Cramer generously began the interview by asking Holmes what hadhappened. Holmes, who talks slowly and deliberately, and blinks withalarming irregularity, replied with a variation of a line from Jobs.“This is what happens when you work to change things,” she said, herlong blond hair tousled, her smile amplified by red lipstick. “Firstthey think you’re crazy, then they fight you, and then, all of a sudden,you change the world.” When Cramer asked Holmes for a tersetrue-or-false answer about an accusation in the article, she repliedwith a meandering 198-word retort.
By the time she returned to Palo Alto, the consensus was that it wastime, at last, for Holmes to address her hundreds of employees. Acompany-wide e-mail instructed technicians in lab coats, programmers inT-shirts and jeans, and a slew of support staff to meet in thecafeteria. There, Holmes, with Balwani at her side, began an eloquentspeech in her typical baritone, explaining to her loyal colleagues thatthey were changing the world. As she continued, Holmes grew moreimpassioned. The Journal, she said, had gotten the story wrong.Carreyrou, she insisted, with a tinge of fury, was simply picking afight. She handed the stage to Balwani, who echoed her sentiments.
After he wrapped up, the leaders of Theranos stood before theiremployees and surveyed the room. Then a chant erupted. “f*ck you. . .,” employees began yelling in unison, “Carreyrou.” It beganto grow louder still. “f*ck you, Carreyrou!” Soon men and women in labcoats, and programmers in T-shirts and jeans, joined in. They werechanting with fervor: “f*ck you, Carreyrou!,” they cried out. “f*ckyou, Carreyrou! f*ck. You. Carrey-rou!”
The Game
In Silicon Valley, every company has an origin story—a fable, oftenslightly embellished, that humanizes its mission for the purpose ofwinning over investors, the press, and, if it ever gets to that point,customers, too. These origin stories can provide a unique, and uniquelypowerful, lubricant in the Valley. After all, while Silicon Valley isresponsible for some truly astounding companies, its business dealingscan also replicate one big confidence game in which entrepreneurs,venture capitalists, and the tech media pretend to vet one anotherwhile, in reality, functioning as cogs in a machine that is designed tonot question anything—and buoy one another all along the way.
It generally works like this: the venture capitalists (who are mostlywhite men) don’t really know what they’re doing with anycertainty—it’s impossible, after all, to truly predict the next bigthing—so they bet a little bit on every company that they can with thehope that one of them hits it big. The entrepreneurs (also mostly whitemen) often work on a lot of meaningless stuff, like using code todeliver frozen yogurt more expeditiously or apps that let you say“Yo!” (and only “Yo!”) to your friends. The entrepreneurs generallyglorify their efforts by saying that their innovation could change theworld, which tends to appease the venture capitalists, because they canalso pretend they’re not there only to make money. And this also helpsseduce the tech press (also largely comprised of white men), which isoften ready to play a game of access in exchange for a few more pageviews of their story about the company that is trying to change theworld by getting frozen yogurt to customers more expeditiously. Thefinancial rewards speak for themselves. Silicon Valley, which is 50square miles, has created more wealth than any place in human history.In the end, it isn’t in anyone’s interest to call bullsh*t.
When Elizabeth Holmes emerged on the tech scene, around 2003, she had apreternaturally good story. She was a woman. She was building a companythat really aimed to change the world. And, as a then dark-haired19-year-old first-year at Stanford University’s School of ChemicalEngineering, she already comported herself in a distinctly Jobsianfashion. She adopted black turtlenecks, would boast of never taking avacation, and would come to practice veganism. She quoted Jane Austen byheart and referred to a letter that she had written to her father whenshe was nine years old insisting, “What I really want out of life is todiscover something new, something that mankind didn’t know was possibleto do.” And it was this instinct, she said, coupled with a childhoodfear of needles, that led her to come up with her revolutionary company.
Holmes had indeed mastered the Silicon Valley game. Revered venturecapitalists, such as Tim Draper and Steve Jurvetson, invested in her;Marc Andreessen called her the next Steve Jobs. She was plastered on thecovers of magazines, featured on TV shows, and offered keynote-speakerslots at tech conferences. (Holmes spoke at *Vanity Fair’*s 2015 NewEstablishment Summit less than two weeks before Carreyrou’s first storyappeared in the Journal.) In some ways, the near-universal adoration ofHolmes reflected her extraordinary comportment. In others, however, itreflected the Valley’s own narcissism. Finally, it seemed, there was afemale innovator who was indeed able to personify the Valley’s vision ofitself—someone who was endeavoring to make the world a better place.
