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From $9 Billion to Nothing: How a 19-year-old student researcher almost revolutionized Healthcare Technology at Theranos


Silicon Valley is known for its rich history in housing one of the most innovative companies in the world. In fact, many people across the world come here just for the sake of starting their company. The reason for this is go-getter attitude of companies at Silicon Valley. It was this go-getter environment that influenced a 19-year-old student researcher to revolutionize healthcare technology. This took the company to the absolute peak when it was valued around $9 Billion. However, this success was short-lived as the company has a current net worth of $0.

Elizabeth Holmes: An inventor in the making

In the year 2003, a young researcher at Stanford approached her medicine professor with an ambitious idea. Her fear of needles forced her to restructure the entire blood-testing procedure. She pitched an idea of conducting a blood-test with only a few drops of blood. However, her medicine professor debunked her idea saying “I don’t think your idea is going to work”. That was the beginning of Elizabeth Holmes as a business tycoon. In the following year, she dropped out of Stanford and hard her tuition money to seed her startup idea.


Holmes started Theranos in the year 2003 with an objective to get “vast amounts of data from a few droplets of blood derived from the tip of a finger”. It sounded revolutionary. She pitched the idea to her dean and advisor, Channing Robertson. After liking the idea, the emeritus professor became the first board member of Theranos. The name comes from the combination of “Therapy” and “Diagnosis”.

The next Steve Jobs

One of the things that many investors noticed on Elizabeth was her admiration towards tech mogul Steve Jobs. She deliberately dressed like Jobs to give a good first impression of an inventor. It worked as many people believe it helped her get investors easily. She wears a black turtleneck sweater and speaks in a deep baritone voice. However, her colleagues said her natural voice is a few octaves higher. Her stylized image would, later on, help her sell Theranos to the public.

Theranos’ board of directors

One other thing that Elizabeth excelled in was to rope one of the prominent personalities to her board. In a way, it could be seen as a backup in case things head into the wrong path. Her board was regarded as one of the most illustrious ones in corporate history. She convinced powerful people like former US secretaries of state: George Shultz and Henry Kissinger. She also had the former US Senate, Sam Nunn and former Wells Fargo CEO, Richard Kovacevich. Chairing the board, Elizabeth had a group of people to vest her trust on, in case Theranos failed to deliver. This tells her proactive approach.

“The Edison”: The tech behind Theranos

Elizabeth, undoubtedly, had one of the best visions capable of disrupting the traditional blood-testing method. To back her vision she needed a machine. A machine that could achieve her ambitious vision. This machine was “The Edison”. The name itself is a tribute to the great inventor, Thomas Edison, who found the incandescent light bulb after thousands of failed experiments. The proposed machine was deemed to be way too complicated to be real.

Elizabeth’s Edison is a compact blood-testing machine that looks like a small box. In the machine built too, she showed admiration to Apple. It resembles an Old-school PC tower, similar to what Apple had to offer at the beginning. On the inside, however, it is ugly with thousands of wires going all across the box. The main intent of the machine was to mimic a laboratory assistant in performing an immunoassay. It was akin to a mini robot with hundreds of electric drives and spindles to pick and drop the single drop of blood taken from the patient.

Given the complexity of the machine, the Engineers couldn’t make it work. With a lot of drives going on and off simultaneously, the machine would overheat. Oftentimes, it spills the droplets of blood. It would freeze all of a sudden after breaking the test tubes. It was too dangerous to be used publicly.

Theranos’ unique selling proposition

to back up their idea, Theranos decided to go public in the year 2013. Until then she was functioning the company under stealth mode. The technology, however, was her least concern since her strategy was promising enough to get her across. She had a unique selling proposition.

Heading into commercialization, Elizabeth started partnering with clinics for hosting a booth for Theranos. Using Theranos’ booths, people can “order” blood tests. They pick from a menu having more than 100 tests, listed alphabetically. Concretely, this would allow them to order a la carte without doctor’s prescription. That concerned a lot of doctors. Since they believed that it is important to analyse the patient before prescribing tests for them.

The beginning of the end

With her powerful board of directors, she passed a law in Arizona that would allow Theranos to conduct tests without a doctor’s prescription. Shortly after that, she miniaturised 200 tests into Edison. The company was joyously celebrating their triumph until the results for the first round of tests reached the customers. Test results showed a huge variance. Those who had no diabetic history were given alarming numbers. In addition to that, the test results of infectious disease such as Syphilis were having huge variability. For instance, if 100 people having syphilis get tested at Theranos, only 65 would know that they are positive. The rest of the 35 would be given negatives.

Determined to succeed, Elizabeth houses another testing facility. With this, the samples wouldn’t go through the Edison but would get tested like other laboratories. All of this was happening behind the curtains until an investigative journalist published a piece on the Wall Street Journal, exposing the shortcomings of her technology. As soon as the article reached people, Theranos had already lost its public image following the fake reports.

Criminal charges

Following the vehement public opposition, Elizabeth stepped down as CEO in 2018. Her decision came one day before the federal grand jury’s charges. It was announced that Elizabeth was charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Consequently, she shut her company down in the same year. She spent all of her remaining resources repaying the creditors. As of now, in the wake of the coronavirus outbreak, her trial is postponed. If convicted, she could face up to 20 years in prison. In addition to that, she would also be liable for paying as much as $2.7 million in fine. To sum up, Theranos is currently valued at $0.

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