Connect with us

Business

Theranos Founder Elizabeth Holmes Faces Prison

Published

on

On August 31, 2021, Theranos founder Elizabeth Holmes begins her trial. The ex-Silicon Valley darling and her former COO, Ramesh “Sunny” Balwani, are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. 

What was supposed to be an innovative method of drawing, testing, and interpreting blood results turned out to be an allegedly fraudulent scheme to defraud investors, medical professionals, and patients. If convicted, Holmes faces a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution, for each count of wire fraud and for each conspiracy count. 

How did a promising young entrepreneur and a brilliant idea turn into such an ugly story of lies and abuse? 

Founding Theranos

Elizabeth Holmes founded Theranos in 2003 with a mission to create a device that would collect “vast amounts of data from a few droplets of blood.” Citing her fear of needles, Holmes was motivated to revolutionize the way we collect and test blood from vials and vials to a simple pinprick on the finger. 

Several people, including Stanford medicine professor, Phyllis Gardner, told Holmes that this idea was “physically impossible.” She ignored them and pushed on until she found someone who would listen. That person was Stanford dean of Engineering and Holmes’ advisor, Channing Robertson

Robertson would become Theranos’ first board member. Through Robertson, Holmes was able to meet a variety of influential older men including Secretaries of State George Shultz and Henry Kissinger. 

That’s when the money really started coming in. 

Raking In The Cash

By the end of 2010, Theranos had more than $92 Million in venture capital and was growing quickly. Holmes had put together “the most illustrious board in U.S. corporate history,” and was only growing in influence and power. 

For an idea as revolutionary as Holmes’, she was going to need all the money she could get. After all, what she was proposing would change not just the medical science industry but the chemical engineering industry and all the lives of medical professionals and even more patients. 

In September 2013, Holmes and Theranos had partnered with Walgreens to launch in-store blood sample collection centers in Arizona. An ad directed by Academy Award-winning Errol Morris helped sell this concept of simple blood taking. 

All of the vials of blood and a fear of needles were going to be a thing of the past. The future was a black box called, “The Edison.” 

The Edison

Named after the original “fake it til you make it” master, Thomas Edison, Elizabeth Holmes’ device was about the size of a Keurig coffee machine or old school tower computer. In theory, the Edison could run a multitude of tests off of a single drop of blood. 

There were, however, whispers and murmurs that this revolutionary device did not work. At all. 

The Edison was designed to perform “immunoassays.” which look for the presence of an antibody or antigen in blood or fluid. Your standard, run-of-the-mill immunoassay test is capable of measuring things like drug levels, hormone levels, even certain cancer markers. 

Theranos had a testing “menu,” which is an innovative idea on the surface. They offered roughly 250 tests with just a drop of blood. Using a robotic arm, the Edison was able to automate what a chemist did in a lab:

Take samples

Dilute samples

Add antibodies and a reagent

Reveal a result

But, as those whispers and murmurs teased, the Edison had some serious technical issues. Pieces of the machine would break off, doors wouldn’t close, the temperature wouldn’t regulate, blood would spill, vials would break, and samples would be contaminated. 

Engineers, scrambling to find solutions, would raise concerns with Holmes only to find themselves dismissed or terminated from their position. 

Despite these issues, Holmes would repeatedly lie to investors, Walgreens, and the patients optimistic about this new, simpler blood testing. If you were to meet Holmes at one of her many speaking engagements, you’d think Theranos was creating a device that was going to change medicine, and the world, forever. 

Investigation and Pushback

Wall Street Journal investigative journalist John Carreyou received a tip from a medical expert. The Edison was not working as advertised. As a result, he began a months-long investigation into Theranos. He spoke to ex-employees and whistleblowers about the corporate environment of siloing and silencing to protect Holmes’ ambitions. 

When Holmes discovered the investigation, she launched a campaign through lawyer David Boies in order to prevent Carreyou from publishing. This campaign included legal and financial threats against WSJ, Carreyou, and the whistleblowers. 

