Theranos: The $9 Billion Case Study in What Happens When Critical Thinking Fails

Theranos: The $9 Billion Case Study in What Happens When Critical Thinking Fails In 2015, Elizabeth Holmes was the world's youngest selfmade female billionaire. Theranos, the bloodtesting company she had founded at 19, was valued at $9 billion. Its technology, Holmes claimed, could run hundreds of medical tests from a single drop of blood using a proprietary device called the Edison. The company had partnerships with Walgreens and Safeway. Its board included George Shultz, Henry Kissinger, and James Mattis. By 2018, Theranos had dissolved. Holmes had been indicted on federal fraud charges. Patients who had received Theranos test results — results that were, in many cases, wildly inaccurate — had made medical decisions based on false data. In January 2022, Holmes was convicted on four counts of fraud and conspiracy. She was sentenced to more than eleven years in federal prison. The Theranos story is one of the most studied business failures of the modern era. It is also one of the most instructive — not because it is a story about exceptional fraud, but because it is a story about how ordinary failures of critical thinking, at every level, allowed an extraordinary deception to persist for years. The Evidence That Was Not Examined The most striking feature of the Theranos story is not that Holmes deceived investors and partners. It is that the deception was, in retrospect, not particularly difficult to detect — if anyone had applied basic critical thinking to the claims being made. Theranos claimed that its Edison device could run over 200 tests from a single fingerprick of blood. This claim was, from a biochemical standpoint, implausible. The volume of blood in a fingerprick is approximately 50 microlitres. Many standard blood tests require significantly more than this. Experienced laboratory scientists and haematologists who reviewed the claims publicly expressed scepticism — but their scepticism was dismissed or ignored. The investors who poured hundreds of milli