What Happened to Elizabeth Holmes and Theranos?

EDIT: In the episode, we refer to the whistleblower article as being published in the Washington Post. It was actually published in the Wall Street Journal, and we are extremely sorry to John Carreyrou, whose work was instrumental in bringing Elizabeth Holmes and her affiliates to justice. 

We’re back with Season 3, and we’re ready to throw down with a whole new Heavy Hitter series!

But before we do that, we promised to talk about one of the most bizarre and elaborate cases of fraud in recent history: Elizabeth Holmes and Theranos. Today, we discussed the 2019 documentary The Inventor: Out for Blood in Silicon Valley on HBO. As usual, I highly recommend watching the documentary before listening to the episode or reading the rest of this breakdown, but I’m not the boss of you. 

You Can’t Stop Me!

You bet I can’t

Ok, So Who’s Elizabeth Holmes?

You didn’t even watch the documentary, did you?

In a nutshell, Elizabeth Holmes is a Stanford dropout who went on to found her own company, Theranos (a portmanteau of “therapy” and “diagnosis”). Her idea was to revolutionize the way we go about phlebotomy by reducing the amount of blood needed from multiple vials to one tiny “microtainer” per test. She claimed to have designed a machine - the Edison - about the size of one of those old chunky computers that could take this tiny capsule of blood and perform any one of over 200 tests on it with an accurate reading. 

She proposed this idea to investors, who were entirely taken by her heartfelt appeals to the barriers many face when ordering blood work (prohibitive cost, distance, fear of needles, etc.). She convinced them that the technology had already been designed, and that she only needed funding to hire a team to build the functioning prototype. Before she knew it, she had secured hundreds of millions of dollars and a team of 700 in Silicon Valley. 

Wait, Isn’t That Impossible?

Yeah, turns out squeezing 200+ tests into a 2 x 2 space goes against the laws of thermodynamics. And that became apparent pretty quickly into the research and development phase. But Elizabeth and her partner, Sunny, were busy chumming it up with billionaires and presidents and kings, so they couldn’t very well tell their investors that their project was a technological impossibility, could they? Especially when they had already said the tech existed. So they gaslight their employees, insinuating that the scientists and engineers weren’t cut out for Silicon Valley if they couldn’t figure out how to do the impossible. 

Elizabeth was enamored with the mythical image of Steve Jobs, someone who set the bar for outrageous technological feats and overcoming the odds. She emulated his life, dropping out of college to start a tech business, adopting his “fake it till you make it” attitude, even compiling a wardrobe of nothing but black turtlenecks and blazers. She assumed the life of a technology mogul and refused to take “no” for an answer, relying on her charm and unshakable belief in her mission to ultimately see her through.

If only that were enough, eh?

Okay, I Think I See Where This Is Going

Yeah, it’s a pretty easily-tracked trajectory. She lies, it falls apart, she gets caught. And in a nutshell, that’s what happened. She fabricated her own reality and lived in it until it couldn’t sustain itself anymore. But when Tesla makes bad promises and postpones deadlines until the last possible moment, the consequences are mild at worst. We don’t get a new car on the market. Whoopee. 

 When a CEO refuses to listen to her engineers, silos production so no one can communicate with one another, and releases a medical product to the public that doesn’t function at all - then we have a bit of a problem.

She Did WHAT?

Honestly, I can forgive the wishful thinking and idealism. Yeah, what she wanted was impossible, and yeah she was unfair to her employees. But if she had stopped before it started to mess with other peoples’ lives, maybe something could have been salvaged.

Instead, she and Theranos partnered with Walgreens to create wellness centers in the state of Arizona that would feature the Edison as an a la carte blood testing facility. But, because the machines didn’t function, they ended up buying commercially-available blood testing machines (the same ones used by Quest and LabCorp) and shipping the microtainers back to Silicon Valley for testing. But since they were collecting such tiny quantities of blood, they would have to dilute the samples for use in the commercial machines. 

As you can imagine, this somewhat skewed the tests’ accuracies. Not only were people ordering their own blood tests with no concept of what they actually needed, they were given bad results that their doctors couldn’t interpret because Theranos refused to give doctors information about their practices. Even worse, Theranos actively incentivized the use of their Edisons with coupons and vouchers for free tests. 

Best case scenario, people without illnesses would suddenly be under the impression that they were sick. Worst case scenario, legitimately sick people would think they were healthy and forego further diagnostics or treatment.

Blood was on Elizabeth Holmes’ hands. Pun absolutely intended.

She Got Caught, Right?

For once, justice reigned somewhat supreme on this one. After a handful of employees spoke with journalist John Carreyrou at the Wall Street Journal (corrected from the episode, where we incorrectly refer to the Washington Post), the reality of Theranos’ situation became painfully public. 

Theranos’ legal team, headed by resident scumbag David Boies, attempted to make these peoples’ lives miserable by suing them for defamation, revealing industry secrets, breaking their NDAs, etc., but in the end a surprise inspection brought their own incompetence crumbling down. 

Elizabeth Holmes and Sunny Balwani were charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud, and her trial date is currently set for July 28, 2020. 

It’s obviously nice to know that she and her partner are paying for what they did, but the damage was beyond done. Those they threatened with lawsuits paid upwards of $500,000 in legal fees. Ian Gibbons, one of Elizabeth’s closest partners during Theranos’ beginnings, committed suicide after being betrayed by the company he helped conceive. Thousands of folks used and relied on Theranos’ tests. This was far from a victimless crime.

Wow.

You can say that again. 

Though there are some who think Elizabeth manipulates her own mind to believe the garbage she spins, Olivia and I both theorize that Elizabeth knew all along that she was lying through her teeth. To her, the ends justified the means. Sure, she was lying and gaslighting everyone around her - but she was doing something righteous. She wanted to save lives. Isn’t that a reason to commit a little fraud?

Sure, Elizabeth. Until your actions literally kill people.

To me, her interpersonal actions speak volumes to how she really felt about other human beings. She claimed to be interested in the greater good, in saving lives, etc. But when it came to real human empathy, she seemed completely closed off. She blew off Ian Gibbons’ death, only communicating with his widow to request Theranos’ private information. She was cold and uncaring about the people who would be using her faulty machines, even launching a marketing campaign to ensure people would use her fake services. 

For Elizabeth, it was never about helping people. It was about feeling like she was helping people.

Olivia is constantly staggered by how common this is. This level of fraud and disregard for human rights is standard practice in just about every corporation, and lies are a dime a dozen in startup culture. We see Apple and Tesla as the pinnacle of technological achievement, but Apple still outsources its labor and pays its workers pennies an hour. Tesla still endangered their solar farm workers’ lives by manipulating the flag system. It’s almost like there’s no ethical consumption under capitalism. 

And I am terrified by the implications this kind of life has on the human brain. As I said in the episode: no one is built for this! Human beings are not developed for being billionaires, never mind conniving those billionaires out of their money. They aren’t built for the kind of pressure that comes with creating a multi-billion dollar company, managing 700 people, and then watching your work crumble. 

I don’t think that Elizabeth Holmes’ actions were defensible. Everyone should have the ability to pump the breaks when human lives are on the line. But it’s not hard for me to imagine that this kind of overwhelming pressure would be enough to break your brain (assuming Elizabeth’s wasn’t broken to begin with). We were made for community and collaboration for the betterment of the world, and that simply can’t happen under the constraints of capitalism and funding and lobbying and on and on and on. 

Well, That Was Fun.

Welcome back, kiddos. It’s time to get sad again.