However, in October 2015, Carreyou went through with publishing a “bombshell” article. The story detailed how the Edison delivered inaccurate results. As well as Theranos using other commercial machines for a majority of its testing. The lie being that those tests results came from the Edison. 

Elizabeth Holmes fought back. On the evening Carreyou’s article publication, Holmes appears on CNBC’s Mad Money with Jim Cramer. 

Cramer said, “The article was pretty brutal.” 

To which Holmes’ infamously responded, “This is what happens when you change things. First, they think you’re crazy, then they fight you, then you change the world.” 

After an inspection revealed irregularities, the Centers for Medicare and Medicaid Services (CMS) sent a warning letter to Theranos. By July, CMS officially banned Holmes from owning, operating, or directing a blood-testing service for a period of two years. 

Once the writing was on the wall, Walgreens ended its relationship with Theranos and closed all in-store blood collection centers. Things were coming to an end. 

In 2017, State of Arizona filed suit against Theranos. The state alleged that Theranos had sold 1.5 million blood tests to Arizonans all while concealing or misrepresenting facts about those tests. By April, Holmes had reached a settlement.

In March 2018, U.S. Securities and Exchange Commission (SEC) charged Holmes and Balwani with fraud.

Later that month, Holmes settled. The terms of the settlement included that Holmes surrender voting control of Theranos. Along with a ban on holding an officer position in a public company for 10 years, and a $500,000 fine. 

At Theranos’ height, the company boasted over 800 employees with more to come. In October 2016, the company had fired 340 of its staff. By January 2017, 155 employees were fired. By April 2018, 105 employees. 

On September 5, 2018, Theranos announced that it had begun the process of formally dissolving. Holmes’ dream of changing the world had just ended.

The Trial

After a two-year investigation by the U.S. Attorney’s Office for the Northern District of California, a federal grand jury indicted Elizabeth Holmes and Sunny Balwani for fraud.

Both have pleaded not guilty.

The trial will take place over four weeks.

Chris Blondell is a Philadelphia-based writer and social media strategist with a current focus on tech industry news. He has written about startups and entrepreneurs based in Denver, Seattle, Chicago, New Haven, and more. He has also written content for a true-crime blog, Sword and Scale, and developed social media content for a local spice shop. An occasional comedian, Chris Blondell also spends his time writing humorous content and performing stand-up for local audiences.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

Kuda Raises $55 Million Series B Funding Quicker Than Most Startups

Published

on

One of the most promising industries to launch a startup is in the digital banking or fintech sector. Untapped markets can become a goldmine for startups that aim to disrupt the banking infrastructure. And that’s what Kuda has experienced over the past couple of months. Read more about Kuda here and how they were able to raise millions for their Series B funding.

Kuda: An Overview

What sparked Babs Ogundeyi and Musty Mustapha to start Kuda? Excessive and inconsistent fees. Fueled to reduce that, they launched the fintech company to develop a savings app. Wanting to make banking easier and more accessible without any charges, the founders aim to change banking for Nigerians all over the world.

Series B Funding and Possible Kuda Expansion

Kuda raised $55M funding for Series B. For Kuda, this funding will be fundamental not only in the creation of new services on their savings app but also in launching it to Africans across the continent. Ogundeyi hopes that their app can become a widely used app for Africans globally. 

Expansion is vital for Ogundeyi and his team. He maintains that Nigeria is still a market crucial to their operations, but the funding will also go to expanding efforts.

Back in March 2021, Kuda raised $25M, all thanks to Valar Ventures. Back then, they had only 650K app users, but they doubled that number in August 2021, with registered users around 1.4 million.

This funding round is once again led by Valar Ventures. But Target Global and SBI have also played a role in helping the fintech startup raise $55 million. Target Global leader Ricardo Schäfer believes in the impact that Ogundeyi and Mustapha will have in Africa. But what excited him the most was the idea that 1 billion users would benefit from their app.

