Theranos: The Most Evil Business In The World
Summary
TLDRElizabeth Holmes, once hailed as the youngest self-made female billionaire, founded Theranos with the promise of revolutionizing healthcare through a single-drop blood testing device. Despite early skepticism from experts, she secured funding and gained media attention. However, the technology was faulty, leading to inaccurate test results and endangering lives. Holmes engaged in elaborate deceptions to secure further investment, including misleading demonstrations and inflating revenue predictions. Theranos' partnership with Walgreens and Safeway to offer blood tests in stores put the public at risk, as the machines were not fully functional. Holmes' fall from grace highlights the dangers of unchecked ambition and the importance of transparency in the medical industry.
Takeaways
- 💡 Elizabeth Holmes had a vision to revolutionize healthcare with a device that could test for diseases using just a drop of blood.
- 🎓 At 19, she dropped out of Stanford University to start Theranos, a company that aimed to change the world with its innovative blood testing technology.
- 💸 Despite warnings from experts that her idea might not be feasible, Holmes secured investments by presenting a persuasive vision and confidence.
- 🔬 Theranos developed a prototype machine called Edison, which was supposed to perform blood tests with high speed and accuracy but was found to be highly unreliable.
- 🚫 Holmes engaged in elaborate deceptions to convince investors and the public of Edison's capabilities, even when the technology was not ready for use.
- 🔍 The company's culture was marked by extreme secrecy, with employees required to sign non-disclosure agreements and being monitored closely.
- 🗣️ Holmes and her second-in-command, Sunny Balwani, fostered a culture of fear and intimidation, leading to high staff turnover and a lack of transparency.
- 🏥 Theranos partnered with Walgreens and Safeway to offer blood tests in stores, but the machines were still not functioning properly, leading to further deceptions.
- 🚨 The use of Theranos machines in stores put patients at risk due to the potential for inaccurate test results, which could have serious health implications.
- 🏆 Despite the internal chaos, Holmes was celebrated as a visionary and was named the world's youngest self-made female billionaire by Forbes.
Q & A
What was Elizabeth Holmes' initial ambition when she was nine years old?
-Elizabeth Holmes initially said she wanted to be a billionaire when she was nine years old.
What was the original name of Elizabeth Holmes' company, and why was it changed?
-The original name of the company was 'Real-Time Cures,' but it was changed to 'Theranos' after Elizabeth Holmes worried that people would be skeptical of the word 'cures' and she didn't want to attract suspicion.
What was the vision behind the name 'Theranos'?
-The name 'Theranos' is a combination of the words 'therapy' and 'diagnosis,' reflecting Elizabeth Holmes' vision of a new approach to healthcare.
How did Elizabeth Holmes raise initial funds for Theranos?
-Elizabeth Holmes raised initial funds for Theranos by leveraging her well-connected family background and her persuasive sales skills to attract investors.
What was the main issue with the prototype machine called 'Edison'?
-The main issue with the 'Edison' prototype was that it rarely worked correctly and had an extremely high error rate, despite claims of making blood tests faster, cheaper, and easier.
How did Elizabeth Holmes deceive investors about the capabilities of the Edison machine?
-Elizabeth Holmes deceived investors by creating an elaborate demonstration where she would take a small amount of blood from the investor, then secretly replace the Edison machine with traditional lab equipment to produce test results, making it seem as though the Edison machine was functioning properly.
What was the consequence for employees who questioned Elizabeth Holmes' methods or the technology's efficacy?
-Employees who questioned Elizabeth Holmes' methods or the technology's efficacy were often fired due to a culture of fear and a policy of treating questions as disloyalty.
Who was Sunny Balwani and what was his role in Theranos?
-Sunny Balwani was the number two in command at Theranos, in a relationship with Elizabeth Holmes. He was known for his aggressive and intimidating management style and was responsible for many of the firings within the company.
How did Theranos handle the secrecy of its operations and technology?
-Theranos enforced a culture of extreme secrecy, requiring all employees and even visitors to sign non-disclosure agreements, blocking internal communication, and using legal threats and lawsuits to silence anyone who might speak out about the company's operations.
What was the significance of the partnerships with Walgreens and Safeway for Theranos?
-The partnerships with Walgreens and Safeway were significant because they allowed Theranos to offer its blood tests in stores, which helped raise additional funding and credibility, despite the technology not being fully functional.
