Nick Bilton, How Elizabeth Holmes’s House of Cards Came Tumbling Down. Vanity Fair, 6 September 2016. “In a searing investigation into the once lauded biotech start-up Theranos, Nick Bilton discovers that its precocious founder defied medical experts–even her own chief scientist–about the veracity of its now discredited blood-testing technology. She built a corporation based on secrecy in the hope that she could still pull it off. Then, it all fell apart.”
It was late morning on Friday, October 16 [2015], when Elizabeth Holmes realized that she had no other choice. She finally had to address her employees at Theranos, the blood-testing start-up that she had founded as a 19-year-old Stanford dropout, which was now valued at some $9 billion. Two days earlier, a damning report published in The Wall Street Journal had alleged that the company was, in effect, a sham—that its vaunted core technology was actually faulty and that Theranos administered almost all of its blood tests using competitors’ equipment….
[Like Steve Jobs at Apple] Holmes…paid indefatigable attention to her company’s story, its “narrative.” Theranos was not simply endeavoring to make a product that sold off the shelves and lined investors’ pockets; rather, it was attempting something far more poignant. In interviews, Holmes reiterated that Theranos’s proprietary technology could take a pinprick’s worth of blood, extracted from the tip of a finger, instead of intravenously, and test for hundreds of diseases—a remarkable innovation that was going to save millions of lives and, in a phrase she often repeated, “change the world.”… Holmes adorned the covers of Fortune, Forbes, and Inc., among other publications. She was profiled in The New Yorker and featured on a segment of Charlie Rose. In the process, she amassed a net worth of around $4 billion.
One of the only journalists who seemed unimpressed by this narrative was John Carreyrou, a recalcitrant health-care reporter from The Wall Street Journal. Carreyrou came away from The New Yorker story surprised by Theranos’s secrecy—such behavior was to be expected at a tech company but not a medical operation. Moreover, he was also struck by Holmes’s limited ability to explain how it all worked. When The New Yorker reporter asked about Theranos’s technology, she responded, somewhat cryptically, “a chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.”
Shortly after reading the article, Carreyrou started investigating Theranos’s medical practices. As it turned out, there was an underside to Theranos’s story that had not been told—one that involved questionable lab procedures and results, among other things. Soon after Carreyrou began his reporting, David Boies, the superstar lawyer—and Theranos board member—who had taken on Bill Gates in the 1990s and represented Al Gore during the 2000 Florida recount case, visited the Journal newsroom for a five-hour meeting. Boies subsequently returned to the Journal to meet with the paper’s editor in chief, Gerard Baker. Eventually, on October 16, 2015, the Journal published the article: HOT STARTUP THERANOS HAS STRUGGLED WITH ITS BLOOD-TEST TECHNOLOGY.…
[Venture capitalism] generally works like this: the venture capitalists (who are mostly white men) don’t really know what they’re doing with any certainty—it’s impossible, after all, to truly predict the next big thing—so they bet a little bit on every company that they can with the hope that one of them hits it big. The entrepreneurs (also mostly white men) often work on a lot of meaningless stuff, like using code to deliver frozen yogurt more expeditiously or apps that let you say “Yo!” (and only “Yo!”) to your friends. The entrepreneurs generally glorify their efforts by saying that their innovation could change the world, which tends to appease the venture capitalists, because they can also pretend they’re not there only to make money. And this also helps seduce the tech press (also largely comprised of white men), which is often ready to play a game of access in exchange for a few more page views of their story about the company that is trying to change the world by getting frozen yogurt to customers more expeditiously. The financial rewards speak for themselves. Silicon Valley, which is 50 square miles, has created more wealth than any place in human history. In the end, it isn’t in anyone’s interest to call bullshit.…
One of Holmes’s first major hires,…was Ian Gibbons, an accomplished British scientist who had a slew of degrees from Cambridge University and had spent 30 years working on diagnostic and therapeutic products. Gibbons was tall and handsome, with straight reddish-brown hair and blue eyes. He had never owned a pair of jeans and spoke with a British accent that was a combination of colloquial and posh. In 2005, Holmes named him chief scientist.
Gibbons, who was diagnosed with cancer shortly after joining the company, encountered a host of issues with the science at Theranos, but the most glaring was simple: the results were off. This conclusion soon led Gibbons to realize that Holmes’s invention was more of an idea than a reality. Still, bound by the scientific method, Gibbons wanted to try every possible direction and exhaust every option. So, for years, while Holmes put her fund-raising talents to use—hiring hundreds of marketers, salespeople, communications specialists, and even the Oscar-winning filmmaker Errol Morris, who was commissioned to make short industrial documentaries—Gibbons would wake early, walk his dogs along a 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 who plays dumb to unwittingly become the most powerful person on earth.
While Gibbons grew ever more desperate to come up with a solution to the inaccuracies of the blood-testing technology, Holmes presented her company to more investors, and even potential partners, as if it had a working, fully realized product…
While the government [Food and Drug Administration and the Centers for Medicare and Medicaid Services] was scouring through Theranos’s inaccurate files and data [in late August 2015], Carreyrou was approaching the story not as a fawning tech blogger, but rather as a diligent investigative reporter. Carreyrou, who had worked at the Journal since 1999, had covered topics ranging from terrorism to European politics and financial misdeeds before returning to the New York newsroom and taking over the health-and-sciences bureau. As a reporter of obscure and often faceless subjects, he was not enticed by access, nor was he afraid of lawyers. In fact, he had won two Pulitzer Prizes for taking on nemeses as significant as Vivendi and the U.S. government….
Carreyrou subsequently wrote more than two dozen articles about the problems at Theranos. Walgreens severed its relationship with Holmes, shuttering all of its Wellness Centers. The F.D.A. banned the company from using its Edison device. In July, the Centers for Medicare and Medicaid Services banned Holmes from owning or running a medical laboratory for two years. (This decision is currently under appeal.) Then came the civil and criminal investigations by the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for the Northern District of California and two class-action fraud lawsuits.…
When I arrived in Palo Alto in July [2016], I wasn’t the only person setting out to interview anyone associated with Theranos and Holmes. The Federal Bureau of Investigation was, too. When I knocked on a door, I was only a day or two behind F.B.I. agents who were trying to put together a time line of what Holmes knew and when she knew it—adding the most unpredictable twist to a story she could no longer control.
See also: John Carreyrou, Hot Startup Theranos Has Struggled With Its Blood-Test Technology. The Wall street Journal, 16 October 2015.