Tuesday, May 24, 2022

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    Theranos: A seemingly humanitarian company that committed a massive fraudulence

    Theranos was a blood-testing startup that claimed to perform a hundred tests ranging from cholesterol levels to genetic analysis with just a pinprick of blood.

    It was founded by Elizabeth Holmes who had dropped out of Stanford University in 2003 to focus on the foundation of Theranos. Within a year, Theranos raised funds worth USD 7 million with a valuation of USD 30 million.

    After further funding, Theranos was valued at a whopping amount of USD 1 billion. The pathology company was then known as “Real-Time Cures.”

    With further marketing and exposure, the turnover of Theranos increased to USD 9 billion making Elizabeth a multi-billionaire. Amidst the pacing success of Theranos, people started speculating the technology used by the company as Holmes never talked about it.

    In 2015, John Carreyrou, a journalist from the Wall Street Journal raised relevant questions about the same and it was eventually found that the claimed technology never really worked. The machine used for the blood tests “Edison”, had an efficacy nowhere near to what was claimed.

    According to a federal indictment, Holmes defrauded doctors and patients by:

    (1) “Making false claims concerning Theranos’s ability to provide fast, reliable, and cheap blood tests and test results. “

    (2) “Omitting information concerning the limits of and problems with Theranos’s technologies.”

    This later led to the final shutdown of Theranos on August 31, 2018. On September 4, 2018, Theranos announced in an email to investors that it would cease operations and release its assets and remaining cash to creditors after all efforts to find a buyer came to nothing.

    The rise and fall of Theranos is a great lesson of business ethics for future businessmen. Lies are fragile in the business world, often one lie leads to another leaving the company with the long list of frauds that seem impossible to rectify.

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