Maybe you all heart of Elisabeth Homes, who invented the wearable patch, which could test patients blood per the course of the day using microneedles. In 2004, she wanted to publish her idea and founded Theranos. Suddenly she realized that microneedles would not be able to draw on enough blood and the idea started to break. Nevertheless: Theranos claimed its technology was revolutionary and that its tests required only about 1/100 to 1/1,000 of the amount of blood that would ordinarily be needed and cost far less than existing tests.
Quickly Elisabeth built up a reputation and she was the new star in Silicon Valley. Investors took note of her and started investing in Theranos. The hype snowballed until the company was valued at 9$ billion in 2004. But how did that happen? Are making outlandish claims about the company enough to attract investors?
In 2015, articles in the Wall Street Journal were published, which revealed the story and secrets of the company. Blood tests which were claimed to be performed by the new machine at Theranos were actually performed by traditional blood test machines, which were bought from other companies. Finally, the FDA pulled the plug on the company and charged Elisabeth with massive fraud. She was fined 500,000$ and lost the Theranos. Further, the company ended up losing more than 600 $ million.
This horrific story was a very important lesson for the Silicon Valley, since it showed to all investors how much can be reached with simply advertising and being self-confident. Investors who will seek to revolutionalize and disrupt the industry have to be honest with their technology.
Resources:
Bad Blood: Secrets and Lies in a Silicon Valley Startup
