The Fall of Theranos: A Brand Management Study

There is a healthcare company in Silicon Valley that is currently under fire.  Full disclosure: I was awe struck by the company and the potential it had if the claims were true.  I’ve been following them now for nearly two years.  Their product would have been a revolutionary change to the healthcare industry.  The company is Theranos and was founded by Elizabeth Holmes.  Holmes was 19 when she dropped out of Stanford University to start Theranos and just last year, at 31 years old, she was valued at $4.5 Billion.  As of today, many put her fortune at less than $100,000.  Holmes is also banned from owning or operating a medical laboratory for two years.

Some of you may be wondering what Theranos produces.  You’re probably also wondering why they were so revolutionary.  Theranos had created a blood-testing machine by the name of Edison.  This machine was supposed to take blood from Nanotainers – which were vials no more than half an inch long – and run them through 15 different tests.  These tests ranged from cholesterol, prostate cancer, Herpes Simplex, and even pregnancy hormones.  All these tests from just a few drops of blood.  Like I said, revolutionary.

What actually happened was that Edison could only accurately test for Herpes Simplex 1, and then lied about all of the rest.  Theranos went so far as to run their proficiency samples with other lab testing machines and then slap the Edison name on the final result.  The end to the tragedy was Shakespearean in quality.

The Fall of Theranos

I encourage you to check out this story by the New York Times for a brief synopsis and history of Theranos.  It’s published as an easy to read timeline.  Here are a few key features though: Oct 16, 2015 Theranos collecting of tiny blood samples opting for a traditional direct venous approach; April 18th, 2016 the S.E.C and Justice Department begin their investigations of Theranos; June 12th, 2016 Walgreens closes the 42 testing centers using Theranos products – these centers were most of Theranos’ customers; July 7th, 2016 the Center for Medicare and Medicaid Services bans Elizabeth Holmes from owning or running a medical laboratory for two years, and also ban her laboratories from receiving Medicare and Medicaid payments.

How Do You Manage Your Brand?

How Do You Manage Your Brand?

Theranos still exists.  At least in theory, anyway.  They are still trying to market products, but it’s mostly falling on deaf ears.  The company was so carefully crafted as a revolutionary breakthrough and Silicon Sweetheart, that the level of penalties and credibility issues they’ve received have made them defunct.  Simply said, they lack credibility.  The fact that their COO explicitly told Theranos lab techs to run proficiency samples with other company’s products, and then publish those results as Theranos results was damning.  Theranos has also voided any and all tests done on the Edison machine in 2014 and 2015.

The problem with Theranos is that they kept everything guarded.  Employees Department A were not allowed to communicate with Department B, this led to Holmes understanding the master plan, but the employees were left in the dark – this breeds discontent.  This also turns into a bunch whistleblowers coming out to the news media in secrecy if something goes wrong.  That’s exactly what happened with Theranos.  Furthermore, Holmes refused to allow any scientist doctor or medical journal to review their science, even under non-disclosure.  That means someone in Theranos didn’t feel confident enough in the product to show off how it worked.

In medicine, credibility is paramount to success.  If you’re a doctor, and your patients don’t trust you, they don’t use you.  If you’re a drug maker, and people don’t believe the drug works, they’ll refuse to take it.  Theranos created lab equipment and couldn’t prove to others that their science worked, so why should they be amazed when people won’t use it?

What Theranos Can Teach Everyone

Theranos is a modern day brand management example that applies to everyone.  It’s important to craft yourself as unique brand that stands out from the crowd.  What’s more important though is to craft a brand that’s real.  It needs to be authentic.  Theranos created a beautiful image, but they failed to substantiate their claims with credible science.  Don’t be a Theranos.

Instead, be yourself.  Create a beautiful image based upon something you know to be true in yourself.  Why did I choose Cash Flow Celt?  Well, my ancestors come from both Scottish and Irish roots.  More than that, Irish and Celtic history has become a passion of mine to research.  Through college I read volumes of material on the topic and still continue that today.  Thus, “Celt” is central to my image.  It also helps that I’m a big, bearded, kilt-wearing man.  Cash flow was just the extension for finance – my other love.  I didn’t start a fashion blog because I don’t follow haute fashion themes and the upcoming fashion shows.

As important as being authentic is to be kind.  Treat everyone with compassion and respect.  Holmes ruled with omniscience because she kept her employees in the dark.  Personally, I feel this strategy is disrespectful to the intelligence of employees.  Disrespect breeds discontent as well.  She also knowingly lied about her product to investors and people relying on her blood tests to be accurate.  Lying is showing a disdain for other people’s emotions and it’s narcissistic; neither of which are respectful or compassionate.  Moreover, lying does not strengthen a brand – just check out my article about Wells Fargo for more examples of that.


Theranos will go belly up soon enough.  The lied, and lied, and then lied again.  Moreover, they knowingly gave false results to people relying on their tests to give relevant medical advice to patients.  Not only were they dishonest and a farce, but they could have very easily put people’s lives at risk.

If you’re looking for an example of what NOT TO DO, check out Theranos.  Your brand should be authentic to you, but it should also be truthful and compassionate.  If you follow those three simple truths, your brand will grow and develop.  In today’s marketplace, your brand is your livelihood.  Whether you’re a business owner, an employee, or a freelancer, once your brand is tarnished your ability to work will falter.

Just be wary, in today’s social media driven environment it’s even easier to inadvertently tarnish your brand.  Yet, in a grand streak of irony, we’re increasingly being forced to post on social media to stay relevant.  That means you need to be hypervigilant when it comes to the tailoring of your brand.  Fear not though!  If you’re a kind and truthful person in everyday life, your brand is nothing to fear.  It’ll grow simply because you’re you.  And that’s the best feeling of all.


Readers, do you agree with my views on brand management?  Let me know in the comments below!  If you haven’t already, check out my review on Republic Wireless to start saving 50% on your phone bill!  Also, be sure to like my Cash Flow Celt Facebook page to stay up to date on all the new articles!

Cash Flow Celt

I'm just a local business and finance nerd looking to help people get educated about small business, marketing, and personal finance! I write about anything and everything that I can tie into those themes. I'm also Central Florida's only Kilted Realtor, so I write about Real Estate too! Check out my About Me page to see the origins of Cash Flow Celt.

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3 Responses

  1. Cathy Colangelo says:

    I wonder why this truthful branding does not apply to politicians. Good article!

    • Cash Flow Celt says:

      I’m not sure either. But it’s likely due to voter apathy and laziness. I would imagine the incumbent success rate would be drastically lower if everyone knew how their official voted even 60% of the time.

  1. October 20, 2017

    […] Unfortunately, many small businesses don’t prioritize branding, which is a huge mistake. Poor branding impacts your business in many negative ways and can threaten the survival of your business (i.e., Theranos).  […]

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