You'd have to look really hard not to see Steve Jobs in
Elizabeth Holmes. Both Holmes and Jobs were loners as kids. As a teenager, Jobs discovered Plato; Holmes favored Roman emperor-philosopher Marcus Aurelius. Both dropped out of college, in part, because they didn't see the virtue in an education they believed wouldn't make a difference in their futures. Like the Apple creator, Holmes has kept her company,
Theranos--which seeks to radically disrupt the lab test industry--shrouded in secrecy. Jobs became a billionaire by the time he was 40. For Holmes, that moment came sooner, when Theranos was valued at $9 billion.
She was not yet 31.
Of course, one obvious difference between them is that Holmes is a young woman in an environment that has long favored young men. But there are few entrepreneurs--of either gender--with Holmes's record of accomplishment and even fewer willing to talk about it publicly. Holmes didn't set out to become a role model; she set out to save lives. But now, as the world's
youngest female self-made billionaire, she's stumbled into this rarefied position and is beginning to own it. "I really believe it's like the four-minute mile," says Holmes, whose estimated net worth is $4.5 billion. "When one person does it, more and more people do it."
Then there are the black turtlenecks. Most have assumed that Holmes's sartorial choice is an eerie, if not presumptuous, homage to Jobs. But it turns out, the black turtlenecks were inspired by, of all people,
Sharon Stone, who, having gotten a Best Actress nomination for her role in Casino, wore one to the 1996 Oscar ceremonies. "My mom thought it was fantastic," explains Holmes, dressed in a black turtleneck at her company's Palo Alto, California, headquarters. Her mother soon overhauled the closets of her two kids, who from then on were regularly spotted in the neck- swallowing shirts.
As with many things in Holmes's life, she's stayed with the look solely for reasons of efficiency: The turtlenecks eliminate early-morning decision making. Holmes has taken a similar life-hack approach to every aspect of her existence outside of her lab test company, which is at best minimal, given that the 31-year-old works seven days a week. Holmes is a vegan because avoiding animal products allows her to function on less sleep. She says she "doesn't really hang out with anyone anymore," aside from her younger brother, who joined Theranos as a product manager four years ago. She didn't take a vacation during the entire decade of her 20s and doesn't date. "I literally designed my whole life for this," says Holmes in a strikingly baritone voice, her shoulders curled inward and hands clasped, the body language of someone who is fiercely protective and on guard. Talking to Holmes is a bit like talking to a politician--she's politely impenetrable, unspooling a stream of words without actually revealing very much.
255 The approximate number of Theranos tests that still need FDA approval. Its first approval, for herpes simplex 1, came in July.
Bloody Ambitious
Theranos is aiming to disrupt the $75 billion lab test industry, and grow it by another $125 billion.
Steve Jobs had massive ambition, but Holmes's is arguably larger. While revolutionizing consumer technology is formidable, Holmes believes her company will actually save lives. Her diagnostic lab test upstart is aiming to disrupt a $75 billion industry, and to help grow it by another $125 billion. There's the revolutionary nature of its science, as well as the transformational vision of its model. Theranos, now valued at $10 billion, has developed blood tests that detect hundreds of conditions and diseases from a couple of drops of blood from the finger, instead of tubes of blood from a vein in the arm. Holmes aims to enable anyone to get lab tests--for anything from cholesterol to cancer--on his or her own at a local pharmacy for
no more than half of what Medicare would pay. Holmes believes that providing faster, more convenient, and less expensive access to lab tests will transform preventive medicine. En route, she may also undo the profitable medical test industry, currently dominated by two decades-old behemoths,
Quest Diagnostics and
Laboratory Corporation of America. "I don't think anyone disputes that Elizabeth and her team are visionaries," says Gary St. Hilaire, the president and CEO of
Capital BlueCross, which recently became a Theranos partner.
To get there, Holmes has taken the road less traveled, and what an exceptionally long road that is. She's already spent a third of her life building an organization that is still in its early days. From its inception in 2003, she operated Theranos in stealth mode, bringing it out into the light only a year and a half ago. She thinks another 20 years is a reasonable time frame for her company to impact the masses worldwide. In many ways, she is the opposite of a serial entrepreneur. She's a devoutly monogamous entrepreneur: For better or worse, in sickness and in health, she sees herself as having only one existential purpose. "You're talking to someone who wants to do this her whole lifetime," she says.
