I spent summer vacations with my uncle when I was a kid, and I remember how much he loved the beach, and I remember how much I loved him. Unfortunately, one day, he was diagnosed with skin cancer, then brain cancer. He didn't get to see his children grow up, and I had time to say goodbye to him for the last time. The right to protect the health and well-being of those we love is a fundamental human right. Our laboratory has achieved this in the last few years, with more than 200 tests that can be performed with blood from the fingertips.
Dressed in a black turtleneck pullover and a firm and deep voice, Elizabeth Holmes, founder of Theranos, a Silicon Valley blood testing company in the United States, once spoke fondly about her original intention of starting a business on TED, saying that Theranos will set off a preventive medicine revolution and subvert the entire medical system.
Holmes has won many praises, is considered a "star entrepreneur", "the next Jobs", behind the support of many political and business tycoons, and once made Theranos a unicorn with a valuation of $9 billion.
However, behind the brilliance is a terrible scam, The Wall Street Journal reporter John Carreyrou after months of investigation, unveiled the true face of Holmes and Theranos, Theranos can not detect the indicators, and its certification process and even financial results are all fake, Holmes is also charged with fraud.
On January 3, after seven days and more than 50 hours of deliberation, the jury found that of the 11 counts indicted by Holmes, four counts were found guilty of fraud, four counts were not convicted, and a decision could not be made on the other three counts, meaning Holmes could face up to 20 years in prison.
And how did Holmes go from a high-achieving genius girl and a young business elite to a notorious liar, and how did her ten-billion-dollar scam last for ten years?
From zero to one: ten thousand tall buildings rise out of thin air
Holmes grew up dreaming of being able to change the world and being smart and studious. In high school, she earned an all-A's and wrote her own programs and sold them to a university in China. In 2002, Holmes was admitted to the Stanford Department of Chemical Engineering, received a presidential scholarship, and served as a researcher and laboratory assistant in the School of Chemical Engineering.
Image credit: HBO Documentary
Not only that, Holmes also has a good family, she was born in the United States to an elite family, her father was a vice president of Enron, her mother is a member of Congress, and she has held administrative positions at the U.S. Agency for International Development and the U.S. Environmental Protection Agency.
Dropped out of school to start a business
In 2003, during the SARS epidemic, she entered the Singapore Biomedical Science Centre for an internship focused on blood testing, during which she developed a wearable drug delivery patch that simplified the process of testing samples and obtained her first patent.
But Holmes is not satisfied with the status quo, she once said in an interview, she grew up interested in innovation and creating new things, she thought of people's fear of needles, hope to make a portable blood detector, like a home blood glucose meter to detect blood sugar, puncture the finger, suck a few drops of blood into the nanotest tube, and then put the test tube into the detector to get a report of more than 200 tests.
So, at the age of 19, she decided to drop out of school and start a business.
In 2003, Holmes founded the biotech company Theranos (synthesized by therapy and diagnosis), and through family ties, Holmes received his first million dollar investment from Tim Draper. Tim Draper is known as the "Godfather of Silicon Valley venture capital" and has invested in Tesla and Twitter. By December 2004, Holmes had raised $6 million.
Theranos is making a name for itself in Silicon Valley, and Holmes is also attracting attention, with gifted teenage girls, dropping out of school, sleeping only 4 hours a day, working late into the night, almost perfectly in line with the "Silicon Valley Legends" setting, and everything seems "reasonable".
Blood turns into gold
At that time, in the United States, independent laboratory giants Quest and Labcorp accounted for 80% of the share, almost monopolizing the US market, and the position was difficult to shake. At the same time, there are also cases in the United States where blood test prices are high and the fees are not transparent.
Theranos claims to have detected all diseases in "one drop of blood" and reduced the cost of a $50 blood test at the hospital to $2.99, less than one-twentieth.
Not surprisingly, Theranos developed by leaps and bounds, creating a legendary myth of "blood turned into gold". By the end of 2010, Theranos had raised $92 million in venture capital.
In July 2011, Holmes became acquainted with former Secretary of State George Schultz. After just two hours of meetings, he decisively joined Theranos' board of directors.
Over the next three years, a number of political and business celebrities joined the company, former Secretary of State Henry Kissinger, financial giant Merckdo, former Secretary of Defense Bill Perry, Holmes formed "the most outstanding board of directors in American history", and even Biden once stood for it.
In 2015, Holmes's career reached its peak, winning 18 U.S. patents and 66 foreign patents a year, creating what he called "the innovative blood testing instrument Edison." Theranos has signed agreements with the Cleveland Clinic and the Blue Cross Blue Shield Health Care Organization to partner with Walgreens, the largest drug store chain in the United States.
Theranos attracted the attention of many media outlets and became famous for a time. The media reported that Holmes was the next Jobs and that Theranos had unlimited growth potential when Theranos was valued at about $9 billion.
Holmes has received widespread acclaim, having been named a member of the Harvard Medical School Board of Trustees in 2015, named one of time's 100 Most Influential People by Time magazine, named "Business Person of the Year" by Fortune magazine, and included on the list of "40 Business Elites Under 40."
So far, Holmes seems to be a bright rising star, the media has compared it to Bill Gates, Zuckerberg, Theranos may grow into an innovative, world-changing company like Apple, but there is still a hidden side to the matter.
“Fake it until you make it”
Theranos product has a fatal problem: fake.
