While it is one thing to be touted as the ‘next Steve Jobs’, it is an entirely different thing to be so taken in by such lavish praise so as to cocoon oneself in an aura of pride, vanity and over-confidence. This is exactly what happened with Elizabeth Holmes. A daring, enterprising and ambitious Stanford drop out, this twenty-two-year-old self-made entrepreneur, billionaire (albeit not a lasting one) and the founder of “Theranos”, a much vaunted and hailed about private health technology corporation.
The story of Elizabeth Holmes and Theranos is one of deceit, camouflage and subversion. It is also a tale of hubris. John Carreyrou, brilliantly chronicles this story in his book, “Bad Blood: Secrets and Lies In a Silicon Valley Start-up”. Incidentally it was Carreyrou who blew the murky lid of Theranos to reveal an inside racked by subterfuge, nepotism and fraud. In this attempt, he was aided by a group of brave but harassed whistle blowers, who, in the course of trying to shine light on the dark deeds of their employer, were hounded and hassled by egregious lawyers and ill-tempered executives. When finally, Theranos turned out to be nothing less than a modern day Thanos, both in aspiration and dealings, its founder’s net wealth had eroded from a jaw dropping $4.5 billion dollars to a more reflective and appropriate number of zero.
The award winning Carreyrou startles his readers by exposing the dangerous methods resorted to by Elizabeth Holmes and her cronies in a desperate bid showcase Theranos as the next generation health care miracle. Claiming to revolutionize the process of testing blood – claiming a paranoia towards needles as an overarching driver – Holmes boasted that the practice of venipuncture (the act of intravenously drawing blood) would soon be replaced by the most innocuous method of pinpricking. Thus would end, what Holmes termed a ‘gruesome medieval torture’ As an added advantage these tests could be conducted at homes of patients, in wellness centres and walk-in clinics. And as Carreyrou illustrates brilliantly, many seasoned businessmen and veteran investors got cot completely taken in by this incredulous claim. Wallgreens and Safeway signed million dollar contracts with Theranos for procuring the blood sampling machines and the Board of Directors of Theranos was a glittering assemblage of America’s most sought after. Some of the eye popping names who offered themselves to be seated on the Board of Holmes’ company were Henry Kissinger, George Schultz and Don Lucas. Marquee investors such as Carlos Icahn, Robert Kraft and Betsy De Vos plunked in $900 million while an eighty-four-year-old Rupert Murdoch contributed his fair share of millions as well.
But as Carreyrou chillingly demonstrates, the technology that was much feted, fanned out and felicitated, was at its core and crux – a dud. While the underlying technology was neither developed nor prepared to perform all the tasks that were proudly being claimed by Holmes, the very premises housing the machines were shady. Theranos in fact used equipment manufactured by other reputed companies such as Siemens (hiding the machines when the health inspectors came calling) and continued drawing blood intravenously to grade tests using routine commercially available equipment.
As sincere and apprehensive employees began raising their doubts and questioned the company’s practices, Theranos became a revolving door of flushed out employees and hastily assembled recruits. In the words of a fired employee, Theranos’ devices were likened to an ‘eighth-grade science project’. The blood samples were stored at incorrect temperatures leading to patients getting faulty results and making unwarranted trips to emergency rooms while cancelling painstakingly planned holidays. Complaints to Theranos fell on deaf ears. When the iceberg along with its insidious tip was finally revealed, nearly a million tests conducted in California and Arizona had to be voided or corrected.
Dressed invariably in black turtlenecks – a consequence of a compulsive obsession towards her idol Steve Jobs – Elizabeth Holmes is described by Carreyrou as a consumed woman who would stop at nothing to get her way. Woe betide anyone getting in her way either. Anyone having the guts to oppose her ended up becoming collateral damage, initially fired from Theranos before being subjected to intense harassment and torment from a battery of the firm’s lawyers. To make herself formidable in a bastion that was the preserve of prideful and haughty men, the founder of Theranos even altered her voice speaking in a forced baritone. “The Theranos device was the most important thing humanity has ever built.” Professed Holmes from various pulpits leaving her listeners mesmerized.