"I realized there had not been a sole female founder-CEO of a multibillion-dollar technology company. I didn't believe it. I still don't believe it."Elizabeth Holmes
Even Holmes's supporters see danger in that kind of commitment. "One of my shareholders said to me, 'You are an athlete running a marathon who thinks she's running a sprint,'" says Holmes. The risks of making a life bet on just one plan are many. There's the possibility of
burnout, sure, but what if after decades of a claustrophobic existence, a new competitor comes along and beats Theranos to market? What if her company runs out of cash, fails to change the world, or collapses? Theranos senior technical adviser Channing Robertson admits, "I do worry, because I've never seen a person with this kind of drive who doesn't miss or skip a beat." Robertson frequently checks in on Holmes, who seems nothing more than bemused by his concern. "She just turns around with a big, wide smile and says, 'Life is great. Everything is fine,'" he says.
Holmes is willing to contemplate failure, but only in the scientific sense. She named one of Theranos's internal projects Edison, as a reminder of the virtue of staying the course: When the inventor was asked why, after thousands of attempts, he hadn't managed to make a light bulb ready for commercial use, he replied that he had in fact made significant progress--he now knew thousands of ways not to make a light bulb. In Holmes's view, being prepared to face failure 1,000 times is simply what is required to finally get it right the 1,001st. And she has no intention of doing anything else, ever.
Being in stealth mode for so long leaves a company
ambivalent about outsiders. Theranos's new headquarters is hardly a haven of hospitality. While the building is being renovated, there is no lobby for visitors, who are greeted by an NDA. In July, when Joe Biden arrived at the company's sprawling, unmarked manufacturing facility, journalists who had been waiting for more than an hour were abruptly escorted out after a mere 10 minutes of remarks. The next day it was revealed that one of the men seemingly protecting the vice president of the United States was not Secret Service but actually a Theranos security guard lurking near Holmes.
Holmes, who now has some 1,000 employees and an orchestration of security around her, has come a long way since ditching Stanford at 20. At the time, there was no model for her to follow; it was 2004, years before dropping out of college and going westward was in vogue, and Holmes was hardly a coder raising money for the
next big app. Most biotech founders had PhDs and years of experience; Holmes had neither. She hadn't even stuck around Stanford long enough to get her undergrad degree in chemical engineering.
How the Sexes Fundraise
- 15 Percent of U.S. venture funding goes to startup teams that include a woman, and only 2.7 percent of venture funding goes to female CEOs.
- 3x Male founders are that much more likely to find equity financing through angels than their female counterparts.
- 14 Percent of men tap business acquaintances, versus 5 percent of women.
- 2 Percent of women are likely to leverage networks of close friends, as opposed to 9 percent of men.
SOURCES: BABSON COLLEGE, INC. 5000 2014 SURVEY
From a young age, Holmes has always exhibited confidence. She led a solitary childhood, her family moving from Washington, D.C., to Houston, where instead of forging friendships, she'd sketch designs for time machines and collect insects. By the time she was a 15-year-old high school sophomore, she was spending her summers in California and had successfully pestered Stanford's administrators into allowing her to take a college-level Mandarin class. During her freshman year at Stanford, she nagged Robertson, at the time a dean of engineering, until he let her into his lab, which was populated mostly with PhD students. "She would just stand in my doorway every day and say, 'When are you going to let me into your lab?'" says Robertson.
By the time she got in, Holmes knew she wanted to devote her life's work to health care. She had been deeply affected by the sudden death of her godfather, who had a heart attack but never knew he had coronary disease. Her parents both have had careers with noble ambition--her mother was a foreign-policy and defense aide on Capitol Hill, and her father is now the global water coordinator for USAID--but Holmes decided government agencies were not effective enough. She'd watched "all these people with incredibly good intentions" get mired in bureaucracy and politics while trying to make an impact, she says. Meanwhile, with a startup, Holmes adds, "you say, 'We're going to do this,' and you
design an organization to do it."
