This Friday, November 18, the infamous elizabeth holmes he could receive a sentence of up to 20 years in prison and a fine of $800 million. How did one of the most promising entrepreneurs of the last 20 years get to these instances? This is his story.
Anyone would think that a 13-year-old company with a valuation of $US9 billion would be a success story that would have already more than proven its importance, but the duel between the US government and the company Theranos It shows that true success is not measured by money but by the culture of the business.
Tharanos by Elizabeth Holmes, the Apple of Health?
Theranos biotech firm was a unicorn, that is, a company that had achieved great growth and profits in a relatively short time (like Uber). The Palo Alto, California company developed a wearable device called Edison who did blood tests with just a finger prick. This technology, which promised entire batteries of studies without having to obtain tubes of blood via an IV, led its founder elizabeth holmes to raise $400 million from investors, valuing the company at $900 billion.
Late last year, author Steve Tobak called the Theranos founder “The Worst Entrepreneur of 2015.” How did what seemed like a great success story go sour?
Holmes’s story has all the makings of a Hollywood movie (in fact, Jennifer Lawrence is going to play her). At 19, the entrepreneur dropped out of Stanford University to revolutionize the $76 billion laboratory diagnostics industry with a low-cost device that gave real-time results to consumers.
That was 2003. A decade later, his Theranos company had deals with Walgreens pharmacies and had amassed several million known investors. Meanwhile, Holmes was on the cover of many business magazines, shows and websites, from fortune until business weekwhere he was recognized as the billionaire model of the new generation.
The beginning of the end for Theranos
But in February 2015 things began to change. John Ionnidis, a professor at the Stanford University School of Medicine, wrote a letter to the American Medical Association accusing Theranos of using press attention to create public excitement and not submit to community review. medical, typical process for any biomedical innovation.
In October of that year controversy began to follow Theranos when the daily The Wall Street Journal questioned the effectiveness and accuracy of the device Edison , saying that he exaggerated his services. The article written by two-time Pulitzer Prize winner John Carreyrou destroyed the company’s credibility, to which he responded by saying that Edison could identify up to 240 health disorders, all with a simple picket. In reality Edison can only process 15 types of tests.
Then the barrage of skepticism broke through and people began to question the quality and ethics of Theranos. Various investigations emerged showing that much of Edison’s tests were wrong and that Theranos labs did not pass safety and hygiene tests.
Since the company had never applied for a health license from the Food and Drug Administration (FDA), the agency decided to pay them a surprise visit.
Theranos went crazy trying to improve their methodology to please the hygiene department, but their efforts were not enough. On July 7, the US government withdrew the few certifications it had and prohibited its CEO, Elizabeth Holmes, from operating laboratories for at least two years.
Why did it become a global story?
The reason is simple: Theranos performed blood tests on thousands of people before the proper technology was available. Overvaluing the virtues of a product is not so serious when it comes to a vacuum cleaner or an iron, but when the result can alter the quality of life of a patient, it is another story.
With all this, faced with a scandal that threatened to destroy her life’s work, Holmes decided to do everything she shouldn’t do during a crisis and denied that anything was wrong and painted herself as the victim of big corporations that didn’t want her and her product to change the industry.
In an interview with NBC, Holmes said:
“This is what happens when you want to change things. First they think you’re crazy, then they fight you. Finally, you change the world. I must say that I was surprised that the WSJ published such a bad article…”
That had been the firm position of the company in the face of the scandal. Even as more studies, reviews, and evidence came to light proving the poor quality of Edison, Holmes and Theranos maintained that the Wall Street Journal article was “inaccurate, misleading, and slanderous,” that Carreyrou was out to harm them, and that many complaints they arose from angry ex-employees and corrupt businessmen.
From denial to apology
Six months later he changed his speech. In a second interview with NBC, Holmes said, “Everything that happens in this company is my responsibility. I feel devastated that I didn’t notice the bugs in time to fix them.” She swore that she would work to rebuild her lab from the ground up and ensure that nothing like this ever happened again.
The interviewer, the famous Maria Shriver, replied: “You run a health startup, you are playing with people’s lives. Doctors prescribe medicines based on the results of blood tests given by your devices. One would assume that the device would be more than perfected.”
“Absolutely,” Holmes replied. “And the most devastating thing about all of this is that we actually believed it was.”
After a decade of development the technology simply does not work. When the truth came out, Holmes set about attacking his accusers. Then, out of the blue, he decides to admit his mistakes and promises to fix his mistakes. He claims to be responsible, but in the same interview he seems to want to show that she didn’t really know what was going on.
Dorothy Crenshaw, founder of the public relations consultancy Crenshaw Communications, points out that the Holmes case demonstrates that “at some point in its history, Theranos began to believe its own PR and thought it might soon meet people’s expectations.”
Despite extensive media coverage and inflated valuations, Theranos’s current situation demonstrates what happens when honesty and transparency are not part of a company’s DNA.
If the company had been open about how its technology worked or the fact that it was underdeveloped, it wouldn’t be finished.
What is Elizabeth Holmes doing now?
The trial against Holmes was first delayed by the pandemic and then by the birth of their first child in July 2021. When the first legal confrontation finally took place, Holmes accused Sunny Balwani of domestic abuse and having been manipulated by the.
Elizabeth Holmes was ultimately found guilty of 4 of 11 federal charges in January 2022: conspiracy to defraud investors and three counts of wire fraud. She is currently free on $500,000 bail, but could face up to 20 years in prison.
Prosecutors requested a 15-year sentence and a $800 million fine to “reflect the seriousness of the crimes and warn Holmes and others like her.” For her part, Holmes’s lawyers requested 18 months of home confinement and no jail time.
Holmes’ sentencing will be given on November 18.
How much money does Elizabeth Holmes have?
When Holmes was 30 years old, Forbes named her the world’s youngest self-made female billionaire with a net worth of $4.5 billion. However, in 2016 when the Theranos scandal broke, she reduced her fortune to $0.
In 2019 Elizabeth Holmes married William “Billy” Evans, heir to the Evans Hotel Group founded in 1953. Evans’ fortune is unknown, but he and Holmes live in a $135 million property in California.