How did Elizabeth Holmes and Theranos handle the launch of their blood testing services in stores?
-Despite the technology not being fully functional, Elizabeth Holmes proceeded with the launch, using workarounds such as collecting blood in stores and sending it to a private lab, and using third-party machines to perform most of the tests, all while pretending it was Theranos' own technology.
Outlines
🚀 The Rise and Fall of Elizabeth Holmes
Elizabeth Holmes, once hailed as the youngest self-made female billionaire, is revealed to have built her fortune on deception. She founded Theranos, a company promising to revolutionize healthcare with a device that could test for diseases using just a drop of blood. Despite the company's claims, the technology was flawed, and Holmes engaged in elaborate deceptions to secure investments and partnerships. The narrative outlines Holmes' early ambitions, her persuasive tactics, and the company's rapid rise in valuation, all predicated on a lie.
🔍 The Deceptive Practices of Theranos
Theranos' operations were shrouded in secrecy, with employees required to sign non-disclosure agreements and a culture of fear cultivated by Holmes and her second-in-command, Sunny Balwani. The company's prototype, the Edison, was a failure, but Holmes continued to deceive investors and the public about its capabilities. Balwani, with no medical background, was ruthless in his management, using surveillance and intimidation to maintain control. Despite the company's internal chaos, Holmes maintained a public facade of success, securing partnerships and investments.
🏥 Theranos' Public Launch and Its Consequences
Despite the lack of a functional product, Theranos entered into partnerships with Walgreens and Safeway to offer blood testing services in stores. Holmes continued to deceive, using third-party machines to perform tests and pretending they were done by Theranos' technology. The company's practices were not only dishonest but also potentially dangerous, as inaccurate test results could have serious health implications for consumers. The narrative highlights the risks Holmes was willing to take for the sake of maintaining the company's image.
🏆 The Peak of Elizabeth Holmes' Fame
Despite the internal turmoil and the fraudulent nature of Theranos' operations, Elizabeth Holmes was celebrated as a successful entrepreneur. In 2014, Forbes recognized her as the world's youngest self-made female billionaire, with a net worth of $4.5 billion. This section of the narrative underscores the contrast between Holmes' public image and the reality of her company's fraudulent activities, raising questions about how such a deception could persist for so long.
Mindmap
Keywords
💡Theranos
💡Elizabeth Holmes
💡Blood testing
💡Innovation
💡Deception
💡Investors
💡Regulators
💡Non-disclosure agreements (NDAs)
💡Sunny Balwani
💡Forbes
💡Self-made billionaire
Highlights
Elizabeth Holmes had a vision to revolutionize healthcare with a single-drop blood test.
Theranos was valued at around $9 billion, with Holmes as the youngest self-made female billionaire.
The company's technology was based on a prototype machine called the Edison, which was claimed to perform hundreds of tests from a single drop of blood.
Investors were drawn to Theranos due to Holmes' persuasive salesmanship and confidence, despite many not having medical backgrounds.
The Edison machine rarely worked correctly and had a high error rate, contrary to what was presented to investors.
Holmes created an elaborate deception for investor demonstrations to hide the machine's faults.
Theranos' financial officer was fired for questioning the company's misleading practices and revenue predictions.
The company's culture involved high staff turnover due to a policy of firing anyone who raised concerns.
Theranos operated with extreme secrecy, including non-disclosure agreements for all employees and tight control over information.
The company's second-in-command, Sunny Balwani, was also Holmes' romantic partner, a fact they kept secret from the board.
Theranos announced partnerships with Walgreens and Safeway to offer blood tests in stores, despite the technology not being fully functional.
The company used third-party machines and normal blood samples to perform tests, contrary to their claims of a revolutionary technology.
Theranos faced regulatory issues and had to use a loophole to avoid in-store testing regulations.
Inexperienced staff and improper handling of blood samples led to inaccurate test results and potential risks to patients.
Despite internal chaos, Holmes continued to secure funding and gain public recognition, being named Forbes' youngest self-made female billionaire.
Theranos' operations were fraught with ethical concerns, including putting patients at risk with inaccurate blood test results.
