The downfall of Theranos and Elizabeth Holmes

June 25, 2018 • 1:00 pm

Many of you will know about the downfall of Theranos, the Silicon Valley company started by Elizabeth Holmes, who claimed to have devised a machine that could do multiple physiological tests on just a single drop of blood. It never really worked, even though investors (including Rupert Murdoch) pumped hundreds of millions of dollars into Holmes’s startup. At one time Theranos was worth over 9 billion dollars on paper.  Then her chicanery was uncovered and published by The Wall Street Journal.

Now Theranos, and Holmes, are bankrupt. And ten days ago, both Holmes and Theranos’s former president, Ramesh Balwani, were indicted for wire fraud: for deliberately lying to investors and the public. (For a brief period Theranos partnered with the pharmacy chain Walgreen’s in a blood-testing collaboration.)

This 31-minute video is an interview of John Carreyrou by Nick Gillespie of ReasonTV; Carreyrou was the Wall Street Journal reporter who unmasked Holmes through dogged reporting.  It is an absolutely fascinating conversation, and Carreyrou is eloquent and thorough.

Based on this interview, I went to the library to get Carreyrou’s new book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, and am reading it now. It’s a page-turner. Holmes was a sociopath but was so charismatic that she managed to dupe lots of investors and persuade famous people like Henry Kissinger to join her board of directors (big names lure big money). Meanwhile, the company was totally dysfunctional, with Holmes firing people right and left and lying to everyone about the ability of her “Edison” machine to test blood (it never worked, and she knew it).

You won’t be wasting your time if you watch this video. If you like it, get hold of Careyrou’s book.

If you don’t have the time, there’s a similar but shorter interview (6 minutes) here.

75 thoughts on “The downfall of Theranos and Elizabeth Holmes

  1. I saw the 60 minutes piece on this but will read further. A high end scam for sure and at this level, just amazing. We should not be so surprised at Trump and his con job.

    1. I should also say P.T. Barnum was absolutely correct…a sucker born everyday. You hear today that Trump had to run his mouth about the restaurant that Sanders was ejected from. Said the place looked filthy and in very bad shape to him. So the reporters, who do not get faked out on anything checked. That restaurant did very well on it’s last few inspections but guess how Trump restaurants have done….terrible. So it’s just open the mouth and the lies come flying out.

  2. I have some experience with several companies that were seeking venture capital, and it is obvious that the older men who typically head up the various investor groups would be easy prey for an attractive young woman like Elizabeth Holmes. They(men)are aware that some women actually do have brains, and it makes them feel enlightened when they help out a young woman (especially an attractive young woman), since they have been working exclusively with male entrepreneurs for years. It’s an ego boost for them.

      1. I wouldn’t say they were simple-minded, they were just old farts who were susceptible to being flattered by this attractive young woman.

      2. This sort of reasoning has always bothered me. We know far, far beyond the shadow of a doubt that you don’t have to be stupid to fall prey to scams, and yet people still casually conflate the two while seated atop their high horses.

        1. I stand by my characterization. Anyone who fails at such a basic and fundamental task because they are bewitched by a pretty face is simple minded.

          1. “I stand by my characterization.”

            Well of course you do. Even on sites like this one it’s rare to ever meet the person who won’t always double down to save face.

            1. WTF?!?

              So if Rita is correct (I’m not saying she is) how would you characterize the leaders of investment groups who shirk their responsibilities because they are “easy prey for attractive young women”?

      1. Au contraire, that bug-eyed Renfield stare just screams pathological and manic to me, and says “Beware of the loon”.

        Another curious thing is that if one looks closely at her hair, it’s not all smooth blond tresses of someone who got fantastically expensive haircuts (or even an inexpensive haircut). When she pulls it back, one sees stray tufts that are irregular, broken and short, they look dry, and I get the sense that in private moments, she’s a compulsive hair puller.

        I also took note of the kind of posturing (silly strutting and swaggering) she engaged in in clips of her walking through her lab wearing a white lab coat. I’ve never seen any real scientist swagger around like that.

        My comments may seem trivial or even catty, but these are to me small but significant disconnects between image and reality, and as such are signals — not proof, but signals to beware.

        1. Yeah, that was my impression, too — but maybe I’m just past-posting her, knowing what we know now.

        2. That stare also reminds me of a hokey hypnotist in a bad movie — “Look into my eyes….You are getting sleepy…You are falling under my spell…” said Circe.

