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Originally published July 20, 2014 at 3:51 PM | Page modified July 22, 2014 at 6:36 AM

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Stanford dropout Silicon Valley’s latest phenom

The latest tech phenom is a 30-year-old Stanford dropout whose hatred of needles helped lead her to start a company aimed to help people better understand their bodies.


San Jose Mercury News

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Silicon Valley, much like baseball, has its share of phenoms, those up-and-comers who demonstrate extraordinary promise.

Meet the latest: Elizabeth Holmes.

The 30-year-old Stanford dropout turned paper multibillionaire has worked for 11 years on her startup, which aims to give all of us better information about our bodies in a quest to revolutionize how we manage our health.

“If people can really begin to understand their bodies, that can help them change their lives,” she said during a recent interview at the Palo Alto, Calif., headquarters of Theranos, a mix of the words “therapy” and “diagnosis.”

Over the past year, Holmes has embraced a more public profile, recently snagging the cover of Fortune magazine in what bore all the hallmarks of a carefully orchestrated media push. Her board includes former Secretaries of State Henry Kissinger and George Shultz, former Defense Secretary Bill Perry, a couple of former U.S. senators, a Marine general. Oracle Chief Executive Larry Ellison is one of her investors.

Holmes’ drive to change the world has a familiar ring here. She may actually do it — or not. It’s always hard to know in Silicon Valley whether the hype matches the reality.

The tech industry has seen phenoms before. They are typically young, bold and single-minded with boundless ambition. Think Steve Jobs, Bill Gates, Jeff Bezos, Mark Zuckerberg.

What often distinguishes great leaders are qualities like determination and persistence, but something else too, said Bob Sutton, a Stanford engineering-school professor and co-author of “Scaling Up Excellence.”

“They believe they are destined to do something special,” he said.

In that respect, Holmes is cast from the same mold as Jobs et al. She launched the company, she told me, after “thinking about what is the greatest change I could make in the world.”

Holmes, who hates needles, zeroed in on blood tests as a starting point. If blood tests were easier, cheaper and more convenient — Theranos aims to put a lab within a mile of any city dweller — people could take multiple tests over time and see signs of a disease or condition before it’s too late, Holmes argues.

She recalled the death of her uncle, whose skin cancer progressed rapidly to brain cancer.

“You look at something like that and it doesn’t make sense,” she said. “If it was caught in time, it’s a completely manageable condition.”

To that end, Theranos has devised software and hardware so that with just one pinprick of blood, critical medical tests can be run more cheaply and more conveniently.

Wellness centers

In September, Theranos and Walgreens announced a deal to open Theranos “wellness centers” at one Walgreens in Palo Alto, as well as 20 stores in Phoenix. The goal is to expand to all 8,200 Walgreens stores nationwide. Theranos’ main revenue stream is payment from customers or their insurance providers for lab tests.

With Theranos, Holmes is taking on the $70 billion U.S. blood-testing industry dominated by such companies as Quest and LabCorp. But she says her aim is something bigger, creating a new market called “consumer-health technology,” which Holmes describes as engaging and empowering people about their health.

“Here in California, I can go and buy a gun and shoot myself but I can’t order a vitamin D test because I might do something quote ‘clinically dangerous,’ ” she said. “We feel strongly over time that this has to change.”

Shultz, who meets weekly with Holmes to discuss the business, described Theranos as “on the cusp of a real movement in preventive medicine.”

“What Elizabeth is doing is important in diagnostics, that the more you are able to spot something before it occurs, the more you can do something about it,” he said.

By the playbook

Holmes’ background is right out of the phenom playbook. Growing up in Texas, Holmes taught herself Mandarin and launched a business in high school selling C++ compilers to Chinese universities. She applied for her first patent while at Stanford, where she majored in chemical engineering. In the summer before her sophomore year, she went to Singapore to work at the Genome Institute on the SARS virus.

Then she dropped out of Stanford to begin working on Theranos, using the money her parents had saved for college.

“She may be the female Mark Zuckerberg that Silicon Valley has been waiting for,” said Vivek Wadhwa, a professor and researcher at Stanford and Duke and a lecturer on entrepreneurship. “She started when she was young, defied the odds and built a great technology, and is doing good for the world.”

Tim Draper, the venture capitalist, said Holmes, who was friends with his daughter growing up, is the first entrepreneur he knows who kept quiet about her business for so long “so that the competition wouldn’t get a chance to start.”

“She had a winner and knew it,” he said. His firm DFJ Venture was the first to invest.

Growth curve

In recent years, Theranos’ workforce has grown to about 500 employees, up from 100 in 2010. It took over the former offices of Facebook at the Stanford Research Park.

Holmes has raised $400 million, valuing the entire company at $9 billion. She has a 50 percent stake, leading Forbes to call her “the youngest woman to become a self-made billionaire.”

As for her gender, Holmes, who wears all black suits and heels and speaks in a deep, soft voice, has never allowed herself to think of it as an issue, she says.

But she knows people are paying attention.

“If I can show that in this country, a 19-year-old girl can drop out of school and build something like this,” she said, “then other women should be doing it.”



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