Swot Analysis Of Theranos

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CORPORATE GOVERNANCE
MGMT 512-2017

EXAM 1
ATIL EREL

The Company

Theranos is an American privately held health company based in Palo Alto, California. It was

founded in 2003 by Elizabeth Holmes at the age of 19 [1]. She has dropped out of Stanford

while she was studying Chemical Engineering to establish the company. She is not only an

entrepreneur but also an inventor who has over 200 patents (U.S. and international) that are

foundational for the company’s more than 1000 pending and issued patents [2]. She was

reflecting the influence of Steve Jobs on her even by her outfit. She was wearing black

turtlenecks.

The mission statement of the company is given in their web site as: “Our mission is to make

actionable information
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In the

pharmacy stores of Walgreens Theranos opened its “Wellness Centers” to allow customers

to test their blood.

In 2014 Theranos and its founder Elizabeth Holmes are profiled in national magazines and

other news outlets. Fortune says the company raised $400 million from equity sales to

investors who have effectively valued the company at more than $9 billion [4].

Elizabeth Holmes managed to attract investors mainly using the strings attached in Silicon

Valley. While doing this she took the money on the condition that she would keep the

technology secret even from the investors and that she had final say and control over every

aspect of her company [5].

What Happened?

While Elizabeth Holmes becoming well-known in public, two government organizations

started inspecting the company. In 2015 totally five investigators from FDA (Food and Drug

Administration) arrived at Theranos’s headquarters and their blood testing lab, demanding

to inspect the facilities. At the same time regulators from CMS (Centers for Medicare
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Being the

founder of the company and the holder of the initial patents, she wanted to deside

everything and was not willing to let others to interfere the desicions. Even members of

board of directors could not question what was going on and they were not allowed to

access the information about the product development and real situation. Maybe Elizabeth

Holmes was one of the very few persons who knew everything. She cared about secrecy so

much that one of her employees (Ian Gibbons) committed suicide because of the pressure.

And after his death she demanded his wife to return any and all confidential Theranos

property.

She so much fell in love with her idea that she could not see the obstacles and faults. When

she saw that the reality was not how she dreamt of (and when it was too late to make an

action) she kept all inside and did not inform shareholders. Because of this at the end she

had to deal with series of lawsuits.

Board consisted of directors with military and diplomatic backgrounds. None of them had a

medical background (Bill Frist, the former Senate majority leader, and former cardiovascular

doctor, was an exception)
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