Here's Why You Shouldn't Let a 19-Year-Old Dropout Run a Medical Company
My, how the mighty have fallen. Elizabeth Holmes, the self-made billionaire who founded Silicon Valley biotech darling Theranos, is in, well, deep shit. Once valued at around $9 billion, Theranos turned out to be a medical house of cards, built more on buzzwords and secrets than any real science.
Not familiar with Holmes and her web of lies? She dropped out of Stanford when she was 19 to create Theranos, a company that purported to administer full blood tests with just the prick of a finger rather than a full withdrawal, with the help of a revolutionary blood-testing device she named Edison. This would save patients and the healthcare community millions, plus be an actual lifesaver, especially for people who are terrified of needles.
Update 10/11: One of Theranos' investors, San Francisco-based hedge fund Partner Fund Management, has sued the blood-testing startup for around $100 million to recover its investment and legal fees. Partner alleges that Theranos lied, while Holmes' company denies any wrongdoing when it was raising capital.
Update 10/6: Theranos CEO Elizabeth Holmes penned an open letter to stakeholders announcing the closure of the blood-testing startup's labs and wellness centers, resulting in layoffs for 340 employees. That's about 40% of the company's workforce. Holmes says the company will focus solely on its miniLab technology, which supposedly provides diagnostics through small-volume testing -- essentially, Theranos still hopes to make effective pinprick blood tests a reality.
Update 11/29: A group of investors, including Robertson Stephens & Co. and Hilary Taubman-Dye, filed a new lawsuit against Theranos, hoping to turn it into a class action suit.
She wasn't just some random unicorn in a valley supposedly full of them, either -- the media and investors were obsessed with her. She had a glowing profile in The New Yorker, covers on Fortune and Inc. magazines, and Forbes listed her on its richest self-made billionaire women list in 2015 (Forbes has since adjusted her net worth to zero).
There's only one small, tiny issue: it was total bullshit. Theranos -- which had its tests available at Walgreens! -- was just using other companies' technology to stay afloat. Since being exposed by the Wall Street Journal, Holmes has received a two-year ban from labs, and the company has crumbled. But that's not all! This excellent exclusive published in Vanity Fair details Holmes' quirks and penchant for secrecy, all of which should be a warning: when a 19-year-old dropout claims to have revolutionized time-tested science, it's a claim best met with skepticism, not billions of dollars and blind faith. You should really read Nick Bilton's entire VF piece to get the full picture, but these are a few of the highlights.
She was a micromanager
"At Theranos, Holmes was founder, C.E.O., and chairwoman. There wasn't a decision -- from the number of American flags framed in the company's hallway (they are ubiquitous) to the compensation of each new hire -- that didn't cross her desk."
She thinks she's Steve Jobs
"At Theranos, Holmes preferred that the temperature be maintained in the mid-60s, which facilitated her preferred daily uniform of a black turtleneck with a puffy black vest -- a homogeneity that she had borrowed from her idol, the late Steve Jobs."
Like, she REALLY idolizes him
"Besides the turtlenecks, Holmes's proprietary blood-analysis device, which she named 'Edison' after Thomas Edison, resembled Jobs's NeXT computer."
She employed a government-level security detail
"She left the war room for her car -- she is often surrounded by her security detail, which sometimes numbers as many as four men, who (for safety reasons) refer to the young C.E.O. as 'Eagle 1' -- and headed to the airport."
She kept the technology a secret from investors...
"She took the money on the condition that she would not divulge to investors how her technology actually worked, and that she had final say and control over every aspect of her company."
... and she couldn't explain it anyway
"When The New Yorker reporter asked about Theranos's technology, she responded, somewhat cryptically, 'a chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.'"
A Google investor discovered that the tests weren't just a pinprick
"Eventually, Google Ventures sent a venture capitalist to a Theranos Walgreens Wellness Center to take the revolutionary pinprick blood test. As the V.C. sat in a chair and had several large vials of blood drawn from his arm, far more than a pinprick, it became apparent that something was amiss with Theranos's promise."
Her dad worked for a little family company called Enron
"She talked about how she didn't play with Barbies as a child, and how her father, Christian Holmes IV, who worked in environmental technology for Enron before going on to work in a number of senior government jobs in Washington, was one of her idols."
Even her poor employees couldn't humblebrag about their jobs
"On LinkedIn, one former employee noted next to his job description, 'I worked here, but every time I say what I did I get a letter from a lawyer. I probably will get a letter from a lawyer for writing this.'"
The labs were so badly run that they were putting lives in danger
"Regulators from the Centers for Medicare and Medicaid Services, which regulates laboratories, visited the labs and found major inaccuracies in the testing being done on patients. (The Newark lab was run by an employee who was criticized for insufficient laboratory experience.) C.M.S. also soon discovered that some of the tests Theranos was performing were so inaccurate that they could leave patients at risk of internal bleeding, or of stroke among those prone to blood clots."
The lesson? "The Emperor's New Clothes" is as true in today's technologically advanced society as it's always been.
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