Transcripts
first they think you're crazy then they
fight you and then all of a sudden you
change the world what do you want to be
when you're older doctor teacher
musician nope when nine-year-old
elizabeth holmes was asked this question
she immediately said i want to be a
billionaire and she succeeded elizabeth
would become the youngest self-made
female billionaire after starting a
company called theranos that claimed it
was going to revolutionize healthcare
and change the world the company became
worth around 9 billion
and elizabeth was on the cover of
magazines being hailed as the next steve
jobs the only problem
is it was all a lie
this is the story of why and how
elizabeth holmes scammed her way to the
top and how it all came crashing down
can you tell us a secret
i don't have many secrets
at the age of just 19 elizabeth holmes
dropped out of stamford university to
start her own business it was originally
called real-time shows but elizabeth
changed the name after worrying people
would be skeptical of the word cures and
she certainly didn't want to attract any
suspicion so she instead renamed it
theranos a combination of the words
therapy and diagnosis elizabeth had a
phobia of needles and had a vision where
you could simply prick your finger and
with a single drop of blood test for
hundreds of different diseases since
elizabeth came from a well-connected
family she was able to raise some
initial money to get the company up and
running to pursue this idea she was also
a very persuasive saleswoman and
investors were drawn in by her vision
and confidence what was noticeable
though is that people who invested did
not have medical backgrounds in fact
some of the experts in this field that
she spoke to specifically warned her
that her idea most likely wasn't even
possible but elizabeth ignored those
warnings and began hiring a team of
scientists to help her unsurprisingly
progress on this revolutionary new blood
testing device was a lot slower than
she'd hoped so she demanded that
research start happening 24 7 meaning
some employees would have to start
working through the night the lab
manager thought this was a bad idea as
they were already so overworked so
elizabeth hired a second team and pitted
them against each other the team that
made the least progress would be fired
by 2006 the engineers had created a
prototype machine called the edison
here's how it worked you put a drop of
blood on a small cartridge and slide it
into the machine which runs the test the
data is then wirelessly transmitted via
the internet to a lab where it's
analyzed and then a report is sent back
basically the machine would make blood
tests much faster cheaper easier and all
from a portable device you could use in
the comfort of your own home at least
that's what the machine claimed to do
but it very rarely worked and had an
extremely high error rate it was clear
to everyone working on the machine that
it needed a lot more work before it was
ready when i was there we could not
complete any
test accurately on the devices that we
were manufacturing the problem was that
by this point theranos had burnt through
its initial funding and they needed more
money fast so elizabeth began sweet
talking more investors bragging about
this revolutionary new machine they'd
created and claiming that it worked
perfectly when investors asked to come
see the machine in action elizabeth
created an elaborate deception so they
didn't realize how faulty the machine
was they would get their finger pricked
with a small amount of blood then they'd
be let out of the room they'd go have a
meeting go have lunch whatever and
at which point an engineer would run in
the room grab the cartridge and bring it
out to the lab
so was the edison doing the testing no
absolutely not who was doing the testing
it was scientists at the bench when the
investors returned to the lab to see
their results they just assumed the
machine had worked perfectly but the
test hadn't even been done using the
machine the demonstration was all a sham
but the investors were fooled many of
them were rich older men who seemed
especially taken in by elizabeth when
the company's financial officer found
out about this he told elizabeth they
had to stop doing fake demonstrations
because it was misleading investors to
think the machine worked much better
than it really did and not just that
elizabeth had also been asking him to
significantly increase the revenue
predictions to make the company's
finances look much better than they
really were when the financial officer
confronted elizabeth about all this her
expression immediately turned ice cold
and she told him he should leave right
now
and she didn't mean leave her office she
meant leave the company for daring to
push back against what she was doing he
was fired and to make things even worse
elizabeth never hired another cfo to
replace him meaning there was nobody to
question the absurd revenue predictions
she was given to investors so she could
easily make up whatever numbers she
wanted and it worked theranos raised yet
more millions of dollars in funding
however the chief financial officer was
just one of many in a long line of
employees to get fired from the company
for example when elizabeth decided to
start doing a trial of the edison
machine on a group of terminal cancer
patients several employees came to her
to tell her she shouldn't be doing this
since the machine was constantly
breaking and giving wildly inaccurate
results and they said it wasn't fair to
use real patients as guinea pigs but she
continued with the trial anyway and
anyone who spoke out against her in any
