[00:00:01.04] PREET: John Carreyrou, thank you so much for being on the show.

[00:00:04.18] JOHN: Thanks for having me.

[00:00:05.16] PREET: So I gotta say, I just finished reading your book in the nick of time for this interview, Bad Blood, it is a fantastic read. It goes by really fast, so I want to congratulate you on the success of the book. And largely I want to talk about this massive fraud that was unfolding you know basically in the public eye, but you’re the one who really got to the heart of it based on your really sharp investigative reporting work that you did. For people who may not be familiar, could you just sort of begin by telling us who is Elizabeth Holmes, and what is or was Theranos?

[00:00:43.10] JOHN: Right, and actually it wasn’t in the public eye until recent years, because the thing about Theranos is it was founded quite a while ago, back in 2003, and Elizabeth Holmes was a Stanford sophomore who dropped out and decided she was gonna pursue this vision of building a startup around a diagnostic device. A portable blood testing device that would do the full range of blood tests, off just a drop or two of blood pricked from a finger. And for the first 10 or so years really of Theranos’s existence, she was operating under the radar and she even referred to the mode they were in as stealth mode. She really rose to fame for the first time in late 2013 early 2014 when she launched her technology, her finger stick blood tests in Walgreens stores in Palo Alto and in the Phoenix area in Arizona, and [00:01:42.16] at that point started drawing quite a bit of media coverage, and one of those stories in mid 2014 by Roger Parloff of Fortune, it was revealed that the company had achieved a 10 billion, 9 or 10 billion dollar valuation that she had kept half the equity, so suddenly here was…

[00:01:59.29] PREET: So she was a self made multi billionaire.

[00:02:01.11] JOHN: Right, she was worth almost 5 billion dollars and she was sort of the first female tech founder in Silicon Valley who had risen that high and become that wealthy and was joining the pantheon of these men, the Zuckerbergs and the Larry Pages and Sergey Brins and before them, you know Jobs and Ellison, etcetera.

[00:02:21.10] PREET: What was the promise and the special thing about this technology, for drawing blood? Why was it such a big deal?

[00:02:27.24] JOHN: Right, I mean to some it may not seem like such a big deal to be able to run a bunch of blood tests of a tiny sample of blood, but actually if you know anything about blood testing, that is something that thousands of researchers in industry and academia have been trying to do for decades. If it were possible, it would have clear uses such as for cancer patients who get stuck a lot with needles, or infants, to be able to just prick a tiny bit of blood and run a battery of tests for a newborn child is great. And elderly patients, applications in the field…

[00:03:03.14] PREET: In the battlefield too.

[00:03:05.03] JOHN: In the battlefield. So for reasons that we can get into, no one cracked this nut, and she claimed to have done so, and she claimed that she could run as many as 70 tests, 70 different blood tests simultaneously off one drop of blood, and that her machine could run the full gamut of blood tests. And if you ask lab experts what the full gamut of blood tests means, it’s anywhere from several hundred to several thousand blood tests.

[00:03:30.26] PREET: So tell us a little bit more about Elizabeth Holmes herself. What drove her to pursue this particular vision?

[00:03:37.16] JOHN: Right so she grew up in a, what I would call an upper middle class family with an actually interesting background. On her father’s side she was descended from the Fleischmann’s Yeast dynasty. By the turn of the 20th century the Fleischmann and Holmes families were some of the richest people in AmErika. Unfortunately her father’s grandfather and father had lived large but flawed and sort of decadent lives, and sort of squandered much of that wealth. Her father very much let her know about this great entrepreneurial dynasty that she was from, and I think communicated to her the expectation that she would follow in their footsteps. [00:04:22.16] He himself, Chris Holmes her father had been a civil servant. I think he and his wife raised Elizabeth with a pressure to achieve and to sort of reclaim their ancestors’ success and wealth, but also with this notion that she should do good, and that she should live a purposeful life.

[00:04:43.11] PREET: Am I correct that as you recite in the book, that over time, she began to present herself even to her own employees, I think the phrase you use is, “a world historical figure.”

[00:04:53.20] JOHN: She didn’t actually say that, she didn’t say it explicitly, but her employees began, some of them at least, became convinced that she saw herself as a world historical figure. And sort of…

[00:05:06.03] PREET: What does that mean?

