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Spilling the Blood of a Silicon Valley Unicorn | Tyler Shultz and Erika Cheung: 2019 — Transcript

by McCoy Family Center for Ethics in Society · 15,145 words · 2,422 segments · language en · Watch on YouTube

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0:06Good evening and welcome.
0:08My name is Colin Anthony and I'm the
0:10associate director for undergraduate
0:12outreach for the Center for Ethics and
0:14Society here at Stanford University.
0:17Our center aims to encourage and promote
0:20ethical reflection through not only
0:22research and scholarship in the
0:23classroom, but also through student
0:25engagement and community events such as
0:28this one this evening.
0:31In planning this event, I have had the
0:33unique privilege of working with many
0:35undergraduate university leaders on
0:38campus without whom this event would not
0:40have been possible.
0:42This includes our co-sponsors of
0:44tonight's event,
0:45the student group CS + Social Good.
0:49Founded in 2013,
0:51this group offers leadership
0:53opportunities that range from summer
0:55fellowships at the Haas Center for
0:56Public Service,
0:58and opportunities for courses where
1:00students can build projects for
1:02nonprofit organizations.
1:05In my work with CS + Social Good, I have
1:08been constantly amazed and by the
1:10passion, rigor, and commitment that
1:13undergraduates have brought to the
1:15table. And so I urge undergraduates in
1:18the audience here to reach out to me if
1:20you have an idea that that connects
1:23ethics and society that you would like
1:25to see um envisioned in society and at
1:28this university. So please reach out to
1:30our center and reach out to CS + Social
1:32Good if you have any ideas that you
1:34would like to work on and and become a
1:35reality.
1:38Before moving forward, I want to share
1:40with you the format of this evening's
1:42event.
1:43First, I will turn it over to Alexander
1:45Lamb, an undergraduate who's affiliated
1:48with the center, who's going to be
1:49giving a sort of brief overview
1:51presentation of the Theranos saga before
1:53introducing our speakers.
1:56The interview is set to conclude at 8:00
1:59p.m., after which there will be a Q&A
2:01period for 30 minutes.
2:04I will allow for specific audience
2:07members if they need to leave at 8:00
2:08p.m. to exit the auditorium during that
2:10time.
2:11At 8:00
2:12after the interview concludes, there
2:14will be microphones in each of the
2:16aisles, as well as a microphone in the
2:18balcony, and at that time I will ask you
2:20to line up for question and answers.
2:24With that said, please join me in
2:26welcoming Alexander Lamb, an
2:28undergraduate and affiliate with the
2:29Center of Ethics and Society, who will
2:31guide us through the story of Theranos
2:33and then introduce our our speakers.
2:36Alexander?
2:44Hi, good evening everyone and thank you
2:46for joining us tonight. I'm very excited
2:48to be here.
2:49I'd like to begin tonight's event with a
2:51photo.
2:53Uh one second.
2:56Four years ago, Elizabeth Holmes, the
2:58CEO and founder of Theranos, sat in this
3:01very auditorium.
3:03Here she promised to deliver technology
3:05that would revolutionize the healthcare
3:07industry in the 21st century.
3:09The idea behind her technology was
3:11simple, yet groundbreaking.
3:14With only a single prick of blood,
3:16patients could gain access to hundreds
3:18of blood test results and use them to
3:20make important medical decisions.
3:23As shown here on the cover of Forbes
3:24magazine, Elizabeth Holmes is holding
3:26what she called a nanotube of blood
3:29between her very fingers.
3:31Because of this technology's potential
3:33impact on the health of millions of
3:35people, she claimed that it was {quote}
3:37the most important thing humanity has
3:39ever built.
3:41This vision gripped the imagination of
3:43Silicon Valley and attracted influential
3:45figures to support her company,
3:47including the former US Secretary of
3:49State George Shultz, who is the
3:51grandfather of one of our guests
3:52tonight, Tyler Shultz.
3:54She also convinced investors such as
3:56Rupert Murdoch of the Fox News
3:58Corporation and the Walton family of
4:00Walmart to back her company.
4:02At its peak, Theranos was valued at over
4:05$9 billion
4:06and Elizabeth Holmes was named the
4:08world's youngest self-made female
4:10billionaire.
4:12Heralded as the next Steve Jobs, she
4:14dressed in black turtlenecks and
4:15described her technology as the iPod of
4:18healthcare.
4:19However, despite her lofty promises and
4:22celebrity status, there were deep flaws
4:24in both her technology and business
4:26practices.
4:28In her relentless pursuit of success,
4:30she manipulated lab results, deceived
4:32government inspectors, and instilled a
4:35crippling fear in her employees as she
4:37struggled to hide the fact that the
4:39technology she promised was simply not a
4:41reality.
4:43In fact, in a brazen case of deception,
4:45Elizabeth Holmes guided Joe Biden
4:48through what turned out to be a fake
4:49laboratory with staged equipment in an
4:52attempt to convince the public that her
4:54technology was ready and that she could
4:56be trusted.
4:58Her ruse had worked. In 2013, despite
5:01glaring deficiencies in Theranos's
5:03faulty technology, Elizabeth Holmes
5:05scaled out products to neighborhood
5:07Walgreens stores, where patients made
5:09serious medical decisions on the basis
5:11of dubious tests.
5:14Uh many stories emerged of people
5:17receiving diagnoses for conditions that
5:19they simply did not have, which
5:21bewildered medical professionals and
5:23frightened patients.
5:25But for the employees inside Theranos,
5:27some of them had seen enough, which
5:29brings us to the real story of tonight,
5:32the story of two courageous individuals,
5:34Erika Cheung and Tyler Shultz, who in
5:37their very first jobs after college
5:39risked their personal and professional
5:41lives to stand for what is right.
5:43As we hear and learn from their
5:45experiences this evening, they will
5:47surely serve as an important reminder to
5:49us all for what happens when myth is
5:51mistaken for reality and when values are
5:54divorced from technology.
5:56And interviewing our two guests tonight
5:58with questions from many of you in the
6:00audience will be Sasank Munukutla, an
6:02undergraduate here at Stanford and
6:04member of the student group CS + Social
6:06Good. So without further ado, please
6:08join me in welcoming Erika, Tyler, and
6:11Sasank to the stage.
6:16Well, Erika and Tyler, on behalf of the
6:18Stanford community, I would like to
6:19thank you for being here today. Um
6:21Thanks for having us. Yeah, thanks for
6:22having us. There has certainly has been
6:24a lot of excitement around campus to
6:26hear from you.
6:27Now, Alexander earlier mentioned um that
6:30Elizabeth Holmes sat here right in your
6:32chair in Cemex Auditorium not too long
6:35ago.
6:37How do you feel about that?
6:39Um considering the seat she was sitting
6:41in today, I hope the trend stops here.
6:45Yeah.
6:46Yeah.
6:47Yeah, it's it's a bit surreal, honestly.
6:49Like uh you never would have expected by
6:52joining Theranos that this is what would
6:54have happened. I never expected that,
6:57you know, I'd enter into a company that
6:59ended up being a big fraud case.
7:02So, yeah, it's a bit surreal.
7:05As a student myself and a lot of us in
7:07the audience today are students, I would
7:09like you to think back to college. What
7:11were your experiences like and what drew
7:13you to Theranos as your first real job
7:15after college?
7:18Do you want me to go with this one?
7:20Okay.
7:21Yeah, so I a little bit of background, I
7:23studied molecular and cell biology and
7:25linguistics and I was on the academic
7:29track. So I was trying
7:31to see about getting a PhD after
7:33college, but had kind of become a little
7:35disillusioned with academia and uh
7:39fell in love with like the vision of
7:41Theranos that it was like getting
7:43research that was in a lab and making it
7:45into a commercialized product.
7:47Um and was super sold on the vision,
7:51totally drank the Kool-Aid initially,
7:54uh you know, making healthcare more
7:56accessible and affordable
7:59um was kind of right up my alley and
8:02how cool would it be to work for a tech
8:04company in the Silicon Valley, right?
8:06The place to be for technology. So that
8:09kind of drew me to Theranos and also
8:11Elizabeth Holmes drew me to Theranos.
8:13From the little that I'd read on the
8:14media,
8:16um having a really strong female
8:18entrepreneur who was um
8:22basically worked very hard to start her
8:24own company
8:26uh was really appealing to me and so
8:28that's why I decided to go working with
8:30Theranos. I had other two other job
8:32opportunities actually at Stanford and
8:34UCSF, but I turned them both down to to
8:36work for Theranos, so.
8:38Yeah,
8:39so when I started working at Theranos,
8:41that was after my junior year of
8:42college, actually. So I was a junior at
8:45Stanford majoring in mechanical
8:47engineering and then I actually met
8:49Elizabeth Holmes and I totally fell in
8:52love with her vision and changed my
8:55major to biology so I could do some more
8:57chemistry and um
8:59yeah, I I was only a bio major for two
9:01quarters, but I ended up graduating
9:03graduating biology and then going to
9:04Theranos.
9:07Could you tell us more about both of
9:09your roles at Theranos? What did your
9:11work entail?
9:12Uh so I started out in protein
9:15engineering, so I was developing
9:16antibodies that would be used in the
9:18tests, but four days after I started
9:20doing that job full-time, they actually
9:21shut down all the research labs and put
9:24us all into what was called the assay
9:26validation team. Um and the reason that
9:29I was told was that that team was like
9:3120 people and then dropped down to like
9:33eight people super quickly cuz they were
9:35working, you know, through the night.
9:38Um
9:39and
9:41yeah, so then I moved into assay
9:43validation
9:44uh where our goal was really to take a
9:46test and make sure that it was safe to
9:48use, you know, on on the general public.
9:52Yeah.
9:53Uh so I started off in research and
9:55development and that's where Tyler and I
9:56actually met. So, I was on the assay
9:58validation team as well. Um and as I
10:02started working with the company, they
10:04also did the same thing where they're
10:05like, "Actually, the clinical lab needs
10:07a lot of help. So, we're going to change
10:09your job role and you're going to work
10:10in the clinical lab." So, I was in
10:12charge of taking Theranos' proprietary
10:14devices that we were validating in
10:16research and development and then
10:18integrating it into the clinical lab.
10:21And the clinical lab, just to give
10:22everyone context, is where you process
10:24patient samples. So, that's regulated by
10:27the Center of Medicare
10:28Medicare and Medicaid services. Am I
10:31saying that right? And uh and the FDA.
10:35Sure. Um I think it was nice to hear
10:37from you that, you know, you were often
10:39moved between different teams. Other
10:41people described the culture of fear at
10:42the company. Entire divisions and teams
10:45were siloed away from each other with no
10:47communication between them. I'd love to
10:49hear more about that culture of fear at
10:52Theranos and what that meant for both of
10:53you personally.
10:55Yeah, so there would be like
10:57uh like barriers up that would surround
10:59where the devices were. So, even if you
11:00were in the lab, you still couldn't see
11:02the devices. So, like I worked there for
11:043 months and didn't see a single device.
