Stories of scandals around Enron and Bernie Madoff are infamous. At first they were cleverly able to deceive the press and this allowed them to operate for several years before their plans were finally discovered. Recently, a company called Theranos followed in their footsteps and found itself bankrupt due to clear failures in corporate governance at the top of the company. Larker and Tayan (2016) define corporate governance as “the set of control mechanisms that an organization adopts to prevent or dissuade potentially self-interested managers from engaging in activities harmful to the well-being of shareholders and stakeholders” (p. 7). Corporate Executive Officer (CEO), Elizabeth Holmes, has made several fraudulent claims about their "revolutionary product." An example of a fraudulent misrepresentation occurred when it was shared with stakeholders that the company had used its product in compliance with the government during oversight operations. They also completely falsified scientific quality control data from a prestigious scientific company, dramatically misrepresenting the quality and effectiveness of their product. These are just two examples of the collapse of corporate governance that occurred under Elizabeth Holmes. There were many different problems and issues that led to the ultimate demise of Theranos and the accusations made against Elizabeth Holmes. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get Original Essay Elizabeth Anne Holmes grew up seemingly bright and driven even at an early age. Her work ethic was second to none and she was a straight A student. His parents were very well connected politically. His mother, Noel, is a congressional committee staffer and his father, Christian, is a U.S. government aid worker. During her childhood, Holmes moved around with her family spending time in Washington DC, Houston and eventually ending up supervising in China. While her family was in China, she began to develop her own ideas and develop into a self-taught entrepreneur. Holmes' hard work eventually paid off and he eventually started his own side business. His first company he developed sold C++ programs that would translate computer code to several schools in Asia. This was the beginning of his young business career, but far from the end. Upon Holmes' return to the United States in 2002, she applied to the illustrious Stanford University and was accepted. While at Stanford, she majored in electrical and chemical engineering. When Holmes went on summer break, he managed to get a highly respected and coveted job in Singapore at the Genome Institute of Singapore. During her time in Singapore, Holmes was assigned to work on a computer chip that would help detect severe acute respiratory syndrome (SARS) in the human body. Her work in Singapore was truly an inspiration to Holmes and she was the spark of a great new idea. He gave her the idea to create new laboratory tests that would be less invasive and the turnaround time to receive these test results would be only a fraction of the time compared to current tests. After Holmes returned to Stanford, he resumed his second year but his studies did not last long. With his experiences at the Genome Institute of Singapore under his belt, he could not ignore the temptation to create an innovative and non-invasive diagnostic test. At the tender age of 19, Elizabeth Holmes made her final decision and subsequently ended her college careerat Stanford University to pursue his dream of innovating the world of medicine. Shortly after, he moved forward and a new company was founded under the name Real-Time Cures, however, this name did not last long and was soon changed to Theranos. This new company in the startup land known as Silicon Valley had a noble idea and thought it could be a real game changer. With the blood test, you usually have to take several vials of blood to run the battery of tests that a doctor signs off for, but at Theranos they came up with the new and innovative idea of ​​being able to run all these tests with just one drop of blood test and the results would come back much quicker than the original blood test. In addition to the less invasive and much faster tests, Holmes thought he could also perform them at a fraction of the price compared to current blood tests performed by other companies. Taking it a step further, it was stated in a CBS article by O'Donnell (2018) that Holmes believed Theranos was saving money, not just for the everyday person, but also saving money for Medicare and Medicaid in numbers that could reach all the way. up to billions of dollars. One of Elizabeth Holmes' strongest attributes was her ability to convince investors to believe in what she was selling and convince them to invest large sums of money. Some of the very first investors were Larry Ellison, Tim Draper and Victor Palmieri, a veritable who's who of the business world and they all believed wholeheartedly in what Holmes had to offer. On top of that, Theranos' board of directors was filled with big shots from different government agencies. Some of the most distinguished people on the board were Henry Kissinger who held several prestigious positions, James Mattis who is the former secretary of defense and George P. Shultz who is a former secretary of state. George Schultz was eventually able to get his nephew Tyler Shultz a job with Theranos. With all the star power and connections Theranos had, according to Lydia Ramsey (2019), Theranos had raised $6 million. In 2005, Theranos launched a device called Theranos 1.0. It was supposed to find side effects in patients participating in drug trials. It was eventually tested on terminal cancer patients in a study in 2007, but Theranos 1.0 was scrapped soon after. In September 2007, the darling of the medical community was developed and presented as a prototype under the name Edison. This was the machine Holmes had dreamed of creating. It would be able to take a single drop of blood and run a full series of blood tests, the results would come back much quicker, and it would be a significantly cheaper option than other labs. While Holmes continued to raise large sums of money for Theranos, in 2009 a new player joined the team. Ramesh “Sunny” Balwani moved to the United States in 1986 and had a background in software engineering. He worked for a time at Microsoft and Lotus before joining a startup company called CommerceBid.com. During his time at this startup, he rose through the ranks and eventually became the company's president, as well as the Chief Technology Officer. He managed to earn a large amount of money during this venture and exit the company before they went bankrupt. During a trip to Beijing organized by the Mandarin Program through Stanford, Holmes and Balwani met and the two hit it off immediately. Shortly after Holmes dropped out of Stanford to found Theranos, Balwani and Holmes had a secret relationship even though Balwani was nearly 20 years her senior. This relationship between the two would remainsecret