) is the founder and formerCEOofTheranos, a now defunct company known for its unlikely claims to have revolutionizedblood testingusing surprisingly small volumes of blood such as from afingerprick.named Holmes the youngest and wealthiest self-made female billionaire in America on the basis of a $9 billion valuation of Theranos.By the next year, following revelations of potential fraud,named Holmes one of the Worlds Most Disappointing Leaders.
The decline of Theranos began in 2015, when a series of journalistic and regulatory investigations revealed doubts about the companys technology claims, and whether Holmes had misled investors and the government. In 2018, theU.S. Securities and Exchange Commissioncharged Theranos and Holmes with deceiving investors by massive fraud through false or exaggerated claims about the accuracy of her blood-testing technology; Holmes settled the charges by paying a $500,000 fine, returning shares to the company, relinquishing her voting control of Theranos, and being barred from serving as an officer or director of a public company for ten years. In June 2018, afederal grand juryindicted Holmes and former Theranos chief operating officerRamesh Balwanion nine counts of wire fraud and two counts of conspiracy to commit wire fraud for distributing blood tests with falsified results to consumers.78
The early credibility of Theranos was in part interpreted as an effect of Holmess personal connections and ability to recruit the support of influential people includingHenry KissingerBill ClintonGeorge ShultzJames Mattis, andBetsy DeVos. Holmes was in a relationship with her chief operating officerRamesh Sunny Balwani.
Holmess career, the rise and dissolution of her company, and the subsequent fallout are the subject of a book,Bad Blood: Secrets and Lies in a Silicon Valley Startupby theWall Street JournalreporterJohn Carreyrou.
Holmes was born inWashington, D.C.9Her father, Christian Rasmus Holmes IV, was a vice president atEnron, after which he held executive positions in government agencies such asUSAID, theEPA, andUSTDA.101112Her mother, Noel Anne (Daoust), worked as a Congressional committee staffer.13Holmes great-grandfather, Christian Rasmus Holmes, was a Danish physician who married Bettie Fleischmann, the wealthy daughter ofCharles Louis Fleischmann, the founder ofFleischmanns Yeast;14Dr. Holmes went on to establish Cincinnati General Hospital and theUniversity of Cincinnatimedical school.15
Holmes attendedSt. Johns Schoolin Houston.9During high school, she was interested in computer programming and claims she started her first business sellingC++ compilersto Chinese universities.16Her parents had arrangedMandarin Chinesehome tutoring, and partway through high school, Holmes began attendingStanford Universitys summer Mandarin program.15In 2001, Holmes attended Stanford, where she studied chemical engineering, and worked as a student researcher and laboratory assistant in theSchool of Engineering.13
After the end of her freshman year, Holmes worked in a laboratory at theGenome Institute of Singaporetesting forsevere acute respiratory syndromethrough the collection of blood samples with syringes.16She filed her first patent application on a wearable drug-delivery patch in 2003.1718In March 2004, she dropped out of Stanfords School of Engineering and used her tuition money as seed funding for a consumer healthcare technology company.1319
Holmes founded the company Real-Time Cures in Palo Alto, California to democratize healthcare.16202122She sought to perform blood tests using only small amounts of blood. Holmes described herfear of needlesas a motivation.1221When Holmes initially pitched the idea to reap vast amounts of data from a few droplets of blood derived from the tip of a finger to her medicine professorPhyllis Gardnerat Stanford,Gardnerresponded, I dont think your idea is going to work, explaining it was impossible to do what Holmes was claiming could be done. Several other expert medical professors told Holmes the same thing.12However, Holmes did not relent, and succeeded in getting her advisor and dean at theSchool of EngineeringChanning Robertson, to back her idea.12
In April 2004, Holmes incorporated the company asTheranos(aportmanteauof therapy and diagnosis)23and rented the basement of a group college house.13At that time, Holmes hired her first employee and rented lab space.24Robertson became the companys first board member and introduced Holmes to venture capitalists.13
