Why did Theranos fail?

Separate the claim from the demonstration

The SEC alleged that the proprietary analyzer performed only a small number of tests and that most patient tests used modified or standard commercial machines made by others. That differs sharply from the promise of comprehensive tests from finger drops of blood.¹

I use Theranos in Chapter 3 because it exposes the mistake of borrowing confidence from the people around a claim. A respected investor or persuasive founder cannot substitute for a checkable result.

What a fair test would ask

Which test, on which samples, compared with which reference method, under which conditions? A demonstration that hides those conditions may tell you less than it seems.

The SEC announcement records a settlement in which Holmes and Theranos neither admitted nor denied the allegations. I keep that distinction visible rather than turning an announcement into an invented confession.¹

Why did the technology not work as promised?

The SEC's account says the analyzer could perform only a limited set of tests while the wider service relied largely on other manufacturers' machines. The failure was the gap between that capability and the claims being made for it.¹