way was fired when someone questioned
her she took it as disloyalty and would
stare at them without blinking until
they broke the silence because of this
culture of firing anyone who raised
concerns staff turnover was ridiculously
high and elizabeth ended up being
surrounded by yes men who had blind
loyalty to her or people who are simply
too terrified to speak up for example
the company hired quite a few workers
from overseas who had a working visa and
would have to leave the country if they
got fired so they didn't speak up about
their concerns it actually wasn't
elizabeth who did most of the firing
though instead it was the number two in
command at the company a man named sunny
balwani he'd come from a software
background so knew very little about
medicine and would often randomly repeat
technical terms he overheard to make it
sound like he knew what was going on
the reason he was second in command was
because him and elizabeth were in a
relationship but this was yet another
secret in fact elizabeth outright lied
to the board about this since she knew
that hiring her partner for the second
in command role was a clear conflict of
interests sunny had met elizabeth when
she was just 18 years old and he was 37
and they'd been dating ever since
however sunny was described by employees
as a tyrant he was brutal aggressive and
intimidating to employees he watched
everyone on cctv to check how long they
were working and angrily shouted at them
if they weren't working lots of overtime
when he found out one employee who had a
family was only working the minimum of
eight hours a day he told him he'd fix
him he made several employees cry with
his interrogations and abuse he tracked
everything they did looking through
their browsing history and even
installing a key logger on their
computers to track every word they typed
including the company's receptionists
this was all part of the company's
insanely secretive culture
employees all had to sign non-disclosure
agreements when they joined in fact
anyone who even entered the theranose
building had to sign one and would be
accompanied to all times by security
guards even to the bathroom employees
also weren't meant to mention theranos
on their linkedin bio or even talk to
their families about what they did
theranos had even blocked the chat
feature on the company's computers so
you couldn't message co-workers on other
teams meaning the company was very
siloed off and divided this was
extremely impractical because it meant
the chemistry team and the engineering
team weren't in communication which
massively slowed research down theranos
constantly claimed that this secrecy was
simply to protect trade secrets but in
reality it was to cover up all the lies
about the state of their technology and
the way the company was being run
and when anyone was fired or if they
quit which also happened very frequently
they were forced to sign yet another
non-disclosure agreement confirming they
wouldn't talk about anything at all that
had happened whilst the theranos they
couldn't even speak to any of their
colleagues on their way out they had to
leave immediately theranos had hired one
of the top law firms and threatened to
sue anyone who mentioned anything about
what they'd seen at the company most
people were just relieved to get out of
there so they reluctantly signed
whatever they wanted to avoid more legal
threats
as a precaution sunny would also ask the
head of i.t to dig up dirt on employees
that could be used as leverage against
them in future if they ever spoke out
there was one incident where an employee
refused to sign an nda when he quit
though and sonny called the cops on him
claiming he'd taken company property but
when the police arrived to ask what he'd
actually stolen suddenly blurted out he
stole property in his mind so to
summarize it was an anxious paranoid
work environment and yet despite that
many in the company believed they truly
were working towards something
revolutionary elizabeth constantly
reminded employees how impactful their
technology would be in making tests more
accessible to everyone it would help
detect a variety of diseases including
cancer and thus saving lives there was a
strong driving mission and elizabeth had
them all convinced they were going to
change the world
you want it to be true so badly i was
working with these devices
every single day
and she could still kind of convince me
and so whilst many employees did have
concerns that the device they'd created
still wasn't working the way elizabeth
claimed it did obviously theron's
wouldn't actually start letting the
general public use these machines until
they were properly working
right
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[Applause]
in 2013 theranos announced a partnership
with walgreens and safeway where they
would start offering theranose blood
tests in their stores for the first time
the general public was going to be able
to use theranos's machine elizabeth
seemed to expect the machines would be
fully working by the time they launched
in stores but they weren't they were
still breaking and producing inaccurate
results did this stop elizabeth from
going ahead absolutely not walgreens and
safeway were putting up a lot of money
for this deal a lot of which theranos
had already spent
plus by rolling out their machines in
stores it helped elizabeth to raise
around 400 million dollars more from
investors who are now even more
convinced that everything with the
company seemed to be going great their
logic was that there's no way fairenos
would be rolling out blood tests in
stores unless their technology worked
just as well as they said it did so
