Elizabeth Holmes & The Theranos Deception | 60 Minutes Archive

Summary

Elizabeth Holmes founded Theranos with the promise of revolutionary blood testing technology, the Edison device, which she claimed could perform hundreds of tests from a single finger prick. The company soared in value, making Holmes the youngest self-made female billionaire. However, as exposed by the Wall Street Journal, Theranos was built on a massive fraud, with investors and patients deceived by false claims and staged demonstrations. Insiders reveal the company's failure to deliver on its promises, leading to regulatory crackdowns, invalidated test results, and a plummeting valuation from $10 billion to zero.

Takeaways

• 🚀 Elizabeth Holmes founded Theranos at 19 with the vision to revolutionize blood testing.
• 💉 Theranos' technology, named 'Edison,' claimed to perform hundreds of lab tests from a single pinprick of blood.
• 💸 At its peak, Theranos was valued at nearly $10 billion, making Holmes the youngest self-made female billionaire.
• 🕵️‍♂️ The Wall Street Journal exposed Theranos as a multi-year fraud, with investors and patients being deceived.
• 🛑 Theranos' board, including high-profile figures like Henry Kissinger, failed to verify the scientific validity of Holmes' claims.
• 🔥 Holmes was compared to tech visionaries like Bill Gates and Steve Jobs, adopting a similar black turtleneck style and persona.
• 🔍 The company staged fake demonstrations for investors, using traditional lab tests to deceive about the capabilities of the Edison device.
• 🚫 Federal regulators eventually shut down Theranos' laboratory for posing 'immediate jeopardy to patient health and safety'.
• 📉 Theranos' valuation plummeted to zero, with investors like Rupert Murdoch and Betsy DeVos losing significant amounts.
• 🚨 Holmes and company president Sunny Balwani were charged with 'massive fraud' by the SEC in March; Holmes settled without admitting guilt.
• 🔒 Theranos employees were closely monitored, required to sign NDAs, and faced threats from a team of lawyers and private investigators.

Q & A

What was Elizabeth Holmes' dream when she dropped out of Stanford University at the age of 19?

Elizabeth Holmes' dream was to create a company that would revolutionize blood testing.

What was the name of the startup Holmes founded and what did it promise to achieve?

Holmes founded a startup called Theranos, which promised that her technology could perform hundreds of laboratory tests from a pinprick of blood on the finger.

What was the name of the invention Holmes claimed would disrupt the lab testing industry?

Holmes named her invention the Edison, a miniaturized blood analyzer.

How did Theranos' board of directors, which included national security heavyweights, influence the company's reputation?

The board of directors, which included figures like Henry Kissinger and James Mattis, added credibility to Theranos, making it appear more trustworthy and influential.

What was the pivotal moment for Theranos when it announced a partnership with Walgreens?

The pivotal moment was when Theranos announced a partnership with Walgreens, which would put an Edison machine in every store, supposedly performing all the tests that big lab machines could.

What did Tyler Schultz, who joined Theranos in 2013, observe about the Edison device?

Tyler Schultz observed that the Edison device did not work as claimed. Components would fall off during testing, doors wouldn't close, and the device had issues with temperature regulation.

Why did Theranos employees stage fake demonstrations for investors?

Theranos employees staged fake demonstrations to deceive investors into believing that the Edison device was successfully performing blood tests, which helped to keep the funding coming in.

What did the employees do with the blood samples after investors had their fingers pricked during fake demonstrations?

After the finger pricking, an engineer would run in, grab the cartridge, and bring it out to the lab where scientists would manually test the blood, not the Edison device.

What was the reaction of the New York State Department of Health when Tyler Schultz alerted them about questionable lab practices at Theranos?

The New York State Department of Health responded by saying that what was happening at Theranos was cheating and not how it was supposed to be done.

What were the consequences for Theranos after the Wall Street Journal published its first article about the company in October 2015?

After the Wall Street Journal's article, Theranos faced increased scrutiny, and federal regulators eventually shut down the company's laboratory, invalidation nearly one million test results.

What were the final outcomes for Elizabeth Holmes and Sunny Balwani after the SEC charged them with massive fraud?

Elizabeth Holmes settled the SEC case without admitting guilt and paid a half a million dollar fine. Sunny Balwani, who left Theranos two years prior, called the SEC charges unwarranted and is fighting them.