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Elizabeth Holmes and the Power of Imagination
A 19-year-old college student had a revolutionary idea that she imagined would make her rich and famous. She quit college and founded a start-up, attracting incredible attention, investors like Lawrence Ellison of Oracle, and a board of directors that included Henry Kissinger and George Schultz. She dressed just like Steve Jobs, in black turtlenecks. She had huge, mesmerizing blue eyes and a very deep voice for a woman. She was sought after for interviews, TED talks, and hailed as a pioneer in medical advances. She claimed that the cost savings using her technology would be in the billions.
Her technology concept was cheap, reliable blood testing done with only a fingerprick, using a device that could test for up to 240 different things. She claimed that she was driven by integrity and the desire to help others.
. . . [T]here’s a tremendous responsibility. I think about it all the time in the context of my mom. And the information that we’re generating, she does all of her tests through us, knowing that we’re right, every single time, and knowing that we’re not compromising on quality, and knowing that we’re, in every action that we take, approaching this with a seriousness that it deserves, in the context of what it means to say to someone, “You don’t have breast cancer” or “You do have breast cancer,” has driven our culture in a huge way.
At one point, her company Theranos was valued at more than $9 billion, more than Quest Diagnostics, the well-known and well-established medical lab company. She claimed that her technology was like a smart phone, where the old lab testing methods were clunky old mainframes.
Initially, she foretold a future in which pharmaceutical drug trials could be given constantly updated, non-invasive information about the real-time affect of their drugs on real live patients, and sought to partner with drug companies. When that failed to pan out, she foretold a future in which every home contained its own minilab for easy, non-invasive blood testing.
As a person with chronic illness, I’d love to be able to get blood tests without a prescription. Theranos championed this cause, getting a law passed in Arizona to allow people to order blood tests on their own.
Many people claimed that Elizabeth Holmes, the woman about whom I am writing, had imagination and vision, and that she was a prophet, a visionary. She did, and she was, but the vision she had was not the one they imagined she was sharing with them. She was a serial, bald-faced, unrepentant liar. She constantly spoke of Theranos’ developmental technology that did not yet exist as though it was up and running and fully tested.
She actively cultivated the Steve Jobs thing with the turtleneck. She is suspected by many (including me) of deliberately lowering the pitch of her voice to sound more commanding and powerful. Margaret Thatcher did that too, and I don’t necessarily criticize her for it. Holmes wanted to be seen as the type of woman who can succeed in the man’s world of the tech industry.
However, clearly she was engaging in this type of theater to the betterment of her company. Zero Hedge has an interesting summary of the laudatory, adulatory paens to Holmes that were written in 2013 to 2015 here.
The first cracks in Holmes’ facade came with a Wall Street Journal piece in 2015. Holmes fought back aggressively, but somehow the spell she had been able to cast was broken.
Although her company, Theranos, was able in 2014 to contract with a major drugstore chain, Walgreen’s, to do blood testing in its stores (here’s an account from 2015 of one person’s experience), Walgreen’s sued Theranos in 2016 for $140 million in damages after two years’ worth of blood testing was voided and corrections were issued. Theranos claimed that no one was harmed by the inaccurate tests, and insisted that their standards were the highest and that their methods would be vindicated.
The journalist John Carreyrou of the WSJ piece went on to write more than two dozen articles about Holmes and Theranos, and recently published a book on the subject which is being made into a movie with Jennifer Lawrence.
Forbes, which once claimed Holmes had a personal worth of $4.5 billion, now claims she is worth “nothing.” Imagine that.
*Photo credit here.
Published in Group Writing
In defense of George Shultz and the other high-profile board members who kept their faith in this company: I can see why they did. A child psychologist I heard interviewed years ago was asked why children continue to believe in Santa Clause even though they see a Santa Clause on every street corner and even though things start to indicate that those gifts are really coming from their parents. He said, “Because they want to believe.”
I think that’s what happened here. The people around Holmes wanted this to be true.
