Elizabeth Holmes: How Theranos founder went from billionaire darling of Silicon Valley to prisoner

Theranos made Elizabeth Holmes America's youngest self-made female billionaire. She boasted its technology would revolutionise health care, but an exposé plummeted it.

"Don't be concerned about the future; we're in capable hands." So says former US President Bill Clinton in 2015, as he presented Elizabeth Holmes to a cheering gathering in New York.

At the time, it appeared like an uncontroversial comment, as he lauded the accomplishments of a lady who had become America's youngest self-made female millionaire after storming Silicon Valley.

Only the affluent white guys who were constantly behind them - turtleneck sweaters and sophisticated trouser-sneaker combinations in tow - were more associated with this notorious area of northern California than scientific advancements and new devices.

Holmes was a true gatecrasher, her remarkable ascension to the cover of Forbes magazine fueled by her founding health technology startup Theranos and its swift advance to a peak value of $9 billion. When considering what it promised to give, it's simple to understand why.

At the centre of its appeal were revolutionary blood tests, which could be conducted in record time with only a little drop - and no needles.

Because the technology her business designed could screen for dozens of illnesses in one shot, Holmes' tagline became "transform the world."

She argued that it would alter healthcare in the United States, not only by speeding up and simplifying doctor appointments, but by ultimately making such visits unnecessary by selling the gadgets in shops.

It took more than a decade for such claims to be revealed as science fiction. However, Holmes' unabashed willingness to talk the talk still helped her become one of Silicon Valley's darlings, garnering hundreds of millions of dollars from investors and venture capitalists.

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As Theranos grew, her public image was perfected to make her the perfect face of one of America's most exciting companies, famously adopting the turtlenecks above from her idol, late Apple founder Steve Jobs, and speaking in a strikingly deep voice that added extra gravitas to her every word.

Fame isn't for everyone, but it felt natural to Holmes. Nothing could go wrong, it seemed, until it happened. It's a big deal.

How the deception was uncovered

Holmes' business started to crumble when The Wall Street Journal published a stunning investigation revealing that Theranos' technology was profoundly defective.

The devices used to collect people's blood, branded "nanotainers" by the company, were reported to be so inaccurate that Theranos has been utilizing other firms' equipment to do blood tests in its facilities.

The most disturbing aspect of the Journal's investigation was that the company's ex-chief scientist, British Ian Gibbons, attempted suicide after informing his wife that the technology did not work. He died soon after due to liver failure.

The allegations surfaced about a month after Holmes shared the stage with Bill Clinton.

When Theranos went bankrupt in 2018, three years after the Journal's story, Sky's Ian King characterised an almost cult-like atmosphere among its leaders and personnel, as well as excessive secrecy, as vital to the business having the wool firmly pulled over the public's eyes until then.

Neither is unique to Silicon Valley – some of the huge tech personalities who have arisen over the years continue to be a weird object of adoration in certain sections of the internet – but they have seldom combined to such devastating effect.

John Carreyrou, the journalist who broke the news, has subsequently authored a book on the incident called Bad Blood, which is set to be made into a feature picture. The fact that it's being made by Apple, whose late co-founder was a source of inspiration for Holmes, is a possibly cruel irony.

Her ascent and collapse inspired a successful podcast series called The Dropout and a later Hulu series starring Amanda Seyfried.

Holmes is shown in the program as a bold, brilliant, single-minded young lady driven to achieve, and she is initially easy to cheer for. "Honestly, it's just extremely thrilling to me because you're a young female CEO, instead of a cocky little kid in a hoodie," Apple designer Ana Arriola tells Holmes in a scene after the unveiling of the first iPhone.

But Holmes' desire to become a rich biotech star gradually overpowers all other inclinations, including a willingness to speak the truth.

It's a quality that has made some employees uncomfortable, including Gibbons and Arriola, who characterizes her experience at Theranos on her LinkedIn profile as "altruism via corrupt unethical science-fiction."

How a life fell apart

Carreyrou's claims, which Holmes confessed he tried to quiet, prompted probes by US medical and banking officials. In 2018, the now 34-year-old was facing criminal charges which were previously unimaginable.

She and Theranos's president, ex-lover Romesh Balwani (who she has since accused of sexual assault), were charged with "a multi-million-dollar scheme to defraud investors, as well as a separate scheme to defraud doctors and patients," and each faced two counts of conspiracy to commit wire fraud and nine counts of wire fraud.

Among those duped were Rupert Murdoch and the American pharmaceutical behemoth Walgreens, while Theranos had recruited comparable high-profile individuals to Theranos' board of directors.

Former secretary of state Henry Kissinger and George Shultz were among them, as was an ex-director of the US Centres for Disease Control.

They'd all been duped by Holmes, who launched Theranos at 18 and rapidly learned how to give her funders precisely what they wanted - what she needed them to hear.

According to Eric Jackson, a company entrepreneur and author of The PayPal Wars, "there is almost intrinsic to the system a desire to, I don't want to say embellish, but to give a compelling story to investors." At some point, hype must align with credibility; else, you're engaging in plain old-fashioned fraud."

Whether it was a delusion, the pernicious "fake it 'til you make it" ethos that permeates American startups, or something more sinister, Holmes claimed throughout her trial that she first thought her company's ostensibly groundbreaking blood tests were genuine.

"I tried to emphasise the effect the firm may have on individuals and health care," she said of her discussions with investors in court.

According to authorities, such claims were made by a lady "out of time and out of money."

After launching her firm with family cash intended for her Harvard education, pushing it mainstream required doing whatever it needed to attract big-name investors and venture capitalists.

Former US Secretary of Defence Jim Mattis, who joined the company's board, said in court: "There simply reached a time where I didn't know what to believe in Theranos any more."

'She chose falsehoods when honesty was required.'

Holmes was sentenced to more than 11 years in jail on Friday after being convicted of fraud earlier this year, her years-long scheme failing to affect the jury as it did her supporters.

Following a case that captivated the globe, much as her ascent to stardom did, US federal prosecutors requested the court to sentence her to 15 years in prison, and a penalty deemed fitting for "one of the most significant white collar offenses Silicon Valley or any other district has seen."

Balwani's sentence has been delayed until next month after he was convicted of fraud offences in a separate trial.

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"She frequently chose falsehoods, hype, and the potential of billions of dollars above patient safety and fair dealing with investors," argued assistant US attorney Robert S Leach in a 46-page brief last week.

"Elizabeth Holmes' sins were not failing, but lying - lying in the most severe situation, when everyone expected her to speak the truth."

An 82-page counter-document from Holmes' lawyers said her reputation had been irrevocably and unjustly ruined, as it had converted her into a "caricature to be ridiculed and hated."

They sought a sentence of no more than 18 months.

More than 130 friends, family members, previous investors, and workers have also written to the judge, Edward Davila of San Jose, California, pleading for mercy.

Senator Cory Booker praised Holmes, who is still just 38 years old, as someone who "can, despite flaws, make the world a better place."

She won't be able to do so from behind bars, whether that's true or not.