The dramatic ascent and downfall of the blood testing company Theranos has played out in the public eye in spectacular fashion. And some think the blame can be placed not only on founder and Chief Executive Elizabeth Holmes, but also on the media which created so much hype around the company.
“We were all excited about the possibility [of Theranos],” said Marco Della Cava, technology and culture writer at USA Today, who conducted one of the first interviews with Holmes back in July 2014. “Did we understand phlebotomy? Did we understand what sort of devices she was creating? Probably not.”
And when journalists did ask probing questions, they were met with “convoluted and confusing statements and also they chalked it up to ‘this is trade secrets,’” said Polina Marinova, Associate Editor at Fortune magazine, which did a cover piece on Holmes that June.
Holmes convinced investors that Theranos’ technology could analyze a single drop of blood, which would revolutionize the healthcare industry. Holmes, a Stanford dropout, got millions of dollars in backing from the likes of Rupert Murdoch, and at 19 she was declared the youngest self-made billionaire in the world. At its peak, the company was worth $9 billion.
The problem was the technology she was peddling didn’t actually work. And eventually the illusion shattered.
On Wednesday, Holmes and Theranos’ former President Ramesh “Sunny” Balwani were charged with “massive fraud” by the Securities and Exchange Commission. As part of her settlement, Holmes will have to return her shares in the company, pay a $500,000 fine, and be barred from serving as president or director of a public company for 10 years. Balwani didn’t reach an agreement.
Going forward, a fraud of this scale “will make it harder for [other] biotech companies to raise money,” said Marinova. “At least it’s going to prompt investors to ask more probing questions when they’re doing their due diligence.”