Elizabeth Holmes seems to know about as much about medical science as I do. When asked how her supposedly miraculous blood testing machine actually worked, her reply was, and I swear I’m not making this up, “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.”
She also seems to have been the kind of boss who makes working at Monty Burns’s nuclear power plant sound like a good option. One of her employees wrote an email saying that Holmes ran her company Theranos “through fear and intimidation,” and that this not only made the company a miserable place to work but also made it impossible for the company to do what it was supposed to. It was the kind of work environment, the employee wrote, “where people hide things out of fear.”
And that’s what they said in an email to her. I’d encourage you to imagine what the workers said to each other, but Holmes seems to have ruthlessly prevented cross-departmental employee communication. There may never have been any scenario where she delivered on the outlandish promises she made for her machine, which she said would be able to take a single prick of blood and instantly process it for a thousand different codes. But Theranos might have been able to make some advances in blood testing if it had been the kind of workplace where engineers and chemists could talk to each other, and where people who brought up problems weren’t marched out of the building.
The maximum number of blood testing codes the machine actually managed to process was twelve. And the results were wrong more often than right. When Theranos “demonstrated” the technology it used competitor’s products for the actual analysis, and when it did use Theranos technology the machine often spit out terrifying (and completely inaccurate) results.
Still, whatever Holmes’s many failings as a medical researcher, a boss, an explainer of chemistry, and a human being, there was at least one thing she did very well. In the domain of talking rich people out of their money, she may actually be one of the world’s greatest geniuses.
Selling the Brand
My favorite piece of Theranos trivia is that Holmes, who micromanaged every detail of the company’s operations, mandated that the temperature in the office be kept in the mid-60s, because otherwise she’d be too hot in her “preferred daily uniform of a black turtleneck and a puffy black vest,” an outfit she wore to evoke a female Steve Jobs. Similarly, while she doesn’t seem to have lost much sleep over what was inside of her blood testing machine, it was important to her that the outside look sleek and modern, with an interface like the touchscreen of an iPhone.
When Holmes talked to investors about “changing the world,” her deep voice and oddly unblinking stare were no less important than her knockoff Steve Jobs uniform and the attractive exterior of her largely worthless project. Like the rest of the venture capitalists throwing money at dubious projects throughout Silicon Valley, her investors were worried about missing the next big thing. They responded to the feel of something big and revolutionary coming down the pipe.
There’s an important and underappreciated point lurking here about the relationship between innovation and economic inequality. If Holmes had been forced to get all of her money from research grants provided by state institutions, or even loans from regular private banks, a number of people would have been tasked with independently examining the evidence for her extravagant claims. Some of these people, one hopes, would have had relevant expertise. At the very least, a few might have asked obvious follow-up questions about how it all worked and why Theranos wasn’t allowing third-party verification of its claims.
Rich investors, however, are under no obligation to verify outlandish assertions. If a black-turtleneck-wearing con-woman is sufficiently spellbinding, they don’t need to justify themselves to anyone before they cut a check.
Despite Holmes’s scientific illiteracy, it’s hard to overstate the effectiveness of her pitch. The Walton family was massively invested in Theranos. Joe Biden visited the lab when he was vice president. Both Clintons were chummy with Holmes until a shockingly late stage in the scandal. Multiple former generals and former cabinet secretaries served on Holmes’s board.
One of those former cabinet secretaries in particular seems to have played a pivotal role. More than half of Theranos’s $700 million in investor money came from the Waltons and three other ultra-wealthy families — the Coxes, the Oppenheimers, and the DeVoses. All four families were sold on the project by estate lawyer Daniel Mosley and his employer Henry Kissinger.
“Dr. Kissinger has mentioned,” Mosley wrote in a 2014 email introduced as evidence in Holmes’s trial, “a couple of other families with whom he has had a very long relationship as possible candidates for investors.” As it turned out, the ripple effects of whatever Holmes whispered in the old war criminal’s ear ended up accounting for more than three-fifths of the money she raised overall.
Estimates of Kissinger’s personal net worth range wildly, but the lowest I could find was $10 million and the highest was $50 million. That range makes him a pauper compared to the likes of the Waltons, but even so he invested $3 million of his own money in Theranos. Mosley put in another $6 million.
The Waltons, Coxes, Oppenheimers, and DeVoses collectively added another $370 million. Bloomberg reports that $50 million more came from two friends of Kissinger and a wealthy Greek investor named Andreas Dracopoulos who consulted with Mosley before sinking his own millions into Theranos.
Sympathy for the Devil?
All of these people are very upset now. It’s not hard to understand why.
Holmes was living high on their money even as she and her equally clueless business partner Ramesh “Sunny” Balwani — who knew so little about how his product was supposed to work that “employees had fun trying to sneak a fictitious scientific terms into a presentation, which Sunny dutifully repeated to the quiet amusement of his subordinates” — cheerfully lied about Theranos’s progress. Her office was modeled in imitation of the Oval Office. Her phalanx security guards were instructed to refer to her for “security reasons” as “Eagle 1” as she was rushed to the airport to “fly alone on a $6.5 million Gulfstream G150.” (Balwani was “Eagle 2.”)
Meanwhile, Mosley has told Holmes’s jury, he was “thoroughly” digesting “everything he could get his hands on: shareholder agreements, reports purporting to be from pharmaceutical companies that verified Theranos blood testing technology and every shred of material Holmes sent him about her company, along with news stories.”
Prosecutors called him to testify contra Holmes’s lawyers’ contention that Mosley and the rest of the investors “were sophisticated enough to understand what they were getting into.” I can just imagine Mosley, Kissinger, or some wretched Walton child crying out in anguish on the witness stand, “No, of course I’m not sophisticated enough to know what I’m doing! Can’t you tell I’m a credulous rube?”
Twenty years ago, the late Christopher Hitchens wrote a book called The Trial of Henry Kissinger. (Sadly, in the intervening decades, Kissinger has not actually had to stand trial for crimes ranging from his role in the coup against Salvador Allende to the infamous instructions he discussed with Richard Nixon and relayed to the Pentagon during the secret bombing of Cambodia: “Anything that flies on anything that moves.”) There’s a line in the introduction that’s always stuck with me.
Yet the pudgy man standing in black tie at the Vogue party is not, surely, the man who ordered and sanctioned the destruction of civilian populations, the assassination of inconvenient politicians, the kidnapping and disappearance of soldiers and clerics and journalists who got in his way? Oh, but he is. It’s exactly the same man.
The very existence of Theranos might be an indictment of our economic system. And Lord knows the money Holmes managed to separate from these ghouls could have been spent on vastly more socially beneficial purposes. Even so, as I read about their anguish over their squandered millions, I can’t help but feeling just a little bit sorry that she was exposed before they could squander even more.