[00:05:07.05] JOHN: Like someone who really puts a dent in the universe, and is remembered as a significant person of their era in the history books. She wanted to be remembered for someone who really had invented something and had you know changed science. You know unfortunately it was all channeled through the prism of Silicon Valley’s culture. And Silicon Valley’s culture, if you go back 40, 50 years, has always included a lot of fake it until you make it. And her idol was Steve Jobs, she absolutely idolized Jobs and Apple, and she really modeled herself after him, to the point of wearing the same attire. She took to wearing black turtlenecks, and she’d also embraced you know this ethos of like it’s okay to you know, sort of get it right or you know, iterate. [00:06:00.03] And so within 18 months, 2 years of starting Theranos in 2003 she was already trying to start to commercialize a blood testing system that absolutely did not work.

[00:06:11.00] PREET: But fooled a lot of people along the way.

[00:06:12.05] JOHN: Right, because starting in those early days, 2005, 2006, she started doing false demos. Faked demonstrations of the product, whereby investors would come around to Theranos’s Palo Alto office, that at the time they were doing microfluidics, they were attempting to do microfluidics, and so the investors would see on the screen the blood running through these little channels and the cartridge that would be inserted into this bigger part of the device called the reader, and then they would go to another room and they would be shown the result from the blood test. And actually the result was a prerecorded result from one of the times that the machine had worked. So it was a half faked demonstration….

[00:06:55.09] PREET: So so much of this was utter fraud.

[00:06:57.03] JOHN: It is, clearly to us, when we look back on it. But I think in Elizabeth Holmes’s mind, this is the way an entrepreneur operated in Silicon Valley. You tried to work on something, you got it to sort of work, not really, but you kept raising money, pretending that you had gotten it to work, and eventually you hoped that the reality of the technologies development would catch up with the promises made to investors.

[00:07:24.12] PREET: In the last couple of months, Elizabeth Holmes has been charged, criminally, by the US ATtorney’s office for the Northern District of New York, and that case is pending and she’s presumed innocent…

[00:07:32.19] JOHN: Northern District of California.

[00:07:34.14] PREET: (Laughs) I’m sorry, I can’t help myself. Freudian slip. Northern District of California. She’s been charged criminally with wire fraud, conspiracy to commit wire fraud along with her former boyfriend and somebody who helped her run the firm. But this is sort of different, when reading the book and thinking about some of the characters that I encountered during my work as a prosecutor. The way you described it, she’s sort of different from Bernie Madoff, although there’s some similarities, in presenting yourself in a particular way, and in social circles as well. But Bernie Madoff never thought, “Ultimately I’m gonna make this right.” You know he was ripping people off, taking their money, pretending that investments were being made with their money over time and generating these false broker statements. She, on the other hand, to engage in a taxonomy of fraud, you think at least at the beginning, was hoping to make something real, ultimately.

[00:08:28.15] JOHN: I think in her mind she continued to think that eventually they were gonna get there with the technology, and all the corners they’d cut along the way, and all the lies she told wouldn’t matter in the end, because when they got there, Theranos would be recognized as a titan of Silicon Valley, would have disrupted medicine, and she would be as well known as Zuckerberg and others, and feted. Really all the cheating that had gotten her there wouldn’t happen. And if you look at one of her early backers, Larry Ellison, you know, he was absolutely famous in the early days of Oracle for totally overpromising about what the Oracle database software could do. And for shipping early versions of that software that was crawling with bugs. And so in her mind she was gonna follow that playbook and so I’ve actually recently come to learn this expression, that I think applies well to her, and that expression is, [00:09:22.03] “Noble cause corruption.” She felt strongly that the cause that she was pursuing was a noble one, therefore, all the cheating along the way to get there in her mind I think was perfectly justifiable because the cause was so noble.

[00:09:40.16] PREET: Also known as “the ends justify the means.”

[00:09:42.08] JOHN: Yes.

[00:09:42.29] PREET: But, along the way, in order to get you know more respectability and more investment, she collected a who’s who of famous people, mostly men, who believed in her and her vision. Take us through a list of some of those people who either became members of the board, or made huge investments, or who otherwise vouched for this unproven technology.

[00:10:05.10] JOHN: Right, and so I just want to start by making a distinction between the early investors and the later investors. You could say that all the investors who came in during those first three rounds were early investors who knew, you know, what the lay of the land was. Theranos was a brand new company, like all startups, the odds that it would succeed were low. On the other hand, most of the money that Theranos raised, and that Elizabeth Holmes raised, came in the later rounds, after the fall of 2013, after Theranos went live with its finger stick tests. 700 million dollars of the billion dollars was raised at that point. And the reason that was outright fraud is she used the fact that she had commercialized the technology that she had gone live with it in stores in California and Arizona, to say to these new prospective investors [00:10:56.25] to say, “Obviously our technology is real. We’ve gone live with it. Patients are using it. How could it not be real?” And I think people…

[00:11:05.14] PREET: And on top of that we have people like former Secretary of State George Shultz.

