The Downfall of Theranos: A Podcast
WRD 201: Digital Writing
Autumn 2024
Transcript:
Stiff air. Gray, empty walls. Grating overhead lights. There’s an unspoken tenseness that
wallows in the room; it’s the fear of uncertainty, of something to come. A clock ticks, someone
taps their foot. Another sneezes. Footsteps echo from a corridor out of view. A phone trills
behind the receptionist’s counter every few minutes, and you can’t help but startle in your seat.
Your fears are unfounded… until a door swings open. Someone mumbles your last name off a
clipboard, and your breath hitches as you stagger from your seat.
Here we go.
We’ve all been there: a doctor’s waiting room. One of many less pleasant experiences.
Generally, we all try to avoid doctors visits if we can help it, but there are a few times where the
“apple a day” rule just doesn’t apply. Annual checkups, vaccine boosters, that sort of thing. And
one of those necessary trips is blood tests. We all need them, we all get them, they’re routine.
As unpleasant as they are, they’re necessary to keep tabs on our health, especially those more
chronic, underlying conditions.
What if there was a way to put an end to the pain of blood tests? The waiting rooms, the
needles, the fear. That’s what Elizabeth Holmes planned to do, with her startup biotech
company that was supposed to revolutionize the blood drawing process. Coincidentally, that
dream landed her with an 11-year prison sentence for fraud, after she scammed her investors
and patients out of millions.
This is the story of the downfall of Theranos.
[ Transition Music - Plucky Music ]
Holmes, Theranos’ founder, was your average quirky private school geek. Awkward, smart, a
big reader. She described herself as “disconnected” from the other girls at school, and struggled
through track and field while excelling in computer science and Mandarin. In a letter she wrote
to her father as a child, she expressed wanting nothing more than to invent something new. But
her parents had more rigid goals for her, wanting her to receive an ivy league education and
pursue more traditional avenues of success in the medical field.
And don’t get me wrong, she had all the merits for a bright future: the highlights of her college
applications were impressive. She went on a study abroad trip to China, she had parents in high
places (with her mother working as a Congressional committee staffer, and her father the vice
president of Enron), and she started her own code translation business; it was no wonder she
was accepted to Stanford as a President’s Scholar to study chemical engineering.
So how did it all go wrong? How did Holmes go from genius to jailbird?
[ Transition Music - Pensive Music ]
During her study abroad trip to China as mentioned, she met her business partner and now
ex-husband Ramesh Balwani. At the time, Holmes was 18, having just graduated high school.
Balwani, on the other hand, was 37 and married. Yes, you heard that right; the two share a
staggering 19-year age gap, a number that sent Silicon Valley into a frenzy during Holmes’ trial.
While they started as a mentor-mentee pair working on a computer chip that could proposedly
scan for the SARS virus in the human body, Balwani eventually divorced his wife to date Holmes
two years after their shared summer in China.Balwani joined Theranos five years after its birth, after Holmes dropped out of Stanford in 2004
because of her struggles with sexual assault. Looking back, her dropping out of college is one of
many red flags concerning her association with her company. Seeing as she has no substantial
training in the medical field (only two years of undergrad study in chemical engineering), many
skeptics rightfully questioned her technical ability to reshape an entire industry on such little
academia. The ignorant majority, however, were more swept away with how she was shaping
out to be the next “Steve Jobs” of Silicon Valley. She was a young college dropout with big
dreams. And much like Steve Jobs, her company boomed exponentially.
Theranos was launched just a few years after she left Stanford, inspired by her own fear of
needles. And in 2013, Theranos had its first big break, with a lucrative partnership with
Walgreens. In 2014, the company had raised $400 million. As she grew into her role as the next
kingpin of Silicon Valley, she charmed tech titans like George Schultz (Secretary of State and
Treasury), Rupert Murdoch (the owner of News Corp), and Tim Draper (who helped fund T esla,
Skype, and SpaceX) with her quirky mannerisms. She spoke with a deep voice. [ Audio clip of
her speaking ] She had a Siberian husky who she convinced her employees was a trained wolf.
She dressed in all black turtlenecks and smart pantsuits. She was a staunch vegan, and she
wrote cringy poetry to her husband. The internet ate up her disjointed, Zuckerberg-like
mannerisms, as did her investors. Little did they know, her quirks were just that; ploys to draw
attention and garner funds for her fraudulent project.
This project, the love child and face brand of Theranos, was fondly named the Edison.