Holmes’ ruthlessness was egged on and enforced by Theranos’ chief operating officer and president Ramesh “Sunny” Balwani. At least two decades older than Holmes and romantically engaged with her (a fact which was conveniently hidden from the Board as well as the employees), he had made his mark in the dotcom bubble and seemed to act as her mentor. To employees, his menacing management style made him Holmes’s “enforcer.” Theranos’ scruples (or a brazen lack of them) would have been lost forever to the world but for a tip received in 2014 by Carreyrou Adam Clapper, a pathologist in Missouri who had assisted Carreyrou with an earlier story. Clapper had blogged skeptically on Theranos’ capability to run multiple tests on just a drop of blood. Hearing from fellow naysayers Clapper passed on their names to Carreyrou. Carreyrou got his break with Alan Beam, who had just left his job as lab director at Theranos.
Heeding Carreyrou’s assurances of anonymity (“Alan Beam” is a pseudonym), Beam spilled two profound and devastating fact beans. First, “Edisons”, the equipment manufactured by Theranos to test the blood samples were error prone and regularly failed quality control tests. Second, most blood test results reported by Theranos in patient trials did not come from the Edisons but were clandestinely obtained from standard blood testing devices. Beam was perturbed about the impact such false results could have upon both the diagnoses of doctors and the future of patients.
Theranos hired the ultra-aggressive and much feared lawyer David Boies, who did all he could to prevent the cat being let out of the bag. Undaunted Carreyrou’s persisted and his dogged determination paid off when in October 2015, his newspaper carried a damning front page story about the Edisons and the secret use of conventional testing. The backlash, outrage and fury that followed was unimaginable and although Holmes tried to allay the fears of her investors and the public at large by refuting, disputing and countering the findings made by Carreyrou in various public appearances, Theranos had begun counting its last remaining days. In an act of unforgettable desperation, at one meeting after the story broke, Balwani led hundreds of employees in a defiant chant: “Fuck you, Carreyrou! Fuck you, Carreyrou!”
On the 14th of March, 2018, the Securities and Exchange Commission charged Theranos, Holmes, and Balwani with fraud. Holmes was required to relinquish control over the company and pay a $500,000 fine, and she was barred from holding any office in a public company for 10 years. Earlier the Centers for Medicare and Medicaid Services, the federal agency monitoring clinical labs, ran inspections, and as a result of its findings banned Theranos from all blood testing.
This blistering story by Carreyrou is a rousing testimony and a deserving tribute to the conscience of a few who ensured that they spoke out to save the lives and future of many. In the process, they suffered irreparable damage themselves. But still they ploughed, waded and marched forward not resting until all the damned lies were exposed and truth prevailed. This story also highlights the inexplicable ineptitude displayed by an illustrious Board of Directors completely in the thrall of one extraordinary saleswoman. For that was all Elizabeth Holmes was, a consummate sales woman with chicanery as her left hand and sleight as her right. A self-proclaimed Marie-Curie and a compulsive narcissist she might have at the outset nursed genuine motives as Carreryrou espouses. But somewhere on the way the motives gave way to mechanics the machineries driving which became alien to even Holmes herself.
The one lingering aspect of Carreyrou’s book is its flourishing finish. I reproduce the same here and leave the readers to digest it and form their own opinion:
“I’ll leave it to the psychologists to decide whether Holmes fits the clinical profile of a sociopath, but her moral compass was badly askew. By all accounts, she had a vision that she genuinely believed in. But in her all-consuming quest to be the second coming of Steve Jobs she stopped listening to sound advice and began to cut corners. Her ambition was voracious and it brooked no interference. If there was collateral damage on her way to riches and fame, so be it.”