Deputy Secretary of Defense Patrick M. Shanahan via flickr
The US Securities and Exchange Commission (SEC) put an end to the business of Elizabeth Holmes, the founder of the start-up Theranos. For her early outstanding business success and addiction to turtlenecks, the press dubbed her "Steve Jobs in a skirt". During the investigation it was found out that the top managers of the company intentionally exaggerated the level of development of their technologies and financial indicators in presentations for investors and press releases.
Thus, the innovative "bloodless" technology for collecting medical analyzes was in fact at an early stage of development, and the company's revenue, despite claims, was below $ 100 million. In addition, since 2015, the startup used devices of other companies (primarily Siemens). To form a positive image, Theranos’ representatives also announced cooperation with the US Defense Ministry in Afghanistan, but in fact, the military department never used the company's services.
As part of the deal with the Securities Commission, Mrs. Holmes agreed to pay a fine of $ 500,000, and do not hold senior positions in public companies for ten years.
Under the terms of the agreement, she will also return 18.9 million shares of Theranos and waive the right to vote in the company. The biotechnological start-up Theranos, in turn, will be put up for sale.
Recall, Theranos appeared on the market in 2003 and immediately became a sensation. The young founder of the company (at that time she was only 19 years old) promised to simplify the procedure for collecting medical tests, receiving 240 values from one drop of blood in 15 minutes without nurses, bandages, needles and pain. Thanks to the supposedly innovative invention, Theranos was able to attract investments from large venture funds, and Henry Kissinger and George Shultz, two former US Secretary of State, joined the company's board of directors. In 2013, the company began to actively develop the market, opening blood collection points in the largest pharmacy chains in the US and launching an aggressive advertising campaign. These measures have yielded results - in 2015 Forbes magazine estimated the capital of Mrs. Holmes at $ 4.5 billion, and the company itself at $ 9 billion, though, after a number of revelations, it nullified the results.
In October 2015, the Wall Street Journal published an article in which the effectiveness of the new technology was questioned. Moreover, the publication stated that the alleged "bloodless" way of Theranos gives incorrect or inaccurate results. The advertised nanocontainers, in turn, could only be used for 15 kinds of analyzes, while the rest used conventional ones. In the same period, the reports of the Food and Drug Administration (FDA), which exposed the company, began to appear.
"The story of Theranos taught an important lesson for the Silicon Valley," said Jina Choi, director of the regional office of the Securities Commission in San Francisco. "The creators of innovative technologies that are trying to bring revolutionary inventions to the market should always tell the truth to their investors, what their technologies can do already today, and not what results these technologies can achieve in the future."
source: theguardian.com
Thus, the innovative "bloodless" technology for collecting medical analyzes was in fact at an early stage of development, and the company's revenue, despite claims, was below $ 100 million. In addition, since 2015, the startup used devices of other companies (primarily Siemens). To form a positive image, Theranos’ representatives also announced cooperation with the US Defense Ministry in Afghanistan, but in fact, the military department never used the company's services.
As part of the deal with the Securities Commission, Mrs. Holmes agreed to pay a fine of $ 500,000, and do not hold senior positions in public companies for ten years.
Under the terms of the agreement, she will also return 18.9 million shares of Theranos and waive the right to vote in the company. The biotechnological start-up Theranos, in turn, will be put up for sale.
Recall, Theranos appeared on the market in 2003 and immediately became a sensation. The young founder of the company (at that time she was only 19 years old) promised to simplify the procedure for collecting medical tests, receiving 240 values from one drop of blood in 15 minutes without nurses, bandages, needles and pain. Thanks to the supposedly innovative invention, Theranos was able to attract investments from large venture funds, and Henry Kissinger and George Shultz, two former US Secretary of State, joined the company's board of directors. In 2013, the company began to actively develop the market, opening blood collection points in the largest pharmacy chains in the US and launching an aggressive advertising campaign. These measures have yielded results - in 2015 Forbes magazine estimated the capital of Mrs. Holmes at $ 4.5 billion, and the company itself at $ 9 billion, though, after a number of revelations, it nullified the results.
In October 2015, the Wall Street Journal published an article in which the effectiveness of the new technology was questioned. Moreover, the publication stated that the alleged "bloodless" way of Theranos gives incorrect or inaccurate results. The advertised nanocontainers, in turn, could only be used for 15 kinds of analyzes, while the rest used conventional ones. In the same period, the reports of the Food and Drug Administration (FDA), which exposed the company, began to appear.
"The story of Theranos taught an important lesson for the Silicon Valley," said Jina Choi, director of the regional office of the Securities Commission in San Francisco. "The creators of innovative technologies that are trying to bring revolutionary inventions to the market should always tell the truth to their investors, what their technologies can do already today, and not what results these technologies can achieve in the future."
source: theguardian.com