Erika Cheung: Blowing the Whistle on Theranos | Inspirefest 2019 — Transcript

Full transcript

1. 0:02So I wanted to get a sense: how many of you guys have heard of Theranos and
2. 0:07the story of it? OK, quite a few of you, alright. Well I wanted to give a bit of
3. 0:12background and kind of take you guys back in time about the story before we
4. 0:18do the Q&A session. So, Theranos. Theranos was a medical diagnostic
5. 0:24company and their mission was to redefine diagnosis and they were doing
6. 0:30this with this new revolutionary technology where you were able to take
7. 0:35one drop of blood, one drop of blood to run all your blood tests. And so how they
8. 0:40did this was with a finger stick. So instead of putting a big scary needle
9. 0:45into your arm, you just need a finger poke. And that finger poke would place
10. 0:51all your blood in these tiny containers called nanotainers, which then would be
11. 0:57inserted into the Theranos devices. And these devices were about the size of a
12. 1:03printer so eventually you would be able to have a Theranos device in your
13. 1:08own home. No longer did you need to go to the doctor or the hospital to get your
14. 1:13lab work done. So the most exciting portion of Theranos, at least for me,
15. 1:20was the fact that it was very cheap. You knew exactly how much it was gonna cost
16. 1:27you when you wanted to get your blood tests done and for many people, at least
17. 1:32in the United States, they wouldn't even need to have health insurance in order
18. 1:36to pay for these tests. And so for me being a starry-eyed
19. 1:42very idealistic recent graduate from UC Berkeley this mission had really hit
20. 1:49close to home for me. So my background: I grew up in a trailer – or I think you guys
21. 1:55call them caravans – and there are many false assumptions that people
22. 2:01make about people who live in trailer parks. But there is one really strong
23. 2:06reality amongst the American working class and that reality is
24. 2:12healthcare costs are too damn high (to plagiarise a politician that never was)
25. 2:20and the consequence of healthcare costs being so high in the US is that many
26. 2:28people will not go to the doctor when they start seeing symptoms. And I had had
27. 2:34my friends, my family, my neighbours and even myself just choosing
28. 2:39not to go to the doctor because we were scared of how much it was going to cost
29. 2:44us. And what would end up happening is a very minor condition would end up
30. 2:52turning into a very major disease and diagnosis like cirrhosis of the liver or
31. 2:58stage four cancer. So this was an exciting opportunity for me. Working at
32. 3:04Theranos was really my opportunity to fulfil a personal mission of mine which
33. 3:09was to alleviate patient suffering. Finally, I could be of service to my
34. 3:14friends, my family in the community that I cared about and loved so much, and I could do
35. 3:19this by alleviating their pains financially and physically and
36. 3:25psychologically. And, in addition to that, the company was backed by a really
37. 3:31charismatic female entrepreneur. Elizabeth Holmes had graduated – or, she
38. 3:38dropped out of Stanford at age 19 to start this company. She had raised $700m
39. 3:44and her valuation for the company was $9bn to $10bn.
40. 3:49She had eccentric qualities, like she
41. 3:55would wear the same black turtleneck every day and she was vegan. She was all
42. 4:01the characteristics that we loved in the Silicon Valley, and the love for Elizabeth Holmes
43. 4:07didn't stop there. She also managed to onboard a really prolific team of
44. 4:14politicians to be on her board: Henry Kissinger, George Shultz and James Mattis.
45. 4:20And her investors included Betsy DeVos, Rupert Murdoch and Tim Draper.
46. 4:26So aside from being a part of the
47. 4:30American elite, the one thread that all these backers had amongst them was none
48. 4:37of them had extensive expertise in biotechnology or healthcare.
49. 4:45The media also adored Elizabeth Holmes. She was on the cover of Forbes and Fortune magazine
50. 4:52and she was allotted as being the next Steve Jobs – but the next Steve Jobs of
51. 4:58the most benevolent of industries, healthcare. And really Elizabeth Holmes
52. 5:05was finally a female entrepreneur in a male-dominated Silicon Valley, who was a
53. 5:12part of the most exclusive community: the unicorn club. So what was the problem here?
54. 5:19Well the problem was that the technology didn't work. The Theranos
55. 5:26devices were nothing more than wishful thinking, and the processes and
56. 5:32procedures that we had in place were full of errors and problems. And the
57. 5:39worst part of it was they were still testing on patients. To give you an
58. 5:45example of these errors, there was one time I was running a patient and I was
59. 5:49testing to check what their thyroid status was. Initially I got a high
60. 5:54concentration which is indicative of hyperthyroidism. I ran it again and it
61. 6:00was low, it would be indicative of hypothyroidism. And I ran the sample
62. 6:05one more time and it was normal. So here I had one patient, three diagnoses,
63. 6:12three apparently different sizes of their thyroid and three radically different treatments.
64. 6:18This is just one case example of the types of errors and
65. 6:25problems that we were seeing with medical tests at Theranos. And when I
66. 6:32explained the environment of Theranos to people I really relayed it as
67. 6:37the Wild Wild West of blood diagnostics. And what they were
68. 6:42doing was essentially experimenting on patients without their knowledge and
69. 6:47consent, and making them believe that they were going to a well-vetted doctor.
70. 6:54Being concerned while I worked for the company, I had approached the COO of
71. 7:00the company, Sunny Balwani, and I said: 'Look, we're seeing tons of issues with
72. 7:05the patient results, with the medical devices and our processes.
