Elizabeth Holmes: From CEO to criminal

23:49You know, the tech is super top secret. The R &D is completely next level. We can't just let anyone see it. And rather than thinking to yourself, okay, well, something seems a bit off. You just think, oh wow, it must be really good then. Walgreens, who did have doubts about Theranos, especially after Elizabeth refused to allow a comparison study of its blood testing technology, the fears of losing out to the rival company CVS, another big brand of pharmacies in the US, pushed the deal forward. Theranos was also in talks with Safeway. Safeway department store were hoping to revitalise its brand and loan the company$30 million and committed to renovating stores for actually in-store blood testing clinics.

24:25Yeah, so Walgreens executives were reassured when Theranos said Safeway had agreed to host blood drawing sites. So they thought, hey, if Safeway trusts Theranos, we can trust Theranos. So you can absolutely see the kind of groupthink emerging here. But what neither Safeway nor Walgreens knew was that the technology just wasn't ready. Theranos' machines often failed or they simply weren't finished. So they secretly were using third party lab machines to produce all their results. Elizabeth and Balwani claimed they performed 90 % of the most commonly used blood tests, when in reality, their machines could only perform a dozen tests.

25:00Now, who knows, maybe if they'd spent longer on this, and maybe if they peer-reviewed it and da da da, it might have worked. It clearly wasn't at the stage of development that was necessary for it to be rolling out to mainstream America. It's interesting, right? Because I think, you know, anybody who's worked in tech and has rolled out a product that, you know, maybe wasn't quite ready to launch an app that maybe is a little bit glitchy, doesn't have a great user experience, they can think to themselves, well, we can just fix those bugs in the next update. But this isn't an app. And it was while working towards this Walgreens launch that Theranos' chief scientist, Ian Gibbons, repeatedly raised concerns about the accuracy of the technology.

25:38His warnings were ignored when he was called to testify against Theranos in a patent suit they were facing. He did want to discuss under oath that he knew the technology wasn't working. And two days before he was due to testify in May 2013. He died from liver failure, having attempted to take his own life. Gosh. Yeah. And in 2022, his widow told CBS News that she believes the pressure at Theranos contributed to his death and said Elizabeth has showed no remorse. Elizabeth has not publicly commented on Gibbon's death. But despite all of this happening behind the scenes, in September 2013, the first Theranos Wellness Centre open inside a Walgreens in Palo Alto.

26:19That's very near Stanford, very near Silicon Valley. Theranos claimed at the time that they could take a small amount of blood from a fingerprint, which could then be used for over 200 tests from cholesterol to cancer. And people in the US at the time could pay$50 for a test for cholesterol. Theranos were charging$2.99. Yeah, that's a sort of revolutionary price point, isn't it, for healthcare? By 2013, Theranos had assembled one of the most impressive boards in Silicon Valley. Former US Secretaries of State George Shultz and Henry Kissinger, former Defence Secretary Jim Mattis and top lawyer David Boyce.

26:53That is quite the list. It's interesting her George Shultz encounter because she'd asked for a 10 minute meeting turned into two hours. Yeah, exactly. He was so impressed he joined the board and he was the one who actually encouraged the other people to follow. So, you know, government heavyweights, but not biotech experts. But they're serious people with enormous clout. So if you're an investor and you say, who's on your board? Henry Kissinger. What? You know, with that kind of prestige, that kind of name recognition, investors were only too happy to shell out more money. For example, Theranos was saying it would earn$165 million in profit on$261 million in revenue.

27:29That's a high profit margin. Those numbers were fiction. Theranos actually made just over$100 ,000 in revenue in 2014, rather than$261 million, but didn't stop Theranos raising the money. They'd raising nearly 200 million from investors in total by early 2014. And in that same year, Elizabeth Holmes fully embraced the billionaire lifestyle. She flew to meetings on private jets. She was regularly accompanied by bodyguards who nicknamed her Eagle One and Sonny Barwani as Eagle Two. She was eating at luxury restaurants. She was buying designer clothes and jewellery. She was charging it all to the company, saying that it was important for Theranos's image.

28:06Theranos' Palo Alto HQ cost a million dollars a month in rent. And Elizabeth reportedly spent$100 ,000 on a single conference table, all part of this carefully curated image of the visionary CEO. Given the fact that she knows, or maybe she's blocked out the fact that lots of people, her chief scientist has been warning, you know, her CFO left, you know, red flags everywhere. And at the same time, you're behaving on private jets as Eagle One and all this kind of stuff. it slips from kind of like confidence into almost delusion. Do you know what I mean? There's something a little bit not right here.