11:07Um it wasn't until I moved uh into the
11:10assay validation team that I actually
11:12saw a device for the first time. And
11:14it's kind of crazy to think that you
11:15have like most of your company working
11:17towards something that they've never
11:19even seen.
11:20Um and that's how siloed it was. Um but
11:23I remember there was one funny
11:25one funny thing that happened where like
11:26a a light bulb went out. So, they had
11:28like an electrician come in and he
11:30stands on this like 12-ft ladder and
11:31puts in the light bulb where he can see
11:33over all of the barriers.
11:34Um so, I saw that happening and I just
11:36thought,
11:38I feel like those barriers are there
11:39like
11:41really for I don't know. It felt weird
11:43that they didn't care about the like
11:44like someone from the outside seeing. It
11:45seemed like it was a barrier to like
11:47make us like the employees realize um
11:50that they weren't supposed to to know
11:52things.
11:53It was also for the vendors too. I would
11:55talk to We had these machines called
11:57TECANs. They were these robotic liquid
11:59handling arms. And they'd find it so
12:01ridiculous cuz the moment you entered
12:03into Theranos, the first thing that they
12:04have you do is sign an NDA and sign like
12:08this sort of like if you do see
12:10anything, you are not allowed to
12:11disclose what you see inside there. And
12:14this was for vendors, new employees. Um
12:17and by the time you were employee,
12:19you've already signed a contract that
12:21you cannot disclose anything uh that
12:23you've seen within those those halls.
12:25But, yeah, there were all these weird
12:29man-filled obstructions. Sometimes
12:31they'd be escorted all throughout the
12:34building with like two security guards
12:36to make sure that they didn't see
12:37anything. I actually remember that when
12:39I first started, there was a list of
12:41words they gave me that I was not
12:42allowed to say when describing my job.
12:45Yeah. And I don't remember exactly what
12:47was on the list, but it was like
12:48pipette, research, biology.
12:51Yeah, that's right.
12:53Yeah. Okay.
12:55And you couldn't put it on LinkedIn. You
12:57couldn't put it on anything. Which was
12:59funny because when all this stuff blew
13:00up, we had to say we were part of a
13:02private biotech company. So, you almost
13:04always knew that someone worked at
13:05Theranos because they probably had
13:07private biotech company on their
13:09LinkedIn profile. Um
13:12Um but then they had a really intense
13:13work culture as well. Like Sunny, the
13:15president of the company, would walk
13:16through the labs like 3:00 in the
13:18morning to make sure people were there
13:19working.
13:20Um
13:22Yeah. Yeah. Just very intense place. And
13:25a lot of people were scared of losing
13:26their jobs. You know, all these people
13:28had families that they needed to support
13:30and feed. And so, constantly
13:34feeling the pressure of needing to make
13:37Sunny and Elizabeth happy and produce
13:39whatever results that they needed to
13:41kind of further whatever initiatives
13:44that they seemed to have come up with
13:46those days. There was a lot of pressure
13:48to perform and provide the the results
13:52that they needed. Uh and we had a lot of
13:56members of the team who weren't
13:57necessarily US citizens too. They were
13:59sponsored. They were scared that if they
14:01stopped working for Theranos, they would
14:02no longer have a visa.
14:04Um but there was a lot of pressure to
14:06get the results specifically that Sunny
14:08and Elizabeth wanted at at any cost. And
14:12really a sentiment that if you didn't
14:14produce, say, if you didn't get this
14:16assay validated and say that, you know,
14:18vitamin D is getting the perfectly
14:20accurate results, there was something
14:22wrong with you. There was nothing wrong
14:24with the technology, nothing wrong with
14:26uh
14:26you know, the chemistry. It was like you
14:28were not performing well and you weren't
14:30getting this done. Um was generally the
14:34the culture.
14:36Both of you discovered troubling results
14:39of various forms despite this culture of
14:41fear and managed to think through of
14:43those results on your own. What exactly
14:45did you find and how did you go about
14:47finding those troubling results?
14:51Yeah. I think we were talking about this
14:53backstage about when I started working
14:55for Theranos, it must've been like 2
14:57months in where I was really struggling
14:59with when did 2 + 2 = 6? Cuz this has
15:02never been a fact ever
15:06in all of my education. Um but there
15:09were simple things in research and
15:10development. We were watching people
15:12basically tamper with data. They were
15:13cherry-picking results. This is like
15:15fundamentals of scientific integrity.
15:18You show all the data. Even if it
15:19doesn't show the accuracy you want, the
15:22CVs you want, you keep it in there. And
15:25that provides you with the information
15:27to know I'm doing something wrong. But
15:29instead of taking those as signals of
15:32I'm doing something wrong, people would
15:34want to alter it to get better accuracy
15:36rates, to get better CVs. And so, that
15:39was the first kind of like, "What is
15:41going on here? I've never been in a
15:43laboratory where this has happened." Uh
15:46and then for me, because I had gone from
15:49research and development, research and
15:50development, you know things are going
15:52to go wrong. That's kind of your job is
15:55to fix the problems of what's going on.
15:57But then going into the clinical lab and
15:59taking what I'd seen not work and and
16:02just constantly being falsified and then
16:05putting it in a clinical setting where
16:07now I was having to test patients. And I
16:09was basically using these same tests
16:11that I saw not working in a research
16:13setting on patients, um
16:17started to raise even more red flags. In
16:20addition to watching inspectors come in
16:23and
16:24you know, Sunny and Elizabeth not
16:25showing them the actual technology we
16:27were using on patients and all these
16:29things. I'd only worked there to give
16:31her for 7 months. Right? So, it was
16:34pretty quick. Like probably about a
16:36month
16:38and a half in that I started seeing like
16:40something's not right here.
16:42Um
16:43but yeah, those were some of the
16:45instances. So, for me, my first red flag
16:47was the first time that I saw what they
16:49called the open reader. So, they had one
16:51reader where they didn't have a shell on
16:53it. So, you could actually see what the
16:54protocol was doing inside.
16:56So, when I first joined the assay
16:57validation team, they showed me and um
17:00a senior scientist, like my uh my boss
17:03from the engineer from the protein
17:04engineering lab, we saw it at the same
17:06time.
17:07And um you can immediately tell that
17:10nothing in there is is new. So, the
17:13senior scientist looked at the person
17:14who was demoing the device and said,
17:16"Do you think this is very cool?" And
17:18then the woman who's giving me the demo
17:20just went,
17:21"I'll let I'll let you decide for
17:23yourself if you think this is cool." and
17:24walked away. And at that point I like I
17:26kind of realized that it was this like
17:27open secret that it wasn't real.
17:31Um and then I started working with the
17:32devices and going to these daily
17:34meetings where we would go over the data
17:36from the day before and you quickly fall
17:38into the habit of just deleting
17:41experiments that don't look good. Even
17:42just parts of experiments that don't
17:44look good. We would go through the
17:45meeting and go, "Oh, that looks weird.
17:46Let's rerun those. Let's rerun."
17:48Everything was okay, what do we need to
17:49rerun? And we just rerun it. So, you
17:51delete it, repeat and repeat it, fill in
17:54the data with the new with the newly
17:56collected data.
17:57Um
17:59and then for me, a big red flag,
18:01probably the biggest red flag, was when
18:02we were doing this for the syphilis test
18:04and I was doing what they called
18:06precision testing. So, I ran the same
18:08sample over and over to see how much
18:10variation there was.
18:11And I found that at our cutoff level,
18:13there was a 43% coefficient of
18:16variation. So, the standard deviation
18:18was 43% of the expected value or the
18:20mean, which is enormous.
18:24And then we ran samples that were known
18:26to be positive for syphilis. And the
18:28first time we did that, we only got 65%
18:31correct. So, we said, "Okay, that's not
18:32good. Let's try that again." And then we
18:34got 80% correct.
18:36Um and then we did this other test
18:38called finger stick versus venous where
18:40we would actually collect samples from
18:42within Theranos, from our own from
18:44ourselves and from our co-workers. We
18:46would get the finger prick. We would get
18:48the venous draw. We would test them both
18:50and compare the results to make sure
18:51that, you know, you could actually do a
18:52finger prick for this.
18:54And a ton of us tested positive for
18:57syphilis.
19:00And I remember the manager of our lab
19:02just going,
19:03"Guys, it's not impossible."
19:08Uh I guess it's not impossible, but if
19:11it's plausible, then we should maybe
19:13send out like a company-wide email or
19:17something. But obviously, no one no one
19:19took that seriously. So, Yeah. Um that
19:22was a huge red flag.
19:23Um yeah, the syphilis test was
19:24definitely for me like the big the big
19:27kind of like wake-up call. Yeah.
19:29And after reporting these troubling
19:32results, um you voiced after recording
19:34these troubling results, both of you
19:35voiced your concerns, which led to
19:38threats of various sorts. Tyler, at your
19:40worst, it was reported you were followed
19:42by private investigators. You had
19:44lawyers showing up to your grandfather's
19:46house unannounced on what was a friendly
19:48visit. Erika, you had an individual
19:50follow you to your new workplace, um who
19:53even knew your temporary home address,
19:55which even your mom wasn't aware of.
19:57Um how did you handle
19:59that type of pressure, and how did you
20:01handle the threats um when you reported
20:03your concerns?
20:06Oh,
20:07I did a lot of running cuz I
20:09was so paranoid and freaked out. Um
20:12yeah, it was
20:14it was a really tough process. I hadn't
20:17expected them to quite go to that
20:19degree, so
20:20um
20:21essentially
20:23after we had reported, I had been
20:25getting calls from Theranos and had
20:27chose, "Okay, I'm not going to engage
20:28with these people because I don't owe
20:30them anything. There's no reason to
20:32engage with them." And And after that,
20:36uh they had showed up at my workplace.
20:38So, I was working late. My coworkers had
20:40come up to me and they said, "Erica,
20:42there's been someone who's been sitting
20:43outside all day. We don't feel
20:45comfortable for you to just go alone
20:47into your car. We're going to walk you
20:49to your car." And
20:51they walk me to my car. This man comes
20:53up to me and he hands me this letter,
20:55and I look at the letter and I see it,
20:57and it was for an address for a
20:59temporary home I was staying. I was in
21:00between houses, and so I was staying
21:02with my coworker Julia, and I was
21:05completely freaked out because no one
21:08had known this address. No one knew I
21:10was living in this place. I was
21:11technically only staying in this place
21:13Monday through Friday, and then every
21:14weekend I'd go to LA or and see my
21:17family and move stuff.
21:19Um and completely panicked. And actually
21:23uh
21:24it was a bit weird because Tyler and I
21:26were going through similar experiences,
21:28but actually had to silo from one
21:29another. And I had made up this cuz I
21:32thought I was being followed. Tyler, I
21:34think, was also being paranoid about he
21:36was followed. I
21:37had this lamp that I said I'd give him.
21:40So, I just like randomly had this lamp
21:42in my house and showed up at his house
21:44and pretended that the reason I was
21:46there was to give him this lamp. And
21:49then we went into this like backwood
21:50area to talk to each other to just check
21:52in and like, "What is going on?
