I’ve been obsessed with the story of Theranos. I’ve written about it extensively. I’ve consumed every podcast, TV show and book on the topic. And while I loved following the rise (with more than a bit of skepticism), the downfall has been even more captivating. The dirty laundry the saga exposed — greed, lies, toxic culture, venture capital delusion and sheer fucking hubris — was a fascinating peek at the filthy underbelly of Silicon Valley and the wrongly heralded 'fake it till you make’ strategy. Ultimately, Holmes was sentenced to over 11 years in prison (her cofounder Sunny Balwani got nearly 13 years). With that ruling, one of the most interesting stories of the past decade came to a close.
Or did it?
Just last week, as Holmes edged closer to starting her prison term, a maddening article appeared in the New York Times. It was titled Liz Holmes Wants You to Forget About Elizabeth. The story tried to give Elizabeth (or Liz, as she now prefers) a persona shift. She was never the sociopathic fraud who conned investors out of hundreds of millions and put people’s lives at risk. No, she was a loving partner and mother of two who liked going to the zoo. The strange deep voice, the Steve Job black turtle neck, the intimidatory personality? It was “not authentic,” adopted by Holmes to ensure she was taken seriously.
The timing of the article wasn’t a coincidence; this attempt to distort reality appeared only a week and a bit before Holmes was back in court, this time to see if she could remain free while she appealed her jail sentence for the blood-testing hoax. However, if the article was designed to sway the judge or increase the chances of leniency, it failed.
On May 17, Holmes lost her latest bid to avoid prison and was ordered to report for jail on May 30. If that bad news wasn’t enough, the judge slapped both cofounders with an enormous restitution bill of 452 million dollars. (It could have been worse; prosecutors had been pushing for a restitution penalty in the $800 million range.)
Some of the notable restitution payments include:
$125 million to Rupert Murdoch — by far the highest amount among the investors listed in the order
$40 million to Walgreens, who became an investor after agreeing to put some of the blood test machines in its in-store pharmacies
$14.5 million to Safeway, which also agreed to become a Theranos business partner before backing out
How the two will divvy up this payment is anyone's guess. Both founders also claim to be broke, having racked up millions of dollars in legal fees; some say Holmes has spent around $30 million on her defense. According to court filings, Holmes also has little in the way of assets and still has a $450,000 loan to pay a settlement with the SEC. So it’s more likely that the restitution will never be paid.
I’ll just go out and say it — I’m not sure it matters.
I won’t lose any sleep over the giant corporations and certainly won’t feel sorry for Rupert Murdoch. All the investors only had to look more closely at the company — hell, they just had to look once — and the red flags would have been obvious. But no, greed and ego took control. And now they will have to take their medicine.
It’s one of the few silver linings of this rise-and-fall tale.
And so, on May 30, the Theranos story closes its final chapter.
As for Holmes, I don’t think this is the last we’ll see of her. (I should caveat that if she somehow wins her appeal, it certainly won’t be). People are quick to forget, especially when some new revolutionary idea is wafted before them. And Holmes is counting on it. As I wrote in a recent edition of Trend Mill,
Despite her conviction and the fact she has burned her reputation, she still sees a future in healthcare innovation. In the article, she’s optimistic about what’s ahead and says she will still work on health-care-related inventions and will continue to do so behind bars. Or, as she puts it — “I still dream about being able to contribute in that space.”
She may well get a shot at redemption and a chance to write a new chapter in this story. To be honest, I’m all for it. At least it appears Holmes will serve time for her crimes and therefore deserves a second chance.
But for now, she’ll be remembered for her crowning achievement — the orchestrator of a colossal fraud.
Billions burned. Reputations ruined. People’s lives altered forever. Investors with egg on their faces. All because a single founder — who was told almost from day one that her ambitions for her idea were impossible — managed to pull the wool over everyone's eyes. At the peak, she was wealthy, famous, and Theranos was valued at over $4.5 billion.
But it was all in vein (sorry).