28:42I think this story is an interesting one because you have to wonder, did she realise that the tech was just not working and maybe would never work and she was just deluding herself into believing that at some point someone's going to make a breakthrough, so I need to do what I'm good at doing, which is getting money out of people, or did she know all along the tech would never work and therefore she was just a grifter who was scamming people. Yeah. Meanwhile, in June 2014, Fortune magazine had Elizabeth on the cover and stated that Theranos now had a valuation of$9 billion. In the article, Elizabeth said, it's kind of like proper text speak this, this is about being able to do good.

29:20Consumerising this healthcare experience is a huge element of our mission. But at the same time, Theranos' lab director, Adam Rosenhoff, was telling Elizabeth that some of the tests had unreliable results. He later said she seemed pretty calm about the whole thing. She didn't seem to share my level of alarm. He then quit a few months later. By October, Forbes calculated Elizabeth's wealth to be four and a half billion dollars based on her 50 percent stake in Theranos. She was ranked 110 on their rich list and was, at 30 years old, the youngest self-made female billionaire in America. In a speech she made after becoming a billionaire, she said, I would say that I am living proof that it's true.

29:59If you can imagine it, you can achieve it.

30:15America is changing. And so is the world. But what's happening in America isn't just a cause of global upheaval. It's also a symptom of disruption that's happening everywhere. I'm Asma Khalid in Washington, D.C. I'm Tristan Redman in London and this is The Global Story. Every weekday we'll bring you a story from this intersection where the world and America meet. Listen on BBC.com or wherever you get your podcasts.

30:52In 2014 she's a billionaire. Let us take her beyond that and bring it up to date. by 2015 Holmes had raised over 400 million dollars from investors her backers now included the Walton family who own that small little family store called Walmart and Rupert Murdoch you may have heard of big names deep pockets they'd all been told about the company by their lawyer who also happened to be Henry Kissinger's lawyer it is interesting lawyers can sometimes be the grapevine in these circles interesting so in early 2015 the Wall Street Journal reporter John and Cariou got a tip. Theranos wasn't what it seemed.

31:28His investigation soon uncovered that the company's technology couldn't reliably perform the full range of tests from just a few drops of blood. And as Cariou dug deeper, Theranos attempted to silence his sources through legal threats and NDAs. Elizabeth even tried to persuade Rupert Murdoch, who was a major investor, to kill the story. In a September 2015 meeting, she urged him to intervene, but he refused. And in October 2015, The Wall Street Journal splashed on it. They published an expose revealing that Theranos was using third-party machines, raising doubts about the accuracy of blood-testing technology.

32:02Theranos denied the claims, calling the report factually and scientifically erroneous, blaming former disgruntled employees. That same day, Holmes went on CNBC's Mad Money. And CNBC is the kind of thing that gets shown on trading floors and whatever all around the world. It's a kind of financial channel defending Theranos with very calm conviction. on live tv she said first they think you're crazy then they fight you then you change the world but despite all this bravado things were not going according to plan a day after the article was published theranos halted use of their nanotainer the small valve that they were using to collect the finger prick blood in for all but one test and that was under pressure from the fda food and drug administration yes so a few weeks later the fda then released two reports citing 14 concerns and called the nanotainer an uncleared medical device.

32:51And by January 2016, a US government health agency found such serious issues in the company's lab that it declared Theranos posed an immediate jeopardy to patient health and safety. That sounds like a death knell to a medical company. Yeah, that is a bombshell and a half. So Walgreens had to act. They suspended Theranos's service at its Palo Alto location. They stopped sending lab tests to the company's California lab. They sent it to third party labs instead. A few months later, they ended their partnership, closed the 40 Theranos wellness centres and Safeway, if you remember that deal, the supermarket there, they ended up paying$350 million to Theranos.

33:28But after years of delays, they never even had a rollout of the blood testing services. They didn't even start there. The clinics they built at over 800 stores were instead used for flu shots and travel vaccines. In June 2016, Forbes changed its estimate of Elizabeth Holmes' net worth from four and a half billion to zero. Ouch. And Theranos' market value went from nine billion to eight hundred million. And as Theranos collapsed dramatically, Holmes flew across the country to buy a Siberian Husky named Balto, hoping that it would help to symbolically reboot the company's future. Not sure how a Siberian Husky would do that.

