“When I was introduced to Elizabeth by George Shultz, her plan sounded like an undergraduate’s dream. I told her she had only two prospects: total failure or vast success. There would be no middle ground.”
Former U.S. Secretary of State Henry A. Kissinger wrote those prescient words in a 2015 Time magazine tribute to then 31-year-old Elizabeth Holmes, the founder and CEO of the multi-billion dollar healthcare company, Theranos. She was heralded as a “Titan” on Time magazine’s list of the “100 Most Influential People of 2015,” and Kissinger was her champion.
Henry Kissinger and former U.S. Secretary of State George Shultz joined a roster of distinguished, politically connected high rollers, including future U.S. Secretary of Defense James Mattis, on the Theranos Board of Directors. Although Elizabeth Holmes’ Silicon Valley success inspired female entrepreneurs and healthcare professionals the world over, no women or medical professionals sat on her company’s Board of Directors.
Just two years later, the bad practices and false promises of her shady enterprise were exposed by a Wall Street Journal investigative reporter and a few brave company whistle-blowers. Holmes’ investors, whom she charmed out of millions of dollars, lost sizable fortunes. And her staffers (at her company’s peak, some 800 strong) had to reclaim what was left of their professional credibility after being strong-armed into silence (and suicide in one case) by Theranos’ cutthroat legal team.
By 2018, when her $9 billion company was worth less than zero, Elizabeth Holmes and her COO and former investor boyfriend, Ramesh “Sunny” Balwani, were indicted by the federal government for conspiracy to commit fraud.
In his new feature-length documentary, The Inventor: Out for Blood in Silicon Valley debuting tonight on HBO, Oscar® and Emmy® Award-winning filmmaker Alex Gibney explores the “psychology of fraud” by tracing Elizabeth Holmes’ meteoric rise from a 19-year-old Stanford dropout and Steve Jobs wannabe to savvy inventor and marketer of what she touted as a groundbreaking blood-testing device that could run hundreds of tests from a single finger stick.
“You’re just too good to be true, can’t take my eyes off of you.”–Frankie Valli and The Four Seasons.
That refrain could easily have been used to describe the startling allure of Elizabeth Holmes. Her Spartan black, turtle-neck wardrobe mirrored the sartorial signature of her idol, Steve Jobs. Her progressively deepening baritone voice and huge, unblinking blue eyes drove storied men and women straight to their checkbooks.
Holmes’ childhood precociousness, fascination with invention and entrepreneurial roots in the Fleischmann Yeast family gave her a step up as she turned the heads of notable professors and mentors at Stanford and beyond. She named her blood-testing machine, Edison, after her earliest role model, Thomas Alva Edison, whose expertise as a pitchman, do or die mindset and myriad trial and errors Alex Gibney recaps in a wonderful opener that features vintage Edison film clips.
If Edison worked, as Holmes promised it did, it would sideline uncomfortable blood draws that required vials of blood and several days to process. Edison would bring low-cost, quick and easy blood testing to neighborhood pharmacies like Walgreens (who bit hard), and remote locations on the battlefield. And it promised to upend the two giants monopolizing the blood-testing industry: Quest and LabCorp.
Edison and Steve Job’s example and the Silicon Valley mantra “Fake it till you make it” drove her relentless ambition to market her blood-testing machine to unquestioning investors and the masses. She became the world’s youngest self-made millionaire; a captivating feature story on all the magazine covers and news shows that mattered (Forbes, Fortune, The New Yorker, The Today Show, Charlie Rose); and she was honored with prestigious awards and endorsements from political and media movers and shakers.
Alex Gibney timelines Holmes’ rise and fall with insight gained from some key early Holmes print profilers (The New Yorker’s Ken Auletta and Forbes’ Roger Parloff) and investors and staffers who jumped on board the Theranos bandwagon as believers only to become unnerved by the paranoia, secrecy and unsound medical practices unfolding behind closed doors.
Especially noteworthy here are the personal anecdotes from the brave Theranos professionals who eventually helped to bring Elizabeth Holmes down, most notably George Shultz’s personable grandson, Tyler Schultz, and medical tech Erika Cheung, as well as investigative reporter John Carreyrou, who first broke the story in the Wall Street Journal and went on to write a book, Bad Blood (Alfred A. Knopf, 2018), about it.
The Edison sounded good on paper in the striking investment portfolios and media campaigns that pitched it (one was directed by renowned documentarian Errol Morris). But it was essentially just a story, one that Elizabeth Holmes was brilliant at telling and selling remarkably by sidelining the prestigious naysayers (professors and healthcare professionals) who said it was a bad idea and a health hazard to patients who relied upon its flawed results.
The Inventor: Out for Blood in Silicon Valley debuts on HBO tonight, Monday, March 18, 2019, 9:00 – 11:00 p.m. ET. (Check for additional play dates in your region and in the days and weeks ahead, and the film’s availability on HBO On Demand, streaming via HBO Max, and on DVD.) I also recommend sourcing ABC-TV On Demand for The Dropout, an excellent two-hour exposé about Theranos and Elizabeth Holmes that covers more of her backstory and additional witnesses. The Dropout aired on ABC-TV’s 20/20 on Friday, March 15, 2019, 9:00 – 11:00 p.m. ET.
And what of Elizabeth Holmes’ future? Will “orange be her new black”? Stay tuned!— Judith Trojan
Well done, Judi. It’s a very good read and evokes wonderment about human beings. To create something out of nothing is surely a wonderous thing. But, to create nothing out of nothing and sell it as something gives the rest of us incredible pause. What enables them to do it? Are they “the same person” except for a gene or two, or perhaps a twist in the neurological network? Could one do the work of the other? Makes you wonder; and it’s Judi that presents it so well.
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The story of Elizabeth Holmes and Theranos has been all over the business press for the past few years, but you captured the essence of the entire story in your quote from Kissinger. Kudos for clearly defining the person, the story and the reasons to catch the upcoming documentary.
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I subscribe to a few blogs. I enjoy your blog as your pieces are always interesting and succinct.
Unfortunately, in this age of the internet many bloggers type and type, they become redundant and confused in their writing. They either do not appear to care about the reader who needs to wade through their wandering mind or perhaps they’re on a blog site that pays by the word as Dickens’ was.
Now all I need to do is get HBO. 🙂
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Thank you, Pete! I truly appreciate your comments and support for FrontRowCenter!