Meet the investigative journalist who pulled back the curtain on Silicon Valley’s Theranos fraud

Wall Street Journal reporter John Carreyrou discusses his new book — Bad Blood; a three-year chronicle of Elizabeth Holmes’s tech charlatanism

(Original illustration for The Six Fifty by Kaz Palladino/Awkward Affections)

Elizabeth Holmes had all the trappings of a successful startup entrepreneur.

At age 9, she claimed she’d rather be a billionaire than be president, suggesting that the former holds more power. At 19, she dropped out of Stanford University, armed with nothing but a ceaseless ambition and a quixotic mission: to revolutionize the medical field by creating portable, prickless blood-testing technology. As the 31-year-old CEO of Theranos, Holmes convinced investors and reporters she would do just that.

Theranos technology was poised to roll out nationally in Walgreens stores, having racked up $900 million from investors like Rupert Murdoch, Larry Ellison and Betsy DeVos. Big shots like James Mattis and Henry Kissinger sat on the company’s board. Even former Vice President Joe Biden gave Theranos praise upon visiting its Newark, CA, laboratory in 2015.

Holmes, armed with hypnotic blue eyes and a persuasively baritone voice, was the architect of it all — the intoxicating female founder America wanted to believe in.

And then came along John Carreyrou.

A reporter for the Wall Street Journal, Carreyrou was hungry for a story when a medically savvy blogger suggested he investigate Theranos. Something about the technology just didn’t add up.

Carreyrou proceeded to uncover one of the biggest corporate frauds in U.S. history. Theranos had no working technology. It had lied about the efficacy of its product, and in so doing, deceived its investors and partners. If not caught, the company would have put hundreds of thousands of patients at risk of misdiagnosis.

In his new book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, Carreyrou recounts the extent of Theranos’ wrongdoing, which resulted in Securities and Exchange Commission penalties and an ongoing criminal investigation.

We caught up with Carreyrou this week to hear more about his reporting process, the story’s impact and, of course, Holmes’ downfall.

Wall Street Journal investigative reporter John Carreyrou. (Image by Michael Lionstar via Knopf Publishing)

Have you heard anything from the Theranos staff since the book was released?

I’ve heard from a lot of ex-employees who say they love it. I’ve not heard from Theranos officially.

I certainly tried to reach out to Elizabeth Holmes on numerous occasions for my initial reporting and for the book. I emailed her as recently as three weeks ago because we ran an excerpt from the book in The Wall Street Journal. I sent her a long and detailed message spelling out what was going to be in the article, giving her an opportunity to comment. It’s been radio silence.

If you did get the chance to speak with Holmes, what would you say to her?

Very simply, I would say, “What were you thinking?”

I’d say, “How did you think it was okay to tell those investors and the public that you had this technology and that it worked? How could you possibly rationalize that? How could you live with that?”

Holmes continuously accused your reporting of being false. Was there ever a moment in which you worried that you’d gotten things wrong?

No, because my sources were unimpeachable. The first story was in the works for nine months before we went to press.

Was I ever rattled by the scorched earth campaign that I describe in the book? Sure I was. But I never had a doubt that I was right, and that my sources were telling me the truth. And it wasn’t just what they were telling me — I had documentary evidence and emails and so on and so forth.

Tell me a little about that scorched earth campaign.

I’ve never seen anything like it. The thing that I thought was beyond the pale — more than them trying to make me and The Journal look false — was going after my sources.

I’ve been a reporter since 1994, and I’ve been doing investigative reporting for the last 10 years or so. I’m a big boy and The Journal has been around for 120 years. It’s not our first rodeo. But going after a reporter’s sources like that…

A group of doctors in Arizona had spoken to me on the record. [Theranos representatives] showed up at their offices and tried to make them sign prepared statements beyond their will…I thought that was outrageous.

Carreyrou’s book is the culmination of three years of reporting on Holmes and Theranos. (Image via Knopf Publishing)

And you write in the book that you suspect you were being followed at one point.

I don’t know for a fact that I was followed, but Tyler Shultz and Erika Cheung [two key sources] were definitely followed. We know that beyond a reasonable doubt.

Though the first story was published in Oct. 2015, all the denials remind me of today’s cries of “fake news.” The attacks on your character feel reminiscent of President Trump’s rhetoric.

Yeah, people who have read the book have tweeted and commented to me about this.

