If you happen to’re a Decoder listener, it’s a reasonably certain wager that you simply’ve heard of Theranos and its charismatic, troubled founder Elizabeth Holmes. Holmes satisfied an extended checklist of main buyers and firms to offer her large quantities of cash, all on the again of her claims that the Theranos expertise might do lots of of blood assessments with only a tiny pattern of blood — a pinprick.

The Theranos testing machine — referred to as the Edison — wasn’t correct, regardless that it was deployed in Walgreens places across the nation. All of the whereas, Holmes was showing on covers of magazines, signing extra offers, and attracting higher and higher fame. Till the whole lot modified. Proper now, Holmes is on trial in a legal lawsuit introduced by the federal authorities. Her former associate, Sunny Balwani, will face his personal trial for comparable fees.

Right now, I’m speaking to the reporter who first uncovered Holmes and Theranos, and began all of it. John Carreyrou was working at The Wall Avenue Journal in 2015 when he began publishing articles about how Theranos was deceptive clients, companions, and buyers. Theranos aggressively tried to cease John’s reporting in 2015 and Holmes even tried to get Journal proprietor Rupert Murdoch, who was an investor in Theranos, to cease the story. He declined, and the tales have turn into a cautionary story: you possibly can’t simply imagine the hype.

I needed to speak to John concerning the case and what it has been wish to cowl the story for six years. He’s as near this story as any reporter will be. He’s even on the witness checklist — and he was put there by Elizabeth Holmes’ authorized crew. And since that is Decoder, we talked about what it’s wish to be a podcast creator — John is protecting Holmes’ trial on a brand new podcast referred to as Bad Blood: The Final Chapterhow that enterprise goes, and why he determined to place a few of his episodes behind the Apple Podcasts subscription system. And I requested for the numbers, in fact.

This transcript has been calmly edited for readability.

John Carreyrou, you have been an investigative reporter for the Wall Avenue Journal. You broke the Theranos story. You’re the writer of Dangerous Blood: Secrets and techniques and Lies in a Silicon Valley Startup, a guide about Theranos. And now you’re the host of the podcast Dangerous Blood: The Remaining Chapter, which is popping out alongside the trial of Elizabeth Holmes, the CEO and founding father of Theranos. Welcome to Decoder.

Thanks for having me, pleased to be right here.

I’m very excited to speak to you. I really feel like, I adopted your reporting, I learn the guide, listening to the podcast, all wonderful work. And I believe, a type of a watershed second in tech reporting and the way the Valley perceives itself in relationship to the media. So I wish to discuss all that, however let’s begin with the very starting. I believe a variety of listeners to the present are accustomed to the Theranos story, they’re accustomed to what occurred, however give us type of the fundamentals. In 2015, you put out a story saying the Theranos fingerprick test just didn’t work. How did you come to that story?

I had not heard of Elizabeth Holmes till I learn a profile of her within the New Yorker in mid-December 2014. At that time, she’d been elevating her profile for a couple of 12 months and a half in Silicon Valley and had turn into fairly well-known. There had been the long-lasting cowl story of her in Fortune journal, about six months prior. So she was turning into a star, however this New Yorker story was the primary time I’d ever heard of her. I learn the story with curiosity, commuting again from the Journal’s places of work in midtown Manhattan to the place I lived in Brooklyn. As fascinating as I discovered it, I additionally was instantly suspicious as a result of this entire conceit on the coronary heart of the story was that she was a school dropout who was revolutionizing this very technical nook of drugs, particularly blood diagnostics. That didn’t appear proper to me.

At that time I had been protecting medication for over 10 years, doing a variety of investigative reporting about well being care and medication, and I knew that science is tough and that it takes a very long time. And it’s not like pc coding the place individuals like Mark Zuckerberg, and Invoice Gates earlier than him, learn to code after they have been in highschool, of their dad and mom’ basement. Medication isn’t like that, you don’t educate your self medication in your dad and mom’ basement. And so I used to be suspicious about that, however to be truthful, once I acquired off the subway and I acquired house, I put the story out of my thoughts and type of forgot about it.

And it was a number of weeks later that I acquired a tip from a pathologist within the Midwest, who had learn the exact same New Yorker story. And he had been much more suspicious than me as a result of he knew rather a lot about blood testing. He didn’t imagine this concept that she had created this nice invention that would do all these assessments off a finger stick of blood. And he and I had had dealings earlier than. So he referred to as me up with a tip and I began digging from there. That was the inception of the entire thing.