          In addition, she apparently disguises her voice and affects the low tones to project masculine authority. I didn’t realize it until I heard someone question her voice, but after that I do find it affected

        1. I found the same in that 5-minute interview. Scary!

          I wondered if they weren’t contact lenses. When Renaissance Pictures was producing Hercules/Xena/Cleopatra 2525 et al in New Zealand, they often used contact lenses to make their more mythical characters (gods, or demonically possessed, or the like) look more weird. It was highly effective. And just look at her eyes in that interview. The exact same look. Maybe it was the lighting – light coming from directly behind the camera? Also her eyes are wide open and you can see the white all round. Strange.


    1. Old, grey-haired Republican dudes are known to have their trophy-wife fixations. I think it was the Ragin’ Cajun, James Carville, who once offered a reward for anybody could name a Republican who divorced his wife to marry an older woman. 🙂

          1. Oh, men from both sides of the aisle do it. But it’s such a frequent occurrence among well-heeled Republicans as to have become a stereotype. 🙂

    2. I think it’s a mistake for so many people here to assume that people heavily invested in this company because they were old men charmed by a pretty woman (as such, this comment isn’t directed solely to you). See Ryan’s comment below comment number nine. VC involves taking risks on many companies and hoping one pays off. Sometimes, the success of a company can be attained by a merely pretty good product and an extremely driven and charismatic CEO. In this case, the supposed technological product was beyond investors’ understanding but would be revolutionary (assuming it existed), and the person who ran the company clearly had enormous charisma and drive. This combination usually makes for a very attractive (ahem!) investment opportunity.

      I think this is a far more likely explanation of how this happened than “old men, pretty lady –> lots of money given to pretty lady”

      1. I think the “pretty lady” narrative was directed more to how she talked all those prominent old Republicans into fronting for her board of directors, rather than to how she conned the investors outta their money.

        1. I mean, being on the Board of Directors is just as attractive (I did it again) a prospect. Shill for the company and get paid in cash and stock. If the company hits it big (and who would think it wouldn’t with all those big-time investors?), you’re one of the people at the head of a company worth billions and famous for enormously important innovation. Plus, pride and ego help.

  3. First they ignore you, then they laugh at you, then they shower you with money, then they find out you’re a bullshitter, then they indict your ass.

  4. I first heard (or remember hearing) about Theranos back in 2014 when Fortune did a cover story on Holmes and her company. I did not think it was a fraud but something struck me as unusual – being able to test for a whole lot of things with a few drops of blood. I am a regular blood donor – six times a year. I need to keep my iron down so not simply because I am a wonderful human being.

    Every time you give blood, in addition to the unit of blood (500ml) they now take six test tubes of blood. They test your blood for (I think) over 60 different things before it goes into the blood supply. And they test it fast since blood goes bad and there usually is a shortage. But it still takes overnight. Then your blood is separated into red blood cells, platelets and plasma and is available for use. But no blood bank was using the Theranos system. Which struck me as unusual. I thought it might be cost but Theranos said it would be cheaper than usual methods.

    If I was involved with Theranos my first question would be how does this thing work. But none of its all star board asked this simple question. Walgreens removed its expert consultant from negotiations with Theranos for asking this question. Theranos insisted it could not reveal anything because trade secrets. The sheer stupidity of this fraud is mind boggling.

    1. The part about using just a few drops of blood actually rang true for me. For years, neonatal ICU’s have been able to do extensive blood panels using blood captured in capillary tubes. So it didn’t seem that far fetched technically.

      1. It isn’t far-fetched in the sense that all the tests they claimed it could do can be done using blood. What they got wrong and lied about was the limitations of the various technologies used in the tests.

      2. I’m not an expert in the area, but since inception scientists were very skeptical of the technology. While some test can be performed with very little blood, Theranos was claiming to be able to do a number of tests that required large samples by nature. The patents were also indecipherable nonsense with limited relationship to blood testing.

        I think most people are missing the underlying incentives of VC though. In a VC fund you expect to make around 20 investments, and if you are lucky 19 will fail and 1 will succeed. If successful, a startups might return >50x which will more than pay for the losers. This inventivizes financing highly charismatic and ambitious CEOs.

        You also have to consider that success for a VC does not require that the business succeeds. These guys have played the game thousands of times and every single sentenced in every document will be constructed in their favor. It is highly likely that investors who were sufficiently early at Theranos benefited in some way, either through returns or via networking/marketing while the music was still playing.

        1. VCs still do due diligence. None was done for Theranos. They relied on claims. But there was no evidence for those claims. Companies like Siemens who make those big industrial blood analyzers had been trying to do for years what Theranos claimed it had done. As Carreyrou pointed out, Theranos was treated like a tech company when it was a biomedical company. Tech is full of claims that are really just vaporware. You can be fooled about code but not when peoples lives are at risk.