Faster Funding Rounds and Other Disruptors

It was surprising how quickly Kuda raised funding over the course of a few months, but it’s due to the current market conditions and the numbers presented to investors. A McKinsey report foresaw this growth, wherein digital financial services would become a major market. Plus, with inaccessibility, Kuda knew that they could change the way Africa could do digital banking.

Kuda isn’t the only fintech startup aiming to change the banking infrastructure in Africa. Other Fintechs changing the game are:

  • Airtel Africa
  • Chipper Cash
  • FairMoney

Meanwhile, here are the other fintech and banking companies also competing to stand out in the market:

  • Revolut and N26 (Europe)
  • WeBank (China)
  • Varo and Chime (U.S.)
  • Nubank (Brazil)

However, what makes Kuda stand out from the others is they have a banking license. With this in mind, they can develop services on their own. This will also help them create and develop other products and services and build credibility more than their competitors.

The Future of Kuda

Ogudenyi aims to launch their app to other African countries but won’t say where they’ll launch it. However, Kuda has an ongoing credit service (through an overdraft allowance) that proves the fintech startup is growing and moving forward.

He says that they do a pre-qualification screening for those who can receive credit. In the 2nd quarter of 2021, over 200,000 users were eligible. They gave over $200M in credit. And to ensure they remain with their purpose of creating their app, they do an allocation of overdraft proportion. It’s based on user activities, and they won’t overpay.

Due to Kuda’s promising mission towards banking in Africa, Valar Ventures seems eager to fund the fintech startup once more in the future. Andrew McCormack, a general partner of the investment firm, says that growth and population acceptance towards digital banking are factors in continuing their support.

Continue Reading

Business

Sam Adams Is Brewing Space Beer

Published

on

SpaceX’s Inspiration4 mission was a raving success with the safety of the amateur astronauts confirmed when they touched down this past weekend. The first all-civilian space flight was historic in and of itself, but they did more than just visit. The four civilians also performed scientific experiments, made art, and brought up to 66 pounds of hops. Sam Adams is going to brew that into our very first “space beer.” 

That’s right, space beer. While we’re probably a way off from a space brewery, we’re definitely heading there with hops having visited space. If you’re wondering what they did with the hops in space, you’re not alone.

Far as we can tell, these hops simply made a trip farther into the heavens than any other hops before them. One might imagine a brewer saying, “one small hop for man, one giant hop for mankind.” 

No? Too lame? Anyway…

Booze. In. Spaaace. 

Sam Adams has been in the news lately with their Utopias beer being so strong it’s illegal in 15 states. While we don’t know the strength of this future “space beer” just yet, one University of Colorado research project suggests that beer brewed in space is higher in alcohol than those brewed on Earth. 

This is not the first alcoholic experiment in the heavens. In 1994, Coors participated in a test fermentation in space. In 2006, Sapporo produced a $110 six-pack using barley seeds that made a trip to space. In 2019, Anheuser-Busch sent several barley samples to the International Space Station to determine the effects of microgravity on barley seeds. Also in 2019, 12 bottles of Bordeaux were sent into space, giving them a value of $1 million per bottle. 

Turns out, if we travel somewhere, we want to know if we can get drunk. Take a look at Everest. If we trek, we drink. 

It’s just human nature. 

Space Beer… For the Children

In order to secure the rights to these space hops, Sam Adams made a donation of $100,000 to St. Jude’s Children’s Research Hospital as part of the overall theme to Inspiration4’s mission. Isaacman, the mission leader of Inspiration4, is aiming to raise $200 million for St. Jude’s. Elon Musk has personally pledged $50 million to the hospital. 

By tossing some money to a good cause, Sam Adams is able to secure the rights to brew the first space beer from the world’s first all-civilian space flight. If the motivation to brew space beer is “for the children,” then we’re all about it. 

When Can We Drink This Space Beer?

Sam Adams’ future space beer has yet to be named. All we know now is that it will be a traditional West Coast IPA and will be on sale later this fall. Sam Adams has stated that it is excited to brew with the out-of-this-world hops. 

