The Next Steve Jobs

Who is the next Steve Jobs?

Who is today’s version of Apple’s (NASDAQ: AAPL) revolutionary co-founder, leader and innovator?

The answer could very easily be Elizabeth Holmes. The 31-year-old Theranos founder is the youngest self-made female billionaire.
In 2003, Holmes dropped out of Stanford to build Theranos, a privately held blood diagnostics company that is radically changing the health care industry.
The company raised $400 million in 2014, valuing it at $9 billion. Holmes owns half of the company.
A few quirky facts about Elizabeth Holmes drive the Steve Jobs comparison. She is viewed as notoriously secretive by her industry peers. She insists the secrecy surrounding her company is necessary to protect her technology from competitors.
According to The New Yorker, Holmes “can quote Jane Austen by heart, (but) no longer devotes time to novels or friends, doesn’t date, doesn’t own a television, and hasn’t taken a vacation in 10 years.” And she works seven days a week.
To strengthen the comparison to Jobs even further is her work attire. She is known to wear a black cotton turtleneck with her suit.

Building a Disruptive Company in Health Care Technology

However, the most significant similarity to Jobs is Holmes’ determination to radically change an industry. She is taking on the health care industry one blood test at a time.
Theranos is changing the ways patients can receive blood tests by making it less painful, faster and cheaper. A lot cheaper.
Pricing is transparent. The site lists an extensive menu of over 200 tests available with the pricing. The cost of a pregnancy test, for example, is about $5.
The amount of blood necessary for a Theranos blood diagnostics test is as little as 1% of the amount of blood from typical blood withdrawals. The test is done with just a prick of the finger with the vials described as “pill-sized.”
The progress made by Theranos in blood diagnostics has been revolutionary. As of the end of 2014, Holmes had 84 patents under her name. She filed her first patent for a drug delivery patch when she was a sophomore at Stanford studying chemical engineering.

FDA Approval and New Laws Give Theranos a Boost

In July, Theranos received Food and Drug Administration approval for key elements of its blood testing platform, including its hardware, software and blood-drawing equipment.
The company has been offering hundreds of its low-price blood tests since late-2013, but received criticism for not being FDA approved. Because of the nature of its business model, FDA approval wasn’t required like it is for other diagnostic labs. The FDA approval further validated the company’s testing procedures.
In the past months laws have also changed in Arizona to make it a viable market for Theranos. In April a law went into effect that allows Arizona consumers to “obtain any laboratory test from a licensed clinical laboratory on a direct access basis without a health care provider’s request or written authorization.”
More states are expected to follow suit, allowing for two things: more opportunity for consumers to own their health care information and more opportunity for Theranos.
Theranos recently partnered with Walgreens Boots Alliance (NASDAQ: WBA) to make Thernos testing available in select wellness centers in Arizona. Theranos lab testing is now available at Walgreens locations in California, Arizona and Pennsylvania.

Is an IPO on the Horizon for Theranos?

There are a few reasons a Theranos initial public offering could be on the horizon. First, biotech IPOs have been hot this year. Second, the FDA approval and new laws in Arizona provide the launchpad for rapid growth for the company, which will require further financing. Lastly, its most recent fundraising round was five years ago.
Regardless of the timing of a Theranos IPO, certain competitors will suffer from the continued growth and success of Theranos. The incumbent diagnostic labs, like Quest Diagnostics (NYSE: DGX) and Laboratory Corporation of America (NYSE: LH), are the first to feel the heat from Theranos. But, the radical impact of Theranos reaches even further.
Unlike most traditional labs that perform their tests on third-party equipment, Theranos performs most of its tests on proprietary analyzers built by the company in its Newark, Calif. plant. Companies like Beckman Coulter, a unit of Danaher (NYSE: DHR), will be affected if, or when, Theranos takes over blood diagnostics.
Holmes and her company should be on the watch list of every investor. The patents filed under Theranos go beyond blood testing. Like the iPod was the jump-start for Steve Jobs’ success into mobile computing, the blood diagnostics technology of Theranos is only the beginning of its changes in the health care industry. The potential extends to wearable health monitors and more.

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