…Elizabeth Holmes realized that she had no other choice. She finally had to address her employees at Theranos, the blood-testing start-up that she had founded as a 19-year-old Stanford dropout, which was now valued at some $9 billion. Two days earlier, a damning report published in The Wall Street Journal had alleged that the company was, in effect, a sham—that its vaunted core technology was actually faulty and that Theranos administered almost all of its blood tests using competitors’ equipment.
There was also an uncomfortable chill in the room. At Theranos, Holmes preferred that the temperature be maintained in the mid-60s, which facilitated her preferred daily uniform of a black turtleneck with a puffy black vest….
One of the only journalists who seemed unimpressed by this narrative was John Carreyrou, a recalcitrant health-care reporter from The Wall Street Journal. Carreyrou came away from The New Yorker story surprised by Theranos’s secrecy—such behavior was to be expected at a tech company but not a medical operation. Moreover, he was also struck by Holmes’s limited ability to explain how it all worked. When The New Yorker reporter asked about Theranos’s technology, she responded, somewhat cryptically, “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.”
But no scientist could credibly vouch for Theranos. Under Holmes’s direction, the secretive company had barred other scientists from writing peer-review papers on its technology.
Absent a plan, Holmes embarked on a familiar course—she doubled down on her narrative. She left the war room for her car—she is often surrounded by her security detail, which sometimes numbers as many as four men, who (for safety reasons) refer to the young C.E.O. as “Eagle 1”—and headed to the airport. (She has been known to fly alone on a $6.5 million Gulfstream G150.)
Holmes, who talks slowly and deliberately, and blinks with alarming irregularity, replied with a variation of a line from Jobs. “This is what happens when you work to change things,” she said, her long blond hair tousled, her smile amplified by red lipstick. “First they think you’re crazy, then they fight you, and then, all of a sudden, you change the world.” When Cramer asked Holmes for a terse true-or-false answer about an accusation in the article, she replied with a meandering 198-word retort.
When Elizabeth Holmes emerged on the tech scene, around 2003, she had a preternaturally good story. She was a woman.
…she approached several of her professors at Stanford, according to someone who knew Holmes back then. But most explained to the chemical-engineering major that it was virtually impossible to do so with any real efficacy. “I told her, I don’t think your idea is going to work,” Phyllis Gardner, a professor of medicine at Stanford, said to me, about Holmes’s seminal pitch for Theranos. As Gardner explained, it is impossible to get precise result from the tip of a finger for most of the tests that Theranos would claim to conduct accurately.
She took the money on the condition that she would not divulge to investors how her technology actually worked, and that she had final say and control over every aspect of her company. This surreptitiousness scared off some investors. When Google Ventures, which focuses more than 40 percent of its investments on medical technology, tried to perform due diligence on Theranos to weigh an investment, Theranos never responded.
Eventually, Google Ventures sent a venture capitalist to a Theranos Walgreens Wellness Center to take the revolutionary pinprick blood test. As the V.C. sat in a chair and had several large vials of blood drawn from his arm, far more than a pinprick, it became apparent that something was amiss with Theranos’s promise.
Later that evening, gripped and overwhelmed with worry, Ian Gibbons tried to commit suicide. He was rushed to the hospital. A week later, with his wife by his side, Ian Gibbons died.
When Rochelle called Holmes’s office to explain what had happened, the secretary was devastated and offered her sincere condolences. She told Rochelle Gibbons that she would let Holmes know immediately. But a few hours later, rather than a condolence message from Holmes, Rochelle instead received a phone call from someone at Theranos demanding that she immediately return any and all confidential Theranos property.
Holmes had a single enforcer: Sunny Balwani, the company’s president and chief operating officer, until he stepped down in May. Balwani, who had previously worked at Lotus and Microsoft, had no experience in medicine. He was hired in 2009 to focus on e-commerce. Nevertheless, he was soon put in charge of the company’s most secret medical technology.
According to a number of people with knowledge of the situation, the two had met years before he began at the company, when Holmes took a trip to China after she graduated from high school. The two eventually started dating, numerous people told me, and remained very loyal even after their relationship ended. Among Holmes’s security detail, Balwani was known as “Eagle 2.”
As Holmes started to assemble her board of directors, she chose a dozen older white men, almost none of whom had a background in anything related to health care. This included former secretary of state Henry Kissinger, former secretary of state George Shultz, former Georgia senator and chairman of the Armed Services Committee Sam Nunn, and William J. Perry, the former defense secretary. (Bill Frist, the former Senate majority leader, and former cardiovascular doctor, was an exception.) “This was a board that was better suited to decide if America should invade Iraq than vet a blood-testing company,” one person said to me. Gibbons told his wife that Holmes commanded their attention masterfully.
C.M.S. also soon discovered that some of the tests Theranos was performing were so inaccurate that they could leave patients at risk of internal bleeding, or of stroke among those prone to blood clots. The agency found that Theranos appeared to ignore erratic results from its own quality-control checks during a six-month period last year and supplied 81 patients with questionable test results.
Forbes, clearly embarrassed by its cover story, removed Holmes from its list of “America’s Richest Self-Made Women.” A year earlier, it had estimated her wealth at $4.5 billion.
“Today, Forbes is lowering our estimate of her net worth to nothing,” the editors wrote.
Holmes may not be prepared to compartmentalize what comes next. When I arrived in Palo Alto in July, I wasn’t the only person setting out to interview anyone associated with Theranos and Holmes. The Federal Bureau of Investigation was, too. When I knocked on a door, I was only a day or two behind F.B.I. agents who were trying to put together a time line of what Holmes knew and when she knew it—adding the most unpredictable twist to a story she could no longer control.