[ Transition Music - Plucky Music ]
The Edison. The device itself looks very similar to a PC desktop or a gaming console. It has a
black matte exterior, with a touch screen roughly the size of someone’s hand. From the outside,
the exterior is woefully unassuming and looks kind of dated, for the $724 million raised in
production (placing its value at well over $10 billion).
But for its humble appearances, The Edison was supposed to revolutionize the medical industry.
Holmes promised that with the Edison, blood draws from veins would be a thing of the past.
Instead, patients would simply need to prick their finger to extract a single droplet of blood,
which would then be placed in The Edison and tested for immunoassays: in simple terms, more
than 240 different substances, cancer markings, and antibodies could be leveled and quantified,
from cancer to chlamydia to cocaine. This would be a life-changer for trypanophobes (those
who fear needles, for my vocab buffs out there), small children who can’t sit still for a blood
drawing, and elderly individuals or cancer patients whose veins may be near impossible for
nurses to find. Sounds too good to be true, right?
That’s because it is.
[ Transition Music - Dramatic Music ]
While Elizabeth Holmes was sweeping the nation with her low timbre and wide, unblinking gaze,
another major player in the Holmes scandal was sweeping the underbelly of Theranos for
whistleblowers. His name? John Carreyrou, a Wall Street Journal investigative reporter. Before
breaking the Theranos scandal, Carreyrou was reporting on French politics and business in
Paris, before moving to New York in 2008 to report on health and science. With two Pulitzer
Prizes under his belt, Carreyrou was primed and ready to take on the titan that Theranos was
growing to become.
What started as preliminary reviews of whistleblowing emails and off-handed interviews of
former Theranos employees quickly became the makings of an explosive article calling
Theranos out on fraudulent data collection methods.
As Carreyrou’s investigation indicated, Theranos had been conducting their preliminary tests
with the Edison using traditional vials of blood as any other lab would, not the pricks of blood
they had claimed to use prior. The Wall Street Journal was proposing a bold claim: the Edison
was faulty, Holmes was a fraudster, and Theranos was in hot water.
Carreyrou’s preliminary article dredged up a staggering amount of concerning data. A
whistleblower exposed that of Theranos’ preliminary testing stage, only 15 tests were actually
run on the Edison. When these results came back faulty, scientists were instructed to falsify data
by running tests on other machines and reporting them as if the data had been collected from
Edison machines. This led to 190 additional tests being run on traditional blood drawing
machines, using blood drawn from a patients’ arm, not their finger. This, paired with the fact that
the tests often came back inconclusive due to a dilution of patients’ blood, made the Edison
worthless in official medical settings.
Carreyrou’s claims were originally denied by Holmes, who said the article was “erroneous”. One day later, however, she immediately halts all blood testing and draws herself from the public
eye. As they say, actions speak louder than words. And in this case, Holmes’ actions were the
smoking gun to her guilt.
[ Transition Music - Dramatic Music ]
Carreyrou’s article is a cannonball to Theranos’ hull, and it’s not long after that the ship begins
to sink. Holmes begins losing partnerships left and right, including the deal she previously struck
with Walgreens. Labs begin to turn Holmes and Balwani away, and investors sue. 340
employees are laid off. It’s a multimillion dollar disaster; literally, multimillion, when Walgreens
sues Theranos for $140 million and Partner Fund Management sues for $96.1 million. Alex
Gibney releases “The Inventor” on HBO, a documentary about Theranos’ fraudulent downfall.
It’s a worst case scenario, for Holmes and her cofounder Balwani. The two were floundering in
the water, with nothing to do but watch as their company went under. Holmes attempted to salvage what was left of Theranos by releasing the miniLab, a blatant rebrand of the Edison, but
was naturally met with criticism. The project was a complete flop.
Theranos’ final moment fittingly ends with a federal court case that catches the nation by storm.
Holmes and Balwani are both charged with wire fraud, purported to have developed Theranos
to enact a multi-million dollar scheme with the express goal of scamming investors. On four
counts of fraud, Holmes scheduled to be released in August of 2032 from Federal Prison Camp
Bryan in Bryan, Texas.
From the awkward high school science nerd to the million dollar genius to the convicted felon,
Holmes’ life is a roadmap detailing where greed and deception can land you. What once started
as an earnest goal to put an end to blood tests ended as a billion dollar scheme and a web of
falsified medical data. It’s debatable if the Edison would have ever worked, and yet many of the
very same tech titans who argued for Theranos still hold fast today, saying that Holmes’ product
was just a work in progress and that her fate was undeserving. What do you think? Does her
punishment fit her crime?
Thanks for listening in. This has been the downfall of Theranos. Tune in next week to hear more
about scandals in the medical world.
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