Her ingenuity ultimately led her to the field of testing. The summer before her sophomore year, she worked at the Genome Institute of Singapore, doing SARS testing with traditional methods, like nasal swabs. At Stanford, she'd been exploring lab-on-a-chip technology, which enables diverse results to be extracted from a minuscule amount of liquid on a microchip. By the time she returned to California in 2003, Holmes had developed a novel drug-delivery device--a wearable patch, or an ingestible, that could adjust dosage according to variables in the patient's blood and update doctors wirelessly. She
filed it for her first patent. "It was not only bold, but also remarkable in terms of its engineering and scientific integrity," says Robertson.
Holmes soon found herself spending more time talking to venture capitalists than in the classroom, and asked the then 59-year-old Robertson to advise her new company. He demurred. He'd been involved in about 40 startups, but never, he says, with one run by a 19-year-old. Her parents let her use the money they'd saved for her education as her first seed round of funding. She hired a couple of students from the lab and started building prototypes, and Robertson agreed to become her first adviser. "Just one or two of these people come forward every generation, and she's one of them," he says.
Even in those early days, it was clear Holmes was designing her company for the
long term. She wasn't going to screw it up by building something suitable only for a quick flip, or slapping together a company that could be gutted by acquirers or investors who didn't share her priorities. Plenty of would-be investors told her she needed to go back to school. Other times, she recalls, "You walk into the meeting and the first question is 'What's your exit strategy?' And you're kind of interested in your entry strategy." Holmes made her task harder by insisting on keeping control of the company, of which she still owns more than half. Jennifer Fonstad, at the time a managing director at
Draper Fisher Jurvetson, was one of Holmes's early investors. "You hear a lot about young entrepreneurs who come in with a certain confidence," Fonstad says. "Holmes had 10 times that."
Holmes would need that confidence. "I certainly didn't start out thinking, OK, it'll be 12 years before we can finally begin to serve customers," she says. Theranos won't share many details about those early days, but it seems to have been trying to build on the wearable-patch patent that had so impressed Robertson. ("Originally, she was hoping to be almost bloodless," says Fonstad.) Robertson says the early work wasn't in vain: "The kinds of things we were working on then are embedded in part of the technology that we use today."
But the challenge of creating tests that were smaller, cheaper, and faster than the competition's was grueling. Each test had to be developed individually, yet ultimately processed on a single platform--and Theranos needed to develop more than 200 of them. Holmes, who by 2005 had raised about $6 million in venture backing, knew she'd have to buy the time to do that, but wanted "to build a company that could grow from operations and not be dependent on what I call the equity umbilical cord." So she jumped at her revenue-making opening: Clinical trials required only a handful of specific tests, so she began securing contracts with pharma companies to function as their testing facility. The deals not only gave Theranos the credibility that helped Holmes raise a total of $92 million in venture capital by the end of 2010; they also created real cash flow that could help it fund continued development of its tests.
Finally, in September 2013, after years of the company's functioning as an outsourced pharma lab, developing dozens of patents, and having never operated a real website or whispered a peep to the press, it was time for Holmes to emerge from stealth mode and show the world what she'd been working on.
Theranos wellness centers feel more like spas than testing facilities, despite being situated inside Walgreens drugstores, where virtually all 56 of them reside. At a Theranos-branded enclave in the downtown Palo Alto Walgreens, white leather couches and New Age music accompany a phlebotomist who warms the patient's fingertip with a gel pack before pricking it. The specks of blood flow into a vial about the size of a pinkie nail, which is marked with a bar code. Holmes, who claims to be terrified of traditional needles, says 40 percent of people don't get blood tests ordered by their doctors because of that fear, along with cost. Holmes's vision is to ultimately have Theranos wellness centers within five miles of every person in the United States--and to provide similar access throughout the world.
"One of my shareholders said to me, 'You are an athlete running a marathon who thinks she's running a sprint.'"Elizabeth Holmes
Although she's a long way from that reality, over the past 18 months the momentum behind Theranos has been building. There's the recent deal with the prestigious
Cleveland Clinic, which will use Theranos technology to test its patients. Theranos secured agreements with Capital BlueCross and AmeriHealth Caritas to be a preferred provider. A partnership with the
Carlos Slim Foundation, which runs a network of health care centers in Mexico, will use Theranos tests to screen for, among other things, diabetes, a disease known to be preventable with early detection. In July, Arizona passed the country's first bill, co-authored by Theranos, allowing patients to order blood tests without a prescription. And then there's the massive Walgreens deal.