Holmes was an admirer ofApplefounderSteve Jobs, and deliberately copied his style, frequently dressing in a black turtleneck sweater, as Jobs did.25During most of her public appearances, she spoke in an unusually deep baritone voice, although a former Theranos colleague later revealed that her natural voice was actually a few octaves higher.15Her family, meanwhile, has maintained that her voice is authentic.26
Theranos experienced a spectacular rise before its ultimate downfall. By December 2004, Holmes had raised $6 million to fund the firm.1324By the end of 2010, Theranos had more than $92 million in venture capital.17In July 2011, Holmes was introduced to former Secretary of StateGeorge Shultz. After a two-hour meeting, he joined the Theranos board of directors.27Holmes was recognized for forming the most illustrious board in U.S. corporate history over the next three years.28
Holmes operated Theranos instealth mode, without press releases or a company website until September 2013, when the company announced a partnership withWalgreensto launch in-store blood sample collection centers.2930Media attention increased in 2014, when Holmes appeared on the covers ofFortune,Forbes,T: The New York Times Style Magazine, andInc.31Forbesrecognized Holmes as the worlds youngest self-made female billionaire and ranked her 110 on theForbes 400in 2014. Theranos was valued at $9 billion with more than $400 million in venture capital.1332By the end of 2014, her name appeared on 18 U.S. patents and 66 foreign patents.18During 2015, Holmes established agreements withCleveland Clinic, Capital BlueCross, and AmeriHealth Caritas to use Theranos technology.17
John CarreyrouofThe Wall Street Journalinitiated a secret, months-long investigation of Theranos after he received a tip from a medical expert who thought the blood testing device seemed suspicious.15Carreyrou spoke to ex-employeewhistleblowersand obtained company documents. On learning of the investigation, Holmes initiated through her lawyerDavid Boiesa campaign to stop Carreyrou from publishing, by levying legal and financial threats against theJournaland the whistleblowers.15
In October 2015, despite Boies legal threats and strong-arm tactics, Carreyrou published a bombshell article33that the Edison blood testing device by Theranos gave inaccurate results, and that the company used commercially available machines for most testing, as well as other incriminating details.34This was the first serious criticism of Theranos in the press, and a further series of articles by Carreyrou followed with more damning details.
Holmes denied all the claims, calling the newspaper a tabloid and promising the company would publish data on the accuracy of its tests.3536She appeared on Jim CramersMad Moneythe same evening the article was published. Cramer said, The article was pretty brutal, to which Holmes responded, This is what happens when you work to change things, first they think youre crazy, then they fight you, and then all of a sudden you change the world.37
In January 2016, theCenters for Medicare and Medicaid Services(CMS) sent a warning letter to Theranos after an inspection of its Newark, California laboratory uncovered irregularities with staff proficiency, procedures, and equipment.38CMS regulators proposed a two-year ban on Holmes from owning or operating a lab after the company had not fixed problems in its California lab in March 2016.39OnThe Today Show, Holmes said she was devastated we did not catch and fix these issues faster and the lab would be rebuilt with help from a new scientific and medical advisory board.40
In July 2016, CMS banned Holmes from owning, operating, or directing a blood-testing service for a period of two years. The company appealed that decision to aU.S. Department of Health and Human Servicesappeals board.1241Shortly thereafter, Walgreens ended its relationship with Theranos and closed its in-store blood collection centers. The FDA also ordered the company to cease using its Capillary Tube Nanotainer device, one of its core inventions.42
In 2017, the State of Arizona filed suit against Theranos, alleging that the company had sold 1.5 million blood tests to Arizonans while concealing or misrepresenting important facts about those tests. The company settled the lawsuit in April of that year by agreeing to refund the cost of the tests to Arizona consumers, and to pay $225,000 in civil fines and attorney fees, for a total of $4.65 million.43Other reported ongoing actions include civil and criminal investigations by theU.S. Securities and Exchange Commissionand theU.S. Attorneys Office for the Northern District of California, an unspecified FBI investigation, and two class action fraud lawsuits. Holmes denied any wrongdoing.12