[00:11:09.00] JOHN: Right.

[00:11:09.20] PREET: We have media baron, Rupert Murdoch.

[00:11:12.12] JOHN: Right.

[00:11:12.29] PREET: We have the person who would become the future Defense Secretary General Mattis. And they’re associated with great integrity, we don’t’ always agree with their views depending on your political stripe. That’s an impressive group. As you recite in your book, missing from the board was anyone who actually was an expert on blood.

[00:11:32.10] JOHN: That’s right. And you know in hindsight that was an enormous red flag. In any case, that board did serve its purpose, because one investor in particular, was a hedge fund based in San Francisco, that put in almost 100 million in early 2014, and one of the factors that swayed them into investing was that sterling board. And then of course, you know, people such as Rupert Murdoch whom you mentioned, and Betsy DeVos, our current Education Secretary, the heirs to the Walmart fortune, the Waltons, put in 150 million.

[00:12:07.19] PREET: Explain something, that i think is fascinating in the story, how she got the trust of so many folks. What was the nature of the force of her personality and her demeanor?

[00:12:18.29] JOHN: Right well, I would say that the pattern that emerged early on was that she would win the backing of someone who was older and had prestigious accomplishments and therefore a good reputation, and the first person she did that with was her Stanford Engineering School professor, Channing Robertson, who was a star of the Stanford faculty, and he gave her credibility when she went and met with VCs early on. And so she then pivoted so to speak to George Shultz, the former Secretary of State, whose house is right off the Stanford campus. And when he heard from Elizabeth, you know about their product, and what she claimed it could do, he was really entranced and in short order joined her board and then introduced her to all his buddies at the Hoover Institution, the conservative think tank on the Stanford campus, [00:13:13.20] and that’s how she got to know Kissinger, and Nunn, and all these other guys with sterling resumes, and one after the other they joined the board in exchange for grants of stock.

[00:13:26.09] PREET: But she had to have a certain kind of personality, to get these very smart people, who had dealt with issues of war and peace, and life and death, how does that happen?

[00:13:35.06] JOHN: Well first of all she’s very smart, she’s a very smart woman, and she’s got charisma, and she’s an incredibly talented pitch woman. She truly did believe in this vision of this device and accomplishing this vision, and so she won people over with her enthusiasm, with her intelligence, with her charm, I think it’s you know, no coincidence that starting with Channing Robertson and going all the way through to Rupert Murdoch, and David Boies that they were all older men, and if you take George Shultz in particular, you know he’s 97 now, when he first met her I think he was 91 or 92, he’s a man of great accomplishments but I don’t think many 20 something year old attractive blondes were hanging out with him. I’m not suggesting anything inappropriate sexually, but I think it can’t be denied that, that you know these older white men one after another fell under this, this [00:14:33.25] young, attractive, charismatic woman’s spell.

[00:14:38.02] PREET: And then, at some point, she becomes a little bit more famous, in part because of a piece that’s written in the paper that you work for, the Wall Street Journal. How did that come about?

[00:14:48.21] JOHN: Right so by then, she had become friends with George Shultz, he had joined her board, he had become her biggest champion and in 2012 came and visited the Wall Street Journal’s editorial board. But at the end of that meeting, he mentioned, “By the way, I know this amazing young woman, who’s come up with this incredible medical invention, she’s very reclusive, and she’s been in stealth mode up until now, but I’m getting the feeling that she’s gonna be ready to sort of present it to the world soon. Would you guys be interested?” And so Paul Gigot who’s the longtime editorial page editor of the Journal said, “Sure, I’ll send a writer when she’s ready.” And a year later George Shultz and Theranos came back to the Wall Street Journal Editor Page and said, “Elizabeth Holmes is ready.” [00:15:36.02] And why was Elizabeth Holmes ready? Because she was on the cusp of launching her finger stick tests in Walgreens stores, and so she wanted to make a splash in the media to coincide with that launch. And so an editorial page writer named Joe Rago flew out to Palo Alto and interviewed her. And then wrote a very friendly sort of profile of her in the editorial pages that essentially took everything she told him about the capabilities of her technology at face value. So now we fast forward from that interview which was August of 2013, published in September of 2013 to early 2015, and by then Elizabeth Holmes has become a household name in Silicon Valley…

[00:16:19.23] PREET: She’s everywhere. Friends of mine would talk about her, women in particular, because she was someone to look up to, self made billionaire. You know part of the attraction of it was that it was not just some sort of software that could make someone rich, but it was gonna have a positive impact on people’s lives, medically.

