June 18, 2018

The rise and fall of Silicon Valley’s queen, Elizabeth Holmes

The rise and fall of Sili...

Few years ago the founder of the vissionary Sillicon Valley medical startup Elizabeth Holmes, is called Queen Elizabeth I after her famou dressed up for the company’s Halloween party. At the time she reigned over Silicon Valley’s startup scene. Between 2013 to 2015 The Valley's Queen raised around $700m capital to fund her company, which had supposedly developed an innovative and breakthrough way to test blood with a single pinprick. Elizabeth Holmes was the youngest self-made billionaire in history and considered the Steve Jobs. At its peak, Holmes company claimed a private valuation of $9bn.

In 2014 the famous investigative Wall Street Journal reporter John Carreyrou received a tip about Theranosblood testing inaccurracies , not knowing that it would lead to one of most audacious scams in startup history. The company promised a needle-freeway to conduct tests for doctors and patients.

In 2015 Mr Carreyrou wrote a story in the Wall Street Journal that raised serious questions about Theranos, testing technique that yielded unreliable results. Earlier this year Elizabeth Holmes settled a fraud civil charges brought by the Securities and Exchange Commision (SEC), America's financial regulator accusing her and  of defrauding and misleading Theranos investors.

Mr Carreyrou suggests Elizabeth Holmes and her ex boyfriend Sunny Balwani cared less for patients than about their own interests and personal brands. According to the SEC, Holmes and Balwani, her deputy misled investors and other corporations about the state of Theranos’s technology and sales. These falsehoods lured new partners. For example, Safeway, a grocery chain, and Walgreens, a pharmacy giant, respectively stumped up around $400m and $140m to collaborate with Theranos.

In reality, Theranos’s tests were never as sound as the firm claimed. Instead of admitting that the technology was not ready to deploy, Theranos “hacked” a solution, using modified traditional devices from other manufacturers. Perhaps Elizabeth Holmes was adhering to the Valley’s spirit of disruption by improvising a fix. That might work for software and internet firms. In the health-care business, the stakes are higher.