Has Elizabeth Holmes Always been a fraud?

A few years ago Elizabeth Holmes, boss of Theranos, dressed up as Queen Elizabeth 1 for the company’s Halloween party. At the time she reigned over Silicon Valley’s startup scene. In 2013-2015 she raised around $700m to fund her firm, which had supposedly developed a way to test blood with a single pinprick. MS Holmes was hailed as the next Steve Jobs and the youngest self-made billionaire in history. At its peak, Theranos claimed a private valuation of $9bn.

“Bad Blood”, an enjoyable book by John Carreyrou, an investigative journalist, charts MS Holmes’ rise and dramatic fall. Mr. Carreyrou first raised questions about Theranos, suggesting in the Wall Street Journal in 2015 that its testing technique yielded unreliable results. Earlier this year, MS Holmes settled civil charges brought by America’s financial regulator, the Securities and Exchange Commission (SEC), of defrauding investors.

Mr. Carreyrou suggests MS Holmes cared less for patients than about advancing her own interests and personal brand. According to the SEC, she and Balwani, her deputy (and, says Mr. Carreyrou, secretly her boyfriend), misled investors and other corporations and the state of Theranos’ Technology and sales. These falsehoods lured new partners.

Here’s what I think, no doubt she was ambitious, she was also delusional. Validations she got from investors helped fuel this. In the process, she convinced a lot of people with non-medical backgrounds that her technology was the big startup for the medical industry. She probably started building the business around an unproven idea, tossing the story around from person to person. People probably started validating her and thus a tree without roots was born.

In Holmes case, it seemed as if she was golden – she could make no mistakes. She kept getting more and more attention, money and validation for telling more and more lies. Instead of scrutiny, she was compared to Steve Jobs. And instead of listening to experts, investors did not want to miss investing on the next big thing.

But again, Holmes was good enough to get admitted into Stanford University. So she’s obviously not stupid.

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