[00:16:38.00] JOHN: Part of that is that journalists who covered her and who wrote about her didn’t really come from a medical reporting background. And she had presented herself as you know the heir apparent to Steve Jobs and the Silicon Valley tradition, and I guess those reporters who covered her early on accepted that portrayal of herself as a tech figure as opposed to a medical figure…

[00:17:01.16] PREET: Right, although you’re not a medical reporter either.

[00:17:03.10] JOHN: Well I’ve spent a lot of time over the previous 10 years reporting on medicine and doing a lot of investigative reporting on health care and medicine. The previous year I was part of a series a few colleagues and I had done on medicare fraud, and in the course of reporting one of those stories I had come across a pathologist in Missouri who wrote an obscure blog that he called “The Pathology Blawg,” which he spelled B L A W G.

[00:17:30.08] PREET: (Laughs) Because how else would you spell it? I’m an avid reader of that blog as well.

[00:17:34.24] JOHN: It was an obscure blog but it did come across my radar and I reached out to him because I needed someone to explain to me certain complexities about laboratory billing for that medicare fraud series, and he obliged, and then you know we weren’t in contact for another six or eight months, and suddenly in early 2015 he comes to me and he says, “Have you read this recent New Yorker Magazine profile a woman named Elizabeth Holmes and her startup Theranos?” And as it turned out I had, I’d found that story interesting but there had also been some things in it that struck me as odd. The main one being the notion that a college dropout can just drop out with very little, if any training in medicine, and then go on to pioneer a new medical science.

[00:18:23.23] PREET: Can we pause there? SO, you know, you are a very smart guy, you’re not a scientist by training…

[00:18:30.27] JOHN: Not at all.

[00:18:31.07] PREET: …but you have a suspicious mind? Why is it that, because I think it’s important  and impressive and I wonder why we don’t have more people like that, so you…

[00:18:39.02] JOHN: It’s fair to say I have a suspicious mind….I’m skep….

[00:18:41.28] PREET: Is that what it is? You’re a skeptic? Meanwhile all these other people who had achieved great fortune and accomplishments in life and served presidents of the United States of America, how come they didn’t have the same suspicion that you had?

[00:18:52.23] JOHN: Well first of all, all these people who jumped on her bandwagon, there are very few if any who had any background whatsoever in medicine, and much less laboratory science, so I at least had that advantage, which is that I’d spent much of the previous 10 years reporting on this stuff.

[00:19:09.04] PREET: Do you attribute your initial suspicion to having that background, or, to just sort of common sense skepticism?

[00:19:16.15] JOHN: I think it was a combination of both, but it was certainly informed by my medical reporting expertise, I mean one of the things that….

[00:19:25.19] PREET: You’re letting those guys off the hook, okay.

[00:19:26.15] JOHN: Yeah, yeah. I mean one of the things in the New Yorker piece which the New Yorker writer pointed out, and there were by the way a few skeptical paragraphs in that New Yorker profile, you know Theranos had never really published any studies in peer reviewed literature, and I couldn’t think of any great advance in medicine that had not involved publishing your discovery in peer reviewed scientific papers. So that was one red flag. So when he told me of his own skepticism…

[00:19:55.27] PREET: This doctor.

[00:19:57.01] JOHN: The pathology blogger. And he knew a thing or two about blood testing, certainly knew more about it than I did. he came to me with other information which was that he, after the New Yorker story, he’d written a short skeptical blog item on  his blog, and this blog item had been seen by a guy named Richard Fuisz, and Richard Fuisz is a former childhood neighbor of Elizabeth Holmes, who had gotten into a patent litigation battle with her, and he had ultimately been steam rolled by Elizabeth and Theranos who had hired David Boies, the famous lawyer, to represent them, and Boies had steam rolled Fuisz. And in the course of that three year litigation, Fuis had become convinced that Theranos was a scam, and by the way Fuisz is a trained medical doctor with a number of patents to his name…

[00:20:48.26] PREET: So you talked to him also?