It’s true that when my first story came out, Theranos outright denied it in press release after press release. And Holmes came to [The Wall Street Journal’s] technology conference, publicly uttering one bald-faced lie after another. It was like the truth didn’t matter; it was just an inconvenient detail. Certainly there are echoes of that with the Trump administration.

Do you think that the fraud would have continued had it not been for your reporting?

Absolutely. I mean, Theranos was on the cusp of rolling out nationally in Walgreens, which is a chain of more than 8,000. Walgreens hadn’t done any due diligence. There was no sign that they would have ever done due diligence. So Theranos had already gotten past that barrier, and there was nothing to stop them from continuing to expand.

Do I think it would have gone on undiscovered for a long time? No. So many people would have received questionable test results that either another reporter or an investigator would have come upon this relatively soon after.

Still, it’s safe to say that some people might have gotten misdiagnosed and hurt.

In the last chapter of the book, I write that the chances of serious injury — or perhaps even death — would have risen sharply had Theranos rolled out nationally.

What was it about Theranos that made so many media organizations — Fortune, Forbes, USA Today, Fast Company, Time, NPR, CNN, even, initially, The Wall Street Journal — willing to believe the narrative of success?

One factor was that there was a yearning in Silicon Valley, and American society at large, to see a woman break through. In Elizabeth Holmes, the Valley had its first female founder who had become so successful that she — like Zuckerberg and Jobs and Gates — was a billionaire.

Another part of it is that Holmes is incredibly smart. She committed fraud and she deviously manipulated people, but this is not an idiot spewing nonsense. This is someone who is physically attractive and incredibly smart saying things that made sense, wowing people with a vision that was both hopeful and attainable.

In start-up culture, personality traits like confidence, ambition and vision can get an inordinate amount of media attention. What does this story say about the danger in idolizing entrepreneurs? Do you think we’ll see any changes in the way we view the stereotypical Silicon Valley CEO going forward?

I hope so. I really hope so. You know, I get feedback that a lot of people in the Valley do see it as a cautionary tale, but then you have a guy like Tim Draper [a famously outspoken venture capitalist] who’s still going on TV and putting the blame on me, refusing to acknowledge that Elizabeth did anything wrong. He epitomizes everything that’s wrong with Silicon Valley.

There’s a lot of tech innovation and boldness, and lionizing start-up founders is fine, but it shouldn’t excuse criminal wrongdoing. It shouldn’t excuse frauding the investors. It certainly shouldn’t excuse putting patients in harm’s way or gambling with people’s lives.

You’ve dedicated three years of your life to chasing this story. When will it be over?

I’m expecting two big shoes to fall in the next few months.

One is the liquidation of the company. The staff at Theranos is down to about 25 people. Holmes laid off 100 people a month ago. That day, in an email to investors, she said that they are on track to go below 3 million in cash by the end of July. At that point, Fortress Investment Group, the private equity firm that loaned them money last year, would seize the assets. Fortress already has the patent portfolio because that was the collateral that came in exchange for extending the loan. So it’s very likely that the company will cease to exist by the end of July or early August.

The other thing that bears watching is that, in addition to the Securities and Exchange Commission investigation, there’s a criminal investigation led by the U.S. Attorney’s office in San Francisco. That’s been going on for more than two years, and I have multiple sources telling me that that investigation is very advanced. I don’t know the exact timing, but it may well result in criminal negligence charges for Holmes and Sunny Balwani [Holmes’ one-time boyfriend and longtime Theranos President.]

Before I let you go: Any word on who might play you in the movie?

Honestly, I think it’s too early to tell. They just hired Vanessa Taylor, the screenwriter who co-wrote the Shape of Water with Guillermo del Toro, to write the screenplay. If all goes well, she’ll be done by the end of the year and that might allow for production to start in 2019. Only then would they start thinking about who to cast. [Though several sources have confirmed that Jennifer Lawrence will star as Holmes.]

I’ve been joking with people that I’d like the actor that played Thor to play me because our physiques are so strikingly similar.

No, I’m joking. I don’t know. Maybe Mark Ruffalo? He’s awesome as the investigative reporter in Spotlight. Maybe he could do an encore as John Carreyrou.

This interview has been edited for length and clarity.

More author interviews from The Six Fifty:

Journalist Franklin Foer tackles Silicon Valley’s “sham populism”

Beyond the stratosphere with breakout sci-fi author Andy Weir

Remembering Silicon Valley’s trailblazing “Troublemakers”

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