Elizabeth Holmes wanted your blood, not very much of it, but what she really wanted was your money, and as much of it as she could talk you out of ideally.
She was following the Silicon Valley startup playbook to the letter. Walk the walk, talk the talk and fake it ‘til you make it. Watch the investment billions flow in, and worry how to make a profit later. How many casually dressed twenty-somethings paced purposefully up and down a stage at a tech launch with visions of a bright new tomorrow that is just around the corner? All it needs is a lousy couple of billion to get it going.
Holmes, and her business, and sometimes life partner Sunny Balwani had a plan. They would build a machine, about the size of a small printer, take a tiny sample of blood from a pinprick in your fingertip, and then instantly analyse if for up to 200 different conditions. Deficiencies, cancer, diabetes, pretty much anything. A change from the decades old technique of painfully pulling a syringe of blood from a vein in a doctor’s surgery and sending it off to a lab to await the result. This was painless, portable and instant. You could set them up in pharmacies, workplaces, ambulances, on the battlefield, hell you could even have one at home. This was game changing stuff, a bona fide revolution in health care. The only snag was that it didn’t work.
No problem though for Elizabeth and Sunny, it was just a matter of time and money. They stretched the truth a bit here, exaggerated a bit there, it didn’t matter much, it would all be ok in the end, wouldn’t it?
The hype took over. Elizabeth was easy to invest in. She modelled herself on her idol, Steve Jobs, sporting the black polo neck and steely gaze. She was young, just 19 when she dropped out of Stanford to try her luck in Silicon Valley. She was confident, charming, and sounded like she was onto the next big thing. The trickle of investment dollars quickly turned into a tsunami. Some very big names pitched in with more than 100 million. Political giants Henry Kissenger, George Schultz, Betsy De Vos, retired generals, Rupert Murdoch, respected hedge funds, and venture capitalists all piled in, many ended up on the company board. Contracts were signed with major pharmacy chains. By 2015 Holmes’ company Theranos was valued at 9 billion bucks, Holmes feted on magazine covers as Silicon Valley’s youngest self made female billionaire. The problem was that despite throwing money and scientists at the problem the machine still wouldn’t do what she had told everyone it would, not even close.
Seeds of doubt started to creep into the minds of investors, questions started to be asked. Elizabeth and Sunny started to lie, bluster, conceal and deceive. They were in too deep to stop now. They began running demonstration tests secretly using off the shelf machines from other competitors, to fabricate tales of new contracts, breakthroughs that were due any day now, but the machine still wouldn’t work. People were told they were sick when they were well, or well when they were sick. Pregnant mums were told their babies were dead, when they were healthy. The results of more than one million tests were annulled. Surely the writing was on the wall for Elizabeth, Sunny, Theranos and their useless box of tricks.
In the end it was a flanking manoeuvre of uneasy investors, whistle blowers and tenacious journalists that caught their lie in a pincer movement. The curtain was drawn back to reveal nine billion dollars worth of absolutely nothing. The game was up.
During Elizabeth’s trial desperate defenses of coercion and abuse were punted in front of the jury, all falling on deaf ears. A suspiciously well timed pregnancy at the time of the trial similarly failed to find a single heart string to tug upon.
Elizabeth was found guilty on counts of fraud, and misleading investors in January, she potentially faces decades in jail, realistically most who know about this stuff reckon six years might be a good guess. Sunny will face his own trial on similar charges later this year.,
Was this a grift from the start?, was it over confidence that gained a momentum that Elizabeth and Sunny were too scared to stop? Only they really know, and you suspect that they will keep that to themselves, at least until a publisher, or movie studio pushes a hefty cheque through the security screen in the visitors room at the jail.
It is, or at least should be, a warning to Silicon Valley and its imitators around the world. It´s entrepreneurs, investors, journalists, its chancers and its geniuses. Fake it ‘til you make it, confidence, bluster and a sprinkling of bullshit are essential to elevate your world changing brainwave above the throng to gain the traction that might just propel it to global domination.
But it might just turn around and bite you in the ass.
Last year Forbes magazine estimated it´s former cover star´s net worth as. Zero.
Phill McCoffers – The Islander Economics CorrespondentÂ
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