Daily Recco, April 14: The Inventor details an extraordinary fraud
Elizabeth Holmes was billed as ‘the next Steve Jobs’ with the promise of a health technology that had no basis on the ground.
Elizabeth Holmes was all of 19, in 2003, when she emerged on the horizon of American health technology claiming to have made a revolutionary invention – a breakthrough blood test which needed blood as less as a drop to perform multiple tests very rapidly using small automated devices the company had developed.
Holmes created a startup named Theranos to sell the dream of a health revolution to the world starting off from Silicon Valley. The company raised over US $700 million (Rs 5,263 crore) from venture capitalists and private investors. The dream run of Holmes, then billed as “the next Steve Jobs”, looked unstoppable by 2013-2014 when the valuation of Theranos climbed to $10 billion.
The company’s valuation multiplied itself several times over between 2003 and 2013 even as the company’s promised testing machines failed to pass even the company’s own tests. Murmurs of the wrongdoings within the company were silenced through sackings and a strict segregation of employees where one group won’t talk to the other. Theranos put its staff under a lens.
Holmes, however, ran out of luck in 2015 when medical researchers and investigative journalist John Carreyrou of The Wall Street Journal questioned the validity of technology under use.
Legal challenges mounted just as quickly as the company’s fortunes had risen. The legal and commercial hardships came the company’s way from medical authorities, investors, the US Securities and Exchange Commission, former business partners, patients, and umpteen others. Estimates suggested Holmes’s net worth plummeted from US $4.5 billion to zilch.
But Holmes so firmly believed that she was doing the right thing by duping everyone that she didn’t give up. It 2017, just when the company was nearing bankruptcy it secured a US $100 million loan from Fortress Investment Group. The loan took the company nowhere since it had no technology to do what it claimed it could.
The company was dissolved in 2018. The Inventor: Out for blood in the Silicon Valley recaptures the rise and fall of Theranos and the rise and refusing to accept the fall of Elizabeth Holmes. Directed by Alex Gibney, The Inventor is a baffling tale of how Homes pulled out the fraud and managed to silence whimpers of criticism for over 10 years till ‘blood’ hit the fan. The 1 hour 53 minutes documentary has been produced by HBO Documentary Films. The documentary is interspersed with accounts of people who worked closely with Holmes and Theranos COO Sunny Balwani (both were thought to be in a relationship too) along with the real footage of Holmes and Balwani. Retrospectively, we know, the duo was lying through it all to investors, partners and patients.
How could Holmes pull it off? A major reason was her hobnobbing with the rich and powerful. Theranos lured these people on its side using different baits as investors, consultants or board members. The lured lot included the likes of David Boies, George Shultz, Henry Kissinger, Sam Nunn and Bill Frist.
Watch the documentary to know the story of one of the most amazingly and easily pulled off frauds. Where? Disney+ Hotstar.