73. 7:10I think we need to pay attention to this and stop processing patient samples.'
74. 7:15His response to me was: 'What makes you think you're qualified to say that?
75. 7:22You need to do the job I'm paying you to do and process patient samples.'
76. 7:28After this conversation, I quit the very next day and I had only
77. 7:32lasted seven months at Theranos. Before this, I really wanted to give Sunny and
78. 7:41Elizabeth the benefit of the doubt. I really thought that perhaps they didn't
79. 7:45know what was going on internally within the company. But it became clear to me
80. 7:50after that conversation that they just didn't care. It didn't matter how much
81. 7:55evidence and how many red flags were popping up and telling them that they
82. 7:59needed to stop, they were gonna continue to process patient samples regardless.
83. 8:05At this point I was heartbroken but I was lucky that I was approached by a
84. 8:11Wall Street Journal reporter, John Carreyrou, and he had heard from other people
85. 8:16in the industry and other employees that there were scandalous activities and
86. 8:22potentially fraudulent activities going on within Theranos. He was
87. 8:28conducting an investigative report but, before it came out, Theranos went on a
88. 8:34witch hunt. They decided to lawyer up with one of the top corporate lawyers in
89. 8:40the United States and come after a whole bunch of prior employees. And the
90. 8:47concerning thing about this letter isn't so much that it was threatening to sue
91. 8:51me and that they were coming after me, and trying to
92. 8:53get me to implicate other workers within the company. The concerning part was the
93. 8:58address. I had just moved apartments and I was staying with a colleague of mine
94. 9:03and on this letter that they delivered to me was my colleague's address.
95. 9:08At this point I knew that not only were they coming after me legally but they
96. 9:13were physically following me. So, freaked out, I called a lawyer and it's actually
97. 9:21pretty funny, after I'd gotten off the phone with a lawyer I had driven to
98. 9:26San Francisco immediately to go into the regulators office – the Centers for
99. 9:31Medicaid and Medicare Services – to just spill everything to them but honestly I
100. 9:37was so scared that I was being followed I kind of just paced the streets of San Francisco
101. 9:42crying and was really confused on what I should do. So instead I bought
102. 9:49a burner phone, I called CMS on the phone and I was able to send them an email.
103. 9:54This email had luckily spurred an investigation, and that investigation
104. 10:01finally revealed the truth that Theranos was in fact putting patients' lives at risk.
105. 10:06They shut down their clinical lab, so they were no longer able
106. 10:12to process patient samples any more and they had to reimburse the hundreds of
107. 10:16thousands of patients that had received their blood testing. Now, Sonny and Elizabeth
108. 10:24have faced numerous legal charges against them from class-action
109. 10:30lawsuits to CMS to investor lawsuits, and the biggest one that is outstanding at
110. 10:38the moment is criminal charges posted by the FBI. That has a current
111. 10:45pending trial date. Through this, though I'm here and very well
112. 10:52at Inspirefest and happy to be here, this experience was filled with an
113. 10:58immense amount of fear and anxiety and self-doubt. And I wasn't always sure
114. 11:05about what the right thing to do was. But I think the one anchor that made it a
115. 11:12bit easier was the reason why I decided to join Theranos in the first place.
116. 11:18This guiding principle and guiding mission that had driven me to want to
117. 11:24work for the company was also the one that was able to pull me out of all the
118. 11:30chaos and madness, and get the clarity on what were the right steps to do the
119. 11:36right thing. Fast forward several years later and
120. 11:41I had moved to Hong Kong and I was a programme director for a technology
121. 11:46accelerator called Betatron. We invest in early-stage tech companies, and
122. 11:50we give them the training and resources to be able to scale and grow their
123. 11:55companies all throughout Asia. What I noticed is that we're very good about
124. 12:01teaching start-ups and tech workers about how to build their products, how to scale
125. 12:06them, how to iterate on an MVP, but we never talk about the shadow side of
126. 12:11running and operating a start-up. And, really, we don't have a lot of good
127. 12:19resources to know what to do when we face ethical dilemmas in these
128. 12:24environments that are very fast-paced, very stressful and very challenging,
129. 12:31and often about survival. What is out there to make sure that companies, tech
130. 12:38workers and the start-up community can prepare themselves when they approach
131. 12:43these ethical challenges? This was a leading question that prompted myself,
132. 12:50Tyler and my founding team to start Ethics in Entrepreneurship. It's a
133. 12:54non-profit where we are trying to explore what are the frameworks, resources and
134. 13:00people that we can integrate into the start-up community to make sure that when
135. 13:05they face ethical dilemmas they'll have the resources to know what to do.
136. 13:11Hopefully, Ethics in Entrepreneurship can become as common nomenclature as
137. 13:15'lean start-up' or 'blitzscaling'
138. 13:18and all these other words that we use to develop these companies.
139. 13:21And I wanted to leave you all with a quote that was very powerful for me
140. 13:30and was actually given to me from an engineer who went through Juicero.
141. 13:37It says: 'Just because our temple has been desecrated, it should not allow us to be
142. 13:43shaken from our faith.' At the end of the day for me, doing something that made an
143. 13:49impact and that served patients – I was willing to stand up for that, whatever it
144. 13:54took. So now I want to question all of you: what are you willing to stand up for?
145. 14:01And with that, I hope together all of us in this room can grow and build
146. 14:09innovations, projects and companies that not only empower ourselves and society and,
147. 14:16in my case, alleviate the suffering that we see in the world. Thank you.