Elizabeth Holmes, a young girl with lofty ambitions was Elizabeth Holmes. Elizabeth Holmes wanted to transform the world.
She will show you how a single pinprick can transform your medical practice.
In the event, Holmes showed only that there is no shortage of gullibility and greed among America’s great and good and super-wealthy.
Bill Clinton, Rupert Murdoch, former U.S. Defence Secretary James ‘Mad Dog’ Mattis — America’s most feted general — and two ex-U.S. Henry Kissinger, George Shultz and George Shultz were both secretaries of state, among others, who fell for the charming blonde with her piercing eyes, deep voice, and amazing powers of persuasion.
At the age of 19, Holmes had set up Theranos, one of Silicon Valley’s most successful new business ventures, raising billions of dollars and being hailed as the ‘next Steve Jobs’ after the mercurial co-founder of Apple.
The portable, inexpensive blood-testing device that she developed was life-saving and could be used to quickly screen hundreds of illnesses.
At the age of 19, Holmes (pictured) had set up Theranos, one of Silicon Valley’s most successful new business ventures, raising billions of dollars and being hailed as the ‘next Steve Jobs’ after the mercurial co-founder of Apple
She even described it as a ‘gift from God’ although it would turn out to be little more than a box of expensive junk.
After a lengthy four month trial, Holmes was found guilty by a San Jose federal jury of fraud. Holmes was found not guilty on the remaining four charges. A jury could not decide on the third. Each charge can carry a maximum of 20 years prison. But they will likely be served together.
In finding her guilty of defrauding investors, jurors accepted the prosecution case that Holmes knowingly lied about her product — crucial to proving the fraud charges.
Holmes and her legal team tried to convince jurors throughout that trial she was noble.
Her mistake, she claimed, had simply been to believe her company’s doctors and scientists when they assured her the technology worked.
Holmes gave birth to her second child in January last year and showed no emotion as she listened to the verdicts. Before leaving court, Holmes hugged Billy Evans (her husband and hotel chain heir), her parents, and her friends.
Rupert Murdoch (pictured) invested $125 million
The ex-lover of her business will appeal the charges and she will be free until a sentencing date has been set. The trial of her former business partner — and ex-lover — Ramesh ‘Sunny’ Balwani, on similar charges will start in a few weeks.
During her trial, Holmes sensationally claimed she had gone to Balwani, 20 years her senior, for comfort after being raped while a student at Stanford University — only for him to subject her to emotional and sexual abuse over many years, which she said had impaired her judgment. The claims were denied by him.
Holmes’s conviction was greeted with particular relief yesterday by Rochelle Gibbons, the widow of Ian Gibbons, a Cambridge-educated British biochemist who became Theranos chief scientist in 2005.
Doctor Gibbons killed himself in 2013, convinced Holmes was going to fire him for questioning her claims about the blood-testing machines. Holmes did not offer any condolences after his death. Instead, he had an underling call his widow and demand that company property be returned.
‘Ian would be very happy,’ Mrs Gibbons told the Mail. ‘He was a very kind, tolerant person but he hated her so much — she was a sociopath, a narcissist, a bully and a liar. When he realised she was pushing things on patients that were fraudulent, it destroyed him.’
Mrs Gibbons knew Holmes in the early years of Theranos before she reinvented herself to appeal to would-be Silicon Valley investors — losing weight, dyeing her mousy brown hair blonde, cultivating a lower male-like voice, favouring black turtle necks as Jobs did, and developing a far more flamboyant personality. Like the ascetic Jobs she spoke of her modest lifestyle, which consisted only in a bed and a pillow.
While Rochelle Gibbons said she believes Holmes genuinely believed in her miracle product ‘for a very brief time’, she fatally came to fall her own hype. ‘She couldn’t escape her persona as a wunderkind and got sucked into it,’ she said.
Holmes’s story is now being made into a film starring Jennifer Lawrence and a TV mini-series with Amanda Seyfried, and it is not difficult to see why Hollywood should be enthralled by a saga that has been described as ‘Silicon Valley’s Greatest Disaster’, revealing the perils of hype and hubris in the avaricious $2.4 trillion technology industry.
After claiming that she experienced a brainwave, Holmes was enrolled at Stanford to study chemical and electrical engineering. She envisaged a device the size of a computer printer — which she called ‘The Edison’ — that would save millions of lives.
‘Don’t worry about the future,’ Bill Clinton (file image from 2015 with Holmes) gushed at a technology seminar as he applauded her. ‘We’re in good hands’
With blood from just a single pinprick on a patient’s finger, it could rapidly analyse the sample, detecting hundreds of diseases and substances, from cancer to cocaine.
Her parents were ambitious (her father was a director at Enron, the scandal-hit oil company) and she was raised in Washington DC.
Holmes dropped out from university when her father, a venture capitalist, offered to invest in her business in 2003. Holmes was confident, believable and worked hard to secure more backing for a venture with astonishing claims that few seemed to doubt.
Drawn from the highest ranks of business and government, this coterie of powerful older men proved very useful in allaying scepticism over Holmes’s lack of experience.
What was it that attracted them like honey to nectar? Perhaps it was her engaging account of how she’d been inspired by her hatred of injections. It was painful and expensive to give blood. It would be stress-free, and it would cost less. It was more likely charm and glamour. Her charm and charisma were evident in an industry without both. It was led by geeky men with low social skills.
