Theranos: The Most Evil Business In The World

Summary

Elizabeth 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

00:00

🚀 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.

05:00

🔍 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.

10:02

🏥 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.

15:04

🏆 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.

Keywords

💡Theranos

Theranos was a healthcare technology company founded by Elizabeth Holmes, which claimed to have developed a revolutionary blood testing technology. The company is central to the video's narrative as it unravels the deception and downfall of what was once hailed as a groundbreaking innovation in healthcare.

💡Elizabeth Holmes

Elizabeth Holmes is portrayed as the founder of Theranos and a key figure in the video. She is described as a persuasive and ambitious individual who managed to raise significant capital for her company, despite the technology's infeasibility. Her character is integral to understanding the video's exploration of ambition, deception, and the pursuit of success.

💡Blood testing

Blood testing is a medical procedure that involves analyzing a blood sample to diagnose diseases or monitor health conditions. In the video, Theranos' promise of a revolutionary blood testing method that required only a finger prick of blood is a central theme, illustrating the company's claims of innovation and the eventual revelation of its inaccuracy.

💡Innovation

Innovation refers to the introduction of new ideas, devices, or methods. The video discusses Theranos' purported innovation in blood testing, which was claimed to be a game-changer in the healthcare industry. However, the term takes on a negative connotation as the video reveals the company's innovation to be fraudulent.

💡Deception

Deception is the act of deceiving or misleading others, typically for personal gain or advantage. The video's narrative heavily revolves around the deception practiced by Theranos and Elizabeth Holmes, as they misrepresented the capabilities of their technology to investors, partners, and the public.

💡Investors

Investors are individuals or entities that provide capital for a business, expecting a return on their investment. The video discusses how Theranos attracted investors with its false claims, leading to significant financial backing despite the lack of a working product, highlighting the role of investor confidence in the company's rise and fall.

💡Regulators

Regulators are government agencies responsible for overseeing certain industries to ensure compliance with laws and regulations. In the context of the video, regulators are mentioned in relation to Theranos' inability to get approval for its in-store testing, which is a critical aspect of the story as it led to the use of alternative, non-Theranos methods for blood testing.

💡Non-disclosure agreements (NDAs)

Non-disclosure agreements are legal contracts that require parties to keep certain information confidential. The video describes how Theranos used NDAs extensively to maintain secrecy and silence, which contributed to the company's culture of paranoia and was a tool to cover up the truth about its technology.

💡Sunny Balwani

Sunny Balwani is mentioned as the second-in-command at Theranos and was in a personal relationship with Elizabeth Holmes. His role in the company and his management style are depicted as tyrannical and aggressive, contributing to the toxic work environment and the company's eventual downfall.

💡Forbes

Forbes is a well-known business magazine that featured Elizabeth Holmes on its cover and named her the world's youngest self-made female billionaire. This recognition is highlighted in the video as an example of the media's role in building and later dismantling her image, which is a significant aspect of the story's narrative about public perception and reality.

💡Self-made billionaire

A self-made billionaire is an individual who has amassed their wealth through their own efforts and business acumen, rather than inheriting it. Elizabeth Holmes was once celebrated as the youngest self-made female billionaire, a title that is central to the video's exploration of her rise and the subsequent revelations about her company's fraudulent activities.

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