The other phenomenon that would have led them to believe in Holmes’s ability to pull this off was the 1990s Human Genome Project. This is a story of a young man who really did change the world. He had to find his own investors, just as Holmes did. Investments in these types of companies are always risky.
I think the fault lies almost completely with Holmes here.
There is a big difference between stretching the truth on a product that is not quite ready and lying about something that could have human health and safety consequences.
If I understand properly, what Theranos did is somewhat analysis to an aircraft components company selling engine parts that have not been properly heat-treated.
Not even remotely similar. It is not as if their technology worked but they just cut a corner or two in the manufacture.
At the beginning of Theranos’ attempts to find their niche, they discussed partnering with the Department of Defense for their mobile technology, and claimed to investors that they were doing so successfully. Not so, the wicked, not so…
To echo ctlaw, not even close – a product that doesn’t exist can’t pose a threat to human health.
As I understand it, Theranos was essentially vaporware.
Maybe they saw Santa Claus because they saw the movie The Santa Clause.
(the spell checker didn’t read your mind either) ;-)
Yes, that was my first impression too, and I always had a frisson of discomfort, every time I heard the word.
I think this is true, and hopethat someone does pick up the torch. Certainly, there are object lessons out there for the next guy.
I don’t fault her for the voice, if it’s “fake,” although it is a bit weird. But if her normal timbre and range is squeaky, grating or vocal fryed, that doesn’t really inspire confidence in the listener. In the clip above, I find Maria Shriver’s voice pretty annoying, just as it is.
Gosh, you mean in our sophisticated, high-tech age, people still fall for the over the top spiels from snake oil
hawkershawkettes? Who da thunk it?And General Mattis ended up on the Theranos Board.
Apparently it was a mixture of frauds.
The Theranos specific device never worked properly and could not give reliable results.
To make up for this Theranos performed analysis on analytical equipment made by others but represented it as done on its own devices.
I think that is correct, Mendel, although there are some pretty cheap blood tests available online where there is a little competition, though the same labs seem to do all the work (LabCorp and Quest, so far as I know, but maybe there are others) and no doctor’s fee to pay (though some sort of doc does sign off on them).
The imagination is a tool, and as a hammer can be used to build things or to pound in heads, the imagination can be used to project a vision for good or ill. It’s like my vision of the car-buying future. Someday, I know it will come true. But, I’m not going to start engaging dealerships to build and sell cars at the moment. Nor shall I try to sell cities and states on my new technology to grow the roads. I know my limitations, and I could not deliver on either. But, I can put the ideas out there and hope that somebody else takes them up. Waiting for someone else to do it won’t make me a billionaire, though. On the other hand, I can’t stand turtlenecks.
This delightfully-engaging conversation is part of our Group Writing Series under June’s theme of Now That’s Imagination! If this topic incited your own imagination or reminded you of another story of imagination gone wrong, we still have June 25th and 26th available. Sign up here.
Our theme for July is Understanding, which it sounds like many people in this drama could have used a bit more of. If you understand how to stay out of trouble or keep from investing in shady companies, maybe you could pass that on to the rest of us? Or, if you have a story to tell about anything else related to understanding, including epiphanies, etymology, or that drip that kept hitting you in the head, why not check out our schedule and sign-up sheet?
MamaT,
Holmes represents the modern millennial triumph of form over substance. She got everything just right. The hair, the eyeliner, the lipstick, the black turtleneck, the big-name board members. There was just one thing missing.
The product! Whoops.
Regards,
Jim
Her voice freaks me out.
Nobody’s perfect, even Jim Mattis. And I agree with @iwe, as posited in an earlier comment, that there’s no reason that, at some point, the vision should not be fully realized. In my mind, it’s somewhat analogous to the DNA testing that, a number of years ago, was highly effete and specialized, but which can now be done by Ancestry and any number of other companies for a very low fee, and in high volumes.
My point is that they were apparently selling and delivering test results that could have been incorrect. This is a separate issue from any defrauding of investors and/or business partners.
