Elizabeth Holmes was once dubbed ‘the world’s youngest self-made female billionaire’ before falling disastrously from grace when it was revealed that the technology she claimed to have was fake.
At the peak of her powers, Holmes pioneered health and technology company Theranos, at one point valued at $9 billion. She claimed she had revolutionary equipment to help diagnose medical diseases.
Holmes and Theranos said they had the capabilities to develop a small box-sized ‘minilab’ which could take a single drop of blood from someone and detect whether they had cancer or diabetes. The technology negated the need for needles and would have been available for easy use in retail pharmacies.
But after the technology was exposed as fake, her company collapsed. Holmes, once described as the ‘next Steve Jobs’ was later convicted on four counts of fraud, carrying a minimum sentence of 20 years in prison.
After a jury found her not guilty on four other charges, and failing to reach a decision on three more, Holmes is set to begin her 11 years and three month prison sentence in April 2023.
Holmes claimed she had revolutionary equipment to help diagnose medical diseases. Pictured: Former Theranos CEO Elizabeth Holmes leaves federal court in San Jose, California, March 17, 2023
At the peak of her powers, Holmes pioneered health and technology company Theranos, at one point valued at $9 billion. Pictured: Elizabeth Holmes moves through security while on her way to court on March 17, 2023 in San Jose, California
Elizabeth Holmes was said to have worshipped Steve Jobs and mimicked every aspect of his life, including the way he dressed, and his strict green juice diet. Pictured: Holmes hold a nanotainer of blood at Theranos headquarters in Palo Alto, California, June 30, 2014
Table of Contents
Why did Elizabeth Holmes drop out of Stanford?
Holmes got into Ivy League Stanford University in 2002 to study chemical engineering. She would also work as a student researcher and lab assistant in the school’s engineering department.
It was during her time at the college that she came up with the idea for a patch that could scan a patient for possible infections that could then also decide whether they needed antibiotics.
Phyllis Gardner, a professor of medicine in clinical pharmacology at Stanford, remembered discussing Holmes’ idea with her and telling her it would not work.
‘She just stared through me,’ Dr Gardner recalled to the BBC.
‘And she just seemed absolutely confident of her own brilliance. She wasn’t interested in my expertise and it was upsetting.’
In 2003, Holmes filed a patent for her wearable patch, and in March 2003, she formally dropped out of Stanford – instead using her tuition money to fund as seed funding for what would eventually become Theranos.
What is the controversy around Theranos?
Theranos was founded in 2003 by then-19-year-old Holmes. She had proposed a revolutionary way of testing blood to determine whether someone had cancer or diabetes, or other medical conditions. Users would only need to supply a finger prick of blood instead of a needle.
Holmes, as well as her ex-partner and colleague Sunny Balwani, essentially touted Theranos’ blood-testing system as a breakthrough in health care when it was entirely fake.
The claims helped the company become a Silicon Valley sensation that raised nearly one billion US dollars from investors and at one point anointed Holmes with a 4.5 billion dollar fortune, based on her 50 percent stake in Theranos.
Holmes is picture in the documentary ‘The Inventor: Out For Blood In Silicon Valley’, which detailed Holmes’ ambition to revolutionize bloodtesting through biotechnology, and the spawn of one of the biggest frauds in Silicon Valley
Elizabeth Holmes was 19 when she founded Theranos in 2003. She claimed that her biotech startup would revolutionize healthcare by creating cheap and accessible blood tests that could screen hundreds of diseases with just the prick of a finger
According to former co-workers and acquaintances, Holmes purposefully lowered her voice to an impossibly deep baritone in order to project gravitas in the male dominated tech industry
Much like the ubiquitous iPod, Holmes believed that her Edison disease-detection devices would one day be in every home
Elizabeth Holmes claimed that her ‘Edison’ device (named after Thomas Edison) was a mini lab that could process over 240 tests, from cholesterol to infectious disease
In 2015, President Bill Clinton invited Holmes to speak at a panel for the Clinton Global Initiative annual meeting alongside Alibaba’s Executive Chairman Jack Ma
Holmes also parlayed the buzz surrounding Theranos to speaking engagements on the same stage as former US president Bill Clinton and glowing cover stories in business publications that likened her to tech visionaries such as Apple co-founder Steve Jobs.
But Theranos’ technology never came close to working like Holmes and Balwani boasted, resulting in the company’s scandalous collapse and a criminal case that shined a bright light on Silicon Valley greed and hubris.
A whilst blower went to The Wall Street Journal in 2015, raising concerns about one of Theranos’ devices, the Edison. The publication released an expose on Theranos that revealed that the company’s test results were unreliable. It also said Theranos had been using other companies’ machines to conduct its testing.
Partners and investors immediately cut ties with Theranos and Holmes and the company was later dissolved in 2018. The fallen biotech star was also banned from operating a blood-testing service for two years.
Who invested in Theranos?
The initial success of Theranos and Holmes was found in the raising of hundreds of millions of dollars in venture capital.
While the earliest seed money came through family connections – her father an executive at Enron and her mother a congressional staffer – increasingly powerful men soon came into the fold.
One early backer was her father’s friend, Oracle super-investor Don Lucas, who then brought Oracle founder Larry Ellison on board. Tim Draper, a venture capitalist who saw promise in companies like Tesla, Skype, Baidu, Hotmail, later joined, with Holmes a childhood neighbor and friends of Draper’s daughter.
