The Strange Tale of Elizabeth Holmes and Theranos: How a Fake Miracle Machine Was Valued at $9 Billion
If you thought a blood-based scandal so shocking it’d make a vampire blush was something out of a work of fiction – think again.
Welcome to the bizarre world of Theranos and Elizabeth Holmes, two players in Silicon Valley who promised nothing short of a revolutionary medical breakthough.
At the center of their promise was the Edison, a tiny, ultra-portable, cheap and quick blood testing device that could screen for 200 different conditions.
Unfortunately, it didn’t actually work…
which is where this extraordinary tale begins.
Amazingly, despite no working device the company was valued at an astonishing $9 billion!
Better yet? You can unearth all the gory details behind this remarkable case.
Discover why investors flocked to such obviously false promises; how Theranos used misleading statistics to fool everyone into thinking they had made real progress; and what happened when they started clamping down on internal dissenters.
It’s all here, just waiting to be discovered.
The Promise of Revolutionizing Health Care Through a Blood-Testing Device
Elizabeth Holmes had a revolutionary idea for a device that could revolutionize medical diagnoses.
Her idea was to create a wearable patch that would use microneedles and test a patient’s blood over the course of a day, eliminating the need for needles while providing real-time information on blood tests.
In 2004, she put this plan into action and founded Theranos with her colleague Shaunak Roy.
However, they realized that using microneedles wouldn’t yield enough blood to conduct diagnostic tests.
So they changed their plan and developed a credit-card-sized blood-testing machine which used only small amounts of blood drawn with a pinprick.
They also created another machine which was slightly bigger in size and ran multiple tests, including vitamin D deficiency, herpes, HIV and more.
This device promised to revolutionize healthcare by allowing people access to cheap medical care without expensive doctors and nurses simply by having the device in your home.
The potential of this machine seemed almost limitless as it could be dispatched to war zones or field hospitals in wake of natural disasters, giving everyone access to medically accurate diagnoses at an affordable price.
Elizabeth’s visionary idea for this revolutionary machine was truly impressive!
The False Promises of Theranos: Why the Edison Miracle Machine Flopped
Theranos’ dream of creating a revolutionary blood testing machine seemed attainable.
Dubbed the Edison, their invention was designed to test a single pinprick’s worth of blood for up to 240 illnesses – an unparalleled feat in medical history.
Unfortunately, this dream soon faced several insurmountable technical issues that the company failed to address adequately.
Problems arose when it became apparent that such a small sample couldn’t be used to screen for all 240 conditions they wanted – despite engineers devoting countless hours attempting to design workaround solutions.
Additionally, the smaller samples led to accuracy issues, making the results unreliable.
Add in temperature sensitivity problems and clogged pipettes needing frequent cleaning, there were too many obstacles for this hope-filled machine.
In fact, even after investing much time and resources into R&D, experts concluded that it was impossible for even one drop of blood so small to have 240 tests run on it within a thousand years.
The harsh reality was that no matter how hard Theranos tried, these machines were virtually impossible to build as proposed – making their dreams unachievable without additional research and development time.
The Seductive Power of Deception: The Story of Theranos and Elizabeth Holmes
Elizabeth Holmes was undeterred by any technical difficulties that Theranos might be facing.
She was so charismatic that investors flocked to her – captivated by her Steve Jobs-inspired wardrobe of black turtlenecks and imitative voice modulation.
The hype surrounding her wunderkind status only grew, as did investor funds.
Holmes also enlisted TBWAChiatDay to support the marketing of Theranos, another homage to Jobs who had previously been a client of the advertising agency.
She quickly charmed CEO Carisa Bianchi and Executive Creative Director Patrick O’Neill, and they leapt at the opportunity to be involved in such an influential project.
By 2014, millions had been pledged from Safeway and Walgreens to fund in-store clinics for Edison installations (Theranos’ revolutionary blood-testing machine).
It seemed like Holmes could do no wrong – but Silicon Valley is finicky, and it can take only one mistake for reputations to be destroyed.
Leveraging her charm, she managed to move forward shrewdly; releasing software with bugs that would later be fixed during phase two testing – something modern tech startups are known for doing routinely.
Thanks to Holmes’ long con based on deception, Theranos became notorious across the globe.
Theranos’ Desperate Attempts to Pass Regulatory Assessments and Keep up Its Deceitful Claims Ended in an Utter Failure
Theranos knew it was essential to get investors on board if its products were going to succeed.
