The scandal stories surrounding Enron and Bernie Madoff are infamous. They were skillfully able to fool the press at first, allowing them to operate for several more years before their plans were finally discovered. Recently, a company called Theranos followed in their footsteps and found itself bankrupt due to egregious corporate governance lapses 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 deter potentially self-interested managers from engaging in activities detrimental to the well-being of shareholders and employees. stakeholders” (p.7). The company's chief executive officer (CEO), Elizabeth Holmes, made several fraudulent claims about their "revolutionary product." An example of a fraudulent claim is where it was shared with stakeholders that the company had used its product in accordance with government instructions during surveillance operations. They also completely fabricated scientific quality control data from a prestigious scientific company, significantly misrepresenting the quality and effectiveness of their product. These are just two examples of the collapse of corporate governance that occurred under Elizabeth Holmes. Many different issues and issues led to the ultimate demise of Theranos and the accusations against Elizabeth Holmes. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay Elizabeth Anne Holmes grew up seemingly bright and driven, even at a very young age. Her fourth place work ethic was second to none and she was a good student. His parents were very well connected politically. Her mother, Noel, is a congressional committee member, and her father, Christian, is a United States government aid worker. During his childhood, Holmes moved with his family, spending time in Washington, D.C., Houston, and eventually ending up in China. While her family remained in China, she began to form her own ideas and become a self-made entrepreneur. Holmes' hard work eventually paid off and she eventually started her own business. Her first business that she developed sold C++ programs to translate computer code to different schools in Asia. It was the beginning of his young entrepreneurial career, but far from the end. Upon returning to the United States in 2002, she applied to the illustrious Stanford University and was accepted. At Stanford, she majored in electrical and chemical engineering. When Holmes went on summer vacation, she was able to secure a highly respected and coveted job in Singapore, at the Genome Institute of Singapore. While in Singapore, Holmes was tasked with working on a computer chip that would help detect severe acute respiratory syndrome (SARS) in the human body. Her work in Singapore was a true source of inspiration for Holmes and she was the spark for a big new idea. This gave him the idea to create new laboratory tests that would be less invasive and whose turnaround time to receive the results of these tests would be only a fraction of the time compared to current tests. Upon returning to Stanford, Holmes resumed his work. in the second year but his studies did not last long. Drawing on her experiences at the Genome Institute in Singapore, she could not ignore the temptation to create an innovative and non-invasive diagnostic test. HASAt the age of 19, Elizabeth Holmes made the ultimate decision and subsequently ended her academic career at Stanford University to pursue her dream of breaking new ground in the medical world. Soon after, she moved forward and a whole new company was formed called Real-Time Cures. However, this name did not last long and was soon changed to Theranos. This new company in the land of startups known as Silicon Valley had a noble idea and they thought it could be a real game changer. With blood tests, you typically have to draw multiple vials of blood to run the battery of doctor-approved tests, but at Theranos they came up with the new and revolutionary idea that you can run all of these tests with just one. drop of blood and the results would be much faster than the initial blood test. In addition to the less invasive and much faster tests, Holmes believed she could also perform them at a fraction of the cost, as opposed to the blood tests currently performed by other companies. Going further, O'Donnell (2018) stated in a CBS article that Holmes believed Theranos saved money, not only for the average person, but also for Medicare and Medicaid, by amounts that could go until the end. up to several billion dollars. One of Elizabeth Holmes' strongest attributes was her ability to convince investors to believe what she was selling and get them to invest very 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 heavyweights from different government agencies. Among the board's most illustrious figures were Henry Kissinger, who held several prestigious positions, James Mattis, former Secretary of Defense, and George P. Shultz, former Secretary of State. George Schultz was finally able to get his grandson Tyler Shultz a job at Theranos. With all the star power and connections Theranos had, according to Lydia Ramsey (2019), Theranos had raised $6 million. In 2005, Theranos released a device called Theranos 1.0. It was supposed to detect side effects in patients participating in drug trials. It was eventually tested on terminal cancer patients in a 2007 study, but Theranos 1.0 was discontinued shortly after. In September 2007, the darling of the medical community was under development and presented itself in the form of a prototype called Edison. It was the machine Holmes had dreamed of creating. It was going to be able to take a single drop of blood and run a full battery of blood tests, the results would be much faster and it would be a significantly cheaper option than other labs. While Holmes continued to raise huge amounts 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 at Microsoft and Lotus for a while before joining a start-up called CommerceBid.com. During his time at this startup, he rose through the ranks and eventually became president of the company as well as chief technology officer. He was able to make a lot of money during this venture and leave the company before it went bankrupt. During a trip to Beijing organized by Mandarin Program through Stanford, Holmes and Balwani met and the two hit it off immediately. LittleTime after Holmes left Stanford to start