One of many issues we discuss on this present is: there are merchandise after which there are the enabling applied sciences that will let you create the merchandise. So the product for Theranos was this gadget referred to as the Edison, which is what analyzed the extraordinarily small quantity of blood. The enabling expertise was the power to do the assessments on a small quantity of blood, proper? That was the declare.

Truly, Elizabeth Holmes and Theranos had not been very clear about what they have been doing in any respect. It was very a lot a black field, bodily and figuratively, however what got here out of all these glowing interviews was that she had a tool that would do lots of of assessments off a pinprick of blood. And if that was true, that was an actual advance as a result of up till that time, nobody had found out find out how to do greater than a few blood assessments off that small a quantity of blood. There are two causes for that; the primary is that there are about 4 massive classes of blood assessments and when you do a pair assessments from one class you shortly exhaust your pattern.

And in the event you attempt to do a number of extra from one other class of blood assessments, which require utterly totally different strategies and strategies, you don’t have any pattern left. Nobody had solved that downside. The second downside was that capillary blood, which is blood that comes from the finger, isn’t pure. It’s polluted by tissue and cells and people intrude with sure assessments just like the potassium check. And nobody had found out find out how to resolve for that both. So, if what she was saying was true, it might’ve been an actual medical advance.

These are questions that you simply, as a reporter, as pathologists who’re writing you ideas, instantly leapt to. Clearly an enormous a part of the Theranos story, the explanation they’re in courtroom now, is that buyers gave her some huge cash. Why do you assume these buyers weren’t asking the identical questions, weren’t asking for proof that these assessments might work the best way that she was claiming they may?

Properly, I believe it’s a must to rewind the tape again to 2015 which was actually, the peak of the unicorn growth. Fb had made some individuals a ton of cash, Twitter too. You had increasingly of those non-public firms that have been getting billion-dollar valuations. In truth, curiously, Theranos, for a brief interval of a pair weeks, was essentially the most helpful non-public startup in Silicon Valley — it was extra helpful than Uber, Airbnb, or Spotify. I believe buyers needed to hitch the following rocket ship to riches. And consequently, they type of suspended disbelief and have been much less cautious. That is earlier than the backlash towards tech, there was much less skepticism again then. And to be truthful, she was an extremely compelling saleswoman. I imply, she had an incredible charisma. She could be very good. She’s a chameleon, a improbable actress. And I believe she charmed the socks off a variety of these buyers and so they actually, actually believed her.

I’ve all the time been caught on that. I run a tech website and we have been working in 2014 and 15. I typically assume that we’d’ve written the Theranos story that Fortune or the New Yorker wrote concerning the claims she made regardless that the product didn’t exist but. She was a really compelling determine, however on the coronary heart of it’s type of a quite simple math downside: You’ve acquired a tiny quantity of blood. All the pieces means that in the event you run these assessments, you’re going to only run out of blood. How did you resolve that downside? I’ve by no means seen any a part of the Theranos advertising and marketing supplies, or Holmes’s displays, or interviews the place that query was addressed.

Proper. And I believe the explanation that the journalists who coated her in these preliminary two years and wrote the glowing profiles didn’t choose up on that’s they didn’t come from a medical reporting background. They accepted the best way she framed herself, which was as a tech entrepreneur, who was following within the footsteps of those different legendary tech entrepreneurs — Steve Jobs particularly, who she idolized and whom she dressed like. And reporters who have been used to protecting tech accepted that she was a tech entrepreneur, when actually she was a medical entrepreneur. It didn’t take me lengthy after the preliminary tip after which doing a little digging to get the laboratory director of Theranos, who had simply left the corporate, on the telephone and granted him confidentiality.

He began confiding in me a bunch of issues that he’d seen. It didn’t take me lengthy after that to only attain out to the heads of pathology departments at universities to ask them about Holmes’s claims. And I discovered that quietly, lots of people within the pathology group had been extraordinarily suspicious and skeptical as a result of they didn’t assume it was bodily attainable. So it wasn’t exhausting to search out individuals to clarify to me why this was in all probability not true.

That skepticism is a dynamic that all of us dwell with now, there was a large backlash to tech firms, and we’ve all realized to be extra skeptical of their claims and what they promise they are going to ship. However the back-and-forth is: the skepticism is unwarranted, we’re doing issues which might be exhausting, we would fail, however now we have to strive dangerous issues with the intention to have the massive innovation.

