Once touted as the “next Steve Jobs”, things were not always this bad for this Silicon Valley Star.

Let’s take a closer look at the rise and fall of Elizabeth Holmes.

Who is Elizabeth Holmes?

Born on 3 February 1984, Elizabeth had shown signs of thinking outside the box. A native of Washington DC, her mother Noel used to be a Congressional committee staffer while her father, Christian Holmes, worked for Enron – an American energy and services company. He later switched to work for government agencies like United States Agency for International Development (USAID).

At the age of nine, Elizabeth wrote a letter to her father penning her dreams and aspirations. In the letter, she said, “What I really want out of life is to discover something new, something that mankind didn’t know was possible to do,” according to a report by CBS News.

The entrepreneur inside her started to play out at a very young age when as a teenager she started her own business where she sold C++ compilers – a computer code – to Chinese schools.

Her inspiration for getting into the field of medicine came from her great-great-grandfather who was a surgeon. Along with this, her own fear of needles and injections played out well for her as it gave her the idea of starting her company Theranos.

A brilliant student, Holmes went on to study chemical engineering in Stanford University, where she became a “president’s scholar”, an honour which offered $3,000 stipend for research projects.

According to a report by Fortune, in 2003, Holmes (then a sophomore at Stanford) approached her professor Channing Robertson and pitched the idea of starting a company. Impressed by her proposition and keeping in mind her experience of working in a lab at the Genome Institute in Singapore, Robertson said, “I knew she was different. The novelty of how she would view a complex technical problem–it was unique in my experience.”

She soon thought of the idea of creating a wearable patch that would not only administer a drug but would also monitor variables in the patient’s blood to see if the therapy was registering the desired results, without the use of any needle.

When asked why she came up with such an innovation, Holmes said, “Because systems like this could completely revolutionize how effective health care is delivered. And this is what I want to do. I don’t want to make an incremental change in some technology in my life. I want to create a whole new technology, and one that is aimed at helping humanity at all levels regardless of geography or ethnicity or age or gender.”

However, not everyone was on board with Elizabeth’s idea. Sceptics like Phyllis Gardner, an expert in clinical pharmacology at Stanford recalled telling Holmes that her idea “wouldn’t work”.

He told BBC, “She just stared through me. And she just seemed absolutely confident of her own brilliance. She wasn’t interested in my expertise and it was upsetting.”

Nothing stopped Holmes. At the age of 19, she dropped out of Stanford and launched a better version of Theranos in 2003 which, she claimed, had the potential to revolutionise the way of testing blood from a simple finger prick.

The meteoric rise of Theranos

The seed idea of Theranos, the ‘Edison’ testing kit brought in many investors to give the push the company needed.

Edison was a machine that could test a variety of diseases by using only a few drops of blood from a person’s finger. It promised to transform blood testing methods around the world.

Apart from this, Theranos also planned to charge half the price of testing services like Medicare and Medicaid in the US, which would have potentially saved the government over $200 billion over the next decade.

It was also hoped that Edison would democratise the testing process, allowing anyone to get a test done at a pharmacy and have it analysed in a matter of a few hours.

Her idea caused a lot of stir and she was able to convince a number of high-profile investors within the next couple of years.

According to a report by Reuters, in just a year, the company raised more than $6 million in funding and reached a valuation of $30 million. By 2009, Ramesh “Sunny” Balwani, who met Holmes in 2002 on a trip to Beijing, joined Theranos as the Chief Operating Officer.

The very next year, the company raised another $45 million in funding, shooting its valuation to $1 billion. In 2011, two former US state secretaries, George Shultz and Henry Kissinger, and media tycoon Rupert Murdoch among others became backed Holmes’ business.

In September 2013, Holmes revealed her long-term partnership with Walgreens – a pharmacy store chain. According to CNN, the first Theranos Wellness Centre was opened in Walgreens in Palo Alto where consumers could access Theranos’ blood test.

Forbes declared Elizabeth Holmes as one of the richest women in America in 2014.

In 2015, the company won US Food and Drug Administration’s approval for a test to detect herpes simplex 1 virus.

The fall

The company’s fall was as sharp as its rise.

The secrets began to unravel when a 2015 Wall Street Journal investigation exposed that Theranos had only performed roughly a dozen of the hundreds of tests it offered using its proprietary blood testing device which also put a question mark on its accuracy. It was revealed that the company was relying on third-party manufactured devices from traditional blood testing companies.

Angry investors revoked their partnerships with Theranos while a number of lawsuits were filed against it. In 2016, the US Centres for Medicare and Medicaid Services (CMS) presented a report that said that one of the company’s facilities presented “jeopardy to patient health and safety”. Soon, US regulators banned Holmes from carrying out blood-testing services for two years.

By June, Walgreens, one of the company’s biggest partners, ended terms with Theranos followed by a lawsuit by Partner Fund Management, which had invested heftily, over securities fraud.

In March 2018, the US Securities and Exchange Commission charged Elizabeth Holmes and Ramesh Balwani with securities fraud and Holmes was stripped off of her stake and control of the company. Both plead not guilty.

Within six months, Theranos announced that it will dissolve.

In August 2021, according to a report by Al Jazeera, a court revealed Holmes’ planned to argue that she was under the control of Balwani, who she claims was abusive, at the time of the charged crimes.

The conviction

“She knew that they were investing in Theranos based on a false premise. She was aware of the mismatch between what she was presenting to investors and reality,” said prosecutor John Bostic on Friday (18 November) during the trial, as per a report by NPR.

In January 2022, Holmes was convicted of defrauding three other investors. She was, however, acquitted on three counts of defrauding patients who had paid for Theranos’ tests.

The sentence imposed on her on Friday by US District Judge Edward Davila was shorter than the 15-year penalty requested by federal prosecutors. It was, however, far tougher than the leniency her legal team had requested for the mother of a one-year-old son with another child on the way.