The original Theranos laboratory, in Palo Alto, 2014.
Holmes’s real story, however, was a little more complicated. When shefirst came up with the precursor to the idea of Theranos, whicheventually aimed to reap vast amounts of data from a few droplets ofblood derived from the tip of a finger, she approached several of herprofessors at Stanford, according to someone who knew Holmes back then.But most explained to the chemical-engineering major that it wasvirtually impossible to do so with any real efficacy. “I told her, Idon’t think your idea is going to work,” Phyllis Gardner, a professorof medicine at Stanford, said to me, about Holmes’s seminal pitch forTheranos. As Gardner explained, it is impossible to get a precise resultfrom the tip of a finger for most of the tests that Theranos would claimto conduct accurately. When a finger is pricked, the probe breaks upcells, allowing debris, among other things, to escape into theinterstitial fluid. While it is feasible to test for pathogens this way,a pinprick is too unreliable for obtaining more nuanced readings.Furthermore, there isn’t that much reliable data that you can reap fromsuch a small amount of blood. But Holmes was nothing if not determined.Rather than drop her idea, she tried to persuade Channing Robertson, heradviser at Stanford, to back her in her quest. He did. (“It would notbe unusual for finger-stick testing to be met with skepticism,” says aspokesman for Theranos. “Patents from that period explain Elizabeth’sideas and were foundational for the company’s current technologies.”)
Holmes subsequently raised $6 million in funding, the first of almost$700 million that would follow. Money often comes with strings attachedin Silicon Valley, but even by its byzantine terms, Holmes’s wereunusual. She took the money on the condition that she would not divulgeto investors how her technology actually worked, and that she had finalsay and control over every aspect of her company. This surreptitiousnessscared off some investors. When Google Ventures, which focuses more than40 percent of its investments on medical technology, tried to performdue diligence on Theranos to weigh an investment, Theranos neverresponded. Eventually, Google Ventures sent a venture capitalist to aTheranos Walgreens Wellness Center to take the revolutionary pinprickblood test. As the V.C. sat in a chair and had several large vials ofblood drawn from his arm, far more than a pinprick, it became apparentthat something was amiss with Theranos’s promise.
Google Ventures wasn’t the only group with knowledge of blood testingwhich felt that way. One of Holmes’s first major hires, thanks to anintroduction by Channing Robertson, was Ian Gibbons, an accomplishedBritish scientist who had a slew of degrees from Cambridge Universityand had spent 30 years working on diagnostic and therapeutic products.Gibbons was tall and handsome, with straight reddish-brown hair and blueeyes. He had never owned a pair of jeans and spoke with a British accentthat was a combination of colloquial and posh. In 2005, Holmes named himchief scientist.
Gibbons, who was diagnosed with cancer shortly after joining thecompany, encountered a host of issues with the science at Theranos, butthe most glaring was simple: the results were off. This conclusion soonled Gibbons to realize that Holmes’s invention was more of an idea thana reality. Still, bound by the scientific method, Gibbons wanted to tryevery possible direction and exhaust every option. So, for years, whileHolmes put her fund-raising talents to use—hiring hundreds ofmarketers, salespeople, communications specialists, and even theOscar-winning filmmaker Errol Morris, who was commissioned to make shortindustrial documentaries—Gibbons would wake early, walk his dogs alonga trail near his home, and then set off for the office before seven A.M.In his downtime, he would read I, Claudius, a novel about a man whoplays dumb to unwittingly become the most powerful person on earth.
While Gibbons grew ever more desperate to come up with a solution to theinaccuracies of the blood-testing technology, Holmes presented hercompany to more investors, and even potential partners, as if it had aworking, fully realized product. Holmes adorned her headquarters and Website with slogans claiming, “One tiny drop changes everything,” and“All the same tests. One tiny sample,” and went into media overdrive.She also proved an effective crisis manager. In 2012, for instance,Holmes began talking to the Department of Defense about using Theranos’stechnology on the battlefield in Afghanistan. But specialists at theD.O.D. soon uncovered that the technology wasn’t entirely accurate, andthat it had not been vetted by the Food and Drug Administration. Whenthe department notified the F.D.A. that something was amiss, accordingto The Washington Post, Holmes contacted Marine general James Mattis,who had initiated the pilot program. He immediately e-mailed hiscolleagues about moving the project forward. Mattis was later added tothe company board when he retired from the service. (Mattis says henever tried to interfere with the F.D.A. but rather was “interested inrapidly having the company’s technologies tested legally andethically.”)
