Beginning in the early 2010s, Elizabeth Holmes, a youthful businesswoman, and her organization Theranos became a global sensation. According to the biotech startup’s assertion that it had created a revolutionary device, a single drop of blood could be used to conduct hundreds of medical tests. Large-scale investments in Theranos came from some of the most well-known figures in Silicon Valley, and the company even put Holmes on the cover of Forbes. Theranos’ technology proved to be too excellent to be true over time, though, and as a result, the business fell apart quickly and dramatically. What went awry with Theranos will be examined in more detail in this piece.
The Rise of Theranos
Elizabeth Holmes, who left Stanford at 19 to follow her dream of revolutionizing the medical field, established Theranos in 2003. The company’s goal was to create a system that would replace conventional, invasive blood tests by allowing a variety of medical tests to be performed using just a tiny blood sample. Theranos claimed that its Edison technology, which could perform up to 240 various tests from a single drop of blood, was quicker, less expensive, and more practical than conventional testing procedures. High-profile financiers like Larry Ellison, Rupert Murdoch, and Betsy DeVos soon took notice of Theranos and invested. The business had agreements with Safeway and Walgreens to provide testing services in their stores by 2014, when its market valuation was $9 billion.
The Fall of Theranos
The technology of Theranos was never verified or authorized by governing bodies like the FDA, despite the company’s hype and promises. In reality, Theranos’ technology was shown to need to be more accurate and reliable in internal papers and whistleblower accounts. Employees stated that most of the company’s tests were conducted using commercially available testing tools, with only a small number of tests utilizing the company’s proprietary technology.
The Wall Street Journal’s 2015 publication of a series of stories detailing the company’s dubious business practices and lack of openness dealt Theranos its first significant setback. According to the reports, Theranos only occasionally used its proprietary technology and instead used conventional blood testing techniques for most of its studies. Theranos’ technology had significant accuracy problems, according to the stories, and some tests produced widely disparate findings.
Regulatory authorities started looking into Theranos due to the Wall Street Journal’s story, and the company’s alliances with Safeway and Walgreens broke up. The SEC and the Department of Justice ultimately filed fraud charges against Holmes, who was then made to resign as CEO of Theranos. In 2018, the business eventually declared insolvency.
What Went Wrong?
Why did Theranos fail, then? Several variables caused the company’s demise.
Several reasons caused the collapse of Theranos. First and foremost, regulatory bodies like the FDA never verified or authorized the company’s proprietary technology. Although the company asserted that its technology was better than conventional blood testing procedures, it never presented its technology for FDA validation or clearance, so it was impossible to determine whether the tests were accurate or trustworthy.
The question of transparency came up next. Theranos was well-known for keeping its technology and operations under wraps, and the company’s management was charged with threatening and stifling reporters who expressed concerns about the company’s methods. Because of this lack of transparency, investors and authorities found evaluating the company’s technology and business practices challenging, which hurt its confidence.
The problem of leadership came up third. However, a convincing and charming leader, Elizabeth Holmes, was criticized for being a micromanager who surrounded herself with sycophants and yes-men. Former workers claimed that Holmes would chastise and bully workers who raised concerns about the company’s procedures. This attitude of coercion and fear eventually hindered creativity and created a toxic work environment.
There have also been allegations of Theranos making false or deceptive claims, such as the claim that its technology could perform up to 240 different tests from a single drop of blood, even though the company’s technology has never been able to produce such findings. Due to this, several significant alliances broke up, and investors lost confidence in the business.
Conclusion
In conclusion, the rise and fall of Theranos serve as a cautionary tale for the biotech industry and the business world at large. It highlights the dangers of hype and the importance of transparency, ethical responsibility, and regulatory oversight. It also underscores the need for diverse perspectives in leadership and the importance of cultivating a culture of accountability and integrity in startups.
