The Blood Unicorn Theranos Was Just a Fairy Tale!

Building a startup is often compared to launching a rocket. Many brilliant and staggering ideas are brought into this startup world, some run amazingly well and some require a bit of time.

But the world of a start-up is not easy and simple as it sounds. Most of you would have heard about money scams happening around your surrounding or in your country

Well, here in this blog we are going to know about a 1.1 billion dollar startup scam.

Let's head into it...

Theranos is a blood-testing startup that developed devices, which are called "TSPUs" and "miniLabs" that were supposed to be able to do a wide range of laboratory tests on a finger-prick blood sample. It seems like Theranos founder Elizabeth Holmes really wanted to build devices that would actually do these things, and thought she could, and tried to. But it didn't work, and Theranos ran out of time: It talked Walgreens into offering Theranos tests at its stores, 1 but "it became clear to Holmes that the miniLab would not be ready" in time for the Walgreens rollout. So she went with Plan B: "Theranos never used its miniLab for patient testing in its clinical laboratory," but did a dozen tests on the earlier-generation Theranos TSPU, 50 to 60 more tests on blood-test-analysis devices that it bought from other companies and modified to take finger-prick samples, and "the remaining 100-plus tests it offered" on regular unmodified devices bought from other companies or sent out to third-party laboratories. Meanwhile, Theranos and Holmes were going around giving interviews about how revolutionary their technology was, without ever mentioning that it didn't work and they didn't use it. This got them a lot of favorable press and a $9 billion valuation, the product didn't work, and that Theranos was lying about using it, after which Theranos fairly quickly collapsed.

Theranos was once valued at $10 billion, and its leadership claimed it would revolutionize the blood-testing industry.

Based largely on the company's claims, Theranos reportedly raised roughly $724 million of capital from venture capitalists and private investors.

The technological breakthrough that CEO Elizabeth Holmes and former company president Ramesh Balwani touted was never demonstrated, and the assertions of Holmes and Balwani amounted to outright deceit.

•  Let's look at the Timeline of Theranos Rise and Fall

2003: Nineteen-year-old Stanford chemical and electrical engineering drop-out Elizabeth Holmes founded Theranos with the aim of revolutionizing blood testing.

2004: Theranos raised $6.9 million in early funding gaining a $30 million valuation.

2007: The company's valuation hit $197 million after it raised another $43.2 million in early-round funding.

2010: After further rounds of funding, Theranos was valued at $1 billion.

2013: After a decade working "in the dark," Holmes introduced Theranos to the world via press appearances and unveiled a website.

2014: With over $400 million in funding, Theranos was valued at nearly $9 billion. Holmes effectively became a multi-millionaire thanks to her 50% stake.

December 2014: Despite her company's hefty valuation, Holmes remained tight-lipped on how exactly Theranos’s technology worked. It turned out that the technology had never been submitted for peer review in medical journals.

July 8, 2015: Capital BlueCross, a Pennsylvania insurer with 725,000 customers, chose Theranos as its preferred lab work provider. Theranos was valued at $10 billion. 

October 15, 2015: The Wall Street Journal ran a scathing article criticizing Theranos.

Holmes appeared on "Mad Money" and other media outlets to do damage control. She was “shocked” by the Wall Street Journal article and claimed that Theranos supplied over 1,000 pages of documentation to refute the allegations. The Wall Street Journal stood by its reporting.

October 16, 2015: A follow-up article in the Wall Street Journal stated that Theranos was forced to suspend the use of its unapproved container for all but one type of blood test.  

October 27, 2015: The FDA released two partially-redacted Form 483 reports from an ongoing investigation into Theranos.

October 28, 2015: Fortune reported that Theranos had sought to raise an additional $200 million in Series C-3 funding just days before the initial Wall Street Journal article was published.

November 10, 2015: A $350 million deal with Safeway fizzled out after Theranos failed to meet key deadlines for rollouts and Safeway executives questioned the validity of the test results.

December 27, 2015: The Wall Street Journal ran another article alleging management ineptitude at Theranos and test rigging to produce better results for its Edison machines.

January 27, 2016: The Centers for Medicare & Medicaid Services (CMS) releases its damming report on Theranos' California-based lab.

January 28, 2016: Following the CMS report, Walgreens Boots Alliance Inc. (WBA) decided to temporarily close the Theranos Wellness Center in its Palo Alto store and suspend its use of Theranos's Newark, Calif. lab.

May 1, 2017: Theranos settled a lawsuit with Partner Fund Management, one of its largest investors, after the hedge fund accused the company of securities fraud. Theranos had previously settled proceedings with the Centers for Medicare & Medicaid Services and the Arizona Attorney General.

March 14, 2018: The SEC charged Theranos, its founder and CEO Elizabeth Holmes, and its former President Ramesh "Sunny" Balwani with massive fraud.

$10 billion

Theranos's valuation was at its height in 2015. 

June 15, 2018: A federal grand jury indicted both Holmes and Balwani on nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

• FAQ's

Is Theranos Still Open?

Theranos started shutting down its clinical labs and wellness centers in late 2016, finally ceasing operations in September of 2018.

Is Elizabeth Holmes Still Wealthy?

According to Forbes, by June 2016, Elizabeth Holmes' net worth dropped from $4.5 billion to "nothing."

FROM : 

Divyashree Chavan

Asst. Event Director, ELESA