34:04That's the craziest idea I've ever had. I mean, the dog became a fixture at Theranos HQ. Despite not being toilet trained, Balto also had a habit of relieving himself during company meetings. I think that's much more of a symbolic reflection of the company's future. It's a bit of dog mess on the floor. Yeah. Imagine being an employee being told that Theranos is on its way back up. Oh, yes. And Balto's in the corner there relieving himself. On the 14th of June 2018, Elizabeth Holmes and Sunny Balwani were charged with multiple counts of wire fraud and conspiracy for misleading investors and patients about Theranos' blood testing technology.

34:41A day later, Elizabeth stepped down as CEO and did not speak publicly. Holmes was tried first and in January 2022 was found guilty on four counts of defrauding investors. She was sentenced to 11 years and three months in prison and ordered to pay part of a$452 million restitution or compensation. Balwani was tried separately and received an even longer sentence of nearly 13 years. Holmes began her prison sentence in May 2023. She was interviewed by People magazine in February 2025, which said that she works out daily, she eats vegan meals and teaches French to other inmates. She also maintains her innocence in that interview.

35:21And in 2025, despite appeals, both Elizabeth and Sonny's convictions were upheld, along with the full restitution order. They were both acquitted of charges relating to defrauding patients. Between 2013 and 2016, Theranos ran over 1.5 million tests for 176 ,000 patients. More than 10 % of those results were voided or corrected due to errors. Some patients even received false positives for serious conditions like cancer and autoimmune diseases, leading to unnecessary treatments and, of course, emotional distress. In 2023, Walgreens agreed to a$44 million settlement with the patients who received Theranos blood tests on their premises.

36:01Each patient got a$10 base payment. That's double the cost of the test and up to$1 ,000 if they'd undergone finger prick testing. Now, what happened to those investors? Rupert Murdoch sold his stock back to Theranos for a dollar to claim a tax write-off and other earnings. He lost£121 million but got£4 million back under legal settlement. But not all the investors who lost their money were wealthy enough to pay for their lawsuits. ABC's The Dropout podcast featured a woman who lost her life savings, $150 ,000, investing in Theranos through her financial advisor and a man who lost$1.2 million, advised again by a financial advisor, testified at Elizabeth's trial.

36:40During the trial itself, it was revealed that Elizabeth Holmes received an annual salary of around$200 ,000 while at Theranos. But she also owes over£25 million to the company taken out in three promissory notes. Basically, an IOU from the company. Give me some petty cash out of the till to pay for my private jets and my nice tables. And I promise I'll pay you back out of my vast fortune when Theranos is a well-beaten company. Well, guess what? None of those promissory notes have been repaid. Holmes is also now in a relationship with a hotel heir called Billy Evans. And they have two children, a son born in 2021 and a daughter born just months before Holmes entered prison.

37:20Anyway, it's time for us to judge Elizabeth Holmes or for you to judge Elizabeth Holmes. We score our billionaires in a few different categories, wealth, controversy, philanthropy, the legacy they've left behind from one to 10. And we always start with wealth. I mean, came from a once rich family, very well connected, had tales of greatness in the family's past. So quite a fertile ground for people to believe that you could go and achieve something. This wasn't someone telling you you can't do stuff. And at the height of that wealth, she was worth, what, four and a half billion. Spending wise, you know, she was flying private jets.

37:57She was having a luxurious lifestyle all on the company dime. Apparently she paid nine million dollars for a five bed mansion in Silicon Valley. So, you know, she was living the life of a billionaire. But it has to be said that, you know, she's now been reduced to earning 31 cents an hour as a re-entry clerk in prison. Gosh, she's making me feel well off. And also one of the most spectacular and rapid falls from wealth we've seen. Four and a half billion in 2015, zero in 2016. I think only Sam Bankman-Fried can rival that in terms of a fall from financial grace. And of course, he's also still in prison too.

38:30He's still in prison, yes. on wealth. You know, she was at one point the youngest self-made female billionaire in the US, in the world. In the world, yeah. So at her height, you know, she was flying pretty high and then what a spectacular fall. Have you heard of this phrase, girl bossing too close to the sun? No. It's very good. It basically applies to female girl bosses, you know, that kind of Elizabeth Holmes type female figures who kind of put themselves out there as these innovative, charismatic messiahs who will change the world who also happen to be women. So it's a feminist win. And they simply go boss too close to the sun.

