Theranos wins huge backing, rises in value to $9 billion by 2014: Part 4

Elizabeth Holmes' partner and Theranos COO Sunny Balwani said he gave the company a $13 million personal loan and Theranos cut a multimillion deal with Walgreens.
9:03 | 03/16/19

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Transcript for Theranos wins huge backing, rises in value to $9 billion by 2014: Part 4
Reporter: In 2009, Elizabeth Holmes found herself in an uncertain place. Despite losing key recruits, her company was now six years old. She had a new office in Palo alto where theranos employees were working to carry out her revolutionary mission. But she was desperately in need of more money. The nation was in the middle of economic turmoil. The country is officially declared to be in recession. 6.5 million Americans have lost their jobs. Reporter: Companies that had been around for generations were struggling to get loans, and even the giants were falling like dominoes. The Lehman brothers investment bank appears headed towards bankruptcy. Reporter: But unlike so many others, Elizabeth had an ace up her sleeve. First name is Ramesh. Last name is balwani. Most people call me sunny. Reporter: Sunny balwani was a multimillionaire who seemingly came out of nowhere to save the day. I knew this mission, what the company was trying to do, was paramount. So I ended up giving a $13 million personal loan. Sunny balwani had made his own fortune at Microsoft and lotus. He had zero medical credentials. Did he have any qualifications in the lab testing business? He did not. Or in pathology or anything like that? Not to my knowledge. And yet, he became essentially the most powerful person at the company, next to Elizabeth. I always wondered why he was there. If she held this vision of really impacting the world, I was like why? Why did she pick him? He was terse and he was a bit of a hothead. He brought this ruthlessness with him that the company had never seen. Reporter: The license plate on his lamborghini was a fitting metaphor for his management style. It paid homage to Caesar's famous "I came, I saw, I conquered." And yet, sunny's vision for the company seemed to line up with Elizabeth's. We have been working hard to build something which we think is magical. Reporter: In early 2010, their work was about to pay off when the duo secured a meeting with pharmacy giant Walgreens. We were interested in partnering with Walgreens because of the retail footprint. The partnership with Walgreens is a huge game-changer because Walgreens has these wellness centers. And if they have the ability to test people's blood with a finger prick right in the store, it could change everything. Reporter: According to Walgreens, theranos said their technology had been co pre hence "Comprehensively validated" and was "Viable and consumer ready." I thought "This is incredible." If these people have actually pulled off what they're claiming then that could certainly change the practice of lab medicine. Reporter: Walgreens saw the chance to be at the forefront of something huge. So they eventually cut a $140 million deal. Fast forward to three years later, and Elizabeth is celebrating the opening of her first theranos wellness center in this Walgreens in Palo alto, California. And with that -- Are you one of these people that love blood tests? No. It grosses me out. Reporter: Elizabeth started peddling her product to the masses, launching this striking video campaign directed by oscar-winning documentarian Errol Morris. I was wondering if you would take a test for us, which is one drop of blood. One drop? Bring it on. That's it? How are you feeling? Feeling good. They exude confidence. They exude this reality that this thing is real. It gives Elizabeth Holmes just one more card to say, "Look, what I'm doing is going to change the world." I'm a fan. Likewise. Our work is in the belief that access to health information is a basic human right. Reporter: Elizabeth took her mission to the mainstage, charming the audience at the Clinton global initiative. You founded this company twelve years ago, right? Yeah. Tell them how old you were. I was 19. Don't worry about the future. We're in good hands. Reporter: In June 2014, she was vaulted to stardom after she was profiled in "Fortune" magazine. The article stated that theranos offers more than 200 blood tests without the need for a syringe. But precisely how theranos accomplishes all these amazing feats is a trade secret. And that's when the press coverage really started picking up and you saw her almost once a week. Elizabeth Holmes from theranos. Elizabeth Holmes. Elizabeth Holmes. Elizabeth Holmes. Thank you for having me. I am so incredibly humbled. We did this. These big splashy profiles were kind of big wet kisses. She did "Mad money" with Jim Cramer, Charlie rose, "CBS this morning." Little tiny tubes which we call the nanotainers. I mean on and on and on. Congratulations on all the success you've had, and I sure hope you win! We cannot lose sight of how much we wanted to believe. There is no better story than the young woman at Stanford who dropped out because she wanted to save people's lives. To the young women in the room here, do everything you can to be the best. Reporter: She was named one of "Time" magazine's "100 most influential people." "Wired" called her work mind blowing. ??? I got what it takes ??? ??? I will never break ??? ??? always going hard ??? Reporter: Elizabeth started living the life befitting of a I also heard she was traveling with four bodyguards packing heat. Reporter: Further adding to the hype, her all-star board of directors. Her board was made up of some of the biggest names in history. George Shultz, I think that was her first connection. The former secretary of state, the guy who many people credit with winning the cold war. He met Elizabeth Holmes back in 2011. She is a dropout. She left after her sophomore year. He joined the board, he then introduced her to all these other aging exstatesmen. Bill Frist. I was impressed with the technology. Admiral roughead. I just saw this this potential that was there and was intrigued by that. She's got Kissinger! Come on, Kissinger! A friend of mine said your board, looks like you guys are ready to take over the world, not start a medical device company. I remember thinking what an odd group of people that is. And it's interesting there wasn't a woman on the board. It's kind of fascinating if you think about it. What Elizabeth Holmes' gift was, was she was able to take older, white men who were incredibly successful at one point in their careers, and wrap them around her finger. Reporter: The board and the Walgreens deal became significant selling points, enticing a variety of investors from the ultra wealthy to the everyday joes. By 2014, theranos was valued at $9 billion. The founders of Walmart invested $150 million. Media mogul Rupert Murdoch, $125 million. And the Devos family, including now education secretary Betsy Devos, $100 million. She was able to sell to all these people and get them because they all trust each other. If you're doing it, it must be good. I'm seeing things pop up inside of Walgreens and I'm wondering maybe it finally works. But I'm still in my mind remembering all these other things and saying I still don't believe it. I still don't believe it. She seemed forthcoming except when you asked her can I see the machine. No, you can't. And then downstairs in the basement area was the secret place you couldn't go.

This transcript has been automatically generated and may not be 100% accurate.

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