21:55What is going on? Like, I am absolutely
21:57terrified right now. I don't feel
21:59comfortable talking to anyone. Like, at
22:02this point, you know, I think I'm I was
22:0323, right? I have no money to my name,
22:06thinking that I'm going to have to hire
22:07a lawyer, and not knowing how much
22:09that's going to cost me. Um and it and
22:12and I'm being followed, right? People
22:14are taking the extreme of of following
22:16me places, so Yeah, actually, I think
22:18Erica, we had like a an extra room, and
22:20Erica was supposed to stay in that extra
22:22room for a little while, and she said
22:23she could bring me a lamp because I had
22:24no light in my room.
22:26Um
22:27literally no light. Um and then I just
22:31started ignoring her. She would text me,
22:33she would message me on Facebook, and I
22:35just stopped talking to her hoping she
22:37would like get the hint or something.
22:39Which I did.
22:39But then I was actually in my driveway
22:41when I saw her driving down our into our
22:44driveway, and I remember thinking, "Oh,
22:45no."
22:47Um cuz we weren't I wasn't supposed to
22:49be talking to anyone from Theranos
22:51anymore.
22:52Um but then I obviously really wanted to
22:53talk to Erica, so I didn't send her
22:55away.
22:57Um
22:58but then I remember we went inside and I
23:00was like, "Uh actually, let's go back
23:01outside." And we went into this like
23:03random place. I was living out in Los
23:04Altos Hills, so we went like down into
23:07the bushes.
23:08Um
23:09because we knew someone was following
23:12us, and like I don't know. I was
23:15I don't know. We were just
23:17I had a burner phone for like over a
23:19year because I was scared my phone was
23:21being tapped. And maybe that was me
23:23being very, very paranoid, but that's
23:25again back to that statement of culture
23:27of fear.
23:28Um just the amount of secrecy, signing
23:32the NDAs, the retaliation of coming
23:34after employees.
23:36This is how paranoid a lot of us were.
23:39We like I Yeah, I had a a fake phone for
23:43over a year. And if I wanted to discuss
23:46anything, like I never said the word
23:48Theranos. It was like you know, the like
23:51forbidden word for a long time,
23:52especially in near any of my phone
23:54communication cuz I was I was so nervous
23:56about
23:58the potential consequences of what that
24:00that could have.
24:02I had a burner phone, too. Yeah.
24:06With all these threats, intimidation
24:09tactics, how did you still find the
24:11courage? Was there ever a thought of
24:13just remaining silent and just moving
24:15on, perhaps like some of the other
24:17employees at the company?
24:19Um well, I think at that point it was
24:22too late.
24:23You know, by the time we were getting
24:24kind of bullied around, it was the
24:26decision had been made.
24:27Um I at least had no idea what I was
24:30getting into when I got into it. Um
24:35I I I mean, I had no idea what was
24:37coming. Mhm.
24:39But once I was in it, there was I was
24:42there was no question in my mind that I
24:44was
24:45about being right. I knew I was right.
24:48Um
24:49there was I was not going to give in.
24:51There's no way. I was so stubborn. Yeah.
24:53There was no way I was going to say I
24:55was wrong when I knew I was right. No
24:56chance.
24:58Yeah. I had a different experience than
25:00Tyler. We're talking about this. Like, I
25:01really felt
25:03uh there's this term that I just learned
25:04called gaslighting, and it's where you
25:07make someone believe that they are the
25:09crazy one. And you use these different
25:11manipulation tactics to make someone
25:13believe that. And really at Theranos, I
25:16thought I was missing something, that I
25:18didn't have enough information, the fact
25:20that I was with people who were PhDs
25:21from MIT, that we had huge teams of
25:24people working on this project. We were
25:27almost like 200, 300 employees.
25:30Me being 22 and come fresh graduate out
25:34of college, like I just was missing
25:36something.
25:37And for me, it wasn't until I knew there
25:40was a lot of messed up things going on,
25:42and frankly, I'm just not one of those
25:43people who can kind of keep quiet. Like,
25:46I'm just going to tell you like, "Yeah,
25:47this is wrong. Like, I don't know what
25:48they're doing, but you know, this was my
25:50experience, and I'm
25:51uh for better or worse, very transparent
25:54uh about about information in general.
25:57Um but it was it wasn't until that type
26:00of retaliation that I knew
26:02"Okay,
26:04they're hiding something." You know, the
26:06fact that they're going to these types
26:07of lengths to come after me, again being
26:10a 22-year-old who's a fresh grad,
26:13um there's something going on here.
26:15Like, I you know, they're lying to
26:18patients. And honestly, because they'd
26:20come after me and I had to seek the help
26:23of a lawyer, I was able to have a
26:25conversation with them about "How do I
26:27report this to a regulatory agency? What
26:29does it mean to be a whistleblower? What
26:31are the next steps to make sure that
26:33they stop processing patient samples?"
26:35Because
26:36you know, at this point I know and I'm
26:38certain that they're trying to cover
26:39something up.
26:41Um
26:42and so in in a weird way, it kind of
26:45backfired on me that they retaliated.
26:46But then it gave it empowered me with
26:49the information I needed to know to say
26:52"I know how I can tell CLIA everything
26:53they need to know
26:55to where they can do this inspection and
26:57actually find out are they
27:01um testing patients the way that's
27:03appropriate?" And come to find out it
27:05wasn't, and and CLIA shut them down,
27:07which was
27:08um
27:09ultimately what I wanted in the end. I
27:11wanted them not to let let not have them
27:14lie to patients anymore.
27:16Yeah.
27:17On the note of intense retaliation, my
27:19next question is for you specifically,
27:21Tyler. The Wall Street Journal reported
27:23that you'd incurred over $400,000
27:26in legal fees, and that your parents
27:28almost had to sell their house to defend
27:30you. Um your grandfather was also on the
27:33board of Theranos. How did you handle
27:36this type of pressure, especially
27:37knowing that family was involved?
27:40Um I mean, it definitely was not easy.
27:44So, at at that time
27:47uh I mean, my lawyers told me that the
27:50only people I can talk to you are my
27:51wife,
27:52my lawyers, and my priest. And I'm not
27:55religious, and I'm not married.
27:59So, the only person I can talk to you
28:02are my lawyers, and that is an extremely
28:05expensive therapy session.
28:08I wasn't talking to anybody, um and it
28:10was really weird for me to be
28:11disconnected from my parents. You know,
28:12my parents obviously knew crazy things
28:14were happening, but they didn't know
28:15what the details were.
28:17Um but the only source of information
28:19that they were getting was actually from
28:21my grandfather, which is ultimately um
28:23he was kind of like a a microphone for
28:25Elizabeth. So, Elizabeth could talk to
28:27my parents, but I couldn't talk to my
28:28parents. It was kind of how it seemed.
28:30Um
28:31so, they were kind of under the
28:32impression that I was being I was the
28:34crazy one. They were told that 80% of
28:37what the Wall Street Journal came only
28:38from me.
28:39Um that I was being unreasonable in our
28:42negotiations to try to settle things.
28:44Um so, we had a tough conversation where
28:47they said, you know,
28:48"The next opportunity you have to sign
28:50something, just sign it um and end this.
28:53This is not your fight anymore. You've
28:54done enough."
28:56Um
28:57and you know, they said, "We will
28:59support you no matter what, and we will
29:01sell our house to keep paying for your
29:02legal fees, but please just end it."
29:06Um but I didn't do that. I let it keep
29:08going, racked up a huge
29:11a huge bill, but um my parents were
29:13awesome the entire time. Luckily, it
29:15ended
29:17luckily, they stopped bothering me
29:18before it came to the point where they
29:20had to sell their house.
29:21Um but yeah, it was a huge huge bill at
29:25the end of the day, but it's funny cuz
29:27for me
29:28um
29:29it ended up being I kind of saw money as
29:32like runway. I had really no emotional
29:35attachment to it. I saw it as like,
29:37"Okay, I can put up a fight for this
29:39long, so
29:41I need to, you know, figure out ex- be
29:43No, obviously be um
29:46be smart, but um
29:49you know
29:50fight This is how long I can I can put
29:51up a fight. I didn't have like an
29:53emotional attachment to oh no, I'm
29:54losing hundreds of thousands of dollars
29:56as this goes on.
29:58Um and I think that just goes back to
30:00how stubborn I was and how
30:02how convicted I was in in knowing that I
30:05was right.
30:08Sure. I would like to reflect now more
30:11on the board of Theranos. The board of
30:13Theranos
30:14um included secretaries of state,
30:16secretaries of defense, generals, a lot
30:19of other big names and influential
30:21people.
30:22Would you say that these individuals,
30:24would you hold them guilty or culpable
30:25in any way? Or would you feel they were
30:27totally unaware, just placeholders,
30:30really?
30:34I mean,
30:36it's one of those things when you come
30:37in as an investor
30:39um I I guess this is a good warning sign
30:43to investors, hey, do your due
30:45diligence, right? If you don't know
30:47anything about medical diagnostics,
30:49maybe you should bring someone in to
30:51kind of research what the product is and
30:54the people behind it and and what's kind
30:56of going on here.
30:57I think in the case of Theranos and what
30:59we saw by the SE SEC filings and
31:02everything, they were feeding their
31:03investors a lot of false information.
31:06So, how would an you know, the board of
31:08directors members know what the extent
31:11of which was going on if
31:14you know, Sun-
31:15Sunny and Elizabeth were lying to their
31:18board members about what was happening.
31:20Um I think they strategically decided to
31:22choose board members that didn't have a
31:24medical background, that didn't have a
31:26biotechnology background, so they were
31:28able to
31:30um
31:31not have people that would investigate
31:32very deeply in kind of the technology
31:34and what was going on.
31:36Um whether they should be held
31:38accountable or not, it's it's hard to
31:40say, right? Cuz you don't know what
31:41those conversations were. I I highly
31:44doubt uh all of these people would have
31:48invested in this company and continued
31:51um their commitment to the company,
31:53which many of them didn't, you know, as
31:56as more information was getting exposed
31:59if they had known what was actually
32:00going on.
32:04Yeah. Yeah, it's hard to know. I mean, I
32:06think the board the board was negligent
32:08at best.
32:10So, I think there is some responsibility
32:12there and I think anytime you give
32:13someone a check for over a hundred
32:14million dollars, you are giving that
32:15person an incredible amount of power
32:18and you should
32:20you should do more due diligence, I
32:22think. There was a
32:23a complete lack of due diligence that is
32:25just astounding. Yeah.
32:27And we were talking about this, like it
32:29was kind of like an echo chamber, where
32:31it's like you get that one guy that you
32:32have a lot of respect for who then gets
32:34like one other guy who they have a lot
32:36of respect for and then you have, you
32:38know, Elizabeth basically convincing
32:40both of them that they're great and then
32:42they're telling each other how great
32:44Elizabeth is, but it's all fed from the
32:46information of this one person and then
32:48it just kind of Yeah. gets it echoes
32:52around And then even if you do bring in,
32:54you know, one more person, it's like,
32:56okay, you you expect this one person to
32:58tell secretaries of state, defense
33:01that they're all wrong.