wealthy investors threw yet more money
in without asking too many questions
because they didn't want to miss out on
investing in such a seemingly
revolutionary company and because many
of these investors were high-profile
names like rupert murdoch and the walton
family it gave theranos even more
credibility now the idea with this deal
with walgreens and safeway was they'd
set up theranose booths in their store
where people could get a blood test done
with just a brick of their finger and
essentially choose from a menu of which
things they wanted to test for however
this had meant to begin in 2011 but
because the machines didn't actually
work properly yet elizabeth kept trying
to stall for time there was excuse after
excuse to delay the launch date often
for completely bizarre reasons like she
once said that they were behind schedule
because of an earthquake in japan even
though that had absolutely no impact on
their business
but anyway after almost two years of
delays eventually elizabeth couldn't
stall any longer and she had to make a
decision admit the technology didn't
work and lose the deal with walgreens
and safeway which would mean refunding
many millions of dollars
or just put the faulty machines in
stores and hope it somehow all works out
this was a turning point up until now
elizabeth had deceived investors but now
by letting the general public use these
faulty fairness machines she was
literally putting lives at risk if
someone got a blood test done on a
theranose machine and it gave the wrong
results it could be fatal they can
either be diagnosed with something they
don't have or think their results are
fine but really they have a serious
issue
but elizabeth pressed on anyway and
walgreens and safeway started offering
theranose blood tests in their stores of
course because the machines weren't
working properly theranos couldn't get
approval from regulators for in-store
testing so as a workaround instead of
actually doing the blood test in store
like elizabeth had promised walgreens
and safeway they would do theranos
instead simply collected the blood in
store and physically sent it off to a
nearby lab they'd set up this loophole
meant they didn't need to go through the
same regulatory checks but not just that
one of the biggest selling points of
theranos was meant to be that you only
needed a small drop of blood from a
finger prick but when people actually
arrived to get their blood tested they
often had their blood taken with a
syringe the traditional way
and whereas the results were supposed to
be ready in just a few hours instead the
results often took weeks
basically the whole thing was advertised
as some revolutionary experience yep it
seemed just like a normal blood test
and the reason for that is it was just a
normal blood test
in order to give the perception
everything was going fine theranos were
taking normal blood samples and using
third-party machines from other
companies to do most of the blood tests
but because they were shipping the blood
off to a private lab people didn't
realize theranos were hardly even using
their own technology fairness had
promised their machine could perform 192
different tests but in reality they
could only perform 12. in fact it was
later discovered that over half of the
tests they promised weren't even
theoretically possible and of the 12
things their machine could test for most
didn't work very well
so theranose was performing tests on
third party machines and pretending it
was their own results and because of
elizabeth's insistence on using a small
amount of blood they had to dilute the
blood samples to be able to run them on
the commercial testing machines which
reduced the accuracy of the results but
it gets much worse the lab there are
notes had set up near the stores to
process the blood samples had been very
hastily put together and many of the
staff they'd hired were very
inexperienced the people who were more
experienced tended to quit or get fired
for criticizing the way things were done
for example when one lab director quit
over concerns that blood samples weren't
being handled properly they were
replaced with a dermatologist one of the
biggest problems was that in order to
send the blood samples from the stores
to the lab theranos was simply using
fedex and this meant parcels often
overheated causing the blood to clot so
not only were theranos completely lying
about how they were doing these tests
they weren't even doing the test
properly very soon people started
noticing abnormal test results for
example one young healthy person got
results back implying he had cancer but
when he went and got the blood test
repeated by his actual doctor his
results were perfectly fine elizabeth
was literally putting patients lives at
risk by sending out incorrect results
and yet they pressed on in order to keep
up the pretense that everything was
working fine theranos was now live in
stores in arizona with plans to roll out
all across america soon and then the
entire world and yet whilst internally
in the theranos labs there was chaos
externally elizabeth was securing yet
more funding from investors and starting
to gain publicity and fame in 2014
forbes named elizabeth holmes the
world's youngest self-made female
billionaire worth 4.5 billion dollars
because she owned around half of there
are no shares which was now being valued
at 9 billion
which raises a very simple question how
the hell was she getting away with this
to find out the answer to that click
right here to watch the second part of
this theranose mini series i'll see you
there in part two
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