Elizabeth Holmes, who founded the medical and tech startup Theranos in 2003 as a 19-year-old dropout — and who was hailed as a brilliant, glass-ceiling-smashing, once-in-a-generation visionary akin to Steve Jobs until some tough investigative reporting exposed Theranos’s technology as a sham and Holmes herself as a ruthless con artist and manipulator — returned to court in early May 2021. Hearings have been underway at a San Jose courthouse as the government and Holmes’s lawyers continue to prepare the cases they will present at Holmes’s trial, for which jury selection is set to begin on August 31.
Charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud for having misled investors, doctors, and patients, Holmes and her former boyfriend and colleague Ramesh “Sunny” Balwani could face decades in jail if convicted. The trial is sure to captivate and engross people around the world once it gets going. What is less clear is whether Holmes will pay for her crimes and whether any of the lessons of this scandal will be remembered. The defendants have heavy legal firepower on their side, in the form of the respected and feared Washington litigation firm of Williams & Connolly. In certain of her public statements, Holmes has adamantly denied wrongdoing, tarred her accusers, and cast herself as a victim of misogyny. For all the headlines about Holmes and Theranos, the full extent of the devastation she unleashed on the world goes unacknowledged.
Charm and Deception
For a period in the 2010s, Holmes and Theranos were on top of the world. At its peak, the firm hit a $9 billion valuation, had more than 800 employees, and Holmes appeared on the cover of Fortune magazine’s June 2014 issue alongside the words, “This CEO Is Out For Blood.” Holmes rode to stardom on the claim that she made available technology that revolutionized blood testing, enabling people to get reliable results from samples obtained with just the prick of a finger. She spoke passionately about the need for wider blood testing as a means of detecting illnesses at early stages and treating them long before they can become debilitating or fatal.
Obviously, the pitch resonated. High-profile investors like venture capital entrepreneur Tim Draper, Mexican billionaire Carlos Slim, and Rupert Murdoch (owner of the very paper that would eventually blow the whistle on Theranos) poured hundreds of millions into the spunky startup. In 2010, Theranos entered into a partnership with Walgreens that led later to Theranos devices popping up in Walgreens branches and a $140 million investment by the retail giant. In September 2015, Holmes appeared at a Clinton Global Initiative event alongside the visibly aged and tired ex-president, who flattered and cossetted her with soft questions.
But Theranos’s Edison blood-testing devices produced wildly unreliable results, misleading patients and doctors about critical health questions and putting lives in danger, and the firm did not consistently use its own technology. The fraud that Holmes, and to a lesser extent Balwani, foisted on the world came to light largely through reporting by John Carreyrou in a series of Wall Street Journal articles and in his book Bad Blood: Secrets and Lies in a Silicon Valley Startup.
When he first heard about Theranos, Carreyrou grew suspicious that a 19-year-old dropout with a few semesters of undergrad coursework behind her had all the answers to questions that vex professionals with Ph.D.s who have toiled for decades in the medical field. Investigation amply bore out his skepticism, and he pulled no punches. Bad Blood is one of those books you come across once in a while that seems the author was born to write. It is detailed and hard-hitting, whether dealing with the technology of blood testing, the legal drama that played out for years as suspicions formed and a Theranos scientist, Ian Gibbons, committed suicide after the firm mistreated him, or the extremes to which Holmes and Balwani went to enforce a culture of secrecy and obedience in a firm founded on lies.
Yet even with the success of the bestselling Bad Blood and a 2019 HBO documentary, The Inventor: Out for Blood in Silicon Valley, not everyone comes close to grasping the full extent of the damage done by Theranos.
John Carreyrou was not the only Wall Street Journal reporter to cover Theranos. Back before the scandal exploded, the firm was the subject of articles by Joseph Rago, a Pulitzer Prize-winning journalist who specialized in covering healthcare and whose tragic, totally unexpected death in July 2017 shocked many people. We wondered what could have happened to an apparently healthy 34-year-old with most of his adult life and journalistic career seemingly still ahead of him. The cause of Rago’s death turned out to be sarcoidosis, an infectious condition in which bodily organs get afflicted with inflammatory cells.