33:03No, yeah, it's not going to happen.
33:06Especially if you I mean, yeah, if
33:08they're like your friend or whatever.
33:10Yeah. Like
33:12Henry Kissinger brought in this surgeon
33:14from New York who he says is the
33:16smartest man in the world. So, obviously
33:17they're good friends.
33:19Um of course he's just going to like I
33:21don't
33:22apparently he like did due diligence or
33:24whatever and said it was all good, but
33:26you know, I don't know. But how honest
33:28is he really going to be with all these
33:30people?
33:33I'd like to explore the theme of
33:35accountability a bit more, especially
33:36with the employees now. Many employees
33:38at Theranos stayed silent despite
33:40knowing that the claims made in the
33:42media were obviously false and knowing
33:45that patients were at risk. On their
33:46perspective, they were arguably silenced
33:49by intense pressure from Theranos,
33:51including the threat of heavy
33:53litigation, intimidation tactics as as
33:55you've already mentioned. Would you hold
33:57your fellow employees who stayed silent
33:59culpable or guilty in any way?
34:03That's super hard, right? I definitely
34:05do not. Yeah, I don't either, but
34:08Um
34:10I mean, it was a really tough situation.
34:12Um like if I could go back and give
34:14myself my advice, I would probably tell
34:16myself not to do anything. Like that
34:18would be my advice, like
34:20you're going to pay a huge huge price
34:22for this. Someone will figure it out
34:23anyway, don't do it.
34:25Knowing myself, I would have ignored
34:27that advice and done it anyway, but
34:30Um but I I don't think any less of my
34:34co-workers who didn't do what I did.
34:38Yeah, it's really complicated, right?
34:40Because these people, again, they have
34:41families, they have
34:45Okay, there there are several different
34:46things. So, Theranos was a big
34:47organization. So, if you're a software
34:49developer just doing the interface for
34:51how the machines work, you're not really
34:53going to know what's going on with the
34:55patient processing. So, there are a lot
34:57of employees that were just very
34:59ignorant to what was actually going on.
35:02One, because of the way that the
35:03structure of the company was worked,
35:05there were physical barriers blocking
35:07people. There was card key access where
35:09some people couldn't get in and others
35:11could.
35:12Um
35:13So, so it makes it really hard for a lot
35:16of even the internal employees going
35:19like within the company to know what's
35:20going on. And then the people working in
35:24a clinical setting, like an example is
35:26we had clinical lab scientists that
35:28typically would work in hospitals, they
35:30do all the patient processing. For us in
35:32the clinical lab, a clinical lab
35:34scientist could not see what was going
35:37on with the Edisons and the Theranos
35:39proprietary devices until they could be
35:41trusted. So, we had CLSs that were on
35:44board, but they were stuck in a separate
35:47room and not to see the actual machines
35:49that we were using to test the patients.
35:51So, there were definitely a lot of
35:53processes like this that like the own
35:56staff and employees were guarded from
35:58seeing what's going on.
36:00Um you know, even in my case, I didn't
36:03end up reporting to the Center of
36:05Medicaid and Medicare Services until I
36:06talked to a lawyer. Like never in my
36:09life would I have anticipated that I was
36:11going to have to report a company to a
36:13regulatory agency. There is nothing in
36:16life that prepares you for that
36:17experience at all. There's just like no
36:20school class, nothing. No one
36:22anticipates having to do this.
36:24Um and so even that first step of
36:27engagement is really hard to figure out.
36:29Like for me, I
36:31how how do you find the number to for
36:34the Center of Medicaid and Medicare
36:36Services with the specific domain of lab
36:40diagnostics, right? Like just even
36:42finding that phone number is actually
36:43quite hard. Um
36:46So, it it's it's it's one of those
36:48things that, you know, no one is really
36:49prepared for these types of instances of
36:52of of what to do and it really took, I
36:55think, the specific
36:57experiences that, you know, I had at
36:59least I can speak for myself
37:01um to know what to do and that empowered
37:03me to sort of make the decision to to
37:05come forward.
37:09I'd now like to move on to a broader
37:11reflection, I guess, of Silicon Valley
37:13on the whole. Now, many people associate
37:15Silicon Valley, of course, with um
37:18limitless innovation
37:20pioneering novel technology, but there
37:21has been pushback against its reckless
37:23culture. Vaporware, the public marketing
37:26of technology that is yet to be fully
37:28realized, is perhaps the worst result of
37:30this.
37:31Um so, do you think there is a broader
37:33problem with Silicon Valley culture, of
37:35which Theranos and Facebook are just
37:37symptoms of?
37:39Mhm.
37:40Um so, after Theranos, I actually
37:42started my own company and I was part of
37:43the the Stanford StartX incubator.
37:47And overall, I would say, you know,
37:49almost every single person in there is
37:51just a really passionate person and
37:55they're not I mean, I don't think anyone
37:57in that incubator, at least, is selling
37:59vaporware.
38:00Um
38:01So, in my experience, I would say no, I
38:04don't I don't I don't think it's a
38:06it's a huge problem. I I genuinely think
38:08that most entrepreneurs are just really
38:10passionate, smart people.
38:12Yeah.
38:13I think the problem here isn't
38:15necessarily saying, okay, I want to
38:17build this product, I need capital do
38:19that and you know, this is my idea and
38:24this is like the
38:25the, you know, minimal viable product
38:28that I have and here are my plans, can
38:29you give me the capital to sort of build
38:31this? Right? And that's that's very
38:33normal. That process is very normal. I
38:34think the like greater problem here is
38:37is
38:38uh lying and and sort of being
38:40delusional. And this this happens across
38:42the board. You know, in the case like
38:46you know, not disclosing to someone uh
38:49not disclosing to your investors that
38:52you know, I am launching a product
38:55that's not ready on patients. Like that
38:58that's a problem, right? Like that's a
39:00that's a severe problem. Um
39:05I
39:05think
39:07it's hard to say, like we were talking
39:08about the software model. So, in
39:10software, you have this instance where
39:12you iterate constantly. Like what makes
39:15a good technology product is the fact
39:16that you can, you know, kind of throw
39:19something out there, see how people
39:21respond, based on what the better
39:23response rate is, you curtail to the
39:25next thing. And I think at Theranos,
39:28they were trying to take the same
39:29software model, but with medical
39:32diagnostics. And you can't do that,
39:34right? You can't decide, okay, I'm going
39:36to launch this product, sacrifice six
39:38patients,
39:40uh you know, see if like some responded
39:42well, then I can move, you know, in this
39:46other direction to sort of iterate and
39:47improve on these medical diagnostics.
39:49It's just really it's it's a different
39:51industry, it's a different field, and
39:52it's not something that, you know, you
39:54can just test on a few users here and
39:56then kind of change what the the the the
39:59product looks like. It's it's it's a
40:01very different, um,
40:04it's a just a very different industry.
40:05You just can't do that in health care.
40:08Do you think that there should be any
40:10alternative cultures that should try to
40:11be fostered, or would you or do you
40:13believe that it's fine to segregate,
40:15keep software as it is, or would you
40:16want to
40:17hope to do any you would you hope for
40:20any alternative culture and hope that
40:22that would maybe inspire the other
40:25industries to have to be less reckless,
40:27perhaps? Yeah,
40:28just be honest, you know? Just be
40:30honest, just be transparent. Uh,
40:35be transparent and honest with your
40:36customers and with your investors, and
40:39just say like, "Look, this is where
40:40we're at." Uh, and you know, these are
40:43be passionate still about what the
40:45possibilities of them some things are,
40:47but be realistic in like what can
40:50actually be reality versus
40:53Yeah, got to be clear about what is
40:54vision. Yeah.
40:56What's the vision and what is reality?
40:58Exactly. Um,
41:01yeah.
41:01Yeah, entrepreneurs are definitely
41:02responsible for selling the vision, so
41:06I guess sometimes it's easy to get like
41:07too caught up in selling your vision you
41:10start pretending like it's real. Yeah.
41:12But
41:13I think I don't think it happens.
41:16I don't know. In my experience, I
41:17haven't seen that happen too too often.
41:20Uh, I see it a lot. Uh, I'm on the I see
41:23it all the time. Especially, yeah, I see
41:26it all the time. In Hong Kong, ICOs have
41:28been very big, and just watching people
41:31uh, now raise money in a very
41:34unregulated way, I've seen people say,
41:36"Oh, yeah, I have this great like
41:38electronic medical records system, you
41:40know, it's going to leverage AI to be
41:42able to do pre-predictive diagnostics."
41:44And you ask them the simple question,
41:46"Hey, let me Can I see your product? Can
41:48I see a product demo?" And it's a Google
41:49Form. Like that's all it is, and you're
41:51like,
41:52But they still showed you the Google
41:53Form.
41:53They still showed me, yeah. Yeah. It's
41:56like, "Look, you can input your name."
41:58I'm like, "Oh, great."
42:02Um,
42:03Elizabeth would have said proprietary.
42:05Proprietary, yeah, exactly. That was
42:07that was the scope proprietary. Sorry, I
42:09cannot disclose this. Um,
42:12yeah, I I I think now coming from an
42:15investment perspective is like just be
42:16honest, just be transparent. Like people
42:19want these things to succeed, especially
42:21the vision like Theranos, right? Making
42:24diagnostics
42:26cheaper to produce, more affordable. You
42:28wouldn't even need insurance to be able
42:30to get these tests done. Like who
42:32wouldn't want to support a project like
42:34that? If you're honest with me and tell
42:36me like, "Look, this is our vision, this
42:38is what we want to do, this is where
42:39we're at, you know, we anticipate, you
42:42know, we need to hit these milestones by
42:43this point, you know, this is our plan,
42:45this is our strategy." I'm more than
42:47willing to give you cash. Many investors
42:50are more than willing to give you cash
42:52in order to
42:54have that come into fruition.
42:56But don't don't lie about it. Don't
43:01falsify data. Don't, um, falsify how
43:04much revenue you're making. All these
43:06things, it's like really just just being
43:09honest. It's such a simple thing. It's
43:11it's almost hard to say that we that's
43:14an alternative culture.
43:16Um, you know,
43:17uh,
43:18yeah.
43:20On those values of honesty and
43:23transparency, um, what do you think
43:25should be the role of educational
43:26institutions such as here at Stanford in
43:28preparing young graduates to navigate
43:31ethical challenges in their careers?
43:36You got anyone with this one? Um, I
43:39don't know. I think it'd be really
43:40really tough. I don't think I could have
43:41taken a class that prepared me for this.
43:44Yeah. Um, I think it's in probably most
43:47important to just be introspective about
43:49the
43:50about your own experiences. Like
43:53after this happened to me, I've had tons
43:55of people come tell me that say, "Oh,
43:57I've experienced something very similar,
43:59obviously not on the same magnitude, but
44:02very similar situation." Like so many
44:04people have said that, and I think
44:05probably everyone in this room has an
44:07experience that's somewhat similar and
44:08they can relate, at least to some
44:10degree. So, I think even better than a
44:12class is just to like
44:14be aware when these types of situations
44:16happen and
44:17check in with yourself and see like what
44:19did you do, what maybe
44:21should you have not done, or what could
44:22you have done better, and, um,
44:25yeah, I don't know.