On May 16, 2017, approximately 99 percent of Theranos shareholders reached an agreement with the company to dismiss all current and potential litigation in exchange for shares ofpreferred stock. Holmes released a portion of herequityto offset any dilution of stock value to non-participating shareholders.4445
On March 14, 2018, Holmes settled anSEClawsuit.46The charges of fraud included the companys false claim that its technology was being used by the U.S. Department of Defense in combat situations.47The company also lied when it claimed to have a $100 million revenue stream in 2014. That year, the company only made $100,000.48The terms of Holmes settlement included surrendering voting control of Theranos, a ban on holding an officer position in a public company for 10 years, and a $500,000 fine.495051
At its height, Theranos had more than 800 employees.52It fired 340 staff members in October 2016 and an additional 155 employees in January 2017.53In April 2018, Theranos filed aWARN Actnotice with the State of California announcing its plans to permanently lay off 105 employees, leaving it with fewer than two dozen employees remaining.5254Most of the remaining employees were laid off in August 2018. On September 5, the company announced that it has begun the process of formally dissolving, with its remaining cash and assets to be distributed to its creditors.55
On June 15, 2018, following an investigation by the U.S. Attorneys Office in San Francisco that lasted more than two years, afederal grand juryindicted Holmes and former Theranos chief operating officer and presidentRamesh Sunny Balwanion nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Prosecutors allege that Holmes and Balwani engaged in two criminal schemes, one to defraud investors, the other to defraud doctors and patients.756After the indictment was issued, Holmes stepped down as CEO of Theranos but remained chair of the board.8
The case is proceeding in the U.S. District Court in San Jose. Holmes and Balwani have pleaded not guilty.57They face up to 20 years in prison.58
Holmes partnered withCarlos Slim Helin June 2015 to improve blood testing in Mexico.59In October 2015, she announced IronSisters to help women inscience, technology, engineering, and mathematicscareers.60She helped to draft and pass a law in Arizona to let people obtain and pay for lab tests without requiring insurance or healthcare provider approval, while misrepresenting the accuracy and effectiveness of the Theranos device.1561
Theranoss board and investors included many influential figures.1562Holmess first major investor wasTim Draper father of Holmess childhood friend,Jesse Draper, and Silicon Valley venture capitalist who cut Holmes a check for $1 million upon hearing her initial pitch for the firm that would become Theranos.6364Theranoss pool of major investors expanded to include62:Rupert Murdoch, conservative media-mogul; theWalton family, founders of retail chainsWalmartandSams Club; the DeVos family (founders of U.S.multi-level marketingfirmAmway), includingBetsy DeVos, who would become Secretary of Education under U.S. PresidentDonald Trump; the Cox family ofCox Enterprises; andCarlos Slim Hel, Mexican billionaire. All of these investors lost tens to hundreds of millions of dollars each when Theranos folded.62
One of Holmess first board members wasGeorge Shultz, a formerBechtelvice-president better known for serving in a variety of Cabinet positions including Secretary of State under four Republican U.S. Presidents (i.e.Dwight D. EisenhowerRichard NixonRonald Reagan, andGeorge H. W. Bush), and for serving as an informal advisor to a fifth (i.e.George W. Bush).1563With Shultzs early involvement aiding Holmess recruitment efforts, the 12-member Theranos board eventually included65:Henry Kissinger, Secretary of State and National Security Advisor under U.S. PresidentsRichard NixonandGerald FordWilliam Perry, Secretary of Defense under U.S. PresidentBill ClintonJames Mattis, retired U.S. Marine Corps General and later Secretary of Defense under U.S. PresidentDonald TrumpGary Roughead, retired U.S. Navy Admiral, former Chief of U.S. Naval Operations, and former Commander of the U.S. Fleet Forces Command;Bill Frist, outspoken physician and former U.S. Senator (R-TN);Sam Nunn, non-profit attorney and former U.S. Senator (D-GA); and former CEOsDick KovacevichofWells FargoandRiley BechtelofBechtel.
