Transcription
Trolls, please raise your right hand. Do you swear to tell the truth, the whole truth? I do.
This woman, Elizabeth Holmes, taking her last steps of freedom, defrauding investors out of hundreds of millions of dollars. "I don't know. I can't remember."
Before all that, she started Theranos, a miracle blood testing and diagnostic startup with hundreds of millions of dollars of investments. She's got heavy hitters on her board, huge partnerships with drugstores. Theranos was worth nine billion dollars. Elizabeth was worth five billion, the youngest female billionaire in the world. Youngest billionaire in the world. Is that heady when you hear that?
But it was all a champ. Theranos was nothing. No product, no results, no miracle tests and cures. She fought, lied, and cheated her way to the top of Silicon Valley, at times even using a brick voice, thinking it would get people to take her more seriously. "Early diagnosis and early detection." Men asking if they could do a finger stick. This story is so nuts. Hang on.
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Thank you.
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It started with this bombshell, "Bad Blood," the book written after Wall Street journalist John Kerry will meet the Theranos broad story with the help of some whistleblowers from inside the company. Shown to light that there were huge deficiencies, directly to their face. As convincing, the story got tons of media coverage. That only escalated this year after Elizabeth's criminal trial took place. But it's hard to piece this whole crazy Theranos story together. So what actually happened here?
And how every time you create something new, there should be questions. Let's dig into this because I actually have one of Theranos's blood testing machines. Well, a tiny, fake, collectible version of a Theranos blood testing machine, perfectly suited, actually, to hang out with my new pad. Rock the boy. Okay.
There are no. So it's 1994, and we've got this chick, Elizabeth Holmes. Now, like most kids, Elizabeth has one singular dream for when she grows up. "Yeah, I must have been a billionaire." "Oh, good girl." She crushes in school, then ends up at Stanford. And while she's on a trip to Singapore in 2002, there was basically an outbreak of COVID 1.0, the SARS virus. "Oh, oh, okay." "Billionaire, I want to be a billionaire. I'll create a patch. A patient puts on their arm. It'll constantly monitor their vitals, and when something goes wrong in their body, it will dispense the perfect amount of medication they need. Super easy."
So she drops out of Stanford to pursue this medical device pipe dream. At 19 years old, she secures seven million dollars in seed funding from wealthy neighbors and friends, and she's off to the races with her new startup, Theranos. Their goal was to prick patients' fingers, store a drop of their blood in a tiny cartridge, click that cartridge into their machine, and in seconds, display a readout for like 200 diseases and illnesses that a patient may or may not have. The machine was Theranos 1.0. And this made total sense. It was a big, ambitious thing to tackle. Yes, but there wasn't really any reason it was technically impossible. Plus, the old way, the still currently of doing blood tests was big, expensive machines, and many days to get your test results. Elizabeth's vision was this machine would be like the personal computer, and everybody would have one in their house. "We'd like to see a world in which every person gets access to this type of basic testing. You'd get diagnostics and lab results, instant, continuously, before something bad happened. If you understand that early, that you're at risk, there's a lot more that you can do about it."
Okay, but there's a huge glaring problem that we need to understand. Thank you. Hello? Hello? Huh?
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Did somebody just? No, you're like Scurry. Am I hearing things? Okay. Um, huge glaring problem. S. Jesus Christ. Sorry. Okay. So the, uh, the, the huge glaring problem for Theranos.
Drop of blood. And let's say you want to run a complete blood count test on this drop of blood. Okay? You take a teeny bit of bud, add some water, so you have enough to test and run your test. Great. But while you've got this sample, we also need to run a lipid profile, basically looking for fats in your blood. Okay? So you take a little more of the first drop, dilute it with water, so you have enough to test and run your test. Great. Except every time you want to run another test, you have to dilute this sample. And when you keep diluting the drop of blood, your results get sketchier and sketchier. And remember, Theranos wanted to test like 200 different things on a single drop of blood. Drone. Maybe there is a reason that when you get your blood tested at the doctor, they need several vials of this stuff to get accurate results. This is the huge Theranos problem that while technically not impossible, it'd be super hard to crack. The technology and computing power just might not have been available at the time to run such crazy tests on such small samples.
But in Silicon Valley, the show must go on. Grow at all costs. Raise more money at higher valuations. Prove to your shareholders that you're developing something big that will have huge returns. Keep the mission and vision bold, so engineers will work for less money and more equity. So things start to heat up for Theranos. And now it's 2007, and Elizabeth's minions, I mean, team has iterated from the Theranos 1.0 machine to the Edison. But things are getting weird internally. "Engineering team, you're falling behind. I want you on the clock 24/7." "Oh, you're a little baby. Good. I hired competing engineering team. Fastest designer wins. Other team gets fired." "If you're not with our mission, you're out." "Elizabeth, you can't lie in our forecast." "As CFO of this company, it's my duty to help fire whatever our internal financial projections are. They should be multiplied 10 times to investors." "Speaking of investors, right this way. Let's show you the magic of medicine." "Yeah, all right, all right. On with your tour. We'll show you the results at the end." "Elizabeth, due to the inaccuracy of Edison blood tests and you're lying to patients and investors about their efficacy, the Theranos board hereby fires you as CEO." "Okay, you don't understand the mission. This is important work we're doing. This is going to be huge." "Elizabeth, you're persuasive as hell. Damn it, we're reinstating you as CEO." "Elizabeth, I, uh, hereby award you the, uh, title of U.S. Ambassador for Global Entrepreneurship."
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Normal stuff, right? Well, not so. All of this craziness catches up to Elizabeth and Theranos. The lies and fake growth and missed deadlines and company pressure can only go on for so long. So back to this book, it stems from a whistleblower, Tyler Schultz, who takes all of that Theranos craziness and leaks it to John Kerry. Roo from The Wall Street Journal. On October 6, 2015, he drops this expose. "Hot startup Theranos has struggled with its blood test technology." This is huge. Nobody thought Theranos was struggling. You've literally got President Obama awarding her entrepreneurship ambassador thing for her supposed technological triumphs. There were none. The lab instrument developed as the linchpin of its strategy handled just a small fraction of the test then sold to consumers. One Theranos employee accused the company of failing to report test results. The race question about the position of Edison system. Then practically overnight, their biggest partner, Walgreens, who Theranos delivered nothing to, cut ties. Investors pull out their money and start suing Theranos for fraud. The SEC opens an investigation. Theranos loses almost all of their value, and so does the world's youngest billionaire, Elizabeth Holmes.
Now, Elizabeth claims she never did anything wrong and wasn't aware of the deception happening inside of the company. And okay, like, I get the heat of the moment and as an entrepreneur having to keep your baby alive. But the stuff she did, like, isn't normal startup behavior at all. And it's even, like, 10 times worse than I even had the time to dig into here. So what now?
Well, on January 3rd, 2022, Elizabeth was convicted on four counts of fraud. She was acquitted on another five, meaning they just threw them out. She faces 11 years in prison and is appealing the decision. But hang on. In true Elizabeth Holmes bashing, she pulled the rebranding of all rebrandings. She's Liz. Almost there. The turtlenecks, the voice, the business persona, it's all gone. We're left with Liz Holmes, devoted mother and wife. I don't know.
So there you have it. A semi-dense history on the Theranos debacle. Uh, what's the lesson here? Don't do that. Don't do that. See ya.
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