44:26But I think it'd be
44:27hard to have a class that prepares you.
44:30Yeah.
44:30Um, but I think it would be good to know
44:32that like whistleblower laws exist.
44:36Cuz I didn't know that at all.
44:38Yeah. Um, yeah. If you go down the right
44:41channels, you actually have a lot of
44:42protections as a whistleblower.
44:45So, it's good to know those channels.
44:48Yeah, I I I after this all happened,
44:50I've been getting a lot of feedback from
44:52people that say the same thing, whether
44:53you work for the NHS, or whether you're
44:56in academia, or you're working for a
44:58biotech company, a lot of people are
45:00like, "Hey, I'm seeing kind of shady
45:02stuff going on in my workplace, and, you
45:06know, I I want to do something about it,
45:08but I don't know what to do about it."
45:10Um,
45:11and, you know,
45:13I I feel bad because people feel that it
45:16cuz I was in that position, I will know
45:17what to do, but I have no idea how you
45:19would report, you know, something to the
45:21NHS or anything, uh,
45:24even in academia, I don't know how to go
45:26through that process. I think we're at
45:28an interesting time where, you know, I
45:30we were talking about this with Theranos
45:32in and in my case, like I had a lot of
45:36doubts whether, you know, what was going
45:39on was again
45:42uh, like I had a lot of doubts about my
45:43own knowledge about the regulatory
45:45landscape. But what I was able to do do
45:47was go on the internet, stay up at 3:00
45:49in the morning, and like, "No, this is
45:51this is not the law. They keep telling
45:52me that this is the law, but it's not."
45:54Um, so I think for a lot of people
45:56knowing that, you know, there's a lot of
45:59resources that you can access. If you
46:00have a question, you can go on the
46:02internet. You can potentially talk to
46:04free lawyers. You can go and talk to
46:08people about certain concerns that you
46:10have, and they'll probably be able to
46:11tell you what the next steps are. Um,
46:14and if you're
46:16I you know, another big thing is if
46:17you're getting retaliation from people,
46:20uh, you know, learning how to have the
46:22mental fortitude to be resilient is
46:24really really important. Um,
46:28and to kind of,
46:30you know, s- stick to integrity, you
46:33know, saying to yourself like for me it
46:36was like I made the commitment by going
46:38into health care to make sure that I
46:41protected the patients that I served.
46:43And holding on to that simple line and
46:45that simple fact really carried forward
46:48all of my actions. Like this is this is
46:51the commitment that you made by going
46:52into this industry that you needed to
46:54protect patients. Um, I don't yeah, it's
46:57hard to formulate like a class or
46:59anything, but depending on what side
47:02you're coming from, like know you have
47:03access to resources now. We live in a
47:05beautiful time where you can type
47:07anything in, you know, to a search
47:09engine to figure out the right person to
47:10talk to or the right resources to go to.
47:14Um, if you are getting retaliation from
47:16your employees, just like
47:18take a moment, breathe,
47:20try and stay resilient through the
47:21process, and, um,
47:24um, I think those are the two two
47:27biggest things that I learned.
47:29How you can put that in a class, I don't
47:31know, but
47:32yeah.
47:33Honestly, having discussions like this
47:36is probably very valuable, too. Because
47:38many,
47:39you know, especially with technology in
47:41general,
47:43um, whether it's big data and AI,
47:45synthetic biology and genetic
47:47engineering, we're going to have a lot
47:49of these discussions kind of coming up
47:50where we don't know how to handle new
47:52technologies anymore. It's something
47:54that we haven't experienced, and we
47:56don't know the consequences necessarily
47:58of what they'll have when they get
48:01implemented into societies.
48:04So.
48:05What advice would you have for students
48:07or new graduates when looking at
48:08potential job offers, internship of
48:11offers to gauge for integrity and
48:13ethical environments? Both of you
48:15mentioned you had multiple job offers.
48:17Do you think there's certain questions
48:18you would have asked retrospectively, or
48:20any red flags you wish you had noticed
48:22perhaps in an interview setting?
48:24Uh, in retrospect, I would I would never
48:27work for another stealth company again.
48:30There's just no way I could
48:32There's no way I would step back into a
48:34stealth company, you know.
48:36I mean, that might be swinging too far,
48:37but I'm sure there are plenty of stealth
48:38companies that are fine, but like at
48:40least just me personally, like I want to
48:41be able to go
48:43do a job and then be able to tell my
48:45friends and family what I'm doing.
48:48Yeah. Having to sign an NDA before you
48:51go into a job interview is probably
48:53like, "Hmm, okay. What This is just a
48:56job interview. I haven't started working
48:57for you. What's going on here?" Um, I
49:00think just like with anything, just ask
49:03questions, do your due diligence. Like
49:05what I've realized with working is like
49:07you're going to spend at least 40 hours
49:09a week doing this thing.
49:12More likely more cuz you drive and you
49:13get there. Like asking people a lot of
49:15questions on, you know, what are your
49:17values? If people have left the company,
49:20talking to previous employees, what was
49:22their experience? I think alone at
49:24Theranos, if we had just talked to
49:25previous employees, that would have like
49:28set the record straight. Yeah, it would
49:30have really set the record straight
49:31quite fast. We would have realized like
49:34just the horrible horrible experiences
49:36that so many people had that preceded
49:39us. Yeah. Actually, a good question
49:40would be uh like how many people have
49:42quit in the last Yeah.
49:444 months.
49:49If it's like 20% of your company
49:51Yeah.
49:52And probably if they say the other issue
49:55too with us at like anytime you would
49:57ask uh Elizabeth a question, it would
50:00always be, "I'm sorry, I can't disclose
50:01that. That's confidential information."
50:03So, that's probably another thing where
50:05you're like, "Hmm, okay." Like is this
50:08warranted secrecy or not? Um
50:11but
50:13it's it's Yeah, just do your due
50:15diligence. Ask a lot of questions. Talk
50:17to former employees. That would have
50:19probably been the most illuminating is
50:21just to talk to former employees.
50:23On the other turn, as a startup founder,
50:25this my next question is sourced from a
50:27member of the audience. Um
50:29how should young startup for founders
50:31work to establish integrity and an
50:34ethical environment, especially in
50:36fields like healthcare?
50:40Um
50:41Just be honest.
50:42Yeah.
50:44I think it just it's going to take a
50:45long time. Yeah. Um so, start building a
50:48track record as early as you can.
50:50I read a a good article actually with
50:53the Stanford um business school. They
50:56were talking about
50:57how in business you tend to create
51:01metrics for your shareholders. So,
51:04you're constantly focused on things like
51:06ROI, and maybe it's much better if we
51:09start thinking about who are our actual
51:11stakeholders. So, in the case of, you
51:13know, uh a healthcare, like what are the
51:16things that would make this product or
51:18service successful for my patients? And
51:20really examining the business in a more
51:23holistic way where we're you know, maybe
51:26we need to design the way that we
51:28examine a company not solely by the
51:30revenue it's generating and the profits
51:32it's making, but also about what are its
51:34consequences for society. What are its
51:37consequences for, you know, the
51:39hospitals it serve, the patients it
51:40serves, the
51:42potentially even the insurance providers
51:45that it has. Um and
51:48to
51:50you know, not solely focus on the bottom
51:53line.
51:56And my final question, um I would like
51:58to hear more about where your careers
51:59are now and how this whole experience of
52:01being a whistleblower has impacted your
52:04careers. Has it Do people view it
52:06favorably? Are there Is anyone you've
52:07interacted with who views your tag as a
52:09whistleblower cautiously? I'd love to
52:11hear about the reflections on your life
52:13after this experience.
52:17Uh for me, it's only been positive.
52:19Yeah.
52:20Um and it's kind of weird cuz in I think
52:22in most whistleblower situations, the
52:24whistleblower has a really hard time
52:25kind of getting their life back on
52:26track. But for me, it was like the exact
52:29opposite. Like after the Wall Street
52:31Journal article
52:32um like said who I was, I was getting
52:35job offers from venture capital firms
52:38from big biotech companies, from small
52:40startups, from research institutions.
52:43Like really the whole gamut. I was
52:44getting emails of people saying, "Hey,
52:47love what you did. Come work for us."
52:48Yeah. And I think that's actually really
52:51rare in these types of situations, and I
52:52honestly don't know what's different
52:54about my situation than other
52:57whistleblowers. Yeah.
52:59I had a similar It was overall it was
53:01very very positive. I think the thing
53:04you never know and Tyler, I think you
53:05actually said this to me. You never No
53:07one who has a problem with it or who
53:10thinks it's a bad thing will tell you.
53:12So, you really don't know what the
53:14consequences of it are going to be until
53:18you're in a room with a VC and then they
53:20get confronted by, you know, they would
53:22say say, "Oh, you were the whistleblower
53:23of Theranos. Okay, get out of my room."
53:25potentially. I don't know cuz you really
53:27can't predict when that would happen,
53:29but I feel like the people that had a
53:31problem with it are not going to tell
53:33you. The people, of course, who
53:35you know, admire what you did, that
53:37they'll be very communicative about
53:39about that process.
53:41Um it's been really interesting now. So,
53:44since I left Theranos, I I now work for
53:46a tech accelerator in Hong Kong. So, we
53:48invest in early stage startup companies.
53:50And now going outside of working for a
53:54startup, building the product, knowing
53:56the grind and the hustle of like, "How
53:58do I get this thing to work? How do I
54:00get people to actually want what I'm
54:02making?" Um and now sitting on how do I
54:06evaluate a company and um
54:09it it
54:10you know, is this a good investment or
54:12not? Uh it's
54:14made me much more skeptical with those
54:17investment decisions. Like it's just the
54:19simple thing of just asking people for a
54:21product demo. You would think it would
54:23be the like first thing you would want
54:25to see, but so many investors fail to do
54:27that, to actually just sit and dig into
54:29the product. Um yeah, this is definitely
54:33you know, kind of
54:34made me, I think, a much better investor
54:37and doing much more
54:38uh much
54:40better due diligence on the companies
54:42now that we support. Um
54:44I'm hoping that
54:47this won't hurt my career in the future,
54:49but honestly, you you don't know kind of
54:52when something will come back to bite
54:53you until it does. I have one kind of
54:56funny anecdote. So, I was asked to uh
54:58like call into a a business school class
55:00at Yale.
55:02Um so, I did that, but the professor
55:03didn't announce to the class that I was
55:05on the line yet. And he asked, "Does
55:07anyone think that Tyler Shultz did the
55:08wrong thing?" One person raised their
55:10hand, and he called on her, and and she
55:13he said,
55:14"He's on the phone right now. Do you
55:15want to tell him why?"
55:18And she went,
55:19"No."
55:20I'm like, "Come on. Trust me, I can take
55:22it."
