Ten years ago, Elizabeth Holmes’ rise to prominence seemed unstoppable. Her biotech startup, Theranos, was valued at a staggering $10 billion, and she was hailed as the next Steve Jobs. However, the story took a dramatic turn when Holmes was indicted for wire fraud five years ago. Today, she finally reported to prison to begin serving her sentence of 11 years and 3 months. The downfall of Theranos has been a long and painful journey, with Holmes’ legal team employing every possible tactic to delay the inevitable.
The tale of Theranos has become well-known. A young Stanford dropout with dreams of revolutionizing healthcare through cutting-edge blood testing technology, Holmes attracted high-profile investors and received glowing press coverage. But in 2015, it all unraveled when Wall Street Journal reporter John Carreyrou exposed Theranos’ fraudulent practices. Not only did the technology not work, but unsuspecting patients were being put at risk with false positive results for conditions like cancer, HIV, and even miscarriages.
Since then, the dismantling of Theranos has been a messy and litigious process. Lawsuits and layoffs became commonplace, as the truth about the company’s deceptive practices came to light. The U.S. government launched an investigation in 2016, and Theranos continued to make headlines, but the tone had shifted drastically.
The litany of events during this period is staggering:
An ex-Theranos customer filed a lawsuit claiming faulty blood tests contributed to his heart attack in July 2016. Theranos closed its labs and wellness centers, resulting in the layoff of 340 employees in October 2016. A hedge fund sued Theranos, citing lies, misstatements, and omissions in October 2016. Walgreens sued Theranos for $140 million in November 2016. A prominent Silicon Valley investment banker filed a lawsuit against Theranos, seeking class-action status in November 2016. Theranos slashed another 41 percent of its workforce in January 2017. Arizona planned to sue Theranos over faulty blood tests in January 2017. Theranos closed its last remaining blood-testing lab after reportedly failing an inspection in January 2017. Theranos offered Elizabeth Holmes' shares to investors as a way to avoid lawsuits in March 2017. Theranos secured $100 million in debt financing in December 2017 to stay afloat, albeit with certain conditions.
Finally, in 2018, the dissolution of Theranos became official. Holmes and her co-conspirator Sunny Balwani were charged with fraud by the U.S. government.
The subsequent years saw the ongoing legal battles and the public’s fascination with Theranos’ downfall. Documentaries, podcasts, and even a mini-series were created to explore the intricacies of the scandal. Hollywood took a keen interest, with plans for a movie starring Jennifer Lawrence, although it was ultimately scrapped after Lawrence saw “The Dropout” and deemed it comprehensive enough.
The long-awaited trials of Elizabeth Holmes and Sunny Balwani finally took place from 2021 to 2023. The trials faced delays due to the pandemic and Holmes’ pregnancy. Ultimately, Holmes was found guilty on four out of eleven counts of defrauding investors, while Balwani was found guilty on all counts. Holmes was sentenced to 11 years in prison, and Balwani received a 13-year sentence.
The aftermath of Theranos serves as a cautionary tale for the tech industry as a whole. It highlights the importance of honesty, integrity, and avoiding fraudulent practices. It also marks a significant chapter in the history of Silicon Valley, serving as a reminder that even the most promising startups can crumble under the weight of deception.