          At a minimum, the VC should have looked into the technology. There never was any supporting evidence. I mentioned that Walgreens had a consultant who smelled a rat but he was pushed aside because of FOMO (fear of missing out). Just so much stupidity.

          1. I agree that the endorsement by Walgreens was probably more important than the personal charm of Ms Holmes. Walgreens FOMO caused them to throw ‘due diligence’ out of the window. I think they are the party most to blame in this bizarre tale (apart from Theranos itself, of course).

      3. Newborn blood testing is limited and difficult. All healthy newborns in the US are screened right after birth using drops of blood from a heel stick.

        For preemies, getting blood is extraordinarily difficult and they need every drop of blood they have. Tests are done – but limited.

        Labs work best when they have a lot of blood and venous blood does not have the issues that you get with blood drops from a finger pricks.

    2. Theranos insisted it could not reveal anything because trade secrets.

      Says every free energy scam artist and a lot of other con artists. This is one of the biggest alarm bells of pseudoscience I can think of. It’s like they’re praying their audience has never heard of nondisclosure agreements or registered patents.

      I used to perform independent assessments of government science programs. I got the ‘we can’t share our proprietary technology’ spiel from a performer exactly once. My recommendation to the government funder on that occasion: stop funding immediately until they explain the operating principle and let you inspect the equipment.

  5. I’m curious. What do you suppose she says to herself when she looks in the mirror these days, now that who she really is is exposed for all to see?

    1. Reminds me of Lance Armstrong. My hero. I believed every word out of his mouth, and then he turned out to be a sociopath.

      I strongly suspect that when Armstrong looks in the mirror, he sees a guy who isn’t as bad as people have made him out to be, that winning is a zero sum game, and besides, everyone was drugging and he had to drug too to make it a level playing field (that one’s probably more true than false.)

      Pretty sure that Holmes is not ever going to be troubled by an attack of conscience. The thing about con men and swindlers is that they never blame themselves. It’s their marks fault for being gullible or stupid or greedy.

      1. Similar for tv evangelists, they get caught after ripping off the rubes, put on a pity party, lay low for a bit, then jump back on the shenanigan wagon. No shame whatsoever. She will probably do just fine, spend a bit in the pokey, then start up another scam to keep her going through retirement. Just get a load of that old shyster Jim Bakker, still fleecing his flock, and now pushing some crazy doomsday prepper crap in a can! Oh, I’m sorry, it’s Banquet in a Bucket, and a bargain at only $195!
        If there really is a sucker born every minute, then there’s a f*cker born very five minutes to screw them over.

      2. I don’t blame Lance for doping, given that everyone was doing it. But I do hold him accountable for the subsequent lying and (much worse) destroying anyone who dared to speak honestly. Greg LeMond is a good guy who was viciously attacked by Armstrong. And there are many others. Despicable, in my view.

  6. According to Wikipedia, she cited fear of needles as a motive for founding the company.
    Evidently, surpassing fear of jail. They’re making a movie about her with Jennifer Lawrence. Wikipedia lists her address as Los Altos Hills, but if she is bankrupt she can’t afford to live there.

    1. Those “needles” they prick your finger with hurt a helluva lot more than the ones they put on a vein.

      1. Baffles the hell out of me.

        Finger sticks are hella painful. Why can’t you use a less painful body area for a blood sample?

    2. I’m guessing she won’t spend a day in prison, she’ll have a book deal worth millions, she’ll get her movie deal worth millions more, and she’ll come out of this doing far better than she would be doing today if she hadn’t pulled this enormous scam.

      1. She deserves a “research fellowship” at Pen…itentiary, but I’ll bet you’re correct, and she gets the money from the movie and book deals. That Stanford engineering professor, Channing Robertson, has a lot to answer for as well, I think.

      2. I dunno, BJ. The federal sentencing guidelines are driven by the “amount of loss” in fraud cases, so hers might well call for substantial imprisonment. Plus, under any applicable “Son of Sam” laws, she might have a hard time hanging on to the dough from the sale of artistic rights. I’ve seen federal plea agreements that have required restitution to victims be paid out of the proceeds of artistic rights.

        1. Well, you know a hell of a lot more about this than I, so I gladly update my prediction to defer to you. I hope you are right. But couldn’t this end up like many high-level securities fraud cases, where an agreement is reached that allows her to avoid prison time? Or is there a reason that this particular case is different?