[00:20:49.29] JOHN: So I, I learned that the pathology blogger had been approached by Fuisz, and that Fuisz was alleging that this thing, meaning Theranos, was a scam. In addition, I also heard that Fuisz had recently himself made contact with an employee of Theranos, who had just left Theranos. And it was a key employee. It was the laboratory director. So I was hearing third hand through the pathology blogger that there was this guy named Richard Fuisz who himself felt Theranos was a scam, and who not only had that hunch but had talked to a primary source who was confirming that hunch to him. And so I thought this story could have legs if I can pull on this string and make contact with the primary source, and if I can confirm that the primary source is alleging wrongdoing, and is alleging that this thing is a house of cards, then you know, this could be a big story.

[00:21:41.14] PREET: Do you have like an investigative spidey sense? So at this moment you’d been reporting for a long time, you have 11, 12 Pulitzers? How many?

[00:21:48.28] JOHN: (Laughs) No. I mean I’ve been part of teams at the Journal who’ve won two Pulitzers.

[00:21:52.29] PREET: You’re so, you’re very modest. Two, two is two more than I have. At that moment how are you feeling, personally when you’re hearing this information? Is it one of those things where, you know it’s happened 20 times before and it usually doesn’t pan out? Or do you have some sense that this is really something?

[00:22:07.21] JOHN: Well I gotta say that I get a lot of tips and I think a lot of reporters get tips, and most of them don’t pan out. I would say 9 out of 10, if not 19 out of 20 don’t pan out. Usually you can tell pretty early on. In this case, I have to say that my ears immediately pricked up, because I was immediately aware of the implications of potentially a fraud at this company. One, you know Silicon Valley is a big story, and this was one of the most valuable private unicorns in Silicon Valley, valued at 9 or 10 billion dollars. IT had this, you know, female founder which was a rarity who had achieved a star status in a short period of time. And then you had the public health dimension of this. If what I was hearing second hand was true, and if this company not only didn’t really have the technology that it claimed it had, but was also [00:23:03.10] putting out unreliable test results, then it meant that patients, and potentially thousands, if not hundreds of thousands, of patients were being put in harm’s way because at that point, the Theranos services had been rolled out in two stores in Northern California and about 41 others in Arizona. So…

[00:23:20.13] PREET: So you talked to a lot of people, and among the other things you did which I thought was fascinating, is you subjected yourself to blood tests.

[00:23:27.04] JOHN: Right.

[00:23:28.14] PREET: Describe why you did that and how that went.

[00:23:29.11] JOHN: Well first of all I wanted to see if they were gonna prick me, and do the finger stick test, or do the traditional needle and a draw, because I’d heard from the former laboratory director who by the way goes by a pseudonym in the book, Alan Bean, I’d heard from Alan, that actually a large proportion of the tests were being done on regular sized samples drawn venously, from the arm.

[00:23:58.16] PREET: And what’s the problem with that? That just went against the entire, you know, glory and vision of what Theranos was putting forward?

[00:24:03.16] JOHN: Right, she had claimed in all these interviews, and she claimed it even on the website of Theranos that they were doing finger stick, and that supposedly…

[00:24:11.07] PREET: That was the whole point.

[00:24:12.05] JOHN: Right! It was the whole point. So if they’re doing venous draws for many, if not the majority of the tests, that’s already  one huge hole in this Theranos myth. So I wanted to see that, and the other thing I wanted to do is I wanted to compare my blood test results from Theranos to ones from a traditional laboratory, and so minutes after I exited the Walgreens in Arizona where I got my blood tested by Theranos, I drove to a LabCorp location, and I wanted them to be close together so that you know Theranos wouldn’t be able to say, “Well you waited too long…”

[00:24:47.07] PREET: You didn’t have a Big Mac in between.

[00:24:48.19] JOHN: Right, and of course I had fasted. And then later, a week or two later, I got my test results from Theranos. I’d by then returned to New York. And I got the ones from LabCorp as well, and there were some discrepancies. One of them was that Theranos labeled my cholesterol measurements as optimal…

[00:25:12.29] PREET: I’m gonna go get tested at Theranos right after this.

[00:25:14.19] JOHN: (Laughs) And then LabCorp actually said, you know they weren’t optimal, that they were high. The doctor who had given me my test order, who became a source for my story because she had come across questionable results for her patients from Theranos, she had had herself tested too. And her Theranos results showed that she had Addison’s Disease, which is a very serious condition that can result in death if it’s not treated. Her LabCorp results showed that that value was perfectly normal. And so she had no doubt in her mind having seen the other questionable results from scores of patients that she had seen, she had no doubt that the LabCorp result was the correct one and that she didn’t have Addison’s.