39:07Really? Yeah, well, this is definitely an example of that. Got it. I just think the wealth is kind of interesting. So I'm going to give her a, even though it's not that much money in the sort of big leagues, it's quite an interesting trajectory. So I'm going to give her a six. Yeah, I think she's a six out of 10 for me from wealth, even though she is technically, I suppose, worth nothing right now. Okay, let us move on to controversy. Well, where do we start? I mean, the whole story is one of controversy. Yeah, with a capital C. Defrauding investors, you know, lying to their faces, even fabricating reports that the technology was working.

39:45Yeah, and convince some of the, you know, wisest people in America, you know, people like Henry Kissinger, George Shultz. You've got Larry Ellison involved, Don Lucas. These people are heavyweights. Yeah. And if you look at pictures of Elizabeth from the time that she was riding high, it is quite a sight. It's this very young looking blonde woman. She's got these enormous kind of quite glassy eyes, black turtleneck. And she's surrounded by these much older men who have, you know, been in politics, been in, you know, the finance world, been in tech for decades longer than she has. And she's sort of there staring at all of them like, give me the money.

40:22I think we should also have a very important shout out to Ian Gibbons, who was the chief scientist at Theranos, who tried to take his own life and died of liver failure. He had had grave concern and his wife was clear that something about the company Theranos contributed to his death. So I think you've got to give this controversy. I'm giving it a 10. I think it's a 10 out of 10 for me. Yeah. OK. I don't think you can come up with a greater cautionary tale in tech. No. Philanthropy. As usual, there doesn't seem to be a lot of public information about her philanthropy. And it seems on this occasion, it's not just because there's lack of information because she didn't want it to be known what great things she was doing.

41:02It seems more likely that there wasn't any. Now, interestingly, there is a company called Wealth X, which helps charities check if their donations are from legit companies. Before the Theranos scandal broke in the news, there were apparently some clients at Wealth X who wanted to add Elizabeth Holmes to their charity boards. But reportedly, this wealth ex-company were advising people from adding her because they were actually quite wary of Theranos' claims. Wow. So what does that mean? A zero for a philanthropy? It's a zero for me, I think. In fact, they're probably anti-philanthropic. This is a judging round of extremes.

41:37We're from 10 to zero. Power and legacy. It's a hell of a tale, this one, isn't it? So I think that the legacy is all in the kind of folk tale that she's drawn during this. apparently, and maybe if you are at business school listening to us right now, I know there are some people who do. Drop out now, you'll become a billionaire. Just kidding. Learn Mandarin. Maybe that's a better learning from this episode. Apparently, this tale is being taught to business school students as a kind of cautionary tale of startup culture. It is absolute worst. Yeah, but in some ways, you could say it's a cautionary tale because she was dabbling in medical technology and therefore the stakes are incredibly high and something was bound to go wrong.

42:19If this had been a, you know, phone that wasn't very good or a service that didn't quite work. Or a VR headset. Yeah, right, exactly. Then she would probably be, you know, lionised as a hero and she would probably be starting another company as we speak right now. And, you know, the fake it till you make it story is not just a cautionary tale. It's kind of a guidebook in some ways, right? In some cases, it's, you know, that's the way you do business. And actually failing a couple of times are seen as a badge of honour in tech world. I wonder if this is just an example of a fatal mismatch. Like if Elizabeth Holmes wasn't interested in biotech and she was interested in, say, you know...

43:00Dating apps or something. Dating apps or HL organisational software. Yeah, exactly. You know, would this fake it as you make it attitude, would it have such serious consequences? I don't think so. No, exactly. I mean, it was basically the fatal flaw in that was that she went after an industry where you basically need to be quite transparent with your technology, with your scientific advances, because that helps you be better. Yeah, yeah. When the FDA come in to shut you down, essentially, then you know you're in a different kind of business. What about, you know, I'm just trying to think if she's helpful or not helpful to female founders.

43:37You know, people say, oh boy, here's another Elizabeth Holmes on her hands. There have actually been some female founders who say that it's actually been bad for them because now people scrutinise female founders more closely because they're worried that they're just another Elizabeth Holmes. That's spectacularly unfair, isn't it? It really is. I'm going to give her a seven for legacy. They'll be talking about this tale for a long time. I think so. I think actually I would give her... Obviously, she's not very powerful now, but in terms of legacy, I think she's up there with some of the biggest kind of scandals and scams of the 21st century.

