The trial of Elizabeth Holmes, who was once the great promise of Silicon Valley, has served three weeks in the California courts. The 37-year-old businesswoman faces up to 20 years in prison for defrauding patients and investors of her company, Theranos, which promised to diagnose dozens of diseases in a few minutes by processing just a few drops of blood in state-of-the-art machines. He never made it. Today fallen from grace, the businesswoman has pleaded not guilty. The trial is already one of the most followed in the United States and promises to become until mid-December, when it is scheduled to conclude, a moral fable of an ambitious executive ready to do anything to succeed. On the defense side, the view is the opposite: “Failure is not a crime,” his attorney told the jury in opening arguments.
After several postponements due to the pandemic, first, and then due to the pregnancy of the accused, who became a mother in July, the trial could begin at the end of this summer. In a sample of the prosecution’s strategy, the prosecutor in the case, Robert Leach, showed documents with the Pfizer seal in one of the first sessions. To attract investment, Theranos assured with reports of this type that its technology had the endorsement of 10 of the 15 large pharmaceutical companies. But the role was fake. “Pfizer did not write this. He did not put the logo or write this report, “said the prosecutor, who also brought charges against Ramesh Balwani, Holmes’ business partner and ex-boyfriend.
In its three weeks of sessions, the trial has brought unknown details to the surface. For example, that Pfizer – while not endorsing the progress of the company – was not the only one interested in the early years of Theranos. General Jim Mattis, who was Secretary of Defense with Donald Trump, testified against Holmes on Wednesday. He claimed to have invested $ 85,000 in the company, which was valued at $ 9,000 million.
That was before everything fell apart. In the beginning, Theranos seemed like a success story, one of those rare cases that fuel the legend of Silicon Valley. Holmes was his face. In 2003, at the age of 19, the businesswoman abandoned her studies in chemical engineering at Stanford University, where she received a scholarship of 3,000 dollars a month (2,600 euros), to bet everything on an emerging company that she named combining the words “therapy” ( therapy) and “diagnosis”. Soon after, the local press had devoted dozens of profiles to his meteoric career and his austere way of life in a simple Palo Alto apartment with no television, no friends, and an empty refrigerator.
Science and entrepreneurship were in Holmes’ blood, descended from Hungarian migrants who founded a yeast company that grew into an empire in the early 1900s in America. His paternal great-great-grandfather, a physician, founded the Cincinnati (Ohio) General Hospital and the City University School of Medicine. His father, Chris, worked in the State Department and in government development agencies. Her mother, the daughter of a West Point military graduate, was a legislative aide on Capitol Hill until motherhood derailed her career.
Family history made it easier to get the dollars that shaped Theranos. The first million came thanks to the father of a childhood friend, a California neighbor. The man was Tim Draper, whose grandfather was one of the first venture capitalists in Silicon Valley. The Draper endorsement was enough to attract other large investments. In time, people like Bill Clinton, Carlos Slim, and Rupert Murdoch would buy shares. The company’s board of directors consisted of senators, high-profile businessmen, and even Henry A. Kissinger, the Secretary of State to Presidents Richard Nixon and Gerald Ford.
The company began publicizing its alleged science and technology breakthroughs in 2013, sparking investor fury at what seemed like a revolution in clinical studies. A 2015 report claimed that Theranos had raised $ 944 million in six investment rounds.
John Carreyrou, an investigative journalist for The Wall Street Journal (WSJ), described in his book Bad Blood (Bad Blood in the Spanish edition) a scene of a family reunion from when Elizabeth was 9 or 10 years old.
“What do you want to be when you grow up?” Someone asked him.
“I want to be a billionaire,” the girl answered without hesitation.
“Wouldn’t you rather be president?” The relative wanted to know.
“No, the president will marry me because I will have a billion dollars,” said the younger.
Two decades later, the childhood dream was fulfilled. In the middle of the last decade, Holmes entered the Forbes millionaires list with $ 4.5 billion. At 32, she was the first so young to join that select group without her fortune coming from inheritances or divorces. It wouldn’t last long on that Olympus. In June 2016, the magazine removed Holmes from the list and several newspaper publications were forced to recant and apologize for not having investigated what was happening inside Theranos.
According to what has been heard at the trial, voices from within the company were the first to warn that what was told to investors was not real. Chemist Surekha Gangakhedkar recounted in one of the sessions how scientists were pressured to validate tests that had not passed the studies necessary to be tested in people. Gangakhedkar worked at the company for eight years, until 2013, when an agreement was signed with the Walgreens pharmacy chain to offer blood tests at 41 locations in Arizona and California for $ 2.99. “I was afraid that things would go wrong and that they would blame me for it,” he said in court. Walgreens broke the deal in 2016, when it received hundreds of complaints from upset patients that they had not gotten what was promised.
Part of the money that the company raised went to monitor and keep quiet the employees who left the ship. A private detective firm received $ 150,000 to follow in the footsteps of two young men who resigned disenchanted with what they saw, Erika Cheung and Tyler Schultz. Cheung, who spent six months at Theranos, said last week that the famous analysis machines that promised analysis in minutes took up to 14 hours to calibrate and another 12 to program to the necessary quality control standards. “There were employees who slept in their cars because of the long wait,” he said. She also said she feared for her safety after being followed by two men. Cheung and Schultz served as sources for Carreyrou’s WSJ reporting. Their testimonies were instrumental in bringing down the house of cards created by Elizabeth Holmes, who has seen her legend evaporate.