Last week, when disgruntled consumers filed back-to-back class-action lawsuits against Theranos, the revolutionary diagnostic-testing disrupter that wasn’t, we were ready to call it: Things can’t get much worse for Elizabeth Holmes, the company’s fallen CEO. And then Forbes went and slashed Holmes’s estimated net worth, declaring "From $4.5 Billion To Nothing: Forbes Revises Estimated Net Worth Of Theranos Founder Elizabeth Holmes." In one unceremonious headline, America’s youngest self-made female billionaire was unmade.
But was she ever really made? That $9 billion valuation for Theranos came from a Fortune profile, not from sales or success (early breathy profiles of Holmes always pointed out that privately held Theranos keeps its finances under wraps). When Holmes catapaulted herself to the top of the tech conference and TED Talk circuit, her wealth was still theoretical, based on estimates of Theranos’s value much like today’s. In a sense, if her technology was never going to work, that wealth was always a phantom. A phantom aided, as Vanity Fair’s Nick Bilton recently argued, by a tech press that beknighted Holmes as “the next Steve Jobs” without asking the tough questions (e.g., “Hey, how does this thing work?”). It’s like deciding a black box contains $4.5 billion but never really taking a look inside. When the “wealth” disappears, is it a loss or just…a return to reality?
For what it's worth: Forbes didn't downgrade Theranos to zero. The magazine puts the company's value at $800 million. Holmes gets zilch because of the kind of stock she holds: It's common stock, which means Holmes is essentially last in line to get paid back if the company were to be liquidated. In sum: “At such a low valuation, Holmes’ stake is essentially worth nothing,” writes Forbes.
Though embarrassing, today's very public downgrade is as fake as the unicorn status that Theranos never lived up to. The company's real problems are, instead, legion: Besides those two class-actions, there's the feds' proposal to temporarily ban Holmes from owning and operating labs, two years of test results voided, and its relationship with Walgreens in tatters.
Today's not a good day to be Holmes, but then neither was yesterday. Or the day before that. Or the one...yeah.