Start-ups are a key element in the development of new technologies towards a more sustainable world. But Elizabeth Holmes, CEO of Theranos, fooled all the investors with a machine that… never worked.
We are talking about a small device capable of revolutionising disease diagnosis. No more long waits for blood test results or painful drawing of countless test tubes with syringes as big as our anxiety. All it takes is a drop of blood, and our state of health is put under the magnifying glass of a device so futuristic it almost looks like science fiction. This is the dream sold by Theranos, Elizabeth Holmes’ start-up, which promises to turn diagnostic medicine into child’s play. Only, as is often the case with dreams too good to be true, there is one small problem: it doesn’t work.
The visionary genius
We are in the early years of this millennium. Elizabeth Holmes is considered a sort of female Steve Jobs, and not only because of her habit of wearing black turtlenecks. Young, charismatic and with a vision that could change the world, Holmes seems destined to become one of the most influential figures in medical technology. In 2003, at the age of 19, she dropped out of a chemical engineering course at Stanford and used her tuition funds to found Theranos. The goal is – quite simply – to revolutionise the blood-testing industry. This is thanks to an enticing portable device, called ‘Edison’, which allows hundreds of diagnostic tests to be carried out with just one drop of blood taken from a finger.
Holmes is not just a start-up founder; she is a black belt in the art of marketing. She manages to raise hundreds of millions of dollars from high-profile investors, the likes of Rupert Murdoch and Henry Kissinger, to say the least. At its peak, Theranos is valued at around $9 billion – and Holmes holds 50% of the shares. In 2015, she made it to the cover of Forbes, which featured her as ‘the youngest and richest DIY billionaire in the United States’.
But there is a problem: nobody seems to bother to check whether the technology actually works.
Edison’s secret
At the heart of the revolution promised by Theranos is the Edison device. Holmes presents it as a machine capable of performing over 200 different diagnostic tests using a single drop of blood taken from a patient’s finger. Imagine the convenience: no more needles in the veins, no more test tubes full of blood sent to distant laboratories. Just a small prick on the finger, a drop of blood, and within minutes you have results for a wide range of tests, from the simplest such as blood glucose or cholesterol, to more complex ones such as monitoring infections and assessing genetic diseases. Theranos promises that Edison is fast, accurate, and above all, economical. Not only does it offer accurate results in real time, but it is a portable device that can be used anywhere, even in pharmacies or field hospitals, completely revolutionising access to medical diagnosis.
However, beneath the veneer of this gilded promise, a very different reality lurks. Scientists within Theranos are beginning to notice that Edison is failing to live up to expectations. Test results are often inconsistent, sometimes dramatically inaccurate. For example, a blood glucose test can return normal values for a diabetic patient, putting his life at risk. Tests to detect infections or genetic diseases, on which the patient’s clinical course and life itself may be at stake, often give absolutely wrong results.
In the investor presentations, it is no wonder that the volunteers who undergo the test with Edison are also subjected to the same series of tests with traditional machines and systems. In fact, in order to prove that Theranos’ device works, it is necessary to show that it is able to obtain the same results from ‘its’ drop of blood – often with greater precision – that other machines have obtained with traditional methods, which are much more time-consuming and expensive and almost bleed the volunteers dry.
Nobody notices, however, that traditional tests are always performed before those with Edison. But the reason, Elizabeth patiently explains, is that the former are much longer and it takes time to have results to compare with those that the miraculous Edison will produce in an instant.
The first cracks
But Edison, in reality, is not able to perform the promised tests accurately at all. Holmes herself, or some trusted (or desperate) collaborator, puts the results obtained with traditional diagnostic systems into Edison, while continuing to tell the world that everything is done with a single drop of blood and a truly revolutionary device. The truth is that the technology is not only imperfect, it is fundamentally flawed. What was supposed to be the keystone of a new era in diagnostics seems to be a resounding failure.
