Anyone still remember Elizabeth Holmes? Yes, the disgraced founder and former CEO of Theranos, the clinical lab-testing company. The tragic story of young wunderkind, rags-to-riches-to-rags and highly ambitious Stanford dropout that had a vision to revolutionise the world but finally succumbed to the uncontrolled lies and crisis and eventually bringing $9 billion startup to hit the iceberg and sank into the ocean of died companies, with it the investors and employees.
Like all other startups (or businesses for that matter), it began with the need to address his or her own problem rather than disrupting the world (like Travis Kalanick who happened to have trouble hailing a cab home, therefore founding the solution with Uber). Holmes uses her fear of needles (and the death of her uncle due to cancer) as the catalyst that sparked the founding of Theranos, a blood-testing company at the age of 19 with the idea of “to reap vast amounts of data from a few droplets of blood derived from the tip of a finger”.
In short, a single drop of blood out, information in.
And so Theranos was officially founded in 2004, right after she dropped out from Stanford Engineering school (she’s supposed to finish her Chemical Engineering degree) and using her own tuition fee to fund Theranos on its early stage, before further raised around $6 million in 2004. By 2010, that number jumped to $92 million, and the charming and vision of her attracted several high-profile investors (like Rupert Murdoch, Betsy DeVos and Carlos Slim Helu) and powerful and well-connected people to be Theranos’ director (like Henry Kissinger and William Perry).
It was a great idea actually, considered that back in 2004 we talked a lot about new startups like Facebook and Twitter. Elizabeth had none of those, although she founded Theranos around the same time as Facebook. Her idea was to democratise healthcare through innovative technology yet simple and elegant enough that anyone can and will use it, instead of trying to create another social network. And to enable that, they had a device called ‘Edison’, which claimed that it can
The announcement of partnership with Walgreen in 2013 not only catapulted Theranos image (and valuation), but also made Holmes as one of the youngest self-made billionaire (with a stake worth around $4.5 billion). Seems like nothing could go wrong either with the company or its founder, and the only way to go is up. But just like the old mantra said, ‘the higher they rise, the harder they fall’.
And Theranos surely fell in a hard, spectacular way similar to Enron or Lehman Brothers years earlier.
John Carreyrou of WSJ was among the first to unravel the secretive nature of Theranos in October 2015, after talking to the ex-employees and combing through email exchange. His report was explosive enough that Theranos threatened a lawsuit towards WSJ to stop the story from being disseminated. And not long after, the downward spiral of Holmes and Theranos continues and things gone from bad to worse. Among his claim? Theranos’ Edison blood-testing machine couldn’t produce accurate results from the sample, and Theranos used other, traditional blood-testing machine to run the test instead. The ‘Edison’ machine apparently not as bright as Thomas Edison.
In a blink of an eye, Theranos and Holmes’ reputation gone south. Holmes were no longer considered as an intelligent woman with patents, experience and connection under her belt, but became more of an incompetent leader. Or worse, a fraudster.
And she make it even worse when she got the opportunity to present Theranos’ 3 years of their scientific and peer-reviewed results to the scientific community in August 2016. Instead of showing evidence and test results, she presented a marketing presentation in a room filled with geeks and PhDs who wants to see what Theranos had claimed so far, that their blood-testing unit is much better than whatever available currently in the market. And also, a new device called ‘miniLab’, which supposed to be a successor to ‘Edison’. The result from audience? Just shrugged and asking a lot more questions, further unveiled whatever lacks with the company and its star founder.
She had turned a golden opportunity into a pile of dung.
The rest was history. Theranos no longer exist as company as of August 2018. And Holmes is no longer the wunderkind that the world is waiting for.
Sneaky or Naive?
So the big question is, does Elizabeth Holmes outright sneaky by defrauding her investors and employees? Or just a case of young entrepreneur tried to disrupt the world but took a wrong turn somewhere? Or took wrong decision and the effect of that wrong decision just snowballed into worse and worse? Very much like a trader or gambler that took a loss and try to recover by betting (or investing) more and more.
I opt for Holmes is not a fraudster. She just a human who made mistakes. Here’s why* (and since this is an opinion, I stand to be corrected, of course).
If she wants to be sneaky and dupe investors and her own employees, she won’t be bold enough to drop an engineering course from major university. She also wouldn’t have to filed several patents (the first was when she was 19) just to show that she meant business. If she wants to dupe others, she wouldn’t let Theranos stayed under the radar for years (until the announcement with Walgreens in 2013, and her fame only really started from there). Have we heard any news that she spent her money or selling shares to buy her a Ferrari? A mansion? Extravagant wedding ceremony? According to the article from The New Yorker, she doesn’t even own television, doesn’t date or doesn’t even went on vacation for ten years!
Would you call someone with that kind of working behaviour as sneaky or manipulative? Workaholic? Obviously. Naive. Maybe? But this is not a work attitude of a fraudster. Or even a manipulative company leader.
Yes, instead of properly deliver scientific data that she claimed that was promised in 2016, the presentation became a commercial instead, by announcing a new miniLab processing unit. Instead of disproving the skepticism of scientific and medical communities how her invention works, she talked about new marketing strategy. You can say she had really squandered the opportunity to turn the things around into her favour and make it worse instead. And the miniLab did not even manage to deliver ‘up to 70 tests from single drop of blood’ as she claimed to be. The device is pretty much like any other conventional system readily available.
In other words, she didn’t deliver what she had promised. But that doesn’t make her a manipulative or sneaky like Bernie Madoff or Joseph Cassano. Maybe more like Lehman Brothers’ Dick Fuld. And even Dick Fuld managed to get his chance of redemption (he joined Matrix Advisors). Why can’t we give the same chance to Elizabeth Holmes? Has anyone lost their lives due to Theranos’ failure or Holmes’ inability to let her technology being peer-reviewed? Did any home got foreclosed and family kicked out because Edison or miniLab failed to deliver what’s being promised?
I truly believe that in trying to run a medtech company at a young age, Holmes either got wrong advice or she failed to grasp what it takes to run one. She tried to imitate her idol, Steve Jobs, whom managed to bring Apple back from almost-certain death. Instead, the only thing Holmes managed to imitate is Steve Jobs’ dressing style (black turtleneck) and the secrecy culture of Apple, not his ability make things happen.
Will She Returns?
I surely hope so. I hope she will return (in real life, not in the movie) and prove that she still has what it takes to bring medtech to us. Imagine one day we never again have to face ‘big, bad needle’, with the least amount of blood drawn and opportunity to run the test from almost anywhere (even at some hypermall) rather than going to some medical centre and gets the result in minutes (if not seconds). Maybe some other existing companies (or maybe the facility already existed somewhere on this planet), or even a new startup will try to finish whatever Holmes had started.
Or better, we should give Holmes a chance to finish what she had started. After all, every saint has a past, every sinner has a future.
*I’m giving my opinion based on my experience of running few failed and some modest success of businesses. Running a business is hard, especially when you were young and innocent. I just reflect my own experience with whatever Elizabeth Holmes faced during those crisis.