55:24But I think she didn't speak up. Yeah.
55:26But there are people out there.
55:28Yeah.
55:29Um it's been incredibly inspiring to
55:31hear from both of you, and I'd like to
55:33thank you on behalf of the Stanford
55:34community for being so candid and
55:36sharing your insights. Um I think
55:38students can certainly look up to you as
55:39role models on how to stay true to your
55:42core values even under intense
55:44adversity. Um it's been my deep pleasure
55:46to moderate this discussion. For the
55:48next segment, I'd like to invite Colin,
55:50who will moderate a Q&A uh from the
55:52audience now.
56:07So, why don't we start with the
56:08gentleman with the Yale shirt on right
56:10here?
56:12Um
56:13Is this on? Yeah, cool.
56:15Uh well, first um you you guys made
56:17enormous sacrifices and and showed
56:19incredible bravery. So, thank you for
56:21that um first of all.
56:23Uh
56:24and and secondly, you know, so I read
56:26Bad Blood, and one of the things that
56:28I've been trying to wrap my head around
56:29that I still don't quite understand is
56:31just the psychology of it. You know, and
56:33I mean, obviously, you you guys aren't
56:34psychic uh Elizabeth's and and Sunny's
56:37head. But can can you help me understand
56:39like what the deal is with Sunny
56:40Balwani? Cuz it's like, you know, he
56:42sort of lurks he sort of lurks in this
56:44Bad Blood story, and it's never really
56:46clear, you know, is he like the puppet
56:47master behind the scenes or like, you
56:49know, Carreyrou came and gave a talk
56:50here, and you know, he sort of said he's
56:51this, you know, oblivious guy, whatever.
56:53Like and I I don't know. That didn't
56:55quite make sense to me. I'm just trying
56:56to to figure it out and wrap my head
56:58around it. It's this weird, dark,
57:00fascinating story that doesn't quite
57:02make sense. And so, I would love to sort
57:04of hear your guys' thoughts on that.
57:07Uh so, I would say that Sunny Balwani
57:10has the personality of gravel.
57:12It's like this
57:14grumbly
57:16I don't know. Grumbly guy just like very
57:18rough around the edges.
57:21Um I didn't interact with him all that
57:23much.
57:24Um but probably the most pleasant
57:27conversation I ever had with him was he
57:28was telling me about how he knows a lot
57:30of cops and they tell him when they're
57:31not patrolling 280 so he can go drive
57:33his cars really fast.
57:36Um but other than like I really didn't
57:37interact with him all that much, but he
57:39would like walk through the labs at 3:00
57:41in the morning and, you know, not really
57:44say anything. Just walk through and walk
57:46back out.
57:47Yeah. Um
57:49but he was definitely running the show
57:52inside Theranos, for sure.
57:55Yeah, it
57:57There were so many instances with him.
57:59It it was funny. Someone asked me the
58:01question, so
58:02like, "What did you think about him?"
58:04And it was clear I was trying to be very
58:07diplomatic about it. He's like, "Was he
58:09an [ __ ] or was he not an asshole?" I
58:10was like, "Total asshole."
58:12It's like hands down.
58:13Um
58:15but
58:17yeah, he definitely was running the show
58:18with a lot of the things that were going
58:20on. And even we did this internal
58:23proficiency testing. So, proficiency
58:25testing is where you're essentially
58:27trying to check if the results you are
58:29given in third-party labs,
58:32uh are you getting within the same
58:33accuracy range? And we had decided to um
58:40essentially test it on our old machines,
58:43like the Siemens Advia, all the other
58:45machines.
58:46Uh and the Theranos proprietary methods
58:49cuz what they used to do it on was just
58:51the old machines, and we were finding
58:53that the results weren't lining up. And
58:56he sent back First of all, he wasn't
58:58even on this email.
58:59So, he just got all of our emails, and
59:01we had no idea. He was like monitoring
59:03all of us.
59:04And piped in about how this was the most
59:07terrible thing that we had ever done.
59:09Like how dare we use the Theranos
59:11proprietary like the Edisons to
59:14double-check whether, you know, the
59:16results were actually accurate. It was
59:19all in broken English. Like you couldn't
59:20understand what he was saying. It was
59:22just an absolute mess.
59:24Um
59:25it was like he
59:28uh uh
59:29just
59:30was constantly surveillancing all the
59:32employees, was making a lot of calls and
59:34decisions without having the expertise
59:36within those domains, particularly
59:38within healthcare and a clinical
59:40laboratory. People had those like dots
59:44that they'd put over the cameras on
59:45their computers cuz they thought Sunny
59:47was watching them. And same with phone
59:49calls. Like everyone knew that their
59:50phone calls were being tapped and so
59:53people would like pass like I remember
59:55our lab director was so paranoid about
59:57it. He would like pass me notes
59:59because he was like convinced that they
1:00:01were monitoring all his phone calls.
1:00:03And
1:00:05and a big reason why I quit I had I had
1:00:07a few interactions with Sunny
1:00:10throughout the course was because I got
1:00:11pulled into his office and basically
1:00:13knew I was like this person's a crook.
1:00:15Like I don't know what they're doing but
1:00:16they're lying. They're there's just
1:00:19something wrong here. I don't know
1:00:20what's going on but after the
1:00:22conversation that I had in his office
1:00:24one-on-one
1:00:25I quit. I called my dad crying on the
1:00:27phone like what what do I do? And I'm
1:00:30like I can't work for this company
1:00:31anymore. I do not feel good about this.
1:00:33Like I'm sorry. I know like I got
1:00:35student loans to pay but I'm out of
1:00:36here. Like I can't do this.
1:00:38Um and
1:00:40yeah, he was he was not a good figure in
1:00:43the whole story line.
1:00:44at all.
1:00:46Thanks again for your honesty and for
1:00:47your sacrifice. Yeah.
1:00:50Uh the gentleman in the balcony.
1:00:52Uh first of all, I'd like to thank you
1:00:53so much for the wonderful conversation.
1:00:56Uh my question revolves around uh your
1:00:58guys' experience with regulatory
1:01:00agencies and with lawyers. Um I was
1:01:03wondering if either of you were heading
1:01:05up Medicare or or the FDA or in Erica's
1:01:08case the Chinese counterpart of those,
1:01:11what would be a regulation you'd want to
1:01:13put in place to try to make sure that
1:01:15companies like Theranos couldn't rise to
1:01:17$10 billion
1:01:18before having whistleblowers stop them.
1:01:21Wow.
1:01:22Ooh, that's tough.
1:01:24Um
1:01:25I feel like the systems that are in
1:01:27place now just need to work better.
1:01:29Um like for instance I sent an email
1:01:32about the proficiency testing to the
1:01:35Center for Medicaid and Medicare
1:01:37Services back in 20
1:01:40early 2014
1:01:42and um they referred me to like like
1:01:45basically they referred me to the
1:01:46correct department. I I contacted them.
1:01:48They said okay, what's the name? They
1:01:50said this is cheating. Please let us
1:01:51know the name of the company, what tests
1:01:53were run, um what dates they were run so
1:01:56we can reach out to them and help them
1:01:58improve their methods. And I gave them
1:02:00all that information and then that email
1:02:02just got lost in the shuffle and nothing
1:02:05happened.
1:02:06Yeah.
1:02:06Um
1:02:07same thing when CMS came to inspect
1:02:09Theranos, they weren't shown the
1:02:11Theranos devices.
1:02:13They should know that a like a startup
1:02:16diagnostic company is going to have some
1:02:18not off-the-shelf diagnostic product.
1:02:21Um
1:02:23but Yeah, it's hard.
1:02:26It's hard for regulators too because
1:02:28when they're going in they're regulators
1:02:30are regulators aren't there to crack
1:02:32down on people. That's not really what
1:02:34they want to do. They want to like work
1:02:35as a system of checks and balances but
1:02:37they don't anticipate that a company is
1:02:39just going to go to such extreme lengths
1:02:41to deceive them.
1:02:43Um in terms of new policy that you can
1:02:46create
1:02:48I I don't even know.
1:02:50Like it's it's it's really it's really
1:02:52hard to say. I think the policies
1:02:54developed tests loophole should be
1:02:56closed.
1:02:56Oh, yeah. So there's a loophole where so
1:02:59people thought that this was regulated
1:03:00under the FDA but it's not. It's
1:03:02regulated under the Center of Medicaid
1:03:05and Medicare Services. And the way that
1:03:07LDTs work is that you can actually run
1:03:10an LDT for I think 6 months before you
1:03:13act have to report it to CLIA.
1:03:16Um the thing about Theranos why they
1:03:18were a special case is because no one
1:03:19anticipated that people would say for
1:03:23like HbA1c, right? This this test has
1:03:26been around forever. That someone would
1:03:29mess it up so bad, right? Because
1:03:32I just don't think regulators thought
1:03:33that with a test that's existed for like
1:03:3650 years now that you would really like
1:03:39shake it up so much to to to have that
1:03:41much variability and and to have that
1:03:43many problems. But it's really it's
1:03:45really tough to say what the
1:03:47the right policy would be. It's really
1:03:49about funding. Like making sure that
1:03:50these these organizations have enough
1:03:53resources to be able to conduct a proper
1:03:56inspection.
1:03:59Thank you. The guest with this card.
1:04:01Yeah, I'm assuming that you've both read
1:04:03Bad Blood and I'm just interested if
1:04:05there's anything about the story or the
1:04:07book that you were surprised by. And
1:04:09then if you can speak more to how you
1:04:11think Elizabeth Holmes won all of these
1:04:14people over because it is an impressive
1:04:16skill to get that many CEOs and
1:04:18investors behind you. And there are
1:04:20still people who stand behind her. So
1:04:22from your perspective
1:04:24what it is about her personality and how
1:04:27she did that that got so many people
1:04:29behind her.
1:04:32Mhm.
1:04:33Um
1:04:35I mean she is she she was extremely
1:04:38charismatic. Like I would go into her
1:04:41office and she would
1:04:43tell me about
1:04:44you know, she would tell me about the
1:04:46vision of the company and helping third
1:04:48world countries and I would I would be
1:04:50so motivated to do my job and then I
1:04:52would go back and I was working with the
1:04:54Theranos device and I go wait, what just
1:04:55happened? This is what we were talking
1:04:57about that whole time?
1:04:59How did she just do that to me? Like I
1:05:00was working with this device every day
1:05:02but in you know, like a 5-minute
1:05:04conversation with her she was able to
1:05:06change my mind and for me to feel
1:05:08motivated again. Yeah. So I can see how
1:05:10if you weren't actually working with the
1:05:12device every day how how easy it would
1:05:14be for her to convince you that this was
1:05:17real and all these things were
1:05:18happening. Yeah.
1:05:20I
1:05:21I think the biggest surprise about Bad
1:05:23Blood was like how many people had such
1:05:25a like intense crazy experience with
1:05:28her. Like there were so many people, so
1:05:30many iterations of employees that had
1:05:32like worked with her and just been like
1:05:34oh my gosh, this is an absolute
1:05:36disaster.
