Theranos saga: the rise, the fall, and the trial of disgraced founder Elizabeth Holmes

Thursday, September 9, 2021 by Robinhood Snacks | Disclosures

Not a chapter in the Twilight saga... but this story features blood, drama, and bad actors. Yesterday kicked off the trial of Elizabeth Holmes, the disgraced founder of blood testing startup Theranos. The Theranos saga has spawned a book, a documentary, a miniseries, and an upcoming movie — but we're Snack-ifying it.

  • The company... was seen as revolutionary. Theranos claimed it had devised blood tests that, using only a few finger pricks of blood, could detect hundreds of health conditions from cancer to high cholesterol — and make lab testing more accessible.
  • The founder: Holmes dropped out of Stanford at 19 to start Theranos, grew it to a $9B valuation, and became the youngest female self-made billionaire. She saw herself as the female Steve Jobs, even sporting the black turtleneck.
  • The come-up: Theranos raised $700M+ from big investors, and had partnerships with companies like Walgreens, which planned to open Theranos testing in-store.
  • The scrutiny: In 2015, scientists started raising questions about Theranos' secretive testing tech, and the FDA began investigating. Then, a bombshell WSJ report found that Theranos was running its samples through the same machines used by traditional blood-testing companies, since its own machine wasn’t accurate.
  • The fall: In March 2018, Theranos and Holmes were charged with "massive fraud" by the SEC for allegedly lying to investors and customers. Ramesh Balwani, Theranos’ former president and Holmes’ ex-boyfriend, is facing the same charges in a trial set for 2022. Both have pleaded not guilty.

The trial... is high stakes. If convicted, Holmes faces up to 20 years in prison, plus $2.7M in fines, plus restitution to victims. Think: investors who lost money, and thousands of patients who were wronged by Theranos — like people who received false HIV-positive results. The trial is expected to last three months, and legal experts say the prosecution has a strong case.


Holmes is a cautionary tale... To the "move fast and break things" ethos of Silicon Valley culture. Recent SV falls-from-grace share one feature: highly charismatic founders who sold investors on larger-than-life ideas. Think: WeWork's Adam Neumann and Nikola's Trevor Milton. But it's rare for a CEO to face trial and 20 years in jail.