The Rise and Fall of Theranos

What happened

In the early 2000s, Elizabeth Holmes founded Theranos, a Silicon Valley startup that promised to revolutionize blood testing.
Its pitch was irresistible: with just a few drops of blood from a finger prick, Theranos claimed it could run hundreds of medical tests quickly and cheaply — disrupting an industry dominated by established laboratories.

Holmes raised over $700 million from high-profile investors and assembled a board filled with former U.S. secretaries of state, generals, and CEOs. The company was valued at $9 billion, and Holmes became the youngest self-made female billionaire on paper.

But behind the scenes, the technology didn’t work.

Theranos couldn’t perform most tests accurately on its own devices (called Edison). In many cases, the company secretly used conventional machines from other manufacturers while publicly claiming its system was revolutionary. Employees who questioned results or raised ethical concerns were silenced or dismissed.
Clinical data were withheld, regulatory warnings ignored, and internal quality failures hidden even from the board.

In 2015, investigative journalist John Carreyrou from The Wall Street Journal began exposing the inconsistencies.
By 2018, the SEC charged Theranos, Holmes, and her COO Sunny Balwani with massive fraud for misleading investors, doctors, and patients. Both were later convicted and sentenced to prison in 2022–2023.

Holmes and Balwani were also ordered to pay $452 million in restitution to victims. The company was dissolved.

Why it matters

Theranos wasn’t just a fraud — it was a systemic failure of governance, due diligence, and culture.
It’s a cautionary tale about how the “fake it until you make it” mindset can cross a moral line when transparency and scientific integrity are replaced by storytelling and ambition.

The warning signs were there:

• Claims without data: No peer-reviewed studies or reproducible evidence.
• A culture of secrecy: Employees signed strict NDAs; information was siloed.
• A prestigious but uninformed board: Few directors had medical or technical expertise.
• Investors blinded by hype: Due diligence focused on vision and branding, not proof.
• Governance failure: No internal audit, ethics committee, or independent validation process.

Lessons learned for startups and investors

For startups

1. Evidence before promotion. No public claim without documented validation.
2. Independent oversight. Create a small integrity or technical committee with access to raw data.
3. Protect internal dissent. Transparency is a control mechanism, not a threat.
4. Separate storytelling from science. Marketing can’t approve technical claims.
5. Governance isn’t bureaucracy — it’s a safety system.

For investors

1. Diligence the proof, not the pitch. Ask for test protocols, validation data, and third-party reviews.
2. Talk to skeptics. Speak with ex-employees and technical experts, not just founders.
3. Require governance. Insist on audit rights, validation milestones, and claim accountability.

Move fast, but never crash: how Naltilia helps

Startups scale at speed — and compliance often lags behind.
Naltilia helps companies build ethical, evidence-based governance without slowing innovation.

With Naltilia, companies can:

• Consolidate risk maps and control dashboards, showing where compliance gaps exist and what’s being done.
• Assign and monitor actions across teams, linking them to deadlines and supporting documentation.
• Record whistleblower and red-flag reports, ensuring concerns are investigated and lessons tracked.
• Generate instant board or investor reports with progress indicators, risk exposure, and control effectiveness.

Naltilia’s approach is simple: AI accelerates, humans validate.
The platform lets growing companies move fast — but with structure, traceability, and integrity.

Because the goal isn’t to cross the finish line spotless — it’s to get there without crashing.

The takeaway

Theranos is not only a story about deception; it’s a lesson about the fragility of trust.

Innovation moves the world forward, but trust keeps it stable.
Compliance and governance are not the brakes of a company — they are the steering and the seatbelt.

Moving fast is good.
Moving fast and staying true is better.