for several years to come. Balwani was hired in September 2009 and even though he had no medical knowledge, he was named president of Theranos. While Holmes seemed to be the face of the company, Balwani tried to stay in the background and be more concerned with managing the company's day-to-day operations. By all accounts, he was an emotionally abusive boss who would try to terrorize and talk down any employee at the drop of a hat. Even though his knowledge of everything related to medicine was very limited, he tried to discuss different results with experienced scientist. By all accounts, he appeared to be on the paranoid side about leaking company secrets. Balwani didn't seem to fit in with the company, but while there seemed to be a number of problems, Holmes remained the number 2. Even with the distraction of this new tyrant, the well-oiled machine that was Theranos continued to move forward and gain momentum. .Finally, in 2010, big things started to happen for Theranos. Holmes and Balwani made the bold move to go to Walgreens and begin business discussions about the potential of operating in-store health clinics. Not only were they in business discussions with Walgreens, but they were also attempting to start a relationship with Safeway for the same thing. With this potentially huge step, Holmes would need to create something new capable of running blood tests. In 2011, this device was created and was coined with the nickname 4s. 2012 was a big year for Theranos in several ways. First, Theranos was now doing blood testing at Safeway stores in their health clinic on an experimental basis. Secondly, they had also signed a deal with Walgreens to place their machines in their stores. None of these events went without its own set of problems, and the first signs of possible cracks in Theranos' armor began to show. Some people began to realize that this new product might not be as perfect as once thought. Although they had an agreement with Safeway to allow them to take their equipment to several health centers, Safeway's Chief Medical Officer had major concerns about some tests that had come back. These tests had discrepancies that made him feel uncomfortable and although he brought this extremely important information to Safeway's CEO, these concerns were ignored and business went on as usual. Even though Walgreens had just signed a contract with Theranos that was north of $100 million, they had some issues with them. With the deal in place, Walgreens expected to have the machines in its stores. However, these deadlines seemed to come and go and it didn't seem like any progress was being made. Theranos continued to meet these deadlines set by Walgreens. In 2013, everything seemed to be going rosy and working perfectly for Elizabeth Holmes. It still brought in large sums of money, and the company was eventually valued at $9 billion. He had achieved his dream and all his hard work was finally paying off, with his personal wealth exceeding $4.5 billion. People were really starting to notice her publicly and she was considered one of the top 30 people under 30 and was invited to give TED talks. The sky seems to be the limit and nothing can stop her. Then people started looking at things deeper and deeper and started asking questions. Things began to change. The shield of secrecy Holmes had created since the company began to crack. Tyler Shultz, grandson of one of the first major investors and a family friend of Holmes, started his owncareer at Theranos in late 2013. He graduated from Stanford University with a bachelor's degree in biology and after talking to Holmes about Theranos, he had no doubt that this was where he wanted to be. This was around the time that Theranos and Walgreens announced they would start a business together, and Shultz was very excited about the possibilities that could come from bringing these two companies together. Finally, things that had been hidden for years began to come out. . Shultz finally had the opportunity to look at the Edison machine and was absolutely shocked by what he saw. Instead of being able to do all the blood tests with a single drop of blood, the Edison was lucky if it didn't fall apart. Not only did the machine not work as Holmes had preached, but there were pieces hanging from it. It wasn't as functional as it should be. Shultz was not the only person who encountered numerous problems with the Edison machine. Doug Matje was a biochemist who joined the team in 2012. His job was to make sure the blood analysis was adaptable to the Edison. Investors assumed that this technology already worked properly because Elizabeth Holmes had already told them so. Not only had he told investors this, he had told Walgreens exactly the same thing. He had told them that this machine could successfully perform over 200 different types of blood tests and would eventually be able to perform over 1,000 different tests. From Doug Matje's findings, everything Holmes had told investors and Walgreens was a complete falsification of the truth. He discovered that the Edison machine did not work properly and that the test results very rarely came back correct. Soon after, they were not even using their revolutionary machine, but ordinary blood testing machines, just as they used all other rival blood testing facilities. Yet another employee was seeing troubling signs while conducting his work at Theranos. Erica Cheung was a bright student who had recently graduated from the University of California, Berkeley with a degree in cellular and molecular biology. Cheung joined Theranos soon after and almost immediately encountered problems with the blood tests being performed. He found that the results came back incorrect, and after re-testing these blood tests, they often came back contradictory to the original test. So, unfortunately, no one really knew what the actual test results were, and the main people who would suffer would be the unsuspecting patients. Elizabeth Holmes' plans were becoming increasingly vague. He began telling Theranos employees to fake tests if they happened to show something to an investor to give the illusion that the Edison machine was working properly even if it wasn't working at all. Due to the immense level of secrecy, Holmes did not allow anyone to see any actual tests. As a matter of fact, people working in different departments never had access to each other. Each department had its own key cards to limit access, so no one really knew what the others were doing. During this façade, Holmes' lies began to get bigger and bigger and investors became increasingly disillusioned. As he continued to bring in money, Holmes claimed that the Edison machine had been used in Afghanistan and had received the OK from the US Food and Drug Administration. Both of these claims were not just fabrications but outright lies. Even after these fantastic admissions, the lies continued. He went on to say that he also collaborated with the prestigious Johns Hopkins University and concluded that it is possible.