It seems curious, to say the least, that in all the articles written about Theranos and in the coverage that followed Rago’s passing, no one takes note of a fact mentioned by Carreyrou on page 176 of Bad Blood or goes on to ask some obvious questions. In the course of Rago’s research and reporting on Theranos, Holmes offered Rago a demonstration of one of the firm’s blood tests, which Rago agreed to undergo. Rago got his results by email before he even left the premises. We now know that Theranos’s testing machines didn’t work and left people who took the blood test totally in the dark about conditions that an accurate test would have brought to light.
One of the tragic things here is that sarcoidosis is not hard to detect, or to treat once detected. Real blood tests are one of a number of methods, along with chest X-rays, biopsies, and CT scans, that can easily diagnose the inflammatory markers, kidney or liver damage, abnormally high levels of vitamin D, and other factors that are telltale signs of sarcoidosis. While the test results may not themselves provide the basis for a diagnosis, they will, if properly administered, at the very least raise flags that lead to further tests and a diagnosis.
Sarcoidosis develops over time and there are ample opportunities to detect and treat it before it can become fatal. One study published by the National Library of Medicine found an average clinical course of ten years from the onset of sarcoidosis in patients to its fatal stages. Rago took the Theranos test in the course of research for his September 2013 article, and died less than four years later, in July 2017. Accurate test results could have spurred him to get further tests and treatment, but the faulty Theranos test may have misled him into believing nothing was wrong. A journalist who produced outstanding, Pulitzer Prize-winning coverage of healthcare in the U.S. became the victim of a medical scam. We may never know for certain whether Rago, and thousands of others, would still be with us if the Theranos blood tests they received had functioned the way that Elizabeth Holmes promised.
Politicizing the Trial
Holmes has pled not guilty to the charges against her and tried to politicize the backlash and the proceedings by painting herself as the victim of forces that wanted to see an ambitious young woman fail. In a Bloomberg interview, Holmes commented, “Until what happened in the last four weeks, I didn’t understand what it means to be a woman in this space. Every article starting with ‘A young woman.’ Right? Someone came up to me the other day, and they were like, ‘I have never read an article about Mark Zuckerberg that starts with ‘A young man.’”
If you fail to appreciate Holmes’s status as a female groundbreaker smashing the glass ceilings of male-dominated Silicon Valley and the medical profession, you are a sexist dinosaur. But if you so much as mention Holmes’s gender in an article, you are also a sexist dinosaur. Damned if you do, damned if you don’t.
Contrary to her self-serving public statements, Holmes was the beneficiary of fawning coverage precisely because many observers and supporters in the media, the tech world, the political realm, and the angel investment space believed in her. Many gifted inventors and startup pioneers who have taken the trouble to become educated about their field, and to develop and roll out their products in a manner that is responsible and does not recklessly endanger lives, go unnoticed and unsung by comparison.
This writer would be willing to bet that not many people reading this article have heard of a young company called Athletigen Technologies, which uses sophisticated DNA profiling to develop and put to use training programs and dietary regimens tailored to individual users. It really does not make sense for people with highly individual physiognomies to follow training programs devised for others with totally different bodies. Here indeed is a breakthrough that many people, once they do hear of it, will no doubt wish they had thought of. Athletigen’s founder has done postdoctoral studies in human genetics and earned a Ph.D. in biochemistry and molecular biology. The point here is simply that, contrary to the claims of Elizabeth Holmes, investors, the tech and startup worlds, and the media do not reward men just because they are men and punish women just because they are women.
And whatever sentence Elizabeth Holmes gets for her fraud, it’s not enough.
Michael Washburn is a Brooklyn-based writer. He has worked in both publishing and journalism over the past two decades, with a concentration in financial and legal reporting. He is the author of an acclaimed cover story in the Philadelphia City Paper entitled “Home & Abroad: Haunting Memories Aside, Local Vietnamese Refugees Refuse to Forget the Country They Fled.”
Washburn’s short fiction has appeared in Rosebud, Green Hills Literary Lantern, Concho River Review, New Orphic Review, Stand, Still Point Arts Quarterly, Weird Fiction Review, Weirdbook, Meat for Tea: The Valley Review, Nomadic Sojourns, Black Fox Literary Magazine, and many other publications. His books include The Uprooted and Other Stories (2018), When We’re Grownups (2019), and Stranger, Stranger (2020). His short story “Confessions of a Spook” won Causeway Lit’s 2018 fiction contest, and his story “My Role in the Rise of Julian Assange” won the Adelaide Books fiction award for 2019.