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Elizabeth Holmes has been in the news recently in regard to her now notorious company, Theranos. Defunct as of September 2018, the seemingly innovative blood-testing firm has been the subject of a compelling documentary on HBO “The Inventor: Out for Blood in Silicon Valley”. The topic has garnered plenty of attention, with another upcoming blockbuster film adaptation set to star actress Jennifer Lawrence, titled “Bad Blood”.



Elizabeth Holmes was once known as an impressive young woman who founded a healthcare startup company called Theranos in 2003 at only 19 years old after dropping out of Stanford University. Holmes ran the company with Ramesh “Sunny” Balwani who was the firm’s Chief Operating Officer and secretly her romantic partner. By 2015 the company was worth billions, raised by various venture capital firms and private investors. This was all based on the idea that Theranos had developed revolutionary blood testing products, utilizing a patch instead of a needle. In reality, Theranos misled the public, its investors, and patients as to the true capabilities of the products they had developed.

Theranos’ scheme was initially uncovered by reporter John Carreyrou of the Wall Street Journal, who was following up on rumors that the company may not have been completely honest about their capabilities. In October 2015, he published an article that detailed Theranos’ struggle with their blood testing technology, the same technology that their $9 Billion valuations relied upon.  In addition to this, he revealed that Theranos did not use their own products (nanotainers and Edison machines) to run tests.

As an investigative firm, our perspective on this case centers around how the immensity of this fraud could have been prevented. With a standard due diligence report, many potential red flags could have been uncovered and possibly would have deterred investors from being one of the many conned by Holmes. Prior to Carreyrou’s findings, there was a wealth of knowledge available that would have been effective in alerting investors of potentially fraudulent activity pertaining to Theranos’ pseudo-scientific practices, company reviews, and Holmes’ relationship with her Chief Operating Officer.

Technology and Solutions


At its core, Theranos was a biotech company that purported to develop revolutionary processes in the blood-testing industry. In reality, their supposed technology had little to no support in peer-reviewed academic journals, which allow scientists to replicate results and further solidify findings.



John Ioannidis wrote an article in the Journal of the American Medical Association published on February 17, 2015, which questioned why researchers and scientists had not published any peer-reviewed studies on the groundbreaking technology that Theranos was said to have developed. Ioannidis called this type of research “stealth research” and reported that it “creates total ambiguity about what evidence can be trusted in a mix of possibly brilliant ideas, aggressive corporate announcements, and mass media hype.” He went on the remark that Theranos was a company that conducted such “stealth research”, which should have raised some concerns. Ioannidis noted, “unless stealth research adopts more scientific transparency, investors, physicians, patients, and healthy people will not be able to judge whether some proposed innovation is worth $9 billion, $900 million or just $9 – let alone if the innovation will improve the health and well-being of individuals.”


What Ioannidis was trying to relay here was that it was impossible for anyone to know whether what Theranos was promoting at the time was actually “revolutionary”, simply because they didn’t share pure uncurated data with the public. Although this is not necessarily a red flag in itself, one should be extremely cautious of grandiose claims from a company like Theranos if there is no hard data to back it up. In a typical due diligence report, the lack of successful trials, reports, and other evidence from Theranos would have raised a cause for apprehension to investigators


Glassdoor Reviews

Websites such as Glassdoor and Indeed can provide snapshot views into the culture of a company.  While these comments should be taken with a grain of salt, they can often provide a general insight into the overall culture of a business.


Many negative reviews prior to October 2015 reported on a “toxic workplace”. One review left on May 1, 2015, stated the following, “Leadership Team believes its own hype but not the Science”. This particular review went on to remark, “Sample Preparation Assays are not special or unique”. This would have been significant because Theranos had continuously touted its equipment, machinery, and methods as being groundbreaking and innovative.


Another reviewer wrote on October 26, 2014, “Company has no protocol if you stick yourself with a needle.” This should have raised raise red flags for an investor because Theranos was a biotech firm that specifically dealt with blood testing. If any company should have had a well-developed plan for an accidental "needlestick" it should have been Theranos.

A different review from April 12, 2015,contained the following: “Some of the practices in place are borderline unethical.” It also should have been noteworthy that after making this comment regarding potential practices, the author mentioned that employees in charge of regulatory practices were highly unappreciated and had a turnover rate of “only a few months”. Reading this review should have caused uneasiness in the practices of the company, especially in dealing with its regulatory process – an essential portion of a company dealing in improving the well-being of others.


Relationship with Balwani

In 2014 Holmes was the subject of a New Yorker profile that focused on both her professional career at Theranos and her personal life (or lack thereof). The article noted that Holmes didn’t date, remarking on how Theranos board member Henry Kissinger, and his wife, had repeatedly attempted to “fix {Holmes} up on dates” without any success.


Holmes with "Sunny" Balwani



Although seemingly trivial, a public address records search would have shown that Holmes had shared a residential address with her Chief Operating Officer, Ramesh “Sunny” Balwani, since at least October 2008. There is nothing inherently wrong with a relationship between two consenting adults. However, it is clear from Kissinger’s comments in the New Yorker article that he was unaware of her relationship with Balwani.  If Theranos’ board wasn’t aware of a relationship between Holmes and her COO, then investors certainly weren’t. It should have begged the question, “What else could she be hiding?”.


Tying it Together

As is clear from what became of Theranos, investors could have utilized a proper due diligence procedure before putting their time and money into a company that was built on overly ambitious ideas and complex lies.   As part of a standard due diligence review, all the bases covered are featured in this article.  Gryphon's process includes obtaining address history for the company principals, analysis of social media mentions, direct sourcing of former and current employees or colleagues of the company in question, and many other tactics to provide comprehensive and necessary information.

A red flag is just that, a red flag. It doesn’t necessarily mean an idea is “too good to be true”, as was the case with Theranos. It simply means that something may need just a bit more attention. There were many red flags that, if investigated further, could have been preventative in the loss of hundreds of millions of dollars for investors and the collapse of a multi billion-dollar company.


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