It’s not that she couldn’t blink, but that she chose not to. It’s not that her voice was really that deep, but that she knew investors look for someone who speaks with authority. It’s not that she wanted to wear black turtlenecks, but that that’s how Steve Jobs dressed and that’s what she was shilling: a chance to invest in the next Apple computer. It’s not that she became what she wanted, but that she became what you wanted—you being the market, the boardroom, the wise old men, and Wall Street.
That’s the story of Elizabeth Holmes, disgraced founder of Theranos, a “private health care and life sciences company,” which, before the balloon popped, was ranked among the most valued companies in Silicon Valley, making Holmes the billionaire face of America’s high-tech future.
The trial of Elizabeth Holmes, who counted George Shultz and Henry Kissinger among her champions, opens this month in a federal courthouse in San Jose, California. Having been charged by the U.S. Attorney’s Office of the Northern District of California with 11 counts of fraud and conspiracy for engaging in “a multi-million-dollar scheme to defraud investors … doctors and patients,” Holmes faces up to 20 years in prison.
But the case is even bigger than that. The fact is that Elizabeth Holmes, who comes from a wealthy if beleaguered family—her father, Christian Rasmus Holmes IV, was a vice president at Enron—has become paradigmatic, a focus of dozens of newspaper and magazine pieces, fawning at first, scathing at last, with one great book (Bad Blood, by John Carreyrou), one good documentary (The Inventor, by Alex Gibney), and at least one future feature film, in which Jennifer Lawrence will reportedly play Holmes. (There is, in fact, a physical resemblance.)
At the core, all these stories circle a single question, which might be a central question for America itself (that’s what it means to be paradigmatic): Was Elizabeth Holmes a fraud from the start or did she begin with good intentions only to lose herself in a maze?
Holmes faces up to 20 years in prison. But the case is even bigger than that.
Her initiating insight was simple: if you want to get rich and famous, build your narrative story by finding something people hate doing and then telling them that, by using your invention, idea, or gizmo, they’ll never have to do it again. Maybe it’s flying with no legroom—I can sell you extra space! Maybe it’s calling a taxi—with my app, you’ll be able to ride in that guy’s car. Holmes started with something that she herself hated: giving blood, or, to be more specific, needles, and concocted her product from there.
Extrapolating from her own fear, she pitched it like this: What if I told you about a device, a black box small enough to fit in your den or kitchen, which, with a single drop of blood—taken not from your vein but from your finger, with a pinprick—can quickly tell your doctor everything he or she needs to know about your cholesterol, blood sugar, kidney function, et al.? It’d be like one of those home espresso machines, like a Keurig, only, instead of getting you going in the morning, it would possibly save your life, or the life of a loved one.
She started selling this dream in 2003, while still at Stanford—she dropped out during her sophomore year—that is, before she’d built the machine, or even knew if such a machine could be built. Then, as the scientists and engineers she hired worked under the simple command Build it!, she traveled the world, meeting bigwigs and financiers, soliciting investments, and offering invitations to her corporate board to the sort of grandees—Jim Mattis, David Boies—that would set other investors at ease.
By 2013, she’d formed a partnership with the pharmacy Walgreens, which, she promised, would install her machines, called Edisons. A doctor would write an order for a blood test. Then, instead of going to a lab, such as Quest, where they’d jab a needle and draw vial after vial of blood, patients would go to Walgreens, hold out their index finger for a prick, shop for Pop-Tarts and licorice and whatnot, then return to grab the results, which would have already been sent to the physician.
Holmes had a partner. His name was Ramesh Balwani, but everyone called him “Sunny.” Though nearly two decades older than Holmes, Balwani, who has also been indicted and will also stand trial, was Elizabeth’s partner, in romance as well as in business. Holmes was 19 when she founded Theranos; Sunny, a Silicon Valley veteran, was in his late 30s. Holmes met Balwani when she was still at Stanford; he joined Theranos after Holmes founded the company.
