Billion Dollar Baby Bye Bye: Regulators Seek To Ban Theranos Founder Elizabeth Holmes

Tyler Durden's picture

It seems billion dollar baby of Silcon Valley, Elizabeth Holmes, is facing yet another unicorn-slaying moment as the fairy-take ending for Stanford drop-out looks increasingly distant after WSJ reports regulators are seeking ban the so-called "billionaire" from the blood-tsting business for two years after U.S. health inspectors have found serious deficiencies at Theranos Inc.’s laboratory in Northern California.

As The Wall Street Journal, which has broke and has been on this story from day one, reports,

In a letter dated March 18, the Centers for Medicare and Medicaid Services said it plans to revoke the California lab’s federal license and prohibit its owners, including Ms. Holmes and Theranos’s president, Sunny Balwani, from owning or running any other lab for at least two years. That would include the company’s only other lab, located in Arizona.


The two labs generate most of Theranos’s revenue and are at the core of its strategy to revolutionize the blood-testing industry with new technology, user-friendliness and quick results.


The letter hasn’t been released to the public, but a copy was reviewed by The Wall Street Journal.

Holmes has 10 days to try to clear her name: "under federal law, Theranos had 10 days to give CMS evidence of why the sanctions shouldn’t be imposed. The company has responded, and CMS is reviewing the response, according to a person familiar with the matter. If the company doesn’t respond to the satisfaction of the regulators, CMS said in the letter that it will proceed to impose the sanctions."

And if sanctions are imposed, it's pretty much game over.

If the sanctions are imposed, some would take effect within eight days. Others would take longer, including revoking the California lab’s license, which could occur in 60 days.


Theranos could appeal to an administrative law judge and then a departmental appeals board, which could delay the effective date of some of the sanctions. If Theranos were to appeal, the lab would keep its license pending the outcome of the appeals process. The proposed ban on Ms. Holmes and Mr. Balwani would take effect at the same time as the lab’s license revocation and would be subject to the same appeals process.


The appeals process could take months, and such appeals have rarely succeeded in the past. A list of appeals decisions on the agency’s website shows that the agency didn’t lose a single such case from 2001 to the end of 2010.

None of this should be a huge surprise, after Aswath Damodaran chastened just a few months ago, looking back at the build up and the let down on the Theranos story, the recurring question that comes up is how the smart people that funded, promoted and wrote about this company never stopped and looked beyond the claim of “30 tests from one drop of blood” that seemed to be the mantra for the company. While we may never know the answer to the question, Aswath Damodaran offers three possible reasons that should operate as red flags on future young company narratives...

1. The Runaway Story: If Aaron Sorkin were writing a movie about a young start up, it would be almost impossible for him to come up with one as gripping as the Theranos story: a nineteen-year old woman (that already makes it different from the typical start up founder), drops out of Stanford (the new Harvard) and disrupts a business that makes us go through a health ritual that we all dislike. Who amongst us has not sat for hours at a lab for a blood test, subjected ourselves to multiple syringe shots as the technician draw large vials of blood, waited for days to get the test back and then blanched at the bill for $1,500 for the tests? To add to its allure, the story had a missionary component to it, of a product that would change health care around the world by bringing cheap and speedy blood testing to the vast multitudes that cannot afford the status quo.


The mix of exuberance, passion and missionary zeal that animated the company comes through in this interview that Ms. Holmes gave Wired magazine before the dam broke a few weeks ago. As you read the interview, you can perhaps see why there was so little questioning and skepticism along the way. With a story this good and a heroine this likeable, would you want to be the Grinch raising mundane questions about whether the product actually works?


2. The Black Turtleneck: I must confess that the one aspect of this story that has always bothered me (and I am probably being petty) is the black turtleneck that has become Ms. Holmes’s uniform. She has boasted of having dozens of black turtlenecks in her closet and while there is mention that her original model for the outfit was Sharon Stone, and that Ms. Holmes does this because it saves her time, she has never tamped down the predictable comparisons that people made to Steve Jobs.



If a central ingredient of a credible narrative is authenticity, and I think it is, trying to dress like someone else (Steve Jobs, Warren Buffett or the Dalai Lama) undercuts that quality.


3. Governance matters (even at private businesses): I have always been surprised by the absence of attention paid to corporate governance at young, start ups and private businesses, but I have attributed that to two factors. One is that these businesses are often run by their founders, who have their wealth (both financial and human capital) vested in these businesses, and are therefore as less likely to act like “managers” do in publicly traded companies where there is separation of ownership and management. The other is that the venture capitalists who invest in these firms often have a much more direct role to play in how they are run, and thus should be able to protect themselves. Theranos illustrates the limitations of these built in governance mechanisms, with a board of directors in August 2015 had twelve members:




I apologize if I am hurting anyone’s feelings, but my first reaction as I was reading through the list was “Really? He is still alive?”, followed by the suspicion that Theranos was in the process of developing a biological weapon of some sort. This is a board that may have made sense (twenty years ago) for a defense contractor, but not for a company whose primary task is working through the FDA approval process and getting customers in the health care business. (Theranos does some work for the US Military, though like almost everything else about the company, the work is so secret that no one seems to know what it involves.)
The only two outside members that may have had the remotest link to the health care business were Bill Frist, a doctor and lead stockholder in Hospital Corporation of America, and William Foege, worthy for honor because of his role in eradicating small pox. My cynical reaction is that if you were Ms. Holmes and wanted to create a board of directors that had little idea what you were doing as a business and had no interest in asking, you could not have done much better than this group of septuagenarians. 