[00:25:58.16] PREET: So here’s a question I have, and maybe people listening have the same question, that seemed to be a very easy common sense, smart, confirmable comparison test.

[00:26:07.27] JOHN: Right.

[00:26:08.16] PREET: Why isn’t the whole thing over at that point? Isn’t it easy for everyone to then, to just confirm what you tested and concluded, and put these folks out of business? But that didn’t happen…

[00:26:17.06] JOHN: Right so when we started confronting Theranos with this information, and I want to say I had at least a half dozen patients’ test results, and I had a handful of doctors participating on the record and saying that they didn’t trust the Theranos results and they felt the ones from the other labs were the correct ones, they told us, “Well this is just a small sample. And by the way there’s a lot of variability, traditionally, between lab test results.” And so basically…

[00:26:46.25] PREET: They had an excuse for everything.

[00:26:48.15] JOHN: They had an excuse…yeah….

[00:26:49.07] PREET: …along the way, there are a hundred stories like this.

[00:26:51.04] JOHN: We didn’t accept that excuse. That said, we were mindful that we couldn’t empirically prove that Theranos’ results were consistently inaccurate. Because it was, they were right, we only had a small sample. But we did feel we had enough to raise questions about the accuracy and reliability of tests, especially, I also had these sources who had worked at Theranos, among them the ex lab director who were telling me that the Theranos machine could only do a handful of finger stick tests, and that for all the others, or at least for 80 other tests, they had hacked and basically modified regular Siemens machines to adapt them to small finger stick samples, and that one of the things that they had done to adapt them was to dilute the finger stick samples, to create more volume so that the probe that went down in the cup inside the Siemens machine could reach the blood if it was a tiny sample. [00:27:48.23] So what they did to get around that is they increased the volume of diluting the blood. The thing about the Siemens machine is it already has a dilution step as part of its protocol, and so that introduced more room for error, and it also reduced the concentration of the analytes that the Siemens machine was trying to measure, it reduced them to a level that was so low that it was beneath the analytical measurement range that the FDA had approved for the machine.

[00:28:17.00] PREET: Theranos was not a small company in the later years. What happened to the people, if anything, who raised questions and raised doubts and were concerned about the ethics of what they were doing?

[00:28:28.04] JOHN: Right, so there was a pattern starting early on of Elizabeth firing people…

[00:28:34.01] PREET: Lots and lots of people got fired.

[00:28:35.11] JOHN: Hundreds of people got fired, especially after the fall of 2009 when her boyfriend Sunny Balwani joined, he became the number 2 executive, the president and chief operating officer, and he was very haughty and demeaning with employees, and he took to firing people all the time to the point that it gave rise to a new expression at Theranos, shortly after he came onboard, which was, “to disappear someone.” If a colleague was suddenly no longer there, in the morning, that it meant that Sunny had disappeared them. Before they were escorted out of the building, they were made very much aware of the fact that if they talked about anything they had seen while employed at Theranos, Theranos would come after them and sue them for violating their nondisclosure agreements.

[00:29:21.21] PREET: So you’re putting together this article, they were very nice and open and transparent with you I presume? And were…

[00:29:26.22] JOHN: No.

[00:29:26.25] PREET: …helpful to you, and helped you?

[00:29:29.00] JOHN: Quite the opposite. I mean they, at first when I was…

[00:29:31.22] PREET: Describe what happened, and how hard they fought back against your reporting.

[00:29:35.21] JOHN: Yeah so I started looking into Theranos in early February of 2015, and by mid to late April I started communicating with the company and wanting, and asking for an interview with Elizabeth Holmes and Sunny Balwani.

[00:29:49.20] PREET: Did you ever get one?

[00:29:50.09] JOHN: No, and they hired an outside PR guy who at first, for the first month or two, just put me off. And then it became apparent to them by June of 2015 that I wasn’t going away, and that they had to deal with me, and so at that point that took the form of David Boies…

[00:30:09.05] PREET: David Boies is the most prominent and powerful lawyer in AmErika.

[00:30:11.17] JOHN: Yep. Now arguably one of the best known and most feared litigators in America.

[00:30:17.02] PREET: Although he does not have a podcast. I’m just stating for the record, he does not have a podcast. That’s all.

