The fall from grace of Elizabeth Holmes is complete and there is no going back. The courts found Theranos founder guilty on four counts of fraud last month. If the law has its way, she could end up serving around 20 years in prison.
The verdict against Holmes does not come as a shock though. She masterminded the whole fraudulent operation at Theranos and defrauded her investors and business partners of millions on the pretext of transformative blood-testing technology – a technology that did not exist.
Holmes’ downfall started when the WSJ journalist, John Carreyrou, launched a full-blown, private investigation on her company. His scanning of the company resulted in a massive exposé. It revealed that Theranos was a dubious setup and Holmes was its charismatic-yet-evil-underneath founder.
Once a leading Valley startup, Theranos looked all set to turn the blood-testing industry on its head. Holmes claimed her company could run accurate blood tests with just a prick of a finger.
She went full PR with stories and articles about her revolutionary device called Edison. But it was later revealed that Edison could only perform 15 out of 240 tests on its menu. And, even those 15 tests were prone to high rates of error. This means that Edison was nothing more than an alpha stage product.
Theranos was fudging data and whenever required, it was using traditional methods of blood testing. Theranos’ lab as explained in Carreyrou’s book, was nothing less than a covert nuclear facility. Of course, Holmes knew what was going on. She was the one who was orchestrating this vast deception.
In her heyday, Elizabeth Holmes graced the covers of Forbes and Fortune. She convinced such distinguished statesmen as Henry Kissinger and George Shultz to join Theranos’ board. Such was her charisma that not even seasoned pros like Larry Ellison, Tim Draper, and Rupert Murdoch could see through her fraudulence.
Many people raised questions as to how she could hoodwink sophisticated investors into believing her false claims. How could they not spot multiple red flags owing to her lack of background, education, or experience in healthcare? Well, the answer is simple. They were blinded by her aura. It was all smokes and mirrors and Holmes, to her credit, had crafted her subterfuge to near perfection.
Yes, it is incredible that Theranos, without having any technology, to begin with, achieved a valuation of $9 billion. There was a time when its valuation outmatched the combined valuations of Uber and Spotify. This also made Elizabeth Holmes a self-made billionaire… And, then started the downward spiral.
Carreyrou’s story and the subsequent book annihilated Theranos. The company soon went into the dumpster can. With it, went Holmes’ ambitions of doing a Steve Jobs in the healthcare industry.
In the end, Theranos will be remembered for pulling off one of the biggest scams in Silicon Valley. But will it be the last? There is no reason to think so. It won’t be long before someone else’s greed drives them over the hill.
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