Former tech entrepreneur, Elizabeth Holmes began her sentence for fraud on Tuesday, marking the end of a high-profile case that rocked Silicon Valley.
Holmes was convicted by a California court in 2022 on four counts of defrauding investors by promoting failed blood-testing technology. In November, she was sentenced to 11 years and three months in jail. She will serve her term in a minimum-security prison located in Bryan, Texas, about 70 miles from Houston.
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The controversial case centered on Theranos, a firm Holmes founded in 2003 after dropping out of Stanford at the age of 19. Theranos claimed to have created a groundbreaking technology that could conduct hundreds of health tests on a single drop of blood, which unfortunately did not work as expected.
As investors poured in funds, the media-savvy Holmes established herself as a Silicon Valley darling, attracting attention not only for her exciting technology that promised so much, but also for her unique personal style, distinctive voice, and penchant for wearing Steve Jobs-style black turtlenecks.
As Theranos’ profile rose– the now-defunct startup was once valued at $9 billion— it won over prominent backers such as former Secretary of State Henry Kissinger, former Defense Secretary James Mattis, and media mogul Rupert Murdoch.
However, things went awry following a Wall Street Journal investigation in 2015, which claimed that Theranos had conducted only a fraction of the objectively huge number of tests it said was possible with its proprietary technology. Additionally, it turned out that most of the startup’s work was done using machines from established blood-testing companies, calling into question the capabilities of Theranos’ own machine.
When she was sentenced last year, Holmes and her former business partner Sunny Balwani were ordered to pay $452 million in restitution to dozens of high-profile investors who they defrauded through Theranos. Balwani is already serving a 13-year sentence in California for his involvement in the failed startup.
When U.S. District Judge for the Northern District of California Edward Davila sentenced Holmes last year, he said, “The tragedy of this case is that Ms. Holmes is brilliant. She had creative ideas. She is a big thinker. She was a woman moving into an industry that was dominated by, and let’s face it, male ego. That young women entrepreneurs are regrettably denied access to, but she made that. She made that. She got into that world.” He added that “this is a fraud case where an exciting venture went forward with great expectations and hope only to be dashed by untruth, misrepresentations, hubris, and plain lies.”
Holmes told the court that she “loved Theranos,” and that it was her “life’s work.” However, she acknowledged her “failings” and apologized to everyone associated with Theranos, including employees, investors, and patients. “I’m so, so sorry,” Holmes said. “I gave everything I had to build our company and to save our company. I regret my failings with every cell in my body.”
It’s expected that the highly-publicized Theranos story will serve as a cautionary tale for other tech entrepreneurs and make them think twice before trying to pitch risky projects as transformative.
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