And why shouldn’t they be? Anything with a “genuine” space label should be exciting to produce. While they’re not the first brewery to experiment with space booze, Sam Adams is the latest and therefore the hottest. With our attention spans lately, it pays to be a trending topic. 

Sam Adams isn’t the only thing to come from SpaceX’s Inspiration4 mission. We have a lot to learn from this historic flight. While Sam Adams may be the most fun, there is plenty to look forward to in terms of scientific development. 

What is it that Sam Adams said? 

“If ye love wealth better than liberty, the tranquility of servitude than the animating contest of freedom – go from us in peace.”

No, not that. The other thing. 

“This is Boston. Drink Accordingly.” 

No, that’s their current slogan. 

“America’s World Class Beer.” 

Nevermind. Call me when Sam Adams Space Beer is available.

Continue Reading

Business

Scott Tong Shares Invaluable Product Design Insights and Culture for Startups

Published

on

Many startups are launching their businesses left and right, but some may not have a design plan in mind. This, in turn, could lead to challenges ahead for startups looking to stand out from the crowd. And it’s best that startups learn to value design and development. One such expert in the field is designer Scott Tong. He worked as the head designer for Pinterest and was the co-founder of IFTTT. Currently, he’s an advisor for Designer Fund. Here, we take a look at the advice he has shared for startups.

Scott Tong: Early Stage 2021 Tidbits

TechCrunch held their TC: Early Stage 2021: Marketing and Fundraising Bootcamp for early-stage startup founders from July 8 to 9, 2021. One of their guest speakers was Scott Tong. 

He spoke with Jordan Crook from TechCrunch to discuss early-stage design and its long-term impact on the startup. Plus, he even reveals how to find the right people for product design work. He disclosed two important points on what entrepreneurs should think about when it comes to design: reputation and existing vs. preferred.

For Tong, he considers a brand as the reputation of a company. Here, he examines the following ideas:

  • First impression
  • Repeated long-term behaviors
  • Unique and memorable moments

And the other point he brought up in Early Stage 2021 is “existing vs. preferred.” This means scrutinizing design and understanding how it matters in your company.

User: The Driving Force of a Product

Scott Tong is no stranger to TechCrunch. In his article for Techcrunch around four years ago, he emphasizes that when developing or creating a product, the one thing that matters is the user. He urges startups to ask the question, “what is right for the user?” than “who is right.”

In the article, he branched out three concepts that have value when it comes to developing a product. And finding the best people to understand your users.

The first of his points is about understanding and driving T-shaped people. It’s when you have someone well-versed in their field while collaborating with another person from another field. The best ones are curious, empathetic, and humble.

His second point deals with T-shaped people and user-centered thinking coming together. Your T-shaped people should always have the question of how to solve problems for users. And these T-shaped people will know that they can’t satisfy all of your user’s needs but identify the best solutions for your users.

Lastly, your startup should always know how to craft high-quality decisions. But what counts as one? He lists down what makes a decision, high-quality:

  • User-centric
  • Timely
  • Calculated
  • Communicated
  • Humble
  • Shared
  • Monitored
  • Considered
  • Balanced

Other Speaking Engagements

Early Stage 2021 wasn’t the only time Scott Tong shared his design insights and experiences as a founder. The Designer Fund advisor was a guest in the Startup Grind. In this event, he talked about being a designer for IDEO and Pinterest. At the same time, as a founder, he also touches on the subject of culture. 

He gives his advice for entrepreneurs who have lost their sense of purpose. He says to get in touch with values. Plus, he’s aware that disagreements are ever-present in any business setting. And to reduce friction, trust is key, and understand your team.

One other podcast tapped the ex-Pinterest Head of Design to discuss Design Entrepreneurialism. In this podcast, he talks more about his journey as a designer and working in the new venture: IMO Ventures. 

And the one thing he emphasizes about design is culture, which he also wrote in his TechCrunch article. Here, he says that design is connected to messages, wherein it means one thing to the designer and another to its viewer. That’s one way startups may look when considering product design.

Continue Reading

Trending