Elizabeth Holmes: The Story of the Rise & Fall of an American Entrepreneur’s Empire

Gone are the days when men used to run businesses and dominate women in every sector. Today, you can find several women breaking stereotypes and doing better than men. For instance, Oprah Winfrey is a philanthropist, entrepreneur, and TV host worth 260 crore USD. Another woman, Elizabeth Holmes, is a former American businesswoman and the founder of Theranos. Theranos was a privately held health technology corporation.

 It was a breakthrough technology company with claims of having blood tests that required small amounts of blood and could be performed rapidly using automated devices the company had developed. Founded in 2003 by Elizabeth Holmes when she was 19 years old, she raised over $700 million from venture and private investors.

By 2009, Forbes listed Elizabeth Holmes as the youngest and the wealthiest woman in America based on the valuation of her company. After the revelation of fraud, Forbes revised its published estimate of Holme’s net worth to zero. Later, Fortune named her as the ‘World’s Most Disappointing Leaders.’

It was in 2015  when journalism and other investigations revealed doubts about the company’s technology claims. In 2018, the U.S Securities and Exchange Commission charged the company and Holmes for deceiving investors through false claims about the accuracy of the company’s blood-testing technology. She settled the charges by paying a $500,000 fine and also returned over $18 million shares to the company.  

Later in 2018, Grand juries in the United States accused Holmes and former Theranos chief operating officer of nine counts of wire fraud and two counts of conspiracy to commit wire fraud for distributing blood tests with false results to the end-users. 

Early Life of Elizabeth Holmes

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Born on February 3, 1984, in Washington, Elizabeth’s father, Christian Rasmus Holmes IV, was a vice president at Enron corporation. It was an American energy commodity that went bankrupt after an accounting fraud scandal. Later, he served in different positions in government agencies such as the EPA, USTDA, and USAID. 

Her mother worked as a Congressional committee staffer. She joined St. John’s School in Houston. In school, she was interested in computer programming and started her first business selling C++ compilers to Chinese University. Her parents did home tutoring and also attended Stanford University’s Summer Mandarin program.

After the end of the undergraduate year, she worked in a laboratory at the Genome Institute of Singapore and tested for acute respiratory syndrome coronavirus. She filed her first patent application on a drug-delivery patch in 2003. In 2004, she dropped out of Stanford’s School of Engineering and used her tuition money as funding for a customer healthcare technology company.

Founding of the Company

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She founded the company, Real-Time Cures in Palo Alto, California, to democratize healthcare. When she pitched the idea to reap vast amounts of data from a few droplets of blood deprived of the tip of her finger to her medicine professor at Stanford, Gardener responded- “I don't think your idea is going to work" and explained it was impossible to do what Holmes was claiming could be done. 

In 2003, she renamed the company Theranos. She was an admirer of Steve Jobs and copied his style, and dressed in a black turtleneck sweater as Jobs did. In the majority of her public appearances, she spoke in a baritone voice.

How She Funded and Expanded Her Company

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In December 2004, she had raised &6 million to fund the firm. By 2010, she had over $92 million in venture capital. In 2011, Elizabeth Holmes was introduced to the secretary of state of George Shultz. She was recognized for forming “the most illustrious board in US corporate history” over the next three years.

She operated Theranos in stealth mode without a press release until September 2013, when the company announced a partnership with Walgreens to launch-in-store blood sample collection centers. Forbes recognized Holmes as the world’s youngest self-made billionaire and ranked her #110 on the Forbes 400 in 2014. She was valued at $9billion and raised more than $400 million in venture capital.

By the end of 2014, her name appeared on 18 US patents and 66 foreign patents. In 2015, she established agreements with Cleveland Clinic and AmeriHealth Caritas to use Theranos technology.

The Downfall of Her Empire

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The French American journalist, John Carreyrou of The Street Journal, initiated a month-long investigation of Theranos after he received a tip from a medical expert who thought the Edison blood-testing device seemed suspicious. When Holmes knew about the investigation, she initiated the campaign with the help of her lawyer David Boies to stop Carreyrou from publishing. 

In 2015, despite legal threats and strong-arm tactics, he published a bombshell article and detailed how Edison gave false results and revealed that the company had been using commercial machines made by other manufacturers for most of its testing. He continued to expose Holmes in a series of articles, and in 2018, published a book titled Bad Blood: Secrets and Lies in a Silicon Valley startup. 

Later, she denied the claims, calling the journal a "tabloid," and assured that the company would publish data based on the accuracy of its tests. She was featured on Mad Money the same evening when the article was published.

Cramer said, 

"The article was pretty brutal." 

She replied, 

“This is what happens when you work to change things, first they think you're crazy, then they fight you, and then all of a sudden you change the world.” 

In 2016, Centres for Medicare and Medicaid Services sent a warning letter to Theranos after an inspection. They banned Holmes from owning or operating a certified clinical laboratory after the company didn’t fix problems in its California lab in March 2016. In another show, she said- 

“Devastated we did not catch and fix these issues faster." 

In 2016, CMS officially banned her from directing blood-testing services for two years. In 2017, the State of Arizona filed suit against her company, claiming that the company had sold 1.5 million blood tests to Arizonas while misrepresenting facts about those tests. In 2017, the company settled the lawsuit by still agreeing on refunding the costs of the test to the customers. 

She further agreed to pay $225,000  as attorney fees and in civil fines. In 2017, the majority of Theranos shareholders reached an agreement with the company to dismiss potential litigation in exchange for shares of preferred stock. 

In 2018, Elizabeth Holmes settled the SEC lawsuit. The charges included the company’s false claim that its technology was used by the US Department of Defense in tough situations. In 2015, the company had over 800 employees and fired 340 staff members and 155 employees in January 2017. 

Criminal Charges 

After the investigation by the U.S Attorney’s office that lasted for over two years, the grand jury indicted Elizabeth Holmes and former Chief Operating Officer and President on nine counts of wire fraud and two counts of conspiracy to commit wire fraud. After the charge was filed, Elizabeth Holmes stepped down as CEO but remained chair of the board. 

The case is the US vs. Holmes 18-cr-00258, United States District Court for the Northern District of California, and it is set to begin in August 2021. If convicted, Elizabeth Holmes would face a maximum sentence of 20 years in prison with a fine of $250,000 for each count of wire fraud and for the conspiracy count. In August 2020, the Holmes team filed new motions seeking the discharge of seven of the 12 fraud charges. In February 2021, government prosecutors accused Elizabeth Holmes of destroying evidence in Therano’s final days in business. 

Before the collapse of the business, she was appointed as a member of the Harvard Medical School Board of Fellows and was named one of Time’s Magazine Most Influential People in the World. She also received the Under 30 Doers Award from Forbes and was ranked on the list of the Most Powerful Women. 

Personal Life and Affairs

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Elizabeth Holmes was romantically involved with entrepreneur Ramesh Sunny Balwani, who was the former chief operating officer at Theranos. When they met for the first time, Sunny was already married to another woman. In 2002, he divorced his wife and started a relationship with Holmes in 2003. The couple moved into an apartment in 2005. 

The relationship was hidden for a long time as they jointly ran the business. In 2019, Holmes got engaged to William Billy Evans. Later they got married in a private ceremony. She is pregnant and is expecting a child in July 2021. 

Final Words

In 2014, the billion-dollar company and its CEO Elizabeth Holmes were the top in the world. The company was a revolutionized idea initiated by a woman who styled herself as Steve Jobs.

If you browse the internet, then you would find interesting stories of several women who had built businesses and unfortunately failed due to some reason.

Do you know other things about Elizabeth Holmes? If so, then share them below.