering thousands of diagnoses from a drop of blood. The blood collection vessel was dubbed the nanotainer and Holmes named its revolutionary analysis machine the Edison, after inventor Thomas Edison. Now I understand that after reading this you will be impressed, and maybe even inspired, but so were half the billionaires of Silicon Valley when this story was pitched to them.

Holmes was not an expert medic, in fact, many who worked with her say she lacked medicinal knowledge and only knew enough buzzwords to dazzle investors and the general intelligentsia. However, Holmes has mastered the one thing that was enough for investors to pour in millions, and for politicians to defend her in public- storytelling. She was extremely skilled at telling a great story and casting herself as the main character, and that’s what let Theranos put on a billion-dollar show for over a decade.

A Failing Product and a Glimmering Boar

The Edison was a disaster. The technology simply did not work as it is not physically possible to incorporate microfluids and nanotechnology into a patch. Accurate blood testing today requires larger volumes of blood to deliver correct results as risking misdiagnoses is extremely dangerous. Theranos hid the fact which was later exposed by whistleblowers, that the Edison machine was failing to function as centrifuges were exploding, and pieces of the device were falling off because potent blood droplets were evaporating into the lab air. Theranos was also diluting the blood samples that were producing grossly wrong results.

However, on the public side, Holmes was busy racking up the most prestigious board in the history of corporate America. Theranos’ investors included an array of billionaires like Media mogul Rupert Murdoch, Oracle founder Larry Ellison, and venture capitalist Tim Draper. The board was unequivocally illustrious with influential men in the government like Henry Kissinger, George Schultz and other powerful people with military connections who employees described as “captivated” by Holmes’ charm. By late 2013, Theranos had crept up to a $9 billion valuation and Holmes was the youngest Female billionaire at the time.

It’s always “Sunny” in Palo Alto

Another character integral to the story was Sunny Balwani, the COO of Theranos. His background was that he was a Pakistani immigrant and had made some serious cash in the dot com boom. He had worked at Microsoft and claimed to have written over ten million lines of code when an average coder writes only around a thousand lines of code per year. Sunny had almost no knowledge of medicine, let alone haematology. Engineers who worked at Theranos say Sunny was known to use buzzwords to boast enough knowledge. Sometimes engineers at Theranos used to intentionally use complicated buzzwords to see if he would start using them in his conversations. He did. However, Sunny ruled with a heavy hand and was feared as he often let his temper flare. Another bizarre thing was that Holmes was in a relationship with good ol' Sunny, who was two decades older than her, but never disclosed this fact to the investors. You gotta love the Cassanova. He once infamously fired an employee for working only 8 hours a day and projected to the investors, a profit 20x higher than actuality. Holmes later accused him of torment and sexual abuse. Shocking.

Downfall and Modern Tyranny

The downfall of Theranos was inevitable. The dominoes of lies fell when John Carreyrou, from the Wall Street Journal, wrote an exposé after months of conducting a secret investigation. Several employees spoke to Carreyrou anonymously as whistleblowers. Carreyrou disclosed that Theranos was actually using a Siemens machine to run its tests and was heavily diluting blood samples. This was the start of the end.

The Greek Tragedian Sophocles had once said, “A tyrant is a child of pride who drinks from the sickening cup of recklessness and vanity, until from his high crest headlong he plummets to the dust of hope.” Holmes was exactly that, a modern-day blonde tyrant in a black turtleneck feigning a Steve Jobs look without a shred of innovation.

After whistleblowers tried to expose Theranos’ deceptions, they were strong-armed when Holmes hired David Boies, the same lawyer who represented Harvey Weinstein and was definitely not the cleanest guy on the block. Employees, especially the younger ones in their early twenties, were fired without cause, bludgeoned with NDAs, and threatened with blasphemous lawsuits of heavy sums.

A brilliant scientist and key employee, Ian Gibbons, committed suicide as he feared losing his job when he tried to expose the lies of the company. His family was never contacted nor confiscated by Theranos. By 2016, Theranos came under criminal investigation by the SEC and was forced to close down laboratory operations. Its major partner and one of the USA’s biggest pharmacy companies, Walgreens withdrew from their $400 million partnership.

Holmes laid off a majority of its employees in 2017 and finally dissolved in 2018. The trial of Elizabeth Holmes went on for 3 years and concluded recently in January 2022. Holmes was found guilty of one count of conspiracy to defraud investors, and 3 wire fraud counts tied to specific investors. Holmes faces up to 20 years in prison and a $250,000 fine with additional restitution.

A Glimpse into the future?

Theranos will go down as one of the most epic failures in the annals of American capitalism while exposing the dark underbelly of Silicon Valley. The “fake it until you make it” culture created the conditions for someone like Holmes to come along and thrive. Elizabeth Holmes was a zealot, she believed in her reconstruction of reality so deeply that she obliterated the prominent line between hype and outright lies. Holmes wasn’t the first entrepreneur whose fairytale-esque transparent promises were in actuality just a labyrinth of mirrors and the terrifying part is, she won’t be the last.