Secrets and Lies in A Silicon Valley StartupeBook - 2018
"The full inside story of the breathtaking rise and shocking collapse of Theranos--the Enron of Silicon Valley--by the prize-winning journalist who first broke the story and pursued it to the end in the face of pressure and threats from the CEO and her lawyers. In 2014, Theranos founder and CEO Elizabeth Holmes was widely seen as the female Steve Jobs: a brilliant Stanford dropout whose startup "unicorn" promised to revolutionize the medical industry with a machine that would make blood tests significantly faster and easier. Backed by investors such as Larry Ellison and Tim Draper, Theranos sold shares in an early fundraising round that valued the company at $9 billion, putting Holmes's worth at an estimated $4.7 billion. There was just one problem: the technology didn't work. For years, Holmes had been misleading investors, FDA officials, and her own employees. When Carreyrou, working at the Wall Street Journal, got a tip from a former Theranos employee and started asking questions, both Carreyrou and the Journal were threatened with lawsuits. Undaunted, the newspaper ran the first of dozens of Theranos articles in late 2015. By early 2017, the company's value was zero and Holmes faced potential legal action from the government and her investors. Here is the riveting story of the biggest corporate fraud since Enron, a disturbing cautionary tale set amid the bold promises and gold-rush frenzy of Silicon Valley"--
From the critics
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Elizabeth had hung inspirational quotes in little frames around the old Facebook building. One of them was from Michael Jordan: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
Another was from Theodore Roosevelt: “Far and away the best prize that life has to offer is the chance to work hard at work worth doing.” Patrick suggested they make them a more integral part of the workplace by painting them in black on the building’s white walls. Elizabeth liked the idea.
She also loved a new quote he suggested. It was from Yoda in Star Wars: “Do or do not. There is no try.”
The media mogul sold his stock back to Theranos for one dollar so he could claim a big tax write-off on his other earnings. With a fortune estimated at $12 billion, Murdoch could afford to lose more than $100 million on a bad investment.
“VAPORWARE” was coined in the early 1980s to describe new computer software or hardware that was announced with great fanfare only to take years to materialize, if it did at all. It was a reflection of the computer industry’s tendency to play it fast and loose when it came to marketing. Microsoft, Apple, and Oracle were all accused of engaging in the practice at one point or another. Such overpromising became a defining feature of Silicon Valley. The harm done to consumers was minor, measured in frustration and deflated expectations. By positioning Theranos as a tech company in the heart of the Valley, Holmes channeled this fake-it-until-you-make-it culture, and she went to extreme lengths to hide the fakery.
The odd couple:
It isn’t clear exactly when Elizabeth (Elizabeth Anne Holmes born 1984) and Sunny (Ramesh “Sunny” Balwani born 1966) became romantically involved, but it appears to have been not long after she dropped out of Stanford. When they’d first met in China in the summer of 2002, Sunny was married to a Japanese artist named Keiko Fujimoto and living in San Francisco. By October 2004, he was listed as “a single man” on the deed to a condominium he purchased on Channing Avenue in Palo Alto. Other public records show Elizabeth moved into that apartment in July 2005.
FoMO—the fear of missing out.
March 14, 2018, the Securities and Exchange Commission charged Theranos, Holmes, and Balwani with conducting “an elaborate, years-long fraud.” To resolve the agency’s civil charges, Holmes was forced to relinquish her voting control over the company, give back a big chunk of her stock, and pay a $500,000 penalty. She also agreed to be barred from being an officer or director in a public company for ten years. Unable to reach a settlement with Balwani, the SEC sued him in federal court in California. In the meantime, the criminal investigation continued to gather steam. As of this writing, criminal indictments of both Holmes and Balwani on charges of lying to investors and federal officials seem a distinct possibility.
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High-profile investors who lost the most money on Theranos per WSJ (in $Millions):
Walton Family: 150
Rupert Murdoch: 121
Betsy DeVos: 100
Cox Family 100
Carlos Slim 30
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