[00:30:20.22] JOHN: And he came with his henchmen to the Journal offices in late June 2015, first of all they told us that I had procured trade secrets from Theranos, and that was, that I had illegally procured them and that I needed to either destroy them or return them immediately. At the same time they said that my sources were unreliable, were leading me astray, and they would not answer my questions about how many tests were done on their own technology, versus a third party commercial analyzers, that was a trade secret. I mean basically we went around in circles for five hours in this conference room.

[00:30:58.19] PREET: Did they threaten you?

[00:30:59.07] JOHN: They had these two tape recorders at each end of the conference table, it was very clear that they were approaching that meeting as a deposition in a future legal…

[00:31:11.18] PREET: You should be aware, I am also taping this conversation.

[00:31:13.17] JOHN: I’m aware.

[00:31:14.04] PREET: Okay.

[00:31:14.23] JOHN: You know and then, in the ensuing days and weeks we got a very sternly worded letters from Boies, telling us in no uncertain terms that if we continued with the story that we would get sued for libel. Pretty soon I started finding out that they figured out who some of my confidential sources were and were putting the screws to them. You know I got a frantic call from one of them, this young woman named Erika Cheung, she had been confronted in the parking lot of her new employer in Sunnyvale California by a guy who had presented her with an envelope, and the envelope contained a letter from David Boies telling her that she needed to meet with him by a certain day and a certain time, because he and Theranos suspect that she was leaking trade secrets and they were gonna sue her. [00:32:03.26] And the envelope had her name and underneath it had the address of the house in East Palo Alto where she had been staying for less than two weeks.

[00:32:13.25] PREET: So do you think she was under surveillance?

[00:32:15.11] JOHN: There was no other way. Her mother didn’t even know she was staying with this colleague at this place in East Palo Alto. The only person on earth who knew that was the colleague whose house it was.

[00:32:25.27] PREET: Do you believe at any point you were under surveillance?

[00:32:28.03] JOHN: I would say it’s probable, I wouldn’t be surprised at all if I find out that I was. I am certain that Erica was, I am certain that Tyler was, Tyler Shultz was another one of my confidential sources as it turned out, he’s George Shultz’s grandson, and George Shultz was on the board of Theranos, so it was this strange situation where one of my confidential sources was the grandson of a famous board member. Tyler went dark on me before we published the first story, I had no idea what was happening, I suspect that they were putting the screws to him. And what I learned later is that they ambushed him, they meaning two attorneys for Boies, Schiller & Flexner, ambushed him at his grandfather’s house. And…

[00:33:10.03] PREET: Do you think that the lawyers representing Theranos, based on your interactions and your reporting, behaved unethically in any way?

[00:33:18.04] JOHN: I believe that they crossed lines. I thought that one guy in particular named Mike Brille who is an associate of David Boies’s at Boies, Schiller & Flexner, the way he behaved toward Tyler Shultz was thuggish. He hid upstairs, along with another lawyer at George Shultz’s house, waiting for Tyler to show up, and Tyler had agreed to meet his grandfather under the understanding that they would meet face to face and there would be no lawyers involved. A few minutes after he arrived these Boies Schiller attorneys Mike Brille among them, showed up, brow beat him, and tried to get him to admit he was a source of mine and tried to get him to sign these papers. And threatened him. This went on for months. Tyler had to hire lawyers, you know, I’m told that at one point Mike Brille threatened to bankrupt Tyler’s entire family, [00:34:16.06] if he didn’t sign the latest version of the affidavit.

[00:34:20.03] PREET: One interesting aspect of this is, the Boies firm, I believe you wrote this, in lieu of fees, typical legal fees, took stock in the company.

[00:34:28.15] JOHN: Yeah, and that’s something that I learned later as well, or at least after my first story was published, that during the Fuisz patent litigation, the Boies firm had been paid for its worked, in that litigation, entirely in stock. And as a result they had almost 5  million dollars worth of Theranos stock. So by the time that I came along, and David Boies was trying to convince the Journal not to publish my story, and was representing Theranos effectively against me and the Journal, he was not only a legal advocate for the company, he also had a financial stake in the company. And to me that was a conflict of interest, when I learned of it. Not to mention the fact that 10 days after my first story was published, he joined the board.

[00:35:13.22] PREET: Joined the board, right.

[00:35:14.17] JOHN:…which compounded the conflicts of interest.

[00:35:17.21] PREET: And people not only wrote strongly worded letters and tried to get people to stop by you know these methods that you describe, they also went straight to the top, to Rupert Murdoch.

[00:35:28.12] JOHN: Right.

[00:35:29.02] PREET: …who simultaneously was the head of the parent company that owns your paper, your employer the Wall Street Journal, and also had made a 125 million dollar investment in Theranos. How did that turn out?