According to unsealed documents from several lawsuits brought against Theranos, other investors included: the founders of Walmart – the Walton family – who gave $150million; Rupert Murdoch, who invested $125million; the DeVos family office put in $100million.
In addition to the scions of the Cox telecommunications family who lost a cool $100million, there was also the Mexican tycoon Carlos Slim, Robert Kraft and the Oppenheimer family who once owned De Beers diamonds.
Holmes also insulated herself with an authoritative and established Board of Directors. This included former Secretary of State Henry Kissinger, and former Secretary of State, Labor and Treasury, George Shultz. On the board also sat two former Secretaries of Defense: Bill Perry and James ‘Mad-Dog’ Mattis in addition to former senators, Sam Nunn and Bill Frist.
Some of the biggest Theranos investors included: the founders of Walmart, who gave $150million; Rupert Murdoch, who invested $125million; the Devos family office put in $100million. In addition to the scions of the Cox telecommunications family who lost $100million, as well as the Mexican tycoon Carlos Slim, Robert Kraft and the Oppenheimer family who once owned De Beers diamonds
Holmes’ success hinged on a powerful and established board. Sitting on her Board of Directors, were two former Secretaries of State, two Secretaries of Defense, and the Former CEO of Wells Fargo
Who is Sunny Balwani?
Born in Pakistan, but later moving to the US via India, Ramesh ‘Sunny’ Balwani started his career at Lotus Software and Microsoft before joining online auction company CommerceBid.com as its president. Another company Commerce One bought the company out in 2000, with Balwani netting himself $40 million from the sale of his stock.
One former employee described Balwani as ‘a Mark Cuban character’ who made a lot of money ‘being in the right place at the right time’ during the dot com bubble in the 1990s.
He then decided to go back to education, first receiving a Master of Business Administration from Berkeley, University of California, and studying at Stanford before dropping out in 2008.
Holmes met Sunny Balwani when she was just 18 and he was 37. The two met on a Chinese-language immersion trip in 2002. The pair quietly started dating.
Without any experience in medicine, he was hired at Theranos in 2009 to focus on e-commerce but was soon made President and Chief Operating Officer.
Initially, the couple did not disclose their relationship to Theranos investors. After attempting to keep the romance under wraps, their romance soon became obvious to colleagues around them.
Holmes’ former executive assistant, Paige Williams, told the FBI that she only learned Holmes and Balwani lived together after visiting their home in the small suburb of Atherton which they purchased in 2013.
Ramesh ‘Sunny’ Balwani, the former lover and business partner of Theranos CEO Elizabeth Holmes, arrives at federal court in San Jose, California, December 7, 2022
Theranos CEO Elizabeth Holmes and COO Sunny Balwani addressing the company’s staff in 2015 at the company’s then-headquarters in Palo Alto, California
During Holmes’ fraud trial, some 600 pages of private text messages between her and Balwani. The messages revealed the couple’s lavish lifestyle, from trips to Las Vegas, reservations at three star Michelin restaurants, and thousand dollar hotels.
Some of the texts revealed rather ornate romantic love overtures. Holmes wrote in one: ‘We can never forget it tiger… for our kids never forget who we are.’
Another message from Holmes in 2015 said: ‘You are breeze in desert for me. My water. And ocean … Meant to be only together tiger. Madly in love with you and your strength.’
Balwani’s own texts to Holmes also appeared rather effusive: ‘Infinite love for you in every breath.’
As issues at Theranos arose in 2015, the relationship quickly soured.
Amid the fraud trial, Holmes testified that Balwani had sexually and emotionally abused her. She also said he controlled what she ate, how she lived, and would often undermined her confidence in running the company. She alleged that he dictated the clothes she wore, and frequently forced her to follow a strict daily prayer routine and adhere to a punishing diet consisting of green juice that kept her ‘pure.’
Balwani was convicted at a separate trial to Holmes and is also slated to serve time in prison. The former Teranos COO was sentenced to nearly 13 years in prison for his role in what prosecutors argued was a massive fraud perpetuated on the company’s investors and patients.
Why is Elizabeth Holmes going to prison?
The fallen biotech star is set to begin serving her prison sentence in April 2023 after a judge denied her request to remain free while appealing her fraud conviction.
In a ruling denying a motion by Holmes, US District Court Judge Edward Davila wrote that it was unlikely her appeal would succeed. ‘The court does not find that she has raised a substantial question of law or fact that is likely to result in reversal or an order for a new trial of all counts,’ wrote Davila, who presided over Holmes’s trial.
In 2015, then-Vice President Joe Biden heralded Theranos as ‘a laboratory of the future’. He is pictured with Holmes in Newark, California, July 23, 2015
Elizabeth Holmes is now married to hotel heir Billy Evans, an MIT graduate. The couple share two children together
Former Theranos CEO Elizabeth Holmes and her partner, Billy Evans, leave federal court in San Jose, California, March 17, 2023
Holmes was sentenced to just over 11 years in prison for defrauding investors with her Silicon Valley start-up Theranos. She is scheduled to begin serving her time in prison on April 27, 2023.
She was convicted of four felony fraud counts in January of 2022 for persuading investors that she had developed a revolutionary medical device, until the company flamed out after an investigation by The Wall Street Journal.
The closely watched case became an indictment of Silicon Valley.
Holmes had a child shortly before her trial and has had a second since her conviction.