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pods's picture

She's good light, bad light. Couple of nice poses, then a couple of ones that scream crazy whackjob.

And how can she be banned by Medicaid or Medicare?  Who the fuck are they?

FDA can shut them down.  Medicare/Medicaid can drop them as a key supplier and not use them. 


NoDebt's picture

"regulators are seeking ban the so-called "billionaire" from the blood-tsting business"

The blood tasting business?  So they have "tasters" to make sure the infant blood is pure before Henry Kissinger drinks it?

Herd Redirection Committee's picture

Ladies and gentleman, I give you...

The Calling Card of the Elite.   If you don't "believe" in symbolism, secret hand shakes, and hand signs, being used by secret societies, then you can be on your way.  But for the rest...

The 666 hand sign, by Elizabeth Holmes:

Tip of the hat.  Wink wink.  This was a message to all the other elites, you can get on board this one, you just have to know when to jump off, too!

mtl4's picture

Nice to see a warm fuzzy pic of her and Bill, that's certainly adds to her credibility no doubt.

nuubee's picture

So you like seeing Bill grooming his targets? Personally, I find it gross.

JRobby's picture


I would like to suck, er test your blood

chumbawamba's picture

Henry Kissinger is 92?  When the fuck is that vampire going to finally get pushed out into the sunlight?

I am Chumbawamba.

Handful of Dust's picture

Uncle Sam just wants to get in her pants. Tha's all.

HowdyDoody's picture

Nah - its a babe's head and Soros' body. That's why the turtleneck is always there - to hide the turtle neck.

Miles Ahead's picture


How was she able to pull off this scam?  One drop, 30 tests?  19 years old... blonde?  Everybody's searching for a hero. 

I mean, even her facial expression tells me she's a fraud.

Stainless Steel Rat's picture
Stainless Steel Rat (not verified) Automatic Choke Apr 13, 2016 7:29 PM

They have a crappy service.  A much better one is They give reports that are not crippled by either big pharma or the FDA.

jbvtme's picture

thank christ for the FDA. we know how honorable those guys are.

Pinto Currency's picture


Maybe some of the reptiles want to buy her tech for a few cents.

Or perhaps these blood tests would cheaply and quickly detect nagalase.

Who knows.

WordSmith2013's picture
‘Revolutionary’ Company Has
Written All Over It


Theranos Board Of Directors A Dead Giveaway


general ambivalent's picture

Some of you may be interested in this old Russian science fiction story:

Bogdanov created the idea of blood transfusion as a means of life extension, and believed it would lead to immortality. He also, ironically, was completely opposed to technocracy and he died from blood transfusions (they did not know of blood types at the time). In any case, it likely says something about our times that those who dominate our lives have made Soviet science fiction into a reality (Bogdanov was an early Soviet, before the revolution, and was isolated by Lenin's group because of his views and criticism).

Karlus's picture

>>Everybody's searching for a hero.

Elon Musk would like to have a word with you....

JRobby's picture

"Kneel Down and Pray With Me Jew Boy!!!"

One of the more destructive NWO vampire operatives. He needs a "pillowed face"

pods's picture

Does that mean Buckwheat was a Satanist?

BandGap's picture

Little known, but true. Buckwheat was a steadfast ally of Lucifer. Psychoeyes is the tip-off.


East Indian's picture

Only after you pointed out, I noted that Google Chrome also has a 666 logo. 

knukles's picture

So you're familiar with the Reptilians?

Yen Cross's picture

 Knucks, why are these kids so infatuated with cars?

 I just sold my 599 GTO and took delivery on my 488 Berlinetta. [Ferrari did a good job on that car]

  The GTO is being stabled. [ Front engine  V-12]

Pairadimes's picture

Apparently her political contributions were considered inadequate.

fockewulf190's picture

Put on the glasses and the true Elizabeth Holmes is revealed.  Explains a lot.

Bangin7PoundCocks's picture
Bangin7PoundCocks (not verified) pods Apr 13, 2016 2:11 PM

For hittin' it once, the crazier the better.

CJgipper's picture

The crazy draws me in like a moth to a flame.  They're crazy in bed, just go to their place and use a fake name.

Alternative's picture

You only see the face. Who knows what's below it? This is America.

SomebodySpecial's picture

Below the face is a pencil-neck geek. The turtle neck hides it all!

TradingIsLifeBrah's picture
TradingIsLifeBrah (not verified) Bill of Rights Apr 13, 2016 1:37 PM

Make sure you get a blood test after...

Infield_Fly's picture
Infield_Fly (not verified) Bill of Rights Apr 13, 2016 1:37 PM

Me too...strawberry sundae comes to mind

Herd Redirection Committee's picture

She's a he, baby.

Why else the turtlenecks to hide the Adams apple?  And the deep voice?

Although if you are a dude, that has been on estrogen supplements for a decade, I would hesitate to call you a man.  Simply conjecture.

pods's picture

Well, does she fuck in the front hole?

CarpetShag's picture

a trifle crude, but insightful....

pods's picture

Doug Stanhope came up with it, along with many other great ones.

Herd Redirection Committee's picture

Yes, but the front hole was previously a banana, that was cut in half like a hot dog, and then folded inside, err, inverted.

HectorCamachoTrump's picture
HectorCamachoTrump (not verified) Herd Redirection Committee Apr 13, 2016 1:56 PM

Thats a man baybee!

Forget the turtle necks. The voice!


pods's picture

For the record, will you please recite "LACES OUT DAN" for us please?

HectorCamachoTrump's picture
HectorCamachoTrump (not verified) pods Apr 13, 2016 2:07 PM

You axed for it nigga!