That was mainly Theranos’s protection towards your story. And I understand that introduced attorneys to you that needed to sue the Journal, they went all out, however the core of the general public protection was “We’re innovating, we’re taking risks, we’re going to fail. But if you believe in us, we’ll succeed.” How has that dynamic modified as we’ve entered the trial section?

I believe that is the place this story is so necessary. That is the place the trial is so necessary. There’s this tradition of faking it till you make it in Silicon Valley. And, I’ll be the primary to grant you that just a little little bit of that’s obligatory to lift cash. It is advisable hype and maybe exaggerate just a little bit to get individuals excited. It is advisable be, in the event you’re an entrepreneur, you’ll want to be tremendous optimistic. It is advisable get your staff excited. It is advisable get buyers enthusiastic about your imaginative and prescient, however I believe there’s a line to not cross. And I believe Elizabeth Holmes and Theranos crossed that line when the hyping and the exaggerating became outright mendacity. And it became outright mendacity for years and years. And it was mendacity to the purpose that she went dwell with blood assessments that she knew have been flawed. And he or she knew she was conducting a large experiment on sufferers.

I believe this trial’s going to be a referendum on whether or not entrepreneurs in Silicon Valley can maintain getting away with that kind of habits. If she’s convicted, I believe it’ll be a wake-up name for the Valley that “No, that was taking things one step too far, and that if you do the same, then you’re looking at prison time.” If she’s acquitted, then I believe all bets are off. I believe you’ll have younger entrepreneurs working across the Valley saying, “Yeah, I’m lying, I’m exaggerating, I’m pushing the envelope. But look at what Elizabeth Holmes got away with, and she didn’t spend a day in jail. So I think I’ll be okay.”

The place do you assume the road particularly was? Was it, famously, that they had purchased different testing gadgets from Siemens and different firms and tried to change them? They’d signed a cope with Walgreens — the place do you assume the road was particularly?

The largest line was going dwell, commercializing blood assessments and having actual sufferers use them, when you realize that the assessments are flawed and you realize that your Edison machine is unreliable, that you simply’re solely doing a handful of assessments with that. And that, for the remainder of the assessments, you’ve hacked a third-party machine referred to as the Siemens ADVIA 1800 and also you’re diluting blood samples to make it work — as a result of the Siemens ADVIA, being an everyday business blood analyzer, requires a sure pattern dimension. And you’ll’t meet that pattern dimension except you dilute the blood, and diluting the blood causes all types of issues as a result of there’s already a dilution step within the Siemens ADVIA protocol. So then you definately’re double diluting and also you’re rising the possibility for errors. And that’s precisely what occurred.

Lots of sufferers acquired inaccurate blood assessments. And we’re now listening to from a few of these sufferers at trial, I believe it was earlier this week or late final week, from a affected person who acquired an inaccurate being pregnant consequence. Theranos advised her twice that she was now not pregnant when actually her being pregnant was completely viable and she or he carried it to time period. In order that’s the massive, brilliant purple line to not cross whenever you’re mendacity to the purpose that you simply’re placing individuals’s lives in jeopardy. And I believe that applies to different industries that Silicon Valley has set its sights on. It’s not simply well being care. It’s additionally self-driving; there have been automobile accidents involving Teslas, the place it appears like drivers have been lulled into considering that they will let the automobile drive itself.

When actually, the software program isn’t as dependable as [Elon] Musk would have you ever imagine it’s. And a few of these accidents have been deadly. There’s additionally been a girl who was run over by an Uber self-driving car in Tempe, Arizona, a pair years in the past and she or he died. So, I believe this has broader classes for Silicon Valley, because it will get into these different areas, because it goes past simply the bread-and-butter pc trade and units its sights on synthetic intelligence, well being care, drones, driverless automobiles — there are traces to not cross.

The intense purple line between hyping your product for buyers in that stage and commercializing harmful merchandise or unreliable merchandise, I perceive. The step for Theranos to get to commercialization was to signal offers with pharmacies, famously Walgreens. Basic [James] Mattis was on the trial this week. He needed to deploy the machines within the armed forces. That looks as if, for me, a gating step the place Walgreens ought to have seen if the machine labored, the place Mattis ought to have had the machine examined extra completely. Why didn’t that occur right here?

I imply, for certain Walgreens ought to have achieved its due