44:12So I'm going to give her an eight. Okay, fair enough. Final reflection. It's one of those stories that doesn't come along very often, isn't it? The thing about this podcast series is that we've seen quite a lot of fortunes made quickly and then lost quickly. And the kind of money that people have made is something that we've never seen in any period in history ever before. Sam Bankman-Fried, for example, went from zero to 18 billion and then down to zero again. She went from next to nothing to four and a half billion, then down to zero again. I think this story will stay with me and with the canon of financial history for a long time.

44:48And yet at the same time, even though we're at a period where people are making and losing more money than ever before in human history, it seems like human impulses and human thinking is still very much the same as it's always been. You know, the effect of groupthink, of herd thinking, the fear of missing out, the ability of people to create themselves as kind of messianic figures, to create cults of personality that encourage people to see past big red flags. You know, these are all things that have been happening for centuries. It's just that the money involved is so much greater now. And it's interesting.

45:25I was more moved by the woman who'd lost$150 ,000 in her life savings and the guy lost$1.2 million, most of his net worth, than I am about the Rupert Marduk, who's$121 million of theirs. I mean, they are used to the fact that they've got many multi-billions. They put$20 million into something, put$100 million in there. One of these things will hit the cover off the ball and be worth a trillion and the other one will crash and burn. And they don't care. Do you know what I mean? That's the risk they take. They're grown up. They've got their eyes wide open. And it's different when it's medical technology, I think, like we were saying, whether it's a car or a smartphone.

46:00But it's those people, I think, who got swindled into believing in this, who lost big parts of their personal net worth. For everyone else, it's part of the game. Yeah, I mean, it is a fascinating story. And I think I keep coming back to that question of, did Elizabeth Holmes know that the tech didn't work? and she either deluded herself into believing it would be fine or did she just simply not care and she was just scamming her way to the top? I don't know. I still don't know maybe even after this episode. What do you think? I'm not so sure, but I think it gets right to the heart of whether she's good, bad or just another billionaire.

46:37What do you think? Please do email goodbadbillionaire at bbc.com or drop us a text or WhatsApp to 001 917 686 1176 tell us what you think. And also don't forget to include your name we may read out your message on a future episode. And a final thanks to John Kerry Roo whose excellent book Bad Blood was one of many sources for this but was an absolute belter of a book. Well we've got some listener feedback Ephraim who is 13 from Ghana got in touch to give feedback on our David Geffen and Sarah Blakely episodes. They said on David Geffen I think David Geffen is just another billionaire he helped pull up other people and also ditched others so he's just in between.

47:19And Ephraim says of Sarah Blakely, I see fashion as waste. But for someone like Sarah Blakely, who's changed how women are viewed in fashion, she's surely a good billionaire. And Scott got in touch from Ontario, Canada. Scott's email and the subject line, almonds, full stop. OK. Scott says, love the show for the insight and fun banter, including January 23rd's show, You Peel Your Almonds. If you remember this, a listener sent in feedback about our Elon Musk episode saying she was listening to it while peeling her almonds. Yes, which I was surprised that that was a thing. Well, Scott, on his part, says he laughed out loud and goes on to say, yes, peeling the almonds makes them creamier in recipes like almond milk and the skins can be ground and used as roughage in face scrubs.

48:02Now have to get back to rolling my pennies. Billionaire not. Thanks very much for getting in touch, Scott. And letting us know how to make good almond milk. So who've we got next? Well, we've got a billionaire who is visionary to some, ruthless to others in the words of one listener who recommended we cover him. He is database mogul. The owner of his own Hawaiian island. And likes to fly fighter jets. Yes, well, he certainly fits the billionaire playboy mold. It's none other than Larry Ellison, the founder of Oracle.

48:38Good Bad Billionaire is a BBC World Service podcast produced by Tamsin Curry. The researcher is Maria Noyan. The editor is Paul Smith and it's a BBC Studios production. For the BBC World Service, the senior commissioning producer is Sarah Green and the commissioning editor is John Lonell.

49:12America is changing. And so is the world. But what's happening in America isn't just a cause of global upheaval. It's also a symptom of disruption that's happening everywhere. I'm Asma Khalid in Washington, D.C. I'm Tristan Redman in London, and this is The Global Story. Every weekday, we'll bring you a story from this intersection, where the world and America meet. Listen on BBC.com or wherever you get your podcasts.