Holmes does not give up. Faithful to the saying – widespread in the world of startuppers – “fake it till you make it”, which we can translate into a confident “pretend you’ve made it, until you actually make it”, he continues his campaigns to attract new investors and to induce those who have already come on board to relaunch with new investments so as not to see their shareholding diluted. After all, how can one resist the allure of a blonde dressed like Steve Jobs and with overwhelming enthusiasm?
But, as they say, the truth has a strange habit of coming out. In the case of Theranos, it is thanks to a Wall Street Journal investigative journalist, John Carreyrou, who begins to uncover the dark sides of the company. In 2015, Carreyrou published an article questioning the reliability of Theranos’ technology. The article is based on testimonies from former employees and internal documents showing that the technology is nowhere near as functional as Holmes, and his team, have led them to believe.
The collapse
After the publication of the article, the situation rapidly precipitates. More serious government investigations are launched, and the Food and Drug Administration begins to take a closer look at Theranos’ practices.
It turns out that, despite promises, Edison has never been able to perform the promised tests accurately. It turns out that, at Theranos, they use conventional blood-testing equipment to perform the tests, while they continue to tell the world that everything is done with a single drop of blood. If Edison is tested before performing the conventional tests, his results are only good for … playing the Lotto.
In 2016, the Centers for Medicare & Medicaid Services cancelled Theranos’ lab licence and banned Elizabeth Holmes from owning or operating a medical lab for two years. Shares in the two pharmaceutical giants Walgreens and Safeway – which had bet $400 million and $140 million respectively on Theranos – plummet, and Elizabeth’s company begins to fall apart. Investors, who had once seen Holmes as a visionary, realise they have been duped.
The showdown
Knots come to the comb sooner or later, even if they are long and blonde. In 2018, Elizabeth Holmes and her boyfriend Ramesh ‘Sunny’ Balwani, Theranos’ chief operating officer, are indicted for fraud. Holmes is accused of deceiving investors, doctors and patients. During the trial, a disturbing picture emerges: the corporate culture at Theranos is based on secrecy, intimidation and constant pressure. Employees are often silenced and crucial information is hidden. Holmes, who was once seen as a role model, is exposed as a fraud. In 2022, she is sentenced to over 11 years in prison for fraud, marking a dramatic and painful fall for someone who was once considered one of the brightest minds of her time.
The power of illusion and the thirst for innovation
How could a fraud of such magnitude have gone unnoticed for so long? The answer lies in a combination of factors: Holmes’ charisma, social pressure and a desperate desire to believe in a better future. Theranos represents a promise that many want to see come true: a future where medical tests are fast, painless and cheap, accessible to anyone, anywhere. This desire for innovation, combined with blind faith in a charismatic figure, creates an environment in which doubt is silenced and scientific verification is considered superfluous.
The irony of a missed revolution
The Theranos case has profound consequences not only for the investors and patients involved, but also for trust in science and technology. When a gigantic fraud like this is uncovered, it is not only investors’ money that disappears, but also the credibility of the entire industry. Trust is a crucial element in the development of new technologies, especially in the medical field. Without trust, it is difficult for scientific innovations to gain the support they need to move from the laboratory to real life.
There is a bitter irony in all this. Elizabeth Holmes wants to be a revolutionary, but ends up destroying the very thing she is trying to build: a future where technology improves people’s lives. Her story is a reminder of the importance of verification and transparency in science and technology. It is easy to be captivated by the promises of rapid innovation, but true revolution takes time, effort and, above all, honesty.
Medical start-ups: a double-edged sword
Start-ups, especially in the medical sector, are a vital engine for innovation and progress. They are often the place where the boldest ideas take shape and become reality. However, the Theranos case reminds us that when fraud creeps into the process, it is not only investors who pay the price. The credibility of science, patient safety and progress towards a more sustainable future can be severely damaged. Trust in the scientific method and technological innovation is crucial; and we must be vigilant that it is not undermined by empty promises and fraudsters in black turtlenecks.