Once upon a time, in Silicon Valley — that dreamland of black turtlenecks — there was a woman named Elizabeth Holmes. She also dropped out of Stanford, at the tender age of 19, to start a company called Theranos. Her grand vision? To transform blood testing with a device that could detect everything from cancer to the common cold with a single drop of blood.” Spoiler alert: it didn’t exactly go that way.
Holmes soon garnered the tagline “the next Steve Jobs,” and appeared to be well on her way to becoming the tech world’s darling. She even stole his black turtleneck signature, which I assume was a “If it worked for Steve, why not me?” move. Theranos was valued at a staggering $9 billion in 2014, and Holmes was touted as the youngest self-made female billionaire in the U.S. You don’t get more (seemingly) meteoric than that!
The famous investors flocked to Theranos like moths to flame. These are big names: Rupert Murdoch, for example, put in a sweet $125 million, and you may have heard of the Waltons, the family of Walmart fame, who donated $150 million. Even Larry Ellison, the Oracle co-founder, was taken with it, pouring $100 million into it. And how can we neglect George Shultz, former U.S. Secretary of State who served not only as an investor but as a general board member? It was a veritable who’s who of the rich and powerful.
But as the old saying goes, “If it sounds too good to be true, it probably is.” Enter John Carreyrou, an investigative reporter for the Wall Street Journal with a nose for sniffing out corporate shenanigans. He began poking around Theranos in 2015 and opened a Pandora’s box of deceit. It turns out, the groundbreaking blood-testing device was about as helpful as a chocolate teapot.
The story thickened when Tyler Shultz, the grandson of George Shultz and a Theranos employee, became a whistleblower. Tyler toughed through legal threats and company pressure to blow the whistle on the company’s fraudulent practices. Talk about family drama!
As the noose tightened, the F.D.A. and the C.M.S. opened investigations. CMS found Theranos’ lab practices in 2016 to be about as messy as a toddler’s birthday party, which contributed to the revocation of its blood-testing license. Holmes was prohibited from owning or operating a blood-testing lab for two years, which had to be a real buzzkill.
In 2018, the hammer finally fell. Holmes and her former lover and business partner Ramesh “Sunny” Balwani were indicted on multiple fraud counts. The trial had been a spectacle, and Holmes had argued that she was merely a gullible entrepreneur who had gotten in over her head. But the jury was not buying it. In January 2022, she was convicted of four counts of securities fraud. In November 2022, she was sentenced to more than 11 years in prison — a far cry from her court contamination days rubbing shoulders with the elite.
With Holmes starting her prison sentence in May 2023, the world was left to ponder the lessons of the Theranos saga. One famous quote that emerged from the trial came from Holmes herself: “I am devastated by my failings.” Well, Elizabeth, you’re not alone.
The Theranos tale has since spawned endless books, documentaries and a Hulu miniseries, “The Dropout.” It’s a story of ambition, deception and the perils of drinking your own Kool-Aid. So the next time someone promises you a revolutionary device for testing your blood, remember the words of the great philosopher Groucho Marx: “I wouldn’t want to join any club that would have me.” Or in this case, invest in any company that seems too good to be true.
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