The Next Big Thing: Theranos

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Edward Hessler

60 Minutes recently did a story on the quick rise of the Silicon Valley company Theranos and its fall.

The company was the idea of Elizabeth Holmes who dropped out of the Stanford University biology program to found a company that would revolutionize blood testing. It would use a fingerstick sample of blood and from that dozens of blood tests could be accurately performed. Well this was the idea.

Theranos resulted from research Ms. Holmes did while an undergraduate at Stanford University. The Wiki entry on Theranos describes it as follows: (She) created a wearable patch to adjust the dosage of drug delivery and notify doctors wirelessly of variables in patient's blood. She started developing lab-on-a-chip technology for blood tests and the idea for a company that would make testing cheaper, more convenient and accessible to consumers  Holmes used the education trust from her parents for Stanford to found the company that would later be called Theranos, which is a combination of the words "therapy" and "diagnosis".

Holmes was able to attract the imagination and the money of venture capitalists as well as very distinguished board members, real heavy hitters, among them, former United States Secretary of State (1982-1989) George Schultz. Walgreen's, for example, bought into Theranos. She became the youngest female, self-made billionaire in the world with many of the trappings, e.g., bullet-proof glass for her office and traveling with a security detail.

Norah O'Donnell reported the story of this deception (and greed)--I'm tempted to say a story of several deceptions. For additional perspective here is the New Yorker article on the rise of Theranos written only three years ago.

Silicon Valley investors are routinely described as extremely cautious and bright.  The Theranos story is an exception. I think scientific publications and peer-reviewed data were missing from the beginning.

Whenever I see Ms. Holmes I notice a similarity in dress between her and the late Steve Jobs: black. Did she think she was the next Steve Jobs? Maybe a blond Steve Jobs. It is clear that she is bright and charismatic.

Holmes and the former president of the company have been indicted for wire fraud.  Here is a video of an interview with Wall Street Journal reporter John Careyrou whose painstaking detective work fully exposed the deception.