Elizabeth Holmes left StanfordUniversity as an undergrad with the ambitious plan to start her own medical technology company. She pursued venture capital funding, convincing firms like Draper Fisher Jurvetson to cough up the dough until she scored more than $6 million. Her company, Menlo Park, California-based Theranos, spent the money developing a handheld device that can monitor a patient’s blood wirelessly while they’re at home and alert their doctor wirelessly if they experience an adverse drug reaction.

Today, the 21-year-old CEO is pairing up with pharmaceutical companies to introduce her device to the commercial market. The device, called Theranos 1.0, works by measuring a tiny amount of blood from a person’s finger or arm. The blood runs through a biochip that searches for different markers like drug or protein concentrations. The concentration measurements are used to determine if an adverse drug reaction—such as a rash, skin reaction, or damage to certain organs—is occurring.

“Once the device starts working, it’s a real-time event,” says Ms. Holmes. The device then electronically transmits the data to Theranos’ web site, where biostatistics algorithms profile the information. Patients can then go to the web site and physicians can turn to their PDA for results. In 2004, 422,500 adverse drug reaction cases were reported to the U.S. Federal Drug Administration. Ms. Holmes wants her device to bring those numbers down.

Ms. Holmes says Theranos’ device will usher in drug-monitoring improvements that go beyond patients feeling safe about the drugs they ingest. The system can also determine if the drug is working on an individual basis. “What we are doing could fundamentally change healthcare,” she says.

The pharma industry is also poised to benefit from the device. Ms. Holmes says it could lead to increased prescription sales by improving a drug’s risk profile, which helps specify which patients should take the medication.

She’s a young CEO by any industry’s standards, but Theranos isn’t even Ms. Holmes’ fist company. In high school, she started a business to distribute to Asian universities C++ software, which uses a general-purpose language for computer programming. She cast the company aside to attend Stanford.

Q: Best and worst things about being a CEO at 21?

A: The best thing is I have an opportunity to really make a difference. I have the ability to impact healthcare, impact society, impact medicine as we know it in a way that’s very different from the way in which the industry is moving. It puts me in a position in which I can implement a lot of ideas and technologies that I have created, and execute on making that a reality. I don’t know if there is a worst thing.

Q: What will be the most important implications of your work in five years?

A: It will save lives and improve the quality of life for millions of people.

Q: What product do you wish you had come up with?

A: Some of Intel’s products that enable you to transmit and effectively process large amounts of data. I think there is a huge amount of power associated with the implications. The ability to control the flow of that information is of great interest to me.

Q: Biggest career or academic setback?

A: I don’t view anything that I have done in my life as a setback.

Q: What do you do every day that is the secret of your success?

A: I think about if someone came in the room and said, ‘you can’t run this company because of x, y, and z,’ and brought someone else in the room to run the company—I think what are they going to do differently.

Q: What do you do for fun, outside of business?