She was an internet visionary of the first order – the first and – after five years of fundraising – only woman to own a major technology company worth $10bn.
On 9 August 2012, Elizabeth Holmes – the young CEO of Theranos, a Silicon Valley startup best known for its all-liquid blood-testing systems, founded when Holmes was just 23 – was born. Almost nine years later, her trial in the US federal district court begins this week – with a jury to determine if the founder of Theranos lied about the company’s technology during her bid to raise $9.5bn in funding, raking in her last fortunes before the truth set in.
The questions will arise whether Holmes lied to shareholders, investors and regulators, and if so, whether that was part of a broader scheme to enrich herself or, even more sinisterly, a cover-up orchestrated by a cabal of doctors and their insiders.
Those insiders include José Baselga, Theranos’s former chief scientific officer, who “self-admitted to money laundering, wire fraud, and insurance fraud as well as financial planning and advising fraud at private treatment centers and clinics run by his patient-owned clinic Hyde Group”, in January 2016, according to a complaint by the Securities and Exchange Commission. Baselga, who promised patients up to 80% in savings by using the test at his centers, was found guilty last May by a federal jury in Florida.
Elsewhere, Theranos’s former chief operating officer, Debra Harris, and former director of finance Michael Dixon pleaded guilty in October 2017 to wire fraud, with both expected to be sentenced this May. In the government’s complaint, both admitted that they committed fraud, encouraging investors to believe that Theranos’s technology would be used to diagnose areas of interest, yet later lying to investors about payment data.
Holmes herself, meanwhile, continues to weather a hit in her personal life. The 2013 deposition that became famous for Holmes’s giggling at government employees was meant to be released last year as part of whistleblower retaliation lawsuit, with a release date of late 2017. But, four months after Theranos reached a settlement with a competitor, Theranos’s Theranos Ventures, $300,000 has been “silently” cancelled, as of November 2018. Holmes may not be able to afford it.
The consequences of the loss of investors come into sharp focus at a time when Theranos’s return to the industry appears to be a blow to the industry as a whole. Theranos last week started producing testing in a clean room setting, in an attempt to repair its brand that had been pilloried with concern during a heated public-relations campaign that attracted headlines such as Newsweek’s description of Theranos’s test as “the quickest-tasting woman’s test in history”.
The president of Theranos Ventures, Shannon Quilliot, followed in Holmes’s footsteps after leaving Theranos in 2015; and co-founder of Theranos Therapeutics and Theranos Research Laboratories, Caryn Kauffman, left her role in 2017, with her last day due to fall out of the company in January of this year. At least three other senior staff members at Theranos, such as venture capitalist Lorne Zollinger, have left the company in recent years, with Zollinger leaving after Theranos threatened to sue him over a report in the Wall Street Journal in 2015.