There are many surprises in this expose of how IT health company Theranos conned billions from American investors and put countless patient lives at risk by claiming to have invented a miniaturised, multi-test blood analysis technology. How could so many large investors, along with retail customers such as Walgreens and Safeway, have flocked to support a company whose testing was so minimal, and whose products simply didn’t work?
The secret, if such it is, lies in the charisma of the company’s founder Elizabeth Holmes, exceptionally bright and self confident, socially well-connected and ruthlessly ambitious. In the over-heated atmosphere of Silicon Valley start-ups, she was hailed, not least by herself, as the female Steve Jobs, playing the part to the hilt, wearing black outfits and seeking to model her ‘miracle’ devices on the iPhone.
In theory the Theranos innovation lay in extracting a pinprick of blood, two at most, from a patient’s finger, conveying it over wi-fi or cellular links to the lab, and providing rapid results from a bevy of tests - HIV to Zika virus, Mexican swine flu, herpes and blood clotting, you name it.
No one could match such technological wizardry and thanks to the PR spin everyone wanted to buy in.
Holmes’s motivation, apart from easy profits, lay in her self-confessed haemophobia. In speeches to medical audiences and interviews to fawning media she spoke of hating to see a syringe drawing blood - a pinprick would be much less daunting for patients, especially those who needed frequent testing.
The Theranos technique was so simple it could be performed by untrained staff in pharmacies, hence Walgreens’ involvement to the tune of $140 million. It was set to revolutionise blood diagnostics… America today, tomorrow the world!
As Wall Street Journal reporter John Carreyrou details, the personalising of this story lies at its core, and he will “leave it to the psychologists to decide whether Holmes fits the clinical profile [of sociopath]”. This is generous of him, for soon after he embarked on his investigation he encountered the company’s vicious legal attempts to silence him and ruin his reputation.
In time they went gunning for all his sources, even pressuring Rupert Murdoch, the paper’s owner, to veto the story.
Murdoch was one of the high profile investors, apparently blinded to Holmes’s deception by her charm, and had put $100 million into Theranos. To his credit, he expressed confidence in the editorial team, and refused to act. When Theranos was about to sink he sold back his stock for $1.00 - “so he could claim a big tax write-off on his other earnings,” Carreyrou writes.
Among supporters of the entrepreneurial Holmes were the Clintons and Barack Obama, while Board members included the current US President’s Defense Secretary, retired general James (‘Mad Dog’) Mattis, Henry Kissinger and another former Secretary of State George Shultz whose grandson Tyler, a sometime Theranos staffer, became a whistleblower about faked lab results.
Despite massive and disgraceful family pressure he told the author that the assays supposedly using blood pricked from fingertips actually came from venous samples analysed by a mainstream company.
Elizabeth Holmes’s co-conspirator in this decade-long corporate fraud was Indian born Ramesh ‘Sunny’ Balwani, nearly twenty years her senior, a bullying and paranoid manager - and in time, her lover - whose scientific knowledge was far outstripped by his liking for Lamborghinis, blue Gucci loafers and telling staff “You’re fired!”
Staff attrition was chronic, morale was rock bottom, and every dismissal or resignation - often resulting in being marched off the premises by security - was met with the forced signing of non-disclosure agreements.
One reads with delight that the company collapsed catastrophically, with Holmes and Balwani continuing to face litigation and possible criminal prosecution. The extent of clinical impacts is not known, although many patients are engaged in legal action.
The sorry saga highlights yet again that if something seems too good to be true, it probably is.