Small point, but thanks for taking the time to put a number of links in your post. Very helpful to the overall picture.
You are very welcome! I preen in your praise.
I’ve been fascinated by this story and found myself reading and listening about it a bunch, so I figured someone else might also find it interesting. So thank you.
I wonder how much of her (temporary) success was due to her looks? Clearly she had to be smart to string this along for as long as she did. And you don’t have to be good looking to be successful in Silicon Valley; Microsoft didn’t succeed because of Bill Gates charming money out of rich old women with his appearance. But Holmes clearly knew how to capitalize on her attractiveness. The contrast of the black turtlenecks and bright red lipstick with the pale face, blue eyes, and blond hair is striking, and let’s be honest here, a good looking woman will often cause male brains to not fully engage. That, the fact that people wanted to believe her product would work, and a good sales pitch make a perfect storm for investors to want to give her billions.
I think the Treasury department has that pen already.
Wasn’t there a study that showed that many CEOs show sociopathic tendencies? Many of the most successfull certainly seem neurotic and obsessive at the very least. But I imagine you kind of have to be a bit unstable to thrive in such a high stakes environment. Most normal people would cut their risk and pull out once they pocketed a few million for themselves.
Is she in jail yet?
Once you make billions of dollars, you will live in comfort the rest of your days.
I’d say about one fourth. The other three factors are her connections, her smarts and incredible amounts of hard work, but at least one fourth is sheer theater, smoke and mirrors, and sadly all the virtue is at the service of deceit and wickedness.
Sometimes the face of evil is beautiful.
I do wonder if she really believed in the beginning that she could make it work. Was it deceit and wickedness or just a refusal to admit failure and trying to hold it all together long enough for the technology to catch up to the hype – an attempt to fake it til you make it? I gotta think that once you reach the level of success she did there in 2013 or so, it would be really hard to say “Yeah, all those billions you’ve given us haven’t worked out. We’ve failed. Sorry about that.” Of course if she knew from the beginning that it would never be more than vaporware then it’s hard to argue against deceit and wickedness.
I personally think that Obama was a moderate–a moderate fascist. I mean, fascism has always had some moderate elements, and I think Obama was a moderate fascist, so of course he did lots of moderate things in addition to the fascism like redistributing wealth from poor whites/blacks to Latino immigrants (which is what his immigration orders tried to do), encouraging a moral superiority complex in the upper classes, and of course encouraging his followers to go on a witch hunt against white men.
A lot of the center-left went fascist under Obama. Center-left people no longer believe in equal application of the laws, or that civil rights are something everyone should have. They do believe in ranking demographic slices by moral virtue and allocating resources accordingly. Aside from the fascism, they also believe in free trade, tax rates that are higher than the right wants, but probably still below 50% at the top; many still support a private healthcare sector, are uncomfortable with excessive business regulation and the minimum wage, and are fans of entrepreneurs and start ups.
People like to debate whether fascism is right or left, but personally I think it’s centrist. Fascism is what happens when moderates go radical.
The sad tale of Thenaros reminds me a lot of Bre-X. Maybe because I live in Calgary (the home of Bre-X) Its on my mind more than any other random stock fraud, pump&dump scheme. Maybe its new American dream – hit the big life on the big lie.
Fantastic post, Mama Toad.
Re: comment # 8.
I read Walker Percy’s Thanatos Syndrome a few years ago. It’s a darkly funny, profound book.
The Feds recently filed criminal charges against her and the chief operating officer of the company, who she happened to be living with (a relationship never disclosed to the company board).
Most of her wealth was on paper and tied to the company. It evaporated with the public disclosures.
I dunno. That story with Melissa McCarthy in the lead would likely be hilarious. 90% more pratfalls than in the Lawrence version. I leave in a 10% chance because Lawrence is kind of a klutz.
And lost every dime of his investment. I know Murdoch is a billionaire and could afford to lose it, but it speaks well of him that he didn’t have the WSJ kill the story.