Imagine walking into your local Walgreens and, following an almost undetectable pin-prick to the finger and a 10 minute wait, you learn that you are HIV negative, not pregnant, anemic and have a low platelet count. Sounds too good to be true, doesn’t it? That snapshot into easy and inexpensive blood work was a vision that many people found enticing.
The ability to receive information quickly, from a small amount of blood, was the idea behind the company Theranos that held promise for the medical community, venture capitalists and the public. Theranos was founded with the intent to revolutionize access to our own health information.
The brainchild of Elizabeth Holmes, the now well-known Stanford dropout who started the company at the age of 19, is as evasive as she is driven. Her persona, complete with a self-promoted likeness with Steve Jobs, appearance on magazine covers and title as the youngest female self-made billionaire, has embodied an illusion that is nothing more than smoke and mirrors.
Ms. Holmes had an exciting and promising idea and was very good at selling it to the world. Her devoted and unyielding promotion was how the company not only got started, but also thrived, over the last decade. However, people have recently started to pull back the curtain on the now famously secretive company. And, when questions were raised as to what was going on behind Ms. Holmes’s speeches and interviews, answers came up short - very short.
This is, in large part, because Holmes and other leaders at Theranos were better at dodging questions than counting money. In a business that was built solely upon new technology, it became routine to avoid answering a question while staying safely behind the all-encompassing veil of proprietary practices and “trade secrets."
And, this reasoning is one that did not seem to bother investors. For a company that, it turns out, wasn’t even close to what they claimed to be, Theranos raised $400 million. The lynchpin to Theranos being able to revolutionize blood testing lay in their technology called "Edison" - the machine that made it possible to perform blood tests on a tiny amount of blood. However, an October 2015 report in the Wall Street Journal revealed that Edison was being used on only a small fraction of the tests being performed at Theranos – with suspect results. The rest of the testing was done on traditional machines, made by companies such as Siemens AG, using either a larger volume of blood taken the old fashioned way - from a vein in the arm, or by diluting the volume of blood obtained from the finger prick method, an inaccurate method that could increase the likelihood of false results.
Theranos has been able to get away with these unscrupulous practices because they are subject to very little oversight. There is no peer-review process for start up biotech companies. Venture capitalists that specialize in biotech routinely have their own scientists on staff, but their decision to invest is multi-faceted and may or may not hinge on actual data. Sometimes, a good idea is good enough to get people to invest.
Ms. Holmes's time seems to have run out, however. The one regulatory agency that Theranos does answer to is the Centers for Medicare & Medicaid Services, which focuses on both Medicare/Medicaid fraud and the regulation of clinical laboratories. Not only is she forbidden from owning, operating, or directing any lab for at least two years, but also, the company's license to operate its laboratory in California has been revoked.
Henry Kissinger (a Theranos board member) wrote the entry for Elizabeth Holmes's inclusion in TIME magazine's 2015 top 100 Most Influential People. In it, he wrote, "When I was introduced to Elizabeth by George Shultz, her plan sounded like an undergraduate’s dream. I told her she had only two prospects: total failure or vast success."