The Inventor, an HBO documentary about Theranos, interviewed team members of Theranos, who pointed out that "putting the lab in a box, many parts integrated into a tiny space, involving different disciplines, is actually very difficult to do.
The research and development process is also a "mess", the problem of regulating the temperature and transporting blood samples is difficult to solve, and machine failures often occur, and even internal equipment falls and centrifuges explode.
Edison's test results were unreliable, with an error rate of 87% in testosterone content, a margin of error of 34 to 48% in vitamin B12 content, and an overall deviation of up to 146% compared to a normal business machine.
In fact, Holmes professor Phyllis Gardner once pointed out in her idea that early prevention and discovery, combining microfluidics and nanotechnology, would not work biologically. But Holmes did not heed her advice.
The documentary mentions that many people in [Silicon Valley] believe in "Fake it until you make it," and usually this kind of behavior is not prosecuted, as is the case with Edison's scam of inventing the light bulb.
Under the influence of this culture, Holmes's dream was divorced from reality, evolved into a century of hoaxes, and intensified, and finally simply purchased various detection instruments from the outside and then integrated into a smaller space. When the test results are abnormal, ask the employee to delete the data.
However, after all, the real thing cannot be fake, and the false thing should not be true after all.
From one to zero: the scam is broken and the building capsizes
In October 2015, Wall Street Journal reporter John Carreyrou published a series of articles exposing Theranos fraud, and of the 240 tests, only 15 were actually performed on the company's diagnostic machines, and the vast majority of the rest were performed on traditional laboratory equipment.
Holmes retorted on CNBC's financial column "Mad Money" that when you try to do it, people think you're crazy, they openly oppose you, and then you suddenly change the world.
The lie is debunked
Theranos has been accused one after another, and has also been targeted by regulators, exposing its "trade secrets" step by step.
In 2016, the U.S. Centers for Medicare and Medicaid Services (CMS) issued a warning to Theranos after inspecting them and found irregularities in employee proficiency, procedures, and equipment. In March 2016, CMS proposed banning Holmes from owning or operating clinical laboratories because Theranos had yet to address the california lab's problems.
In July 2016, CMS barred Holmes from owning, operating, or directing blood testing services for two years.
Shortly thereafter, Walgreens ended a partnership with Theranos and closed the in-store blood collection center.
The U.S. Food and Drug Administration (FDA) also ordered Theranos to stop using one of its core inventions, the capillary nanosycatter device.
In March 2018, the SEC accused Suny Balwani, coO of Holmes and Theranos, of fraud, advertising a fake product. Theranos is also suspected of financial fraud, claiming $100 million in revenue in 2014, but the company only made $100,000.
Image source: SEC official website
At its peak in 2015, Theranos had more than 800 employees, and the company laid off 340 in October 2016 and another 155 in January 2017. On September 5, 2018, Theranos announced the commencement of formal dissolution proceedings, with the remaining cash and assets distributed to creditors.
When the avalanche occurs, not a single snowflake is innocent
After the silicon valley century scam was broken, people can't help but wonder, how did Holmes hide the sky and maintain this scam for 10 years?
When talking about cooperation with Walgreens, Holmes forged a blood test report prepared in advance as an "Edison" test report. When Walgreens asked Edison for more reports, Holmes falsely claimed that Walgreens competitors wanted to sign agreements with them, and Walgreens decided to take advantage of the company's products and cooperate without understanding them.
When the CMS conducted the inspection, Holmes only showed it another laboratory, not the one that was actually developing, and monitored its employees to not disclose the real situation.
It is worth mentioning that Holmes operates Theranos in an "invisible way" and never issues press releases.
From Holmes herself, she has a strong ability to tell stories, in TED's speech, she tearfully told the story of her farewell to her loved ones touched many people, and from the perspective of the human rights that Americans are most concerned about, firmly grasp the audience.
Her abilities are also reflected in a two-hour conversation with former Secretary of State Schultz, who firmly believes she will upend the U.S. health care system. When the board of directors demanded that she be removed from her POSITION as CEO due to poor financial conditions, she retained her position through words.
At the same time, Holmes pays great attention to marketing, she has hired a special marketing company to create her own successful image, she only wears a black sweater for many years to imitate Jobs, and deliberately imitates Jobs's deep voice when speaking.
Coming from an elite family, she met a number of American politicians and business people, such as former Defense Secretary Jim Mattis, former Education Secretary Pesty Devos, former Wells Fargo CEO Dick Kovaceich and many more. Backed by strong relationships, the road to financing went well and created a positive image of Holmes.
Here we have to mention a key person, David Boies, a wall Street ace litigator, who "scorched" Bill Gates in the US government v. Microsoft case, and was called "Microsoft Killer" by the media. As a member of Theranos' board of directors, Boies uses a variety of methods to protect Theranos.
After learning that the Wall Street Journal had begun to investigate Theranos, Boies sent several lawyer letters to people they thought would leak secrets, invited Wall Street Journal reporter John Carreyrou to "talk", and even sent lawyer letters to employees who had left their jobs.
John Carreyrou, based on his own investigative interviews, wrote a book about Silicon Valley's biggest scam of nearly a decade, "Blood of Evil," in which he mentions:
I'm fairly sure that when she dropped out of Stanford fifteen years ago, she didn't start out trying to deceive investors and put patients in harm's way. Everyone believes that she sincerely believes in a vision and is committed to it to make it happen. But in the "unicorn rush of gold rush", in her all-out pursuit of becoming Jobs, there was a turning point when she stopped listening to wise advice and began to seek shortcuts.