Elizabeth Holmes, founder and CEO of Theranos Inc., disrupted the blood testing industry and became the youngest self-made woman billionaire. Like any disruptor, she has faced criticism and now the whole world seems to be against her.
“She went into the field of laboratory medicine without any kind of understanding of the strict regulatory environment,” said Dr. Patricia Jones, the president of American Association for Clinical Chemistry (AACC).
Holmes was only 19 years old when she founded Theranos in Palo Alto, California. She dropped out of Stanford University and jumped right into the startup world.
Theranos invented a new blood testing device called Edison. The device could perform hundreds of tests with just a few drops of blood rather than vials of blood. It replaced needle jabs with finger pricks and claimed its tests were easier and much cheaper than conventional methods.
Holmes made the first breakthrough by convincing investors to support her invention. She raised around $6 million, which valued her company at $27 million in 2005.
Holmes worked seven days a week and did not take any vacation from the day she started Theranos.
“I have trained myself to sleep very little hours,” she said during an interview at Stanford University in February 2015.
Holmes stayed very quiet about her business. She was not well-known until she first appeared on the cover of Fortune magazine in June 2014 and announced that Theranos had reached 500 employees and a valuation of $9 billion.
With 50 percent ownership in Theranos and a net worth of $4.5 billion, Holmes was listed as the “world’s youngest self-made woman billionaire” by Forbes in October 2014.
Holmes was a big fan of Steve Jobs, wearing black turtlenecks like him and applying his approach to product secrecy, according to media reports.
“She grew up in Silicon Valley, where you keep everything as a secret so nobody can steal your ideas. But that is not how it works in laboratory diagnostics,” Jones said.
“You have to properly prove that your instrumentation works.”
Hence, Holmes was often criticized for not publishing any data in peer-reviewed journals.
She appointed prominent names to the board of directors and the advisory board including former secretaries of state Henry Kissinger and George Shultz.
“She stacked the board with former politicians who had no experience in FDA-regulated industry and, in particular, laboratory testing,” said Michael Wienholt, principal consultant at Halloran Consulting Group.
“The managers and operational directors of the company were inexperienced too,” he said.
Everything Starts Falling Apart
Holmes’s fairy tale took a dark turn in October 2015 when The Wall Street Journal (WSJ) published an article questioning the reliability of Theranos’ test results.
“It is pretty amazing what you can actually test on a few drops of blood,” said Jones.
“But I think what was not giving the correct results was the combination of using the very small volume of blood on an unproven instrument,” she said.
