Baby, Now We Got Bad Blood
When I stumbled upon an ABC News podcast called “The Dropout,” I had no idea what I was in for. The podcast tells the story of Theranos, a Silicon Valley startup founded by Elizabeth Holmes. Holmes dropped out of Stanford at the age of 19 and founded the company with the mission of creating technology that could run hundreds of blood tests all from a single drop of blood on a handheld device (later named the Edison), thus eliminating the painful and often difficult process of collecting blood intravenously in multiple vials. Theranos was hyped as being revolutionary, something that would change the healthcare industry and something that would change the world. And the world was fascinated by the Stanford drop out, her deep voice, a penchant for wearing black turtlenecks like Steve Jobs, relentless dedication to her vision, and being a female founder in Silicon Valley. Everyone thought she was a girl boss on the cusp of creating the next Apple.
But it was all a fraud! John Carreyrou, a journalist for the WSJ, investigated Theranos and was the first one to break the story. He has gone on to release the best seller, Bad Blood: Secrets and Lies in a Silicon Valley Startup, that is being made in a Hollywood film directed by Oscar winner, Adam McKay. The reality of the situation was that Theranos’ needle-free, handheld device didn’t work. The results were incomplete, wildly inaccurate, and the device often malfunctioned. People trusted Elizabeth and her company. She said the device was accurate and safe (even for children and cancer patients), but it wasn’t. For example, a woman went in for a routine blood test as someone who had cancer before and her tests came back as showing her cancer had returned, but in reality it hadn’t. Another man was told he had prostate cancer, but he didn’t.
Instead of admitting shortcomings or pivoting, Holmes lied. She claimed to have developed revolutionary technology and continued to thrive on this lie. She lied in interviews, to her employees, to her board, to her investors, on stages, to the SEC, to the FDA, and to the world. Elizabeth was relentless in her vision, even when she was told by her engineers (who had far more experience) that it wasn’t possible. She refused to accept reality. She kept employees from working together, she kept departments separated, she evaded questions, she fooled investors, she created a fake lab to show the SEC and investors, she made excuses when tests required more blood or time to be performed, she sent threatening emails to colleagues, she created an image that was a farce, she demanded complete loyalty, she gave the company speeches and led them in chants, and she fired anyone who stood in her way. Employees were escorted out of the building, not allowed to collect their belongings, they were followed, they were served papers, they were forced to sign NDAs, they were threatened by lawyers, they were sued, their computers may have been hacked, their careers were ruined, and in one instance a life was lost (Ian Gibbons, the Theranos Chief Scientist, took his own life).
Elizabeth’s fall from grace was epic. The SEC, the Department of Justice, and the FBI investigated Theranos. Investors sued the company. Walgreens, which partnered with Theranos on 40 testing sites, terminated the relationship. Holmes’ net worth dropped from $4.5 billion to $0 on the Forbes list. And on March 14th, 2018, Theranos, Elizabeth Holmes, and Sunny Balwani (the COO and Elizabeth’s boyfriend) were charged with fraud by the SEC. They had falsely stated the company had annual revenues of $100 million when it was more like $100,000. Holmes paid a fine of $500,000 and returned 18.9 million shares she held so she no longer controlled the company; she couldn’t be an officer or director of any public company for 10 years. And the company shut down in 2018. On June 15, 2019, the US Attorney for the Northern District of California indicted Holmes on wire fraud and conspiracy charges. And according to a January 2019 filing, Justice Department officials are currently combing through 16–17 million pages of documents, more charges could be on the horizon. Holmes continues to maintain her innocence.
Interesting facts about Elizabeth Holmes because they’re too good not to mention.
-Her voice wasn’t as deep as she portrayed it to be. A former employee once caught her slip out of her deep voice and into her normal register. It was all an act.
-If you watch her in interviews, she hardly blinks. This has often been described as a trait of a sociopath.
-Her father worked for Enron when it collapsed.
-She was obsessed with Steve Jobs. She hired his righthand man who left the company after a year. She wore black turtlenecks like him. She insisted on being driven around in unmarked cars like he had been. She hired the ad agency who made Apple campaigns famous. She insisted on marketing meetings being on Wednesdays, the same day Jobs had had his meetings.
-The company paid of Elizabeth’s extravagant lifestyle. She lived in a mansion, had bulletproof windows in her office, several security guards with her at all times, flew private, and had several Birkin bags.
-She dated Sunny who was almost 20 years her senior (they met when she was 18) and who had no business being a COO, and they never told investors they were dating, which was considered unethical. Sunny was the enforcer in the company.
-If someone wanted to invest in the company, they had to agree to the condition that she wouldn’t have to reveal how Theranos’ technology worked. She was obsessed with secrecy.
-Elizabeth’s assistants tracked employees hours and how much time they spent at the office. Elizabeth wanted all of her employees committed and at the office all the time.
-She came between former Secretary of State, George Shultz and his grandson Tyler Shultz (who spoke to Carreyrou) when Tyler questioned the legitimacy of the company while working there, quit, went to his grandfather (who took Elizabeth’s side) and was then hounded by Elizabeth’s lawyers. Elizabeth’s paranoia and obsession with punishing Tyler nearly tore his family apart.
-Elizabeth hired the lawyer David Boies, who is known as a bully, and represented the likes of Harvey Weinstein at one point. She appointed him to the Theranos board which was very strange.
-During her SEC deposition, she said “I don’t know” over 600 times.
-She has a dog named Balto she tells people is actually a wolf.
-She lives in SF, has been spotted at the dog park with Balto, and is reportedly in a new relationship.
By: Meg Coogan