Editor’s note: This article was originally published in late 2015, prior to official announcements that Theranos is being investigated by multiple federal agencies due to allegations that the company misled investors about the readiness and accuracy of its blood testing technology. Yesterday, Forbes re-estimated Theranos Founder Elizabeth Holmes’ net worth at $0 after having named her America’s richest self-made women last year with an estimated value of $4.5 billion.
You won’t find Theranos in the dictionary. And you won’t find it in a textbook on Mythology next to Dionysus and Zeus. Where you will find it is on the front page of Forbes and Newsweek. Theranos is actually not a word at all. It is an amalgam of the two words that Elizabeth Holmes set out to revolutionize: therapy and diagnosis.
As a 19-year-old sophomore at Stanford, Elizabeth Holmes decided that college was only holding her back. Her work in the lab had produced what she believed to be a ground breaking technique in blood analysis. She threw caution to the wind, dropped out of school and used money that her parents had saved for her education to found her very own company. And so Theranos was born in the basement of her college home (In the basement of my college house we played beer pong and explored the fine line between a good time and alcohol poisoning. We could have used Holmes’ help to know exactly where that line is.)
Fast forward to the present day. Holmes is the world’s youngest female billionaire and her once subterranean business is now a major player in Silicon Valley with an estimated worth of $9 billion. You could say that dropping out was probably the right move. Theranos is believed to be on the cutting edge of a paradigm shift in health care. Theranos claims to be able to run hundreds of tests on a drop of blood far more quickly than could be done with whole vials and at a much cheaper price. Theranos threatens to turn Pathology as we know it on its head.
But we haven’t even touched on the most interesting part of this story. Are you ready for this? No one knows how they do it. Only Colonel Sanders and his 11 herbs and spices are shrouded in more secrecy. Theranos has attracted attention for both the ambition of its mission and the secrecy that veils its means of achieving it.
Theranos has kept its billion dollar secret for ten years now due to a regulatory gray area. Most labs perform their testing on equipment that they purchase from outside manufacturers. Before these medical device companies are permitted to sell their equipment it must be approved by the FDA; this approval makes the validity and performance of the testing available to the public. But Theranos makes their own equipment and because of this is not required to rely on the FDA for approval as long as they do not sell this equipment to any other labs. Very clever Miss Holmes.
Well surely there have been studies performed comparing the results of Theranos’ testing to the methodology currently used today? When asked this question, Holmes brought up a study that she co-authored for Hematology Reports that showed a strong correlation between Theranos and standard lab tests. This sounds fine and good until you find out that the study looked at one biomarker (C-reactive protein) in a grand total of six patients and that Hematology Reports is an online-only journal based out of Italy that charges $500 to publish an article. I’m currently collecting cans to save up the necessary funds to buy the front page for this article.
Theranos has amassed an impressive list of clients and partners (Walgreens, Pfizer and the US military to name a few), has raised over $400 million, is valued at $9 billion, has an astonishing Board of Directors (including Henry Kissinger, Sam Nunn (former US senator), Bill Frist (former US senator), George Schultz (former Secretary of State, Labor and Treasury), William Perry (former Secretary of Defense), and William Foege (former CDC head), among others) and it has accomplished all of this with little to no proof to support its technology or claims. With 40+ patents and a bullpen of lawyers on retainer it would be quite easy for Theranos to pull back the curtain and let us see the Great and Powerful Oz once and for all. The scientific community begs and pleads for answers and they remain content to keep us in the dark guessing and wanting.
If you take one thing away from reading this article I hope that it is the value of transparency. After researching this company for countless hours I am still no closer to figuring out how they do what they claim then before I started. It very well may be that Theranos has discovered a completely new and proprietary means of blood testing that will revolutionize the industry as we know it (they just happen to do it amid a level of secrecy and paranoia rivaled only by North Korea). We owe it to ourselves to never take what is given to us at face value; to delve deep into the minutia of the question at hand to find the truth that lies beneath the surface. In my business that means to constantly audit yourself and those in your employ. Only by having an unbiased, third-party audit of your billing will you be able to know for sure if the claims that are being made are accurate and forthright. We should always be cautious of those who choose to remain silent. That’s the irony of the silent strategy: It only produces more questions. And questions are always a good thing as long as they lead to the truth.
Author: Jake Vugrinac