Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

Hello and welcome back to Patrick Boyle on finance. In today's podcast, we'll look at some of the

biggest corporate scandal since the turn of the century, in no particular

order, and we'll see if there's anything we can learn from them. Okay, so first up we have

Terranos, the blood testing company. Like all good tech founders, Elizabeth Holmes had a great

backstory. Her father had worked for an aid agency overseeing relief work,

and Elizabeth claimed that she had been brought up wanting to change the world for the better.

At the age of 19, she came up with an idea that she believed could change the world.

So like all tech founders before her, she dropped out of university,

started dressing like Steve Jobs, and filed her first patent. The only problem at this point

in the story is that her idea didn't work. Terranos was a blood testing company, and while

the existing technology for blood testing

requires one vial of blood for each diagnostic test, Terranos claimed to be able to perform

over 240 tests, ranging from checking cholesterol levels to complex genetic analysis, with just

a single pinprick of blood.

The technology was automated fast and inexpensive.

Theranos would revolutionize medicine and save lives the world over.

The blood was put in a nano container and analyzed in the Theranos Edison machine. I think the name Tesla

had already been taken. The pitch appealed to the pharmacy chain Walgreens, who partnered

with Teranos offering the blood tests in its stores. Teranos raised over $700 million from

brand name investors like Larry Ellison and Tim Draper

and was seen as a rising star in Silicon Valley.

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