The pressure to release their Edison device was overwhelming, so the company resorted to deceiving its investors, journalists, and even the FDA about the capabilities of their product.
Holmes promised that the boxes could run 800 tests with a single drop of blood, and have results in under 30 minutes – but these claims turned out to be false.
On a good day, the Edison was only able to carry out approximately 20 tests of the 240 most important tests – far from what was promised.
Rather than coming clean about these flaws, Theranos set up their own test centers where customers could receive pinprick testing for immunoassays if they wanted them.
Hematology and chemical tests still had to be conducted using traditional vein extraction methods though- they were being sent away to be tested by machines produced by other manufacturers like Siemens in Palo Alto.
How Theranos Lied and Deceived its Way to Infamy
When it came to keeping up the illusion of success, nothing was off-limits for Theranos.
A major part of their lies involved the deliberately manipulated statistics they were willing to produce at a moment’s notice.
Results from successful tests were often cherry-picked and presented without fail to investors looking to put money in the company.
At one point, they even claimed that studies of their Edison had been published in peer-reviewed journals.
This “study”, however, was nothing more than an obscure pay-to-publish Italian journal article with an extremely small data set (only six patients!).
Meanwhile, the accuracy level of Theranos results was far lower then conventional blood testing results (only 65%), but this fact wasn’t shared with any potential partners.
Instead, in true Theranos fashion, they fabricated more stats – falsely claiming that 93% of errors in traditional blood tests were because of human error in order to make their bags appear superior to competitors.
And speaking of performances….
At events and presentations for potential stakeholders and VIPs, fake machines incapable of actual testing would be used!
Fake results would be seen going through the device…
just before it was revealed that those results had been faked as well!
In conclusion, it is no surprise how much Theranos managed to dupe its investors.
With such a vast array of hollow statistics and false demonstrations under its belt by simply cherry picking data, it’s no wonder why everyone chose to believe them!
How Theranos Dodged FDA Regulation With Clever Storytelling and Cherry-Picking
Theranos went to great lengths in order to dodge FDA inspection while pretending to be pro-FDA campaigners.
To achieve this, they created a clever ploy by pretending that their product, the Edison, was not a medical device and therefore did not need to pass under FDA regulation.
With this loophole, Theranos managed to keep their promise of ‘FDA approval’ without actually having any inspections done or results verified.
However, when US Army Lieutenant Colonel Dr.
Shoemaker insisted on receiving an FDA approval for the device, Theranos reluctantly stated that it would conform to all of the regulations – but conveniently stalled until he retired so that the whole project could be dropped altogether.
Theranos then decided on another strategy and started cherry-picking which tests were submitted for FDA approval.
Knowing that the Edison had produced solid results for HSV-1 and herpes tests, they applied for FDA approval and got it.
But instead of being humble about it, they decided to use it as an opportunity and falsely claimed that they were avid followers of failing to meet every single set standard laid down by the agency – even though at best they had just gotten permission for only two tests!
The Dark Side of Theranos: How Desperation and Unethical Policies Led to Tragedy
At Theranos, they went to immense lengths to make sure their secrets stayed hidden.
They had a strict policy of punishing dissenters – those that didn’t agree with the company’s plans or spoke out against the misinformation campaign would be let go immediately.
However, the company couldn’t just fire employees and leave its laboratories empty-handed.
So it devised a cunning plan – it hired Indian workers who were dependent on work visas for their stay in the US.
These employees were much more likely to be silenced than others – losing their job also meant being deported from the country.
Moreover, as Elizabeth Holmes’ then-boyfriend Sunny Balwani was well-connected in India’s tech industry, finding replacements was made easier by this close relationship.
The tragic consequence of this was seen in 2013, when Ian Gibbons – a biochemist at Theranos – took his own life due to being demoted for questioning the honesty of their technology machines and then kept on board only so that he would keep quiet.
With people like this silenced or backed into submission, there is no knowing how many patients could have been saved if these policies weren’t so draconianly enforced.
The Bad Blood book provides a damning summary of Elizabeth Holmes and the Theranos scandal.
At first, she appeared to be a Silicon Valley wunderkind – wearing a signature black turtleneck and promising her investors and customers that she had invented a portable machine capable of giving instant blood test results, saving time and money.
Unfortunately, it all turned out to be too good to be true, as the company’s “miracle machine” was unsuccessful.
When they realized this failure, they lied and misled their investors, customers and regulatory authorities instead of coming clean.
The Bad Blood book serves as an important reminder that although the promise may seem appealing, truth ultimately always comes to light in business.