Theranos, Balwani and Holmes had a secret relationship even though Balwani was nearly 20 years his senior. This relationship between the two will remain secret for several years. Balwani was hired in September 2009 and even though he had no medical background, he was named president of Theranos. While Holmes seemed to be the face of the company, Balwani tried to stay in the background and worry more about running the day-to-day operations of the company. Clearly, he was an emotionally abusive boss who tried to terrorize and denigrate all employees at the drop of a hat. Even though his knowledge of anything related to medicine was very limited, he attempted to argue different results with an expert scientist. Clearly, he seemed to be on the paranoia side about leaking corporate secrets. Balwani didn't seem to fit in with the company but even though there seemed to be a number of problems, he remained Holmes' number 2. Even with the distraction of this new tyrant, the well-oiled machine that was Theranos continued to roll along and gain momentum. Finally, big things started happening for Theranos in 2010. Holmes and Balwani made the bold decision to go to Walgreens and begin business negotiations about the potential of running health clinics in their store. Not only were they in business talks with Walgreens, but they were also trying to establish a relationship with Safeway for the same. With this potentially huge step, Holmes would have to create something new that would be capable of performing blood tests. In 2011, this device was created and was named under the nickname 4s. 2012 was a big year for Theranos in many ways. First, Theranos was now performing blood tests at their health clinic's Safeway stores on a follow-up basis. Second, they had also signed a deal with Walgreens to place their machines in their stores. None of these events were without their own problems, and the first signs of possible cracks in Theranos' armor began to appear. Some people began to realize that this new product may not be as perfect as once thought. Although they had an agreement with Safeway to allow them to bring their equipment to different health centers, Safeway's chief medical officer had major concerns about a test that had come back. These tests had discrepancies that made him uncomfortable and although he brought this extremely important information to Safeway's CEO, these concerns were ignored and business continued as usual. Even though Walgreens had just signed a contract with Theranos that was north of $100 million, they had issues with them. With the deal they made, Walgreens expected to have the machines in their stores. However, these deadlines seemed to come and go and no progress seemed to have been made. Theranos did not meet deadlines set by Walgreens. In 2013, everything seemed to be going well and working perfectly for Elizabeth Holmes. It still brought in huge amounts of money, and the company was eventually valued at $9 billion. She had achieved her dream and all her hard work was finally paying off, to the tune of a personal wealth of over $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 do TED talks. It seems like everything is the limit and nothing could stop it. Then people started todelve deeper into things and questions started to be asked. Things started to change. The shield of secrecy that Holmes had woven since the start of the business began to crack. Tyler Shultz, grandson of one of the first big investors and a family friend of Holmes, began his career at Theranos in late 2013. He was a graduate of Stanford University. with a degree in biology and after speaking with Holmes about Theranos, he had no doubt that it was the place he wanted to be. This was around the time that Theranos and Walgreens had announced that they were going into business together and Shultz was very excited about the possibilities that could arise from the merger of these two companies. Eventually, things that had been hidden for years began to come to light. . Shultz finally got a chance to look at the Edison machine and he was absolutely shocked by what he saw. Instead of being able to complete the entire blood test with just one drop of blood, the Edison was lucky it didn't collapse. Not only did the machine not work as Holmes had preached, but pieces of it were hanging off. It was not functional as it should be. Shultz was not the only person who found many problems with the Edison machine. Doug Matje was a biochemist who joined the team in 2012. His mission was to ensure that the blood tests were adaptable to the Edison. Investors thought this technology already worked well because Elizabeth Holmes had already told them so. Not only did she tell investors, she told Walgreens the exact same thing. She told them that this device could successfully perform over 200 different types of blood tests and that eventually it would be able to perform over 1,000 different tests. According to Doug Matje's findings, everything Holmes told investors and Walgreens was a complete fabrication of the truth. He found that the Edison machine was not working properly and that the test results very rarely came back correctly. Soon after, they weren't even using their revolutionary machine, but normal blood testing devices, like all other competing blood testing centers. Yet another employee was seeing troubling signs while doing her job 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 shortly after and almost immediately discovered problems with ongoing blood tests. She found that the results were coming back incorrect and when she re-examined these blood tests, they often came back contradictory to the original test. Unfortunately, no one really knew what the actual test results were and the main people who would suffer would be unsuspecting patients. Elizabeth Holmes' plans became more and more sketchy. She began telling Theranos employees to falsify the 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 didn't let anyone see the actual tests. In fact, people who worked in different departments never had access to each other. Each department had its own key card to limit access, so no one really knew what anyone else was doing. During this façade, Holmes' lies began to get bigger and bigger, and investors became more and more disappointed. While continuing to report.