That of Elizabeth Holmes is a story that is told with a straight line. A vertical, oblique, inclined downwards. A line that speaks of a fall without brake or airbag from the billionaire skies to the judicial mire, from the 4,500 million dollars in which his net worth was estimated in 2015 to the 3,600 that he already marked in 2016. And from there descending to the zero in those estimated today.
This is how the chronicle of her wealth is summarized —succinctly, but powerfully graphic— by Forbes, the same magazine that once dedicated its cover to her, labeled her as a paradigm of self-made-woman and, along with other media, contributed to creating a legend that was promised brilliant for later prove fraudulent. And fraudulent goes (also) in the purely judicial sense of the expression.
Elizabeth Holmes’s is one of those stories of disappointments and resounding business bumps that are so well known in Silicon Valley, the same genre that not so long ago added a new chapter with Sam Bankman-Fried, former CEO of the once powerful exchange FTX and who, with a progression almost as meteoric as Holmes’s, he went from crypto “white knight” to black sheep of the industry.
Despite the scope, resonance, and even seismicity levels of the fall of Bankman-Fried, the case of Holmes has been perhaps more mediatic. And it has been like that because of his ingredients. And for the multiple readings that he leaves.
Let’s recap.
The dream of amassing a fortune
In 2015 Holmes was something like the story of the self-made-woman made flesh and raised to its umpteenth power. Her brilliant career had led her, at just 31 years old, to star in extensive reports —when not monothematic covers— in Forbes, Fortune, Inc or The New York Times Style Magazine. It was said of her that she pointed out ways to become “the next Steve Jobs”, who was called to stand out in biotechnology and revolutionize the health sector.
Beyond the labels or predictions, his skill as a businesswoman, the same one that had allowed her to become the youngest self-made billionaire in the world. It was not be for lowerly. At just 30 years old, her assets were estimated at 4.5 billion dollars and in 2015 she was ranked sixth on the list of the richest businessmen in the US under 40 years of age.
His story had the ingredients of the best business epic.
During his high school years, he started a business selling software to Asian universities and years later, in 2003, at just 19 years old, he decided to leave his chemical engineering studies at Stanford University, where he was studying with the support of a generous scholarship. of 3,000 dollars a month, to launch his own startup: Theranos, a brand resulting from the sum of ‘Therapy’ and ‘Diganosis’.
The objective? Revolutionize diagnostic and laboratory tests. And maybe, incidentally, fulfill his old childhood dream of becoming a billionaire.
In October 2014, Forbes estimated Elizabeth Holmes’s net worth at $4.5 billion. Anointing her the world’s youngest self-made female billionaire at the time.
Two years later, Forbes revised its estimate to $0. pic.twitter.com/Keu74waSoJ
— John Pompliano (@JohnPompliano) April 10, 2021
“Wouldn’t you rather be president?” a relative asked her when she was a child, according to journalist John Carreyrou in his book ‘Bad Blood’. “No, the president will marry me because I will have a billion,” replied little Holmes. Well, of those three wishes, the businesswoman only achieved one, to amass ten-figure wealth. The thing about the president and revolutionizing diagnostics fell by the wayside.
His proposal to achieve this was actually quite simple. At least on paper. Theranos, a firm that Holmes founded in 2003 and of which she would later take the reins as chief executive, promised a substantial change in medical testing. With a few drops of blood, she claimed, she could perform hundreds of medical tests in the laboratory. Goodbye to the fear of needles, to the intimidating tubes of samples, to the pain of the syringe in the infirmary. A small puncture and state-of-the-art machines were enough in Theranos’s dream to diagnose dozens of diseases. And in a matter of minutes.
Holmes was helped by his origin, linked to ancestors from Hungary who had excelled in science, entrepreneurship and the ability to reach influential positions, and his own ties. His first million dollars, according to El País, was achieved thanks to Tim Draper, a venture capital investor and father of one of his childhood friends. From there, other large and influential investors arrived, such as former president Bill Clinton, Carlos Slim or Ruper Murdoch. The company board included Henry A. Kissinger himself.
company speech, advertising of its supposed scientific and technological advances, the success of its investment rounds, the exposure of Holmes herself in international media, the agreement with one of the large pharmaceutical distributors in the US… They contributed to the traction of the company, which for 2009 was already valued at around 9,000 million dollars.
The problem is that that story of success and disruptive technology was basically that, a story. More of a paper thing —be careful, not scientific papers— than of reality. The alerts jumped first among the company’s employees: the tests were slow and many of the analyzes were carried out with machines purchased from Siemens, a multinational with which the startup precisely aspired to compete.
It was an investigation by The Wall Street Journal that pointed out part of that panorama and cast doubt on the real scope of the work carried out in Theranos. At the beginning of 2015, even the JAMA, Journal of the American Medical Association, revealed its concern: that startup —he insisted— was selling publicly “novel approaches for diagnostic tests”, but the reality was that little of it ended up being reflected in the peer-reviewed biomedical literature, the true reference for the sector.
A search by the Journal of the American Medical Association itself had turned up only a couple of articles citing Theranos, and none of them actually offering any information about the company.
The outcome of all that was much more predictable than the heights of billionaire success to which Holmes climbed in his ascendant stage. The company ended up being singled out for alleged fraud against patients, investors and doctors and the case reached the courts, with Holmes and Ramesh Balway, her former business partner and ex-boyfriend, at the center of the hurricane. In the fall of 2021, it was pointed out that the entrepreneur designated in her day as “the next Steve Jobs” he faced 20 years in jail.
They will not be so many, but everything indicates that Elizabeth Holmes will hardly escape spending a long time in prison. In November, a US judge sentenced her to more than 11 years in prison —135 months, to be precise— for fraud and property damage estimated at around 385 million dollars, a figure that is also far from the 800 million estimated by the accusation.
“This is a case of fraud in which an exciting undertaking generated high expectations and aroused hope only to be cut short by misrepresentation, arrogance and simple lies”, lamented the magistrate, Edward Davila, for whom his interpretation of what happened is clear: Holmes “got intoxicated with the fame”.
Not all pose the same, of course. The process was marked by Holmes’s arguments about Balwani’s responsibility and the speech that his is more a case of business ambition than a deliberate plan to defraud: “Failure is not a crime,” one of them even argued. their lawyers.
To its history, the one that is so well summarized in a straight line precipitating from the billionaire heights, they could still be left, however. more chapters.
At the end of last year The Guardian specified that a hearing had yet to be set to set the amount he would have to pay as restitution and that his lawyers would probably ask that Holmes remain free on bail while the sentence is appealed, thus avoiding the date already scheduled. for delivery: April 27. You won’t have it easy. Federal prosecutors have shown their opposition to being released while the appeal is being resolved.
The former businesswoman is married to a rich heir to the hotel sector and, according to various media outlets in November, she would be expecting her second child.
What remains of course is a lesson for Silicon Valley investors. “are paying attention. Going forward, founders will be much more careful what they say in the startup phase because it shows that the government will hold them accountable,” Neama Rahmani of West Coast Trial Lawyers and a former federal prosecutor said late last year when the sentence was known.
Images: TechCrunch (Flickr)