  7. Crimony! I didn’t hear anything in the video about anyone on the board with any clinical lab experience.

    Aren’t there any technically competent people in the pool of medical device company analysts? OK – the technology’s proprietary. But did anyone ask what clinical levels were supposed to be tested from this black box? From that, what are the present bases of those analyses? I don’t know the specifics of any of them, but I know enough to know that some are enzyme assays that require addition of substrates and spectrophotometric measurements, among other things. How do you microminiaturize those into something that can function at that level? Not to mention everything else that requires different different approaches.

    1. And none of the board members knew anything about analytical science. As an investor I’d certainly want to know at least in outline how you can both dramatically improve the analytical sensitivity of the instruments to get certain sets of blood components and somehow multiply the low concentration components to get the rest of the information you need. A college dropout would have to have hired some genius analytical people with a lot of experience to get this to work. Software you can do in your own bedroom; analytical techniques requires a LOT of exposure to a LOT of expensive stuff in exceptionally set-up labs. How many upper-level lab classes would a 19-year-old have taken?

      1. Exactly. Pity she didn’t suck the likes of Pat Robertson, Joel Osteen et ux into the scheme.

    2. I expect the investors had heard of things like DNA being extracted from a hair, and figured, if something as complex and sophisticated as DNA can be done with a sample that small, then surely so can some dumb ol’ blood test?


    3. Crimony! I didn’t hear anything in the video about anyone on the board with any clinical lab experience.

      Which was probably intentional on her part, right? She wanted big names, deep pockets…and lack of the knowledge base needed to see through the fraud.

  8. Lot’s of irony here. Rupert Murdoch may have been the single largest investor, but his own WSJ was ultimately responsible for the official takedown. I would be surprised if Theranos/Holmes didn’t approach him to kill the story. He ended up with one hell of a tax write-off.

    1. Because he’s the clownish Jim Cramer? He sheepishly apologized to Jon Stewart and then went right back to hawking his BS.

  9. Reminds me, on a slightly smaller scale, about a franchise company called Brain Balance. This promises to help children with learning or social disorders. There are constant glowy-glo-glo ads on the radio, given with plenty of vageries aimed at those who believe in woo. I was thinking its gotta be at least partly a bunch of b.s. And so I looked into it and yep, it is probably a bunch of bullshit: . What angers me is that they are fleecing anxious parents out of thousands of dollars, and delivering therapies that seem no better than placebo, delivered by underpaid 20-somethings with no credentials at all. I predict this will also crash and burn pretty soon.

    1. Just last week I heard a report on the radio about Brain Balance. The blog entry you cite at neurobollocks is from 2015, so the scam continues. The most recent entry in neurobollocks is from 2015 — is it no longer active? Has it moved? I hope it’s not defunct. If so, do you know of any comparable websites/blogs? Somebody sure needs to keep up with such things.

  10. I recall first hearing about her back in 2015, when she started showing up on magazine covers, as some great visionary who was worth billions. And I’d never heard of her or her company. My first impression on learning that she started the company at 19 after dropping out of Stanford, was to wonder how she could possibly understand enough clinical chemistry to develop new technology. Didn’t any of her investors ask themselves this question?
    As for convincing a lot of prominent older men to join her board of directors – I recall reading somewhere that her family is a well-connected one in California, which helped her in this regards. As for being able to convince investors to part with their money – I think it’s more than her just being attractive. It’s the whole persona that she projected, with the mesmerizing eyes, deep voice, calm but intense demeanor, and the Steve Jobs-like attire.
    I think she’ll go to jail. Plus that will make a much better ending for the upcoming movie. I can’t wait to see what Jennifer Lawrence does with this thespian opportunity.

  11. Heh. I can just tolerate giving blood samples if I look the other way (and apparently it is true that if you don’t see the injury being inflicted, it doesn’t hurt as much) – and also, a good nurse can do it painlessly.

    But sticking a needle in my finger myself? Fuhgeddaboutit!


  12. One “elder statesman” of tech who was skeptical of Ms. Holmes is Jean-Louis Gassée, former executive at Apple, then Be, Inc.

    Mr. Gassée actually compared values for his own blood between Theranos’ and regular tests, and found the discrepancies concerning enough to inquire about technical details by letter. Unsurprisingly, he did not get an answer. He did his comparisons in the summer of 2015 and published them in October 2015, at about the same time the WSJ article came out. Read his account at .

  13. It could only happen in the US. America is for sure the land of “exceptionalism”…. but exceptional naivety. Holmes with her frightening sociopathic stare was obviously a fraud. Why couldn’t naive Americans get it?? A European would NEVER have invested in her hot air.

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