[00:35:40.07] JOHN: When I started looking into Theranos in February 2015, I did not know this, but basically at the same moment, Rupert Murdoch, who as you say owns and controls News Corporation, which is the parent of the Journal, was putting 125 million dollars into Theranos, becoming its single biggest investor. I had no idea. Nor did he have any idea I think that I was beginning to dig into the company.

[00:36:07.05] PREET: But he was asked to kill the story.

[00:36:08.10] JOHN: Later. Later, so…

[00:36:12.03] PREET: And obviously you’re here, so, he did not.

[00:36:13.27] JOHN: He did not. Yet Elizabeth Holmes met with him about four times before, four or five times before that first story was published in October of 2015, and during several of those meetings she appealed to him, she told him, “There’s this guy at the Journal, who has gathered false and misleading information about us, that he’s threatening to publish. This is gonna do great harm to our company…”

[00:36:39.10] PREET: And presumably to your investment. Which he ultimately had to get out of.

[00:36:42.02] JOHN:…and she kept bringing it up in the hope that he would offer to kill the story, and he never did.

[00:36:46.00] PREET: We’re coming up to the end of our time, so one observation I have about the book and the story, and this is not a criticism, but it’s kind of surprising to me, it doesn’t seem to be anything redeeming about Elizabeth Holmes in the book. You know in Shakespeare, and in other stories of people who fall from greatness, there seems to be a little bit more complexity. And there are people who have some good motivations, and there are stories of things that they did, acts of kindness, moments of grace, even though they’re flawed and they commit crime and massive fraud on lots and lots of people. There’s none of that in here about Elizabeth Holmes. What do you make of her, and why she did what she did? And what kind of person she is, you know, separate apart from any crime she may have committed, what do you make of this person?

[00:37:35.16] JOHN: Yeah, well I would say that if there is something redeeming about her, and if you contrast her with a guy like Madoff or some of these other mega fraudsters, I do believe that her vision was genuine. The ultimate vision of creating a diagnostic device that would be revolutionary, and that would therefore you know improve mankind, she really did believe in that vision. Unfortunately, she felt that that vision and achieving it justified everything that she did to get there, and I think that’s where she got herself into trouble. And that’s where she turned back.

[00:38:18.00] PREET: Do you think she understands what she did was wrong? Or do you think she’s still in that mode, even when things were falling apart, that she was right and everyone else was out to get her and everyone else is wrong?

[00:38:28.18] JOHN: I’m not convinced that she understands that she did wrong and that she understands the magnitude of the wrongdoing here. A producer who works for Alex Gibney, who by the way is working on a Theranos documentary for HBO that should come out early next year, had dinner with her last fall, and she said to this producer, that she felt that she hadn’t done anything wrong and that, you know, all she had tried to do was build a successful startup, and that startups often fail, and that male startup founders often fail, and they’re allowed to fail, and that she wasn’t being allowed to fail.

[00:39:06.13] PREET: So, not only is there a documentary being made about Theranos and Elizabeth Holmes, but as we discussed before we started taping, there’s a hollywood movie being made. Is that right?

[00:39:13.28] JOHN: That’s right.

[00:39:14.29] PREET: Who’s playing Elizabeth Holmes?

[00:39:16.06] JOHN: Jennifer Lawrence.

[00:39:17.09] PREET: I’ve heard of her. Who’s playing you?

[00:39:19.28] JOHN: That’s gonna be determined at a later date, right? What’s happening right now is Vanessa Taylor a screenwriter in Hollywood who co wrote The Shape of Water with Guillermo Del Toro, is working on the screen play, and she needs to finish the screenplay, hand it in, and Adam McKay, who is the director attached to film the movie, to direct the movie, and is producing it, will then have to get the screenplay greenlighted, and at that point, will the other members of the cast be determined.

[00:39:51.08] PREET: I see, well if I can make a suggestion, if you need someone to play you, Paul Giamatti’s an excellent choice.

[00:39:57.21] JOHN: How about Mark Ruffalo?

[00:39:59.00] PREET: Also, also great.

[00:40:00.20] JOHN: Who played a great investigative reporter in spotlight?

[00:40:03.09] PREET: And also the Hulk.

[00:40:05.05] JOHN: (Laughs) That’s right.

[00:40:05.28] PREET: That’s where I thought you were going. John Carreyrou thank you so much for being with us.

[00:40:09.26] JOHN: Thank you, it was a lot of fun.