Believing A Fairytale: Elizabeth Holmes' Downfall

Elizabeth Holmes

On Tuesday, Elizabeth Holmes will be imprisoned in Texas. She was a startup founder who was famous beyond Silicon Valley, but her fall from grace is stunning.

Holmes is 39 years old. She made a promise to change the medical world. In January 2022, she was found guilty of deceiving investors in her company, Theranos. Holmes was convicted on four counts.

Holmes, who was once a hot-shot in tech world, made a shocking move. She quit Stanford in 2003 when she was only 19. Her aim was to revolutionize medical diagnosis.

She had created a new technology for testing blood. The technology could do many tests with only a small amount of blood. This would mean that big blood samples would not be needed.

Theranos kept secret for a long time. In 2013, it got famous and people talked about it. Holmes became well-known too. She had blonde hair, wore black turtle necks, and had a deep voice.

Margaret O'Mara, a Silicon Valley historian who teaches at the University of Washington, said that Elizabeth Holmes was posing as a female Steve Jobs. People were drawn to her story because of her looks and charisma.

John Carreyrou, a Wall Street Journal reporter, revealed that Holmes would have been the first female tech leader to become a billionaire. Many people supported her and wrote letters of encouragement, especially young girls. Her story was a symbol of progress for women in a male-dominated industry like Silicon Valley.

Holmes and Balwani were in charge of Theranos. They raised lots of money from investors. Important people like Mattis, Shultz, and Kissinger were on the board. But Theranos had problems proving its claims. They made a deal with Walgreens to sell their devices in pharmacies.

Theranos was once worth $9bn and Holmes became the youngest female self-made billionaire in 2015. But things went wrong that year.

In 2015, Carreyrou wrote an article that showed Theranos's technology wasn't as great as it seemed. After that, Carreyrou continued to prove that the devices Holmes said could do many medical tests with a single drop of blood were not being used for most tests.

Regulators looked at Theranos closely. So, the company withdrew its tests and machines. In June 2018, Holmes quit as CEO. Then, the company shut down that same year.

Holmes agreed to the SEC's accusations of a big fraud. The US government also charged her and Balwani with deceiving investors and patients. They made false statements about their product's efficiency.

The trial, which was talked about in the media, started in August 2021. It was postponed because of the pandemic and Holmes’s baby. The trial went on for four months. The jury in San Jose heard things from ex-workers, investors, and Holmes.

Holmes gave a statement where she said she believed Theranos's tech was better than it actually was. Her defense team claimed that Balwani had a hold on her.

In the end, the jury found her guilty of cheating investors. She got convicted for four counts. In November 2022, she got sentenced to prison. She will stay there for more than 11 years.

Holmes being convicted was a big deal in Silicon Valley. The "fake it till you make it" mentality has been around for a long time in this industry.

Jason Calacanis is an investor from Silicon Valley. He was an early investor for Uber and Robinhood. He said the verdict reminded founders of something.

In a tweet, he said to always be truthful about your progress when asking for money. Don't lie or exaggerate. Stay honest.

Workers in the industry had a significant moment too. Past Theranos employees spoke out in the trial, saying they had doubts about the company's abilities but were scared to ask questions. They thought they could get sued if they spoke up.

Holmes was free on bail after her indictment. She requested to stay out of custody to seek a new trial after sentencing. However, her appeal was unsuccessful.

Before going to jail, she spoke to the New York Times about her experiences at Theranos, her errors as an entrepreneur, and her family life with husband Billy Evans.

Holmes goes to federal prison camp Bryan in Texas. She has to serve 85% of her sentence according to the law. She'll have supervised release for three years after it ends. She also has to pay $452m in restitution to fraud victims.

Holmes will serve in a prison with white-collar and non-violent female prisoners. The prison is not highly secure and has no fences or strict rules. It is a work-focused program where inmates must work for at least 90 days.

Read more
Similar news
This week's most popular news