In a trial that rocked the business world, Theranos founder Elizabeth Holmes has been found guilty of defrauding investors to the tune of $700 million. The trial, held at the Robert F. Peckham Federal Building on January 3, 2022 in San Jose, California found the former CEO, 37, guilty of four counts of fraud, out of 11 charges.

Currently free on a $500,000 bond, Holmes reportedly faces between 80 and 20 years in prison. However, her sentence will not be handed down until the trail of her former business and personal partner Sunny Balwani on related charges has concluded. Balwani was co-president of Theranos for a decade, during which time Holmes claims she was abused by him – claims Balwani denies.

Holmes founded Theranos in 2003 after dropping out of Stanford University aged 19. The following year the company, which claimed to be able to run extensive blood tests on just a few drops of blood, gathered in excess of $6 million in funding, reaching a valuation of $30 million.

For a while it seemed the only way was up, with Theranos once valued at $9bn and Holmes become a cause célèbre among tech journalists and ambitious start-up founders. However, in 2018 the 

ran a series of exposes suggesting Theranos’ devices were inaccurate. In fact, journalist 

 had been asking questions about Theranos since 2015. (“Silicon Valley lab, led by Elizabeth Holmes, is valued at $9 billion but isn’t using its technology for all the tests it offers.”)

Reportedly, Holmes had tried to kill the story by going to the paper’s owner, Rupert Murdoch – who was also a Theranos investor – but to no avail, leading to one of the most shocking business trials of the decade.

Elizabeth Holmes was sentenced this week to nine months in prison


Now, with the dust far from settled, inevitable questions are being asked about the future of the start-up industry and what its future looks like.

So far, the jury is out. Writing in The Telegraph, Ben Wright argues that “

The downfall of Elizabeth Holmes won’t change Silicon Valley culture

.” Wright, is of the opinion that Holmes desire to ‘fake it until you make it’ was not the only sticking point at Theranos, that the companies issues ran deeper. Seen in that light, was Holmes’ fall from grace inevitable?

Certainly, a handwritten note presented by Holmes lawyers points to a robotic persona, but one that may have been more artifice than natural expression (why else would you need to remind yourself of it in a memo?) The note reportedly read:

““I am never a minute late. I show no excitement. ALL ABOUT BUSINESS. I am not impulsive. I know the outcome of every encounter. I do not hesitate. I constantly make decisions and change them as needed. I speak rarely. I call bulls— immediately.”

Either way, the note seems to be evidence of someone wishing to be taken seriously, perhaps by playing at being a business leader. After all, most business leaders are effortlessly sociopathic (not a recommendation for your C.V, by the way); Holmes’ reminding herself to act this way arguably shows she’s anything but.

"I am never a minute late. I show no excitement. I do not hesitate..."

Arguments over Holmes character are largely redundant, however. The law is the law, and there are many that would argue that start-up culture has been in dire need of regulation for some time now. Oliver Kamm, writing for The Times, is certainly one such voice. “

Jailing the Theranos fraudster Elizabeth Holmes will be good for capitalism

” ran a headline to an article by Kamm on January 4th.

Capitalism, Kamm argues, is a good thing. To receive rewards we must take risks, and that’s fair. Fraud upsets this balance because it is not fair. The rewards are gained without playing by the same rules as everyone else and as such are “ill-gotten”. It’s the same as the childhood friend who cheated at school, or who shot for the goal after the bell was rung at break time. It isn’t playing by the rules, and therefore, it isn’t fair. When Holmes defrauded her investors out of $700 million dollars, Kamm implies, not only was this not fair, it caused a massive upset to the established way of doing business – among many the most important code of all.

“Theranos takes its place alongside Enron and WorldCom as a great corporate scandal of this century,” Kamm writes. “Wealthy investors can be exploited and robbed, just as small ones can be. Regulation needs to be tough to deter and expose scoundrels and liars.”

Having defrauded wealthy people, apparently puts Holmes into the category of “scoundrel”.

Writing in the Guardian, Kari Paul points out that Holmes’ conviction fell pray to the “

” that until so recently had been instrumental to her rise.

Elizabeth Holmes arrives at her landmark trial last year — sans trademark black poloneck


“[Holmes’] conviction sealed the extraordinary rise and fall of the company and could have wide-ranging consequences for the tech industry,” Paul writes. “It also marked an indictment of the hype machine that helped rocket Holmes to fame, as she graced the covers of major magazines, headlined conferences, and drew comparisons to Apple’s Steve Jobs.”

Holmes reportedly wore turtlenecks to subconsciously give people the impression she was the second-coming of Jobs. Undoubtedly she has committed crimes, and undoubtedly she is yet another would-be tech innovator caught up in the pumped-up, fund-raising fetishising culture that makes celebrities of tech leaders, celebrating them as much as their accomplishments. It is in many ways a cult of personality that often overshadows a company’s work. Or in this case, misdeeds.

 Aron Solomon agrees that the media played an undeniable role in boosting Holmes (and other tech messiahs) onto a pedestal. “Sometimes a startup founder makes intentionally misleading or overblown statements, but more often than not, the media is at least an accomplice in building up these statements and giving them the weight that should come only through the test of time and actual scrutiny,” he writes.

The obvious question, then, is should we be so ready to believe tech leaders’ promises? Holmes’ case certainly suggests not. In another article on the 

, its editorial staff argue that “The downfall of the founder of Theranos is a story of hubris and lies – and a parable for a financial system that is badly broken.”

"Holmes is far from the only tech leader overpromising and underdelivering..."

How Holmes’ case – and her eventual sentencing – will impact start-up culture remains to be seen. But it is clear change is urgently required.

“America and other rich countries have spent years running record-low interest rates and quantitative easing programmes, which have pushed the cost of capital close to zero. This has not sparked a wave of innovation in socially vital technologies, but pumped more air into asset bubbles,” write the Guardian’s editors. “And in the case of Theranos, all it has done is provide the kindling for a bonfire of wealth – money that could have been spent more wisely, invested more usefully and done some actual good.”

Of course, the problem is not limited to Holmes. “Elizabeth Holmes is far from the only tech leader overpromising and underdelivering” writes tech journalist Chris Stokel-Walker.

Before the fall: Holmes on the cover of Forbes Magazine, 2014


What needs to change is a greater level of scrutiny when successful business people make overblown promises about changing the world. Just because they’ve been able to make a lot of money quickly, it doesn’t necessarily mean they’re a genius adept at solving any problem or implementing any sort of revolution. And, as the 

 pointed out, we need to hold more start-up founders – occasionally modern day snake oil sellers – accountable for their empty promises.

“For many, the saga represents the worst excesses of Silicon Valley’s startup culture, where founders regularly stretch the truth in search of fortune and fame. Such founders, however, are rarely prosecuted.”

Elizabeth Holmes is due to be sentenced in September and faces up to 80 years in prison, with many estimating she could spend the next two decades of her life in jail, at least. If business is about risk and reward, will the reward of making $700 million outweigh the risk of a life in prison to other start-up fraudsters? Only time will tell, but it seems unlikely.

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