The Downfall of Theranos
A couple of years ago, I read a story about the downfall of a Silicon Valley startup called Theranos and its CEO Elizabeth Holmes. The story is crazy.
Theranos promised to deliver a small blood-testing device capable of running hundreds of tests from a tiny pinprick. Investors loved the idea. They loved it so much that they sent the company flying to the moon at a massive $9 billion valuation.
Everyone wanted to invest in Theranos. The company raised more than $700 million from billionaire investors like Carlos Slim and Rupert Murdoch. Additionally, Safeway and Walgreens partnered with the company, and CEO Holmes appeared on the covers of major business magazines regularly.
Fast forward to today, and Elizabeth Holmes is set to go to trial for 2 counts of conspiracy to commit wire fraud and 10 counts of wire fraud. Prosecutors are alleging Holmes intentionally lied to investors and patients about the capabilities of her company’s technology to scam them.
A series of investigations revealed that Theranos’ technology didn’t perform as claimed, that it covertly used commercially available blood analyzers, and that it lied to regulators. In 2014, the firm reportedly promised potential investors that it was on pace to break even and generate $100 million in revenue. Instead, for that period, it raked in just over $100,000.
Theranos is the largest scam ever perpetrated in Silicon Valley. It not only defrauded investors out of hundreds of millions of dollars, but it also put thousands of people’s health at risk.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.