1:05:37Um and just the whole context of that.
1:05:40Like how long that had gone on. Like we
1:05:43I had entered the company about 10 years
1:05:45after it'd been in existence. That was
1:05:47the biggest surprise to me. Like whoa,
1:05:49this has been going on for this long.
1:05:52And and the fact that like you said she
1:05:53had convinced so many people. Part of
1:05:55the reason it was able to go on for so
1:05:56long is because the turnover of people,
1:05:58you know, was was so great where she
1:06:00could constantly onboard new people. Um
1:06:03but it was a beautiful vision, right? I
1:06:05think everyone is dismayed with our
1:06:07healthcare system. The fact that it is
1:06:09way too expensive. That the fact that
1:06:11people can't get a simple blood test
1:06:14without breaking the bank is just it's
1:06:15just atrocious, right? Like this is it's
1:06:17just ridiculous. Um
1:06:20so I think
1:06:22really that vision is very easy to sell
1:06:26and it pulls on the heartstrings of so
1:06:28many people. Um you know, people who
1:06:31have family members that are sick, who
1:06:33have been sick themselves. Uh who've
1:06:36financially devastated themselves
1:06:38because of the healthcare costs. And
1:06:40then also her as a person. It was really
1:06:42remarkable, right? We love these kinds
1:06:44of stories where you get this person who
1:06:46dropped out of Stanford. She had a great
1:06:49idea. She worked insanely hard. It like
1:06:51really builds up that like American
1:06:53meritocracy, you know, like you can just
1:06:56like set your mind to any goal and if
1:06:59you put in the effort and the energy you
1:07:01can make it happen. Um
1:07:05yeah. I
1:07:07I think uh
1:07:09that's probably why she was able to
1:07:12bring so many people on board.
1:07:17Next question. Okay. Um so you mentioned
1:07:19that it was a pretty easy transition to
1:07:21like going back to your careers after
1:07:23the whole incident was over because like
1:07:24you were both whistleblowers, people
1:07:26supported you. Um but how do you think
1:07:28that the people like the head scientist
1:07:29who did know something was wrong for
1:07:31years and years and didn't speak out
1:07:32about it? Like to your knowledge, how
1:07:34were they able to pick up their careers
1:07:35again and like have people trust them?
1:07:39Um they've been fine. Like Sunny got a
1:07:41job and just boggles my mind.
1:07:44There's this
1:07:45Yeah.
1:07:46There's guy who was just, you know,
1:07:48basically in on all that. His hands were
1:07:49everywhere and he just quit and went and
1:07:51got a job at BD. Yeah. I think
1:07:54Fun.
1:07:55For me it was weird when I immediately
1:07:57quit the company it was like a bad
1:07:58breakup though because I really I had I
1:08:01was so committed to this project. Like
1:08:03anyone who knew me working at that job
1:08:05like I really wanted it to work and I
1:08:07could have seen myself working for that
1:08:09company pretty much for the rest of my
1:08:10life. Like I really
1:08:12uh was onboarded to the mission and when
1:08:15I left I became incredibly
1:08:17disillusioned. Just like
1:08:20yeah, I I completely sort of lost hope
1:08:23in in in in faith in these things. But I
1:08:27think for most people there's a big
1:08:29disassociation between, you know, uh
1:08:34what Elizabeth did and and the employees
1:08:37within the organization. I think many of
1:08:39the employees within the organization,
1:08:41they're probably upset just like I was
1:08:43where it was like you know, you feel
1:08:45very you you feel lied to. You were lied
1:08:47to. And and that was it wasn't a good
1:08:51experience.
1:08:52Um
1:08:53but many of them I think can kind of
1:08:56learn to grow and and move on from that
1:08:58because they're like that's you know,
1:09:00she she was kind of a responsible and
1:09:02the ringmaster for a lot of of what
1:09:05happened.
1:09:06But even Elizabeth's brother got a job
1:09:08fairly easily.
1:09:09Really?
1:09:10Yeah. And he knew I mean I'm sure he
1:09:12knew what was going on. Yeah.
1:09:15So And that's I don't know. People don't
1:09:17seem to care.
1:09:19And a lot of a lot of these end up that
1:09:21way, right? Like even the guy the Wolf
1:09:23of Wall Street now is like the
1:09:24successful life coach. You're just like
1:09:27What in the heck is that? just say?"
1:09:30Yeah.
1:09:33Uh thank you. Uh my question was on um
1:09:36in terms of Elizabeth Holmes' uh
1:09:38personality and the way she makes
1:09:40statements that she makes, I think we
1:09:41see many other like famous figures in um
1:09:44Silicon Valley. I mean, Elon Musk and
1:09:45many others making these wild
1:09:47over-promises. And I'm wondering if you
1:09:49see also see those those parallels in
1:09:51terms of successful entrepreneurs in
1:09:52other fields that who seem to be acting
1:09:55just like her, so to speak.
1:09:58Mhm.
1:10:00I think the difference between Elon Musk
1:10:01and Elizabeth Holmes is like Elon Musk
1:10:04did deliver on on quite a bit of things,
1:10:06you know? Like Yeah.
1:10:08You see You can't have go on the road
1:10:10anymore without seeing a Tesla kind of
1:10:12running about, but um
1:10:15uh
1:10:16I I think
1:10:19it it's interesting how this Silicon
1:10:21Valley has been the situate like the
1:10:23hero storyline has really prevailed.
1:10:25Where
1:10:26now instead of, you know, admiring a pop
1:10:28star, you now have you can admire
1:10:32uh
1:10:33uh
1:10:34a technology innovator. And we kind of
1:10:36hold these people on a certain pedestal
1:10:38thinking that they're almost like gods
1:10:41when really they're just human like us
1:10:43humans like us and they're going to make
1:10:44mistakes.
1:10:45Um but
1:10:47you know, I think
1:10:49the striking thing about Elizabeth was
1:10:51the fact that it just you know, we held
1:10:54her to such esteem, but she wasn't
1:10:58producing any results for such a long
1:11:00time, right? Like she just did not
1:11:01deliver any of the things that she had
1:11:04said and she had been dishonest about so
1:11:07many things to so many different people.
1:11:09Her employees, her investors, and and uh
1:11:13her patients.
1:11:16How long has started or how long has um
1:11:18SpaceX been a company?
1:11:21I'm not sure. They Hey, they launched
1:11:24and landed
1:11:25uh their rocket though. They've They've
1:11:27made reusable rockets.
1:11:28that's
1:11:30That was the goal, right? Wasn't that
1:11:31the goal?
1:11:32I think so, right?
1:11:352002 2002
1:11:37So that's like the same time that
1:11:38Theranos was founded.
1:11:41Yeah. And we couldn't get a machine that
1:11:44worked. I know, they couldn't run a
1:11:45freaking glucose test.
1:11:50The balcony?
1:11:51Hi. Um
1:11:53I I first of all, I want to commend you
1:11:54for your uh honesty and your
1:11:57uh courage in doing what you did and
1:12:00coming here to talk to us is is a is a
1:12:01real treat.
1:12:03Uh one of the things I wonder about, I
1:12:05don't know how flat the company was in
1:12:07terms of management, but
1:12:09why do you think I It's easy to
1:12:10understand how recent graduates may not
1:12:13have had the experience
1:12:14to um
1:12:16turn on the lights quicker in terms of
1:12:18figuring out what was going on,
1:12:20but uh
1:12:22experienced people should have.
1:12:24And uh the question I have is why
1:12:27your middle management people weren't
1:12:30the ones who actually became the
1:12:31whistleblowers.
1:12:36I don't know. So many of them had
1:12:38families. That's the only thing that
1:12:39comes to my mind is just like a lot of
1:12:41them had families and
1:12:43had the sense of like they they didn't
1:12:46want to lose something, you know? They
1:12:47were scared Most of them were scared of
1:12:49losing their jobs. A lot of them were
1:12:50scared of maybe even losing face. Um
1:12:54with being with a company that would
1:12:56have failed.
1:13:00The structure of the management wasn't
1:13:02super flat. It was also very fragmented.
1:13:06Like your chemistry team didn't
1:13:08necessarily talk all the time with your
1:13:11immuno assay or your infectious disease
1:13:14team.
1:13:15Um
1:13:16but I think it's just I mean, for us it
1:13:18was weird how many people who were
1:13:20recent graduates did say something. And
1:13:23maybe it was a case cuz we had a lot
1:13:25less to lose Yeah. in in in certain
1:13:28ways. I think it definitely helps, yeah.
1:13:30Having less to lose. But the other thing
1:13:31that confuses me is that there were a
1:13:33lot of people that I respected who
1:13:34stayed at Theranos Yeah. for a long
1:13:37time, like past when all these stories
1:13:39came out. Yeah. That's confusing to me.
1:13:46Um good evening. Thank you. Since we're
1:13:48in the biz school, I figured we should
1:13:50have at least one sort of finance
1:13:51question. And that is uh
1:13:54the sort of 9 and 1/2 billion dollar
1:13:55valuation was based on some amount of of
1:13:59total equity raised, which I I recall
1:14:01was in the 8 or 900 million dollar
1:14:03range, something like that. So the
1:14:05question is is where did all the money
1:14:07go, right? So I know they had to cough
1:14:10up 40 million back to Walgreens, but
1:14:12they took in 140. And I know they paid
1:14:15tens of millions or maybe over 100
1:14:17million dollars to to Boies and other
1:14:19legal firms. Were the salaries
1:14:21incredibly high? Did people Were people
1:14:23attracted more by stock options? Were
1:14:25you know, did did
1:14:27Sting and Bono play at company parties?
1:14:29Uh
1:14:30Where did it go? That's a really good
1:14:32question. Definitely the lawyers took a
1:14:34lot of it. Yeah. Um I wouldn't be
1:14:37surprised if Elizabeth and Sunny took a
1:14:39lot of it as well throughout the years.
1:14:42Um
1:14:44Also
1:14:44when they fined her based on the SEC
1:14:47violation, they gave her some hand slap
1:14:50penalty of what was it? $500,000 or
1:14:52something based on what her net worth
1:14:54was. So I don't see that she was able to
1:14:56liquidate liquidate the assets.
1:14:58I don't think she had a very high
1:15:00salary. Like someone told me her salary
1:15:02was like $250,000 a year. But she took
1:15:05out a 25 million dollar loan from the
1:15:07company. Yeah. Um
1:15:10So she had money in her bank account.
1:15:12Got But that still doesn't account for
1:15:14where all that money went. The salaries
1:15:16weren't insanely high. Yeah. I mean, we
1:15:18did have a lot of employees. Biotech in
1:15:19general is pretty costly, right? You
1:15:21have a bunch of machinery you have to
1:15:22buy. Even the like stock items that you
1:15:25have, like reagents, when you're
1:15:27developing these antibodies, like a
1:15:28small little tube of antibody can cost
1:15:30you like $6,000.
1:15:33Um so the salaries They bought a nice
1:15:36pretty little office building.
1:15:38the overhead is not cheap. Yeah, that's
1:15:40not cheap.
