Theranos Hit a $9 Billion Valuation Without Building Working Blood Tests

In 2003, Elizabeth Holmes dropped out of Stanford's School of Engineering at the end of her sophomore year and founded a medical-device company in Palo Alto. She was nineteen. The company was originally named Real-Time Cures; the legal team made her change it because, as Holmes later said, the word "cure" frightened investors. The new name was Theranos. The pitch was that a small benchtop device could run hundreds of laboratory tests on a single finger-prick of blood — replacing the venipuncture and centrifuge workflow of clinical laboratories with something a drugstore pharmacist could operate.

For the next decade Theranos cultivated investors, board members, and a magazine cover image of Holmes in a black turtleneck that explicitly evoked Steve Jobs. By 2013–2014 the company had raised over $700 million, taken on a board including Henry Kissinger, James Mattis, and George Shultz, signed a partnership with Walgreens, and reached a private valuation of about $9 billion, of which Holmes's stake was worth a paper $4.5 billion.

The technology never worked. Patients in Walgreens locations were having blood drawn into Theranos containers and then quietly handed off to conventional Siemens analyzers in the back. The Theranos "Edison" device, when used at all, produced unreliable readings. Wall Street Journal reporter John Carreyrou, working on a tip from a former employee, broke the story in October 2015 with documents showing the device's actual error rates. The Stanford epidemiologist John Ioannidis had already pointed out, earlier that year, that Theranos had published no peer-reviewed validation studies. The company shut down on September 4, 2018. Holmes was convicted of four counts of wire fraud on January 3, 2022, and sentenced to 11 years and 3 months.