Court filings suggest the defense will say Balwani was abusive toward Holmes, and argue that he used the disparities in age and wealth to intimidate and control her, making Holmes less a participant in fraud than an early victim.
From the start, Theranos was valued not for its accomplishments but its potential—everyone has to give blood; no one likes it. Also for the charisma of its founder, who, though uneducated in a highly technical field, dazzled old guys like Kissinger. He published an essay about her in Time—“Elizabeth accepted only one option: making a difference,” Kissinger wrote. “Striking, somewhat ethereal, iron-willed, she is on the verge of achieving her vision—through a new method of blood testing that significantly reduces costs, tests for a whole range of infections and is mobile and can therefore be easily transported to underdeveloped regions.”
Was Elizabeth Holmes a fraud from the start or did she begin with good intentions only to lose herself in a maze?
And she’d do it all with her large, unblinking blue eyes; deep, throaty voice; pristine white lab coat; black turtleneck; medical jargon; and shiny blond hair. It was the way she told a story, too, for what is a company like Theranos if not a kind of fairy tale?
She studded her pitch with generic Silicon Valley terms such as “disruption” and “revolution.” By 2014, Theranos, which had grown to nearly 1,000 employees, was valued at $9 billion. Holmes was everywhere—in The New Yorker, where she was profiled by Ken Auletta (“Blood Simpler: One Woman’s Drive to Upend Medical Testing”), in Fortune, and on the cover of Forbes, seated beside then vice president Joe Biden at a roundtable discussion in Newark, California.
It was the hottest start-up in the world, and it was all bullshit. When flares of alarm were sent up from the company’s lower ranks, with the engineers still trying and failing to build the thing, Holmes ignored them or fired the naysayers, then threatened legal action if anyone spilled the beans.
By the fall of 2015, patients and doctors were beginning to complain of faulty blood-test results. If Uber is on the fritz, you wind up on the side of the road; if Theranos is on the fritz, you could wind up in the emergency room.
That’s when The Wall Street Journal’s John Carreyrou first broke the true story of Elizabeth Holmes, whose accomplishment was not in the field of medicine but in the field of fraud—fraud on such a scale that she has leapt into the annals of great American cons. Holmes is like Bernie Madoff, only hers was an intellectual Ponzi scheme, wherein the founder keeps raising money to delay investors until the moment her machine will finally do what she says it’s been doing all along.
The Food and Drug Administration followed Carreyrou’s multi-part series with its own damning report, at which point partners began dropping out. A $350 million deal with Safeway fell through, and board members and backers began to flee.
When it goes down, it goes down fast. The Securities and Exchange Commission accused Theranos of “raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.” Holmes was issued civil charges in March 2018. She was criminally charged in June 2018.
After much coronavirus and procedural delay, jury selection for the case finally began on Tuesday. The challenge in choosing a jury for such a case—the defendant has been portrayed in dozens of articles, a best-selling book, and an HBO documentary, becoming a stand for the sins of the age—is finding 17 citizens (12 jurors, five alternates) who either don’t know about Holmes or have formed no serious opinion, and thus can be trusted to make an impartial decision. Prosecutors and defense attorneys presented potential jurors with the sort of long questionnaire you usually toss out with the junk mail; a large portion of the pool was thereby dismissed before serious selection even began. We are now down to the nitty gritty and will soon have, as envisioned by the founders and old English law, a jury, not of perfect people but of people just like the rest us, minus the social media, breaking news, and Schadenfreude addiction.
The trial is scheduled to begin with opening statements on September 8. The courtroom will be closed to spectators and every variety of reporter and camera. There will be no live feed and no Zoom. But transcripts will be released and combed for meaning. The details of the crime are less at issue—we sort of know what happened—than the nature of the criminal, which, if revealed, promises to shed light on the nature of the modern economy and nation.
Who is Elizabeth Holmes—where did she come from, what was she thinking, what does she want, and what does it mean?—that’s what we want to know now.
Rich Cohen is a Writer at Large for Air Mail and the author of numerous books, including Pee Wees: Confessions of a Hockey Parent