How $4.5 billion turned into Nothing

The story of the fall of the biotech company Theranos

marks, Geektimes

Last year, the fortune of Elizabeth Holmes (Elizabeth Anne Holmes), who founded the biotech startup Theranos, was estimated at about $ 4.5 billion. Theranos was considered one of the most successful startups in history. Now Forbes has reassessed the capital of the youngest female billionaire in the world. After the revaluation, Holmes is no longer a billionaire. The fact is that Forbes lowered the initial assessment of her condition to... zero (Matthew Herper, From $4.5 Billion To Nothing: Forbes Revises Estimated Net Worth Of Theranos Founder Elizabeth Holmes).

Let's try to figure out what's going on with Theranos and why a once very promising company now has so many problems, and prospects are also something near zero. After all, just a few months ago, the history of the company was considered a story of dizzying success. Now it's more like a dizzying fall. Why?

The beginning was interesting. The future millionaire woman Elizabeth Holmes decided to quit her studies at the prestigious Stanford, and founded the Theranos company. Holmes planned to create a technology that would allow people to donate blood almost painlessly. She called it a revolution in the medical field. The former Stanford student, according to her, really developed a technology that allowed several dozen tests to be performed with just a drop of the patient's blood.

Thanks to a well–known partner, Stanford Professor Channing Robertson, Holmes managed to achieve fame and receive several million dollars of investment. The company's board of directors includes such famous personalities as former US Secretaries of State Henry Kissinger and George Schultz. For the first ten years of its existence, little was known about the company, but its business gradually grew, the number of customers constantly increased. But three years ago, in 2013, Holmes talked about her company and the latest technologies for blood sampling and analysis. Many media outlets have started to replicate this information. A little later, well-known publications began to call Holmes one of the most successful women in the world, "Steve Jobs in a skirt." Interviews with her were published by literally everyone. The growing popularity of the company helped to attract investors' funds.

Initially, the company attracted "only" a few million dollars a year. After some time, the cash flow became much more stable and broad: Theranos began to receive hundreds of millions of US dollars as investments. Experts, seeing how much money is poured into the company, estimated its capitalization at $ 9 billion. And this despite the fact that the company's financial indicators and the technologies used by its specialists remained a secret. The company did not tell (and does not tell) how many customers it has, did not show statistics on the tests carried out, did not tell about the methods that are used for "micro-sampling of blood").

However, everything was fine. For many years, the company has been functioning, keeping its secrets and attracting new and new investors and customers.

But all good things come to an end, and problems begin. Theranos' problems started a little less than a year ago. Then several publications, including The Wall Street Journal, investigated the activities of the "biotech startup". After interviewing several experts and ex-employees of the company, the journalists concluded that Teranos conducts its tests on conventional medical equipment taken from hospitals. One of the ex-employees of the startup said that the company's own equipment, Edison, was used to conduct only 15 tests in December 2014. The accuracy of the system was extremely far from ideal, and the management decided to use third-party hardware, including popular solutions from Siemens AG.

It didn't help. A few months later, regulators reported the detection of violations that could threaten people's lives and health. And after some time, the company decided to withdraw all the analysis data for a period of several years. The company took this unprecedented measure to whitewash its reputation a little. The updated data was then sent to the patients' attending physicians and to the patients themselves. These are not hundreds or thousands, but tens of thousands of tests.

Plus, it became known that digging takes blood from patients from a vein, not from a finger, and in an amount exceeding "a few drops of blood". Why didn't this become known earlier? It's not clear yet.

But it is clear that the same closed and secret company can no longer remain. In order to prove something to the world, she will have to share information.

Without waiting for the publication of at least some Theranos data, Forbes representatives decided to conduct a detailed assessment of the startup. After talking with a large number of financial experts, venture investors and a number of other specialists, the journalists of the publication decided to make the company's assessment as realistic as possible. After a detailed reassessment, it became clear that the cost of the company is zero. Only the initial investment (approximately $724 million) is worth something. At the same time, the company's investors have preferred shares, which means that they will receive payments first, while Holmes has a regular 50% stake. If the Forbes estimate is correct, it means that even a 50% package is worthless, that is, the fortune of the "youngest billionaire woman in the world" is rapidly approaching zero. Perhaps the company will be able to attract additional investments, but you can't be too sure about that.

Portal "Eternal youth" http://vechnayamolodost.ru  02.06.2016