1:15:40was a lot.
1:15:43Last question, did you ever see her
1:15:44blink?
1:15:48I don't know.
1:15:49I don't Yeah, I don't know.
1:15:54Hi. So you talked about how your
1:15:56grandfather was on the board of
1:15:58Theranos. And I can't imagine if you
1:16:01ever went to him and told him, you know,
1:16:03like I don't believe what's going on
1:16:05here or it's kind of a scam,
1:16:08he would have an easy time believing
1:16:09you. So I'm wondering, were there people
1:16:11around you guys that simply had a tough
1:16:14time believing you? And did they ever
1:16:16say sorry?
1:16:18Um lots of people had a hard time
1:16:20believing.
1:16:22Um
1:16:24Yeah. I mean, we saw it from kind of
1:16:26like the back end. Like when the first
1:16:28paper came out, it was like when the
1:16:31Wall Street Journal first broke the
1:16:32story,
1:16:33you know, at this point neither of us
1:16:35were on the record and we saw it and we
1:16:36saw the response of like, "Oh, of
1:16:38course, you know, they're trying to
1:16:40target her. It's because she's
1:16:41successful. They're targeting her
1:16:43because she's a woman." Like, you know,
1:16:46this is like classic tactics by the
1:16:48media to build another sensational story
1:16:51so they can make more money. So we
1:16:53definitely saw a lot of pushback on what
1:16:56was happening. I had even, you know,
1:16:58personal friends of mine who are
1:17:00entrepreneurs here that said, "Oh, yeah,
1:17:02it's because she's a woman. That's why
1:17:04that they're attacking her because
1:17:05they're trying to, you know, just take
1:17:07down various women in tech."
1:17:10Um so we we kind of saw like the
1:17:12sentiment really shift and slam down.
1:17:16Like kudos to John because he really
1:17:18stacked up those stories in a really
1:17:20intelligent way to make sure like the
1:17:22first one I was pretty underwhelmed. I
1:17:24was like, "Oh, man. Like this is kind of
1:17:26technical. A lot of people aren't going
1:17:28to understand what this means."
1:17:30Um but then just
1:17:32all the lies he was able to unravel um
1:17:36and show
1:17:37people like the depth of deception that
1:17:40was that was occurring. Um but it took a
1:17:42long time for like the consensus of
1:17:44people to realize like, "Okay, this
1:17:46isn't an attack on her. It's really like
1:17:50she has just lied this much and there
1:17:52are just so many problems that have been
1:17:53occurring in this company." It took a
1:17:55long while to to change people's
1:17:57sentiment in that direction.
1:18:01The balcony?
1:18:02So I'm actually really interested in the
1:18:04psychology of being in an environment
1:18:06where you've identified that things
1:18:09aren't right. But everyone around you
1:18:10seems to accept that it's totally
1:18:12normal. And it seems to me that both of
1:18:14you were able to be like, "Nope, I'm
1:18:16going to trust my gut on this."
1:18:18But I'm curious if you have advice for
1:18:19people who maybe aren't able to trust
1:18:21themselves as well or feel like they're
1:18:24the ones taking crazy pills because
1:18:25everyone else is just business as usual.
1:18:28And like how do you
1:18:30how do you basically follow your gut and
1:18:31do what's right when it feels like
1:18:34you're the one who's wrong?
1:18:38I I had the feeling of that I was wrong
1:18:41for quite quite some time. Like I really
1:18:43left there. I I I didn't know if I was
1:18:45wrong. I was like, "No, there's there's
1:18:47something wrong going on here,
1:18:49but maybe there is something I'm not
1:18:51seeing."
1:18:52Um because you were just surrounded by
1:18:55so many talented people. I just couldn't
1:18:58I I really felt that
1:19:00uh there was something that I wasn't
1:19:03seeing. I think honestly, if I had
1:19:06stayed within the company, I would have
1:19:09probably more likely not
1:19:11done something because I would have been
1:19:13so It's It's so hard to say. I have no
1:19:15idea. But you're so easily swayed by uh
1:19:18again, that culture, like the fear
1:19:21that's sort of implemented in there and
1:19:22then everyone else kind of being very um
1:19:27uh just nonchalant about what was going
1:19:30on just kind of going through the
1:19:31motions and the grind of the everyday
1:19:33even though knowing that there's a lot
1:19:35of problems.
1:19:36Um but I don't know. I don't know if I
1:19:38have a very good answer for
1:19:39never thought that I was wrong. Like I
1:19:41never had a doubt.
1:19:44And the part of it was that that were
1:19:46all the senior scientists around me were
1:19:48seeing the same things and I would go to
1:19:49them and and they would say like yep,
1:19:51you're that's what you're seeing.
1:19:53Yeah. But it's mostly like it was it's
1:19:55kind of weird like the culture is mostly
1:19:57brushed off. Tons of people made jokes
1:19:58about it.
1:20:00Um
1:20:01but not that many people really did
1:20:02anything about it but
1:20:04I really never doubted that I was right.
1:20:07Mhm.
1:20:08And I don't know how to tell someone
1:20:10who's doubting themselves to just Yeah.
1:20:13Know you're right.
1:20:15I don't know.
1:20:18Yeah, I don't know. I don't know how you
1:20:19would take that that switch.
1:20:21I guess just
1:20:23just accumulating enough evidence,
1:20:24right? And asking other people like hey,
1:20:27is this right? For me it was really
1:20:29talking to lawyers and regulators. And
1:20:31then it was like oh, okay. Yeah. Um
1:20:34uh these these intuitions that you had
1:20:37about what was going on
1:20:38um can be easily confirmed by by kind of
1:20:42experts in that field.
1:20:46Gentleman here.
1:20:47So part of what I think this makes makes
1:20:48the story so fascinating is how badly it
1:20:50went wrong. And one of the things that
1:20:51makes me curious about is do you think
1:20:53Elizabeth went in knowing she was going
1:20:55to lie and cheat her way if necessary?
1:20:57And if not, kind of where do you think
1:20:59it went wrong?
1:21:02I don't think she went in this to just
1:21:04lie and deceive. I really think that she
1:21:06initially went in with good intentions
1:21:08and I don't know where it went wrong and
1:21:10it's so tragic to me that it went wrong
1:21:13and that so much money was wasted and
1:21:15that now it's put this like sort of
1:21:17scorn around diagnostic projects where
1:21:20they're
1:21:21not getting funded as easily and a lot
1:21:23of people have a lot of skepticism
1:21:24around uh like point of care diagnostics
1:21:27and everything but I have no idea. I
1:21:30think
1:21:31it just again she just over promised so
1:21:34much and just didn't know how to deliver
1:21:36and had so much capital that she was
1:21:38able to
1:21:39just kind of bide her time
1:21:42for a long time but I really don't know.
1:21:44I think she just really wanted to be
1:21:46Steve Jobs so she created a world where
1:21:48she was Steve Jobs.
1:21:50Um
1:21:51but it does seem kind of short-sighted.
1:21:54Um I think she wasn't
1:21:57I think she just wasn't able to let go
1:21:59to admit, okay, this isn't working. I
1:22:02just think she was just not capable of
1:22:05of doing that. Yeah.
1:22:07And there's that very popular psychology
1:22:09that runs through this world that if you
1:22:11like just believe something hard enough
1:22:13that it'll come into fruition, right?
1:22:15We've seen Oprah and all these like
1:22:17successful people kind of take this this
1:22:19mentality that you know, if I just
1:22:21really wish it into being and I just
1:22:24like visualize myself being at my end
1:22:27goal, somehow that's just it's just
1:22:29going to work out. And
1:22:32I don't know. I feel like her and maybe
1:22:34the people she surrounded herself with
1:22:36kind of
1:22:38just like fed into that delusion for so
1:22:40long that they couldn't break break out
1:22:42of it and just face reality of what was
1:22:44sitting right there in front of them.
1:22:46Yeah. It's kind of funny because
1:22:48investors want to invest in someone who
1:22:50says failure is not an option.
1:22:52But
1:22:53it's really I feel like investors should
1:22:56tell
1:22:57you know, their CEOs failure is an
1:22:59option. Yeah.
1:23:02Um and and it's okay. I think investors
1:23:04have to be okay with failures. I think
1:23:06CEOs have to be okay with failures.
1:23:08Um and she was definitely of the mindset
1:23:12failure is not an option.
1:23:16Which is detrimental.
1:23:19I think we have time for one more
1:23:20question.
1:23:22Well, I guess this is I should conclude
1:23:23this. Failure of this question should be
1:23:25an option. There's a lot of pressure. Um
1:23:27but thank you for coming in. I had a
1:23:29question about something you said
1:23:30earlier about this kind of hero worship
1:23:32um which is definitely present in
1:23:33Elizabeth Holmes people people hailing
1:23:35her as the next Steve Jobs and all of
1:23:36that. First of all, hero worshiping
1:23:37Steve Jobs and then hero worshiping her
1:23:39based on this vision of her as Steve
1:23:40Jobs.
1:23:42With this and Elon Musk and all these
1:23:44other people um in Silicon Valley who we
1:23:47look up to and often fall are are fall
1:23:50from grace later on like Steve Jobs was
1:23:52made out to be a bad manager later on in
1:23:54a biography. Elon Musk is kind of gone
1:23:56off the rails a little bit. Um
1:23:59how closely do you think we should tie
1:24:01these people to their company and should
1:24:04we predicate our belief on how good they
1:24:06are as a person on how successful their
1:24:08company is? Because you said earlier
1:24:10that Theranos failed but SpaceX and
1:24:12Tesla are successful um but there have
1:24:14been multiple pieces saying that the
1:24:15working conditions there are very bad
1:24:17anyway even despite their success. So I
1:24:20just wondered if you could talk about
1:24:21that a little bit more.
1:24:24Yeah.
1:24:25Uh it's hard to kind of pull them away
1:24:27from their company because
1:24:29like people like that just spend all
1:24:31their time on their companies so
1:24:34I don't know how you separate. Like
1:24:35Elizabeth was Theranos. Yeah. Like the
1:24:37two cannot be separated.
1:24:40Yeah.
1:24:40Steve Jobs is Apple or was Apple.
1:24:43Um
1:24:45But it's not the case majority of
1:24:46companies that's not actually the case
1:24:48cuz in the US actually what you see is a
1:24:50lot of founders actually get replaced
1:24:52and will they'll have like an actual
1:24:55managing CEO run their company in most
1:24:57cases. And it's weird there've just been
1:24:59these few people that have ma- managed
1:25:01to really link themselves
1:25:03to their companies and become the
1:25:05identity of that organization. People
1:25:07like Elon Musk, um people like Steve
1:25:10Jobs. But I I I think it's the minority
1:25:13more than it is the majority uh uh of
1:25:17people that kind of are these really
1:25:20strong idols and leaders of their
1:25:22companies. And I don't know, maybe they
1:25:24use Twitter more or maybe I don't even
1:25:26know why that happens but yeah.
1:25:31I'm not too sure. Please join me in
1:25:33thanking Tyler, Erica, and Susanna.

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