Holmes was able to spend lavishly as funding began pouring in. She flew by private jet and spent $1 million per month on rent for a Palo Alto HQ. Interviews revealed that she was almost obsessed with religious zeal.
‘She has an ethereal quality, she’s like a member of a monastic order,’ enthused Henry Kissinger.
Holmes was also open to using Holmes’ sex appeal. Ian Gibbons told his wife she would ‘unbutton her blouse at board meetings and be really flirtatious with the older guys,’ Mrs Gibbons recalls. ‘I think she charmed the pants off them.’
Kissinger was soon joining fellow senior statesman George Shultz, and General James Mattis (later Donald Trump’s Defence Secretary) among the luminaries on the Theranos board of directors.
Rupert Murdoch, who invested $125 million, Betsy DeVos — Trump’s Education Secretary — and the Walton family, the multi-billionaire owners of retail giant Walmart were among those who helped provide the nearly £700 million that Theranos attracted in investment, along with billionaire businessmen Robert Kraft and Larry Ellison, founder of the technology company Oracle.
Joe Biden, Vice President at the time, visited her gleaming, high tech operation and called it ‘the laboratory of the future’
Within a dozen years of establishing Theranos, Holmes was running a supposedly revolutionary rapid blood testing company valued at $9 billion (£6.6 billion).
The company had 800 staff and, given the fact Holmes owned half of it, Forbes estimated she was worth $4.5 billion, making her the world’s youngest self-made female billionaire. She graced the cover of myriad magazines — she loved to be photographed in a white lab coat — and was included in Time magazine’s list of the 100 most influential people. Her appointment as a Presidential Ambassador for Global Entrepreneurship was granted by Obama’s administration.
Even the sort of experts who really should have known better were sucked in by the hype — with Harvard Medical School appointing her to its Board of Fellows.
There was no shortage in influential, wide-eyed laymen who took their cues form each other and were eager to share her genius. ‘Don’t worry about the future,’ Bill Clinton gushed at a technology seminar as he applauded her. ‘We’re in good hands.’
Holmes, he assured his audience, was ‘wildly popular among people who follow things like this’.
Joe Biden, Vice President at the time, visited her gleaming, high tech operation and called it ‘the laboratory of the future’.
Kissinger (pictured) was soon joining fellow senior statesman George Shultz, and General James Mattis (later Donald Trump’s Defence Secretary) among the luminaries on the Theranos board of directors
And yet if any of these wise men had looked a little more closely, the warning signs were there — not least Holmes’ technical knowledge which an interviewer described as ‘comically vague’ and, according to Mrs Gibbons, her academic struggles at Stanford. Edison was not the only subject she would avoid, because the information could be commercially confidential or changed.
Many Theranos staff knew something wasn’t right. They saw that Holmes was so blase about the science behind The Edison that she allowed her Siberian husky puppy to run amok through the laboratory, ignoring her chemists’ protests that dog hair could contaminate the blood samples.
Accompanied everywhere by armed guards who codenamed her ‘Eagle 1’, Holmes was so secretive that employees never even knew whether the company was flourishing or on the brink of collapse.
In an apparent attempt to prevent scientists discussing their research with one another, she discouraged them from doing so. Experts who said that it was physically impossible to perform all of her claims were immediately fired and threatened by legal action if the truth is outed.
Ex-staff have shared their memories of Holmes as the leader of a hostile work environment that included bullying and paranoia. Former receptionist Cheryl Gafner described Holmes — simply called ‘E’ by underlings — as so cold-blooded she might have been ‘hatched out of a pod’.
But even when a lucrative deal to supply Edison machines in Walmart pharmacies in 2013 proved a flop — the machines were never installed and the blood testing was instead done by old-fashioned needles and then tested in conventional labs — no one challenged her.
The Elizabeth Holmes tale is an example of high-tech times. But will Silicon Valley investors and foolhardy Theranos shareholders learn valuable lessons from this fallout?
‘We knew Theranos to be a deceptive organisation, but we had to chill out and not say anything about it because they would make our lives difficult,’ said Justin Maxwell, a former designer at the company.
But in the end the presence of so many venerable names on her board and investor list couldn’t protect her forever.
It all began to unravel in late 2015. The Wall Street Journal ran stories that suggested the company wasn’t all smoke and mirrors, thanks to a whistleblower. The Edison simply didn’t work and Theranos had instead been using other laboratories and other brands of machines to do its blood testing.
According to doctors and patients, Theranos blood tests weren’t merely unreliable but so inaccurate they could be lethal.
Holmes was unflinching. ‘This is what happens when you work to change things. First they think you’re crazy, then they fight you,’ she told an interviewer. However, facing several lawsuits from investors as well regulators and partners, she was on the verge of filing for bankruptcy.
In March 2018, the Securities and Exchange Commission charged Holmes and her former business partner Balwani with what it called ‘an elaborate, years-long fraud’.
The allegations were not denied or admitted by her, but she settled the matter and paid a $500,000 penalty.
Three months later, the pair faced criminal charges that accused them of a ‘multi-million dollar’ scheme to defraud patients and investors. Theranos closed its doors in September 2018.
The Elizabeth Holmes tale is an example of high-tech times. But will Silicon Valley investors and foolhardy Theranos shareholders learn valuable lessons from this fallout?
Don’t bet on it. Holmes certainly wasn’t the first to try to succeed by following the Valley creed to ‘Fake It Till You Make It’, she won’t be the last. The rest will be up to credulousness, avarice, and credulousness.