I always knew Elizabeth Holmes would have a second act. But I’m shocked it’s starting while she’s still behind bars.
Elizabeth is now serving an 11-year sentence for defrauding investors in Theranos and has been banned from participating in federal health programs. The company was built on her claim that, at 19 years old, she had invented a device capable of running hundreds of tests from just a single drop of blood. It was a bold vision that captivated the world, and a story everyone wanted to believe — including me.
Now her partner, Billy Evans, has founded a company called Haemanthus, which also touts a diagnostic blood-testing device that uses only small amounts of blood. While Elizabeth has no legal affiliation with the company, her fingerprints and pricks are all over it. Even the naming convention feels familiar: Instead of combining the Greek roots of therapeía and diagnosis like she did with Theranos, this time it’s haema and anthos — Greek for “blood” and “flower.”
Since she reported to prison about two years ago, by far the most common question people have asked me is: “Did Elizabeth start Theranos with the intention to revolutionize health care, or did she intend to commit fraud from the start?” I think the answer is neither. While I wasn’t there in the early days, I believe Elizabeth started Theranos in the pursuit of fame. She wanted to be the female Steve Jobs. She wanted to be known as the youngest self-made female billionaire, fly in private jets, advise the president, rub shoulders with Mark Zuckerberg and Elon Musk. She wanted to be on the cover of magazines. And she got what she wanted. Just a few months ago, she was on the cover of People magazine. Let me repeat: Even from prison, she’s landing on the cover of People magazine.
As the news of Haemanthus broke, I started to hear a similar question: “Do you think Haemanthus intends to revolutionize health care, or do you think it’s another fraud?” Once again — neither. I think it’s just another chapter of her narrative.
Anyone who thought this story was over doesn’t know Elizabeth and her ability to craft a narrative. When she leaves prison, there’s no doubt she’ll manage to appear remorseful without admitting guilt. And if she’s credited with launching a company from a prison cell? That’s more legendary than the Hewlett-Packard garage or Mark Zuckerberg’s dorm room. It’s a story so compelling, people will want it to be true.
Elizabeth is more than a masterful storyteller. She writes the story. Every detail is meticulously chosen to build her narrative, captivate her audience, and distort reality. The black turtleneck, deep voice, college dropout — the parallels with Steve Jobs were no accident.
The very first time I met her, Elizabeth told my grandfather, George Shultz (who served in the Cabinet in the Nixon and Reagan administrations and became a member of the Theranos board), and then-Sen. Dianne Feinstein that Quest and LabCorp would eventually try to take her down. She was planting the seeds of a conspiracy years before she would need to lean on it. She also told us Theranos would never go public, preempting pressure from investors. She completely controlled the narrative from day one.
The Elizabeth I knew would openly talk about her decision to not have friends, to never date, to never have kids, all because she was devoted to Theranos. (This, of course, was another lie. She was dating Sunny Balwani, the COO and president of the company.) However, when motherhood made for a useful character reboot, she became one — twice. Her first child arrived just days before her trial was set to begin, and her second between her conviction and sentencing.
Before her sentencing, the New York Times wrote about how she had become “Liz,” the devoted mother and volunteer who had ditched the black turtleneck. The article even included carefully posed photographs of Elizabeth with her two children. I feel profound sadness for those kids. Most parents would try to shield their children from that type of attention, but Elizabeth put them front and center, using them the same way she used to use her black turtleneck. They were props to support the narrative she was writing.
Similarly, I suspect that Haemanthus’ purpose is not to build a product that will improve the lives of people (or their pets — materials for potential investors say that they plan to start with veterinary medicine). Nor is it to make VC returns.
The purpose is to build something that works, so that she can point to it and say, “See, I would have figured it out. Theranos was never a fraud.” If Haemanthus’ technology does indeed work and she eventually makes that claim, whatever reporter she’s chosen to interview her needs to ask, “How many tens of thousands of people were you willing to hurt on the path to building something that worked?”
This raises another question I’ve been asked this week: “Do you think the technology will work?” Probably not, but I don’t have enough information to really know. Raman spectroscopy has been used for nearly 100 years and hasn’t achieved the resolution needed to perform this type of blood testing from a few drops of blood. Maybe two additional light sources, as described in Haemanthus’ patent, combined with AI solves the resolution problems, but consider me a skeptic until a third party validates its method. Over the past few years a number of people have reached out to me saying they’ve invented “the Theranos that works,” and several of them have concepts similar to this: apply AI to a mountain of noise and get a thousand test results. While many actually do have innovative approaches, none have come close to realizing the Theranos vision.
It’s been reported that Haemanthus aims to raise $50 million, and I have little doubt it’ll succeed. Billy Evans is independently wealthy, an heir to a Southern California hotel chain, so it’s likely a significant portion will be self-funded. And I can think of at least one outside investor who might get involved. Tim Draper, Elizabeth’s former neighbor and one of Theranos’ earliest backers, has maintained an unusual and unwavering loyalty to her. Even after her conviction, he continues to publicly defend her. Draper seems to be as invested in the narrative as she is, and is in a position to fund a company simply for the sake of that narrative.
My advice to prospective Haemanthus investors is this: Ask yourself what motivates Elizabeth Holmes. Money? Possibly. But when she walks out of prison, she’ll be returning to a partner who’s already a millionaire many times over. Mission? I think she’s thoroughly proven that she doesn’t care about improving the lives of patients. The real question is: Will Elizabeth serve the purpose of your fund — or by investing in her, will you simply be serving her purpose of writing her rise-from-the-ashes narrative?
Failed founders deserve second chances. But at Theranos, Elizabeth had a thousand chances — opportunities to listen to her scientists, to tell the truth to her board and investors, to change course and right the ship. At each opportunity she consistently showed poor judgement and a lack of character. Even when the Wall Street Journal began reporting on the company, she still had hundreds of millions in the bank, world-class scientists on payroll, and the most prestigious board in Silicon Valley. In that moment, she had more resources, talent, and opportunity than most founders will ever see — and she blew it.
She’s not Edison. This isn’t going to work on the thousand-and-first try.
Tyler Shultz is a scientist, founder, and whistleblower best known for exposing fraud at Theranos and advocating for ethics in innovation.