Before being exposed and the subsequent collapse of Theranos, Holmes received widespread acclaim. In 2015, she was appointed a member of theHarvard Medical SchoolBoard of Fellows66and was named one ofTIMEmagazines Most Influential People in the World in 2015.67Holmes received the Under 30 Doers Award fromForbesand ranked on its 2015 list of the Most Powerful Women.6869She was also named Woman of the Year byGlamour,and received an Honorary Doctor of Humane Letters degree fromPepperdine Universityafter she delivered the commencement speech to the 2015 graduates.7071Holmes was awarded the 2015Horatio Alger Award, making her the youngest recipient in its history.7273She previously had been namedFortunesBusinessperson of the Year and listed on its 40 Under 40.7475
Following several journalistic and criminal investigations and civil suits regarding Theranos business practices, she was charged with massive fraud by theSecurities and Exchange Commission.47In 2016,Fortunenamed Holmes one of the Worlds Most Disappointing Leaders.6
Before the March 2018 settlement, Holmes held a 50% stock ownership in Theranos.16Forbeslisted her as one of Americas Richest Self-Made Women in 2015 with a net worth of $4.5 billion.32In June 2016,Forbesreleased an updated valuation of $800 million for Theranos, which made Holmess stake essentially worthless, because other investors owned preferred shares and would have been paid before Holmes, who owned only common stock.5Holmes reportedly owed a $25 million debt to Theranos in connection with exercising options. She did not receive any company cash from the arrangement, nor did she sell any of her shares, including those associated with the debt.767778
Holmes was romantically involved withRamesh Sunny Balwani, a Pakistani-born Silicon Valley technology entrepreneur.15She met him in 2002 at age 18, while still in school; he was 19 years older than her and married to another woman at the time.79Sunny divorced his wife in 2002,80became romantically involved with Holmes in 2003, about the same time Holmes dropped out of college,79and the couple moved into an apartment around 2005. Although Balwani did not officially join the company until 2009, as Chief Operating Officer, he was advising Holmes behind the scenes before then.79Holmes and Balwani ran the company jointly in a corporate culture of secrecy and fear.79He left Theranos in 2016 in the wake of investigations. The circumstances of his departure are unclear; Holmes states that she fired him, but Balwani states he left of his own accord.79
Holmes is engaged to William Billy Evans, a 27-year-old heir to the Evans Hotel Group. The couple lives in a luxury apartment in San Francisco.81
Holmes has been featured in a number of media works.82
In May 2018, authorJohn Carreyroureleased his bookBad Blood: Secrets and Lies in a Silicon Valley Startupto considerable acclaim. A movie based on the book is in development, withJennifer Lawrencein the role of Holmes andAdam McKayserving as writer and director.8384
In January 2019,ABC News,Nightline, andRebecca Jarvisreleased a podcast and documentary about the Holmes story calledThe Dropout. It includes interviews and deposition tapes of key figures including Elizabeth Holmes; Ramesh Sunny Balwani; Christian Holmes (Elizabeths brother); Tyler Shultz (Theranos whistleblower); Theranos board membersBill Frist, Gary Roughead, Robert Kovacevich; and others. There is also an interview with Jeff Coopersmith, the attorney representing Balwani.8563
On March 18, 2019, HBO premiered the documentaryThe Inventor: Out for Blood in Silicon Valley, a two-hour documentary film first shown at theSundance Film Festivalon January 24, 2019. It portrays the claims and promises made by Holmes in the final years of Theranos, and how ultimately the entire company was brought down by the weight of many falsehoods. The documentary ends in 2018 with Holmes and Balwani being indicted for multiple alleged crimes.86
The rise and fall of Elizabeth Holmes, who started Theranos when she was 19 and became the worlds youngest female billionaire before it all came crashing down.
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This page was last edited on 12 May 2019, at 20:27