Any of Theranos's advances could potentially transform the lab test industry. But it's in pricing that Theranos arguably has the most powerful opportunity to disrupt, a point the usually restrained Holmes allows herself to get worked up over. "The premise that you're going to run a business, and that if someone is in need, I'm going to charge them a ton of money, is completely wrong," she says. "Price should be the same for everyone, period. And the price should be affordable." Theranos never charges more than half the rate set by Medicare for blood tests; in some cases, it's a 10th of the cost. A test for HIV can cost more than $80.
Theranos charges $16.56.
But Theranos's black-box approach has led to a slew of criticism. Competitors and some in the medical community complain the startup has revealed too little about how its tests work, and have called for Theranos to publish its studies in peer-reviewed journals. Holmes is unapologetic about not giving in to the critics. "I admit it's very intentional," she says. "We don't call on our competitors and explain how our technology works." Instead, she says, Theranos is asking the Food and Drug Administration to approve each of its tests, something no other lab test company has done. In July, it received its first FDA approval, for its herpes simplex 1 test. It has approximately 255 tests to go.
Others argue that early detection, in the absence of medical guidance, doesn't actually lead to saving lives but instead ignites hysteria. "The past 30 years have shown that breast cancer screening has not been effective in reducing the burden of breast cancer. The same with prostate cancer," says Eleftherios P. Diamandis, a professor on the University of Toronto's faculty of medicine. While certain screenings, like cervical cancer, do work, he believes vast numbers of people will end up going to the hospital because of false positives, and endure unnecessary stress, medical procedures, and bills before discovering that, actually, they're fine. Others are concerned that the average person can't accurately interpret test results or even order the right tests. Holmes offers a philosophical, if not libertarian, retort: "The idea that I as a human should not be free to access my own health information, especially using my own money--even though I can buy weapons and anything else I want--and rather should be legally prohibited from doing so, summarizes the root of the fundamental flaw we're working to change in our health care system."
Despite Theranos's reported $400 million in funding, there is also skepticism about the sophistication of its technology. Because of the company's insistence on secrecy, its board, which resembles a presidential cabinet--it includes former secretary of state George Shultz, former secretary of defense William Perry, former head of the CDC William Foege, and former secretary of state Henry Kissinger--can defend Theranos's technology only by asking for blind faith. Board member and former Senate Republican majority leader Bill Frist, who was a heart and lung transplant surgeon before entering politics, says, "I've seen their technology and systems up close. What they've been able to do is create a proprietary platform that really is the lab of the future." But it's certainly possible other needle-free avenues into testing--from lasers to biosensors--could leapfrog those of Theranos.
For a scientist, Holmes has a
notable relationship with her faith, drawing on it when the weeks in the lab are long and the criticism is loud. "My belief in God has played a huge role in everything that I've done," says Holmes, who brings up God multiple times throughout our discussion, although she won't specify her faith. "When you don't have anybody to talk to and when you're going through something that's hard and believing that you're doing that because there's something greater that's going to come from it--that you can't even understand--that gives you the strength to keep going." Frist says the way Holmes sees it, Theranos is her deeper calling. "Her purpose in life is very much on a different plane," he says. "For her, it's a tunnel. She knows right where she is in the tunnel, and she is dedicated to running through it and not paying much attention to the rest of the world."
More recently, Holmes has tried dabbling with life outside the tunnel. She's been speaking to groups of girls, encouraging them to excel academically. "This is just one of those areas where a glass ceiling shouldn't exist," she says of entrepreneurship. "We change this for the next generation by our actions." This is a point she's reminded of often, particularly when thinking about where she falls in history. "It was a long time after I started this company that I realized that there had not been a sole female founder-CEO of a multibillion-dollar health care or technology company," Holmes says, incredulous. "I didn't believe it. I still don't believe it."
When it is noted that being "the only woman" can make for a very lonely career, Holmes, who typically has a long, winding answer for everything, replies with just a single word: "Yes."