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Two years ago, the blood-testing startup Theranos "was one of the hottest properties in Silicon Valley," said David Crow at the Financial Times. Valued at $9 billion, it promised nothing short of a paradigm shift in medicine with its revolutionary, needle-free test method. CEO Elizabeth Holmes, a 32-year-old Stanford dropout, was gushingly profiled in the business press as the world's youngest self-made female billionaire. But today, the company is "fighting for its survival," amid claims that its tests are "at best, fundamentally flawed and, at worst, unsafe." The trouble began six months ago, when The Wall Street Journal reported that the company's breakthrough technology, which could affordably run hundreds of tests with blood from a finger prick, couldn't actually deliver. Not long after, the Centers for Medicare & Medicaid Services, which regulates lab testing, said that Theranos "put patients' lives at risk" with faulty tests at its California lab. The latest blow: The Justice Department and the Securities and Exchange Commission recently opened separate criminal investigations into whether Theranos misled investors about its technology.

"Nothing is proven yet," said Nick Stockton at Wired. But Silicon Valley has been put on notice: "Keep your promises, or else." It's very unusual for the SEC to investigate a privately held company like Theranos, but it could begin to happen more often. SEC Chair Mary Jo White wants to give more scrutiny to the growing number of so-called unicorn startups, which are valued at more than $1 billion, "because they pose a high risk to investors." The company's fate is now in the hands of its charismatic founder, said Reed Abelson at The New York Times. As the company's chief executive, chairwoman, and majority stakeholder, Holmes can dictate "what she wants done at her company." It's a common arrangement in Silicon Valley's startup culture, where boards have "little real power." Many venture capitalists are willing to take the risk, hoping to get in with the next Mark Zuckerberg, but "if trouble brews," the cult surrounding a founder can become a liability.

"The Theranos downfall was inevitable," said Alice Park at Time. To date, the company has never been able to prove its testing technology actually works. Instead of publishing research in peer-reviewed journals, or allowing its blood-testing machines to be examined by outside experts, the company has always kept its methods shrouded in secrecy. Theranos argued that it was protecting trade secrets, but testing transparency is standard practice in the medical industry. Even drug companies, which operate in a highly competitive sector, publish enough results of their drug trials to prove that a medicine actually works, while still keeping enough details secret to make their product proprietary. Blood testing is a $73-billion-a-year industry ripe for disruption, said Arthur Caplan, also at Time. As anyone who's had blood drawn can attest, it's time-consuming, uncomfortable, and expensive. Who better to shake up this stodgy old industry than Holmes, who came complete with a familiar, Steve Jobs–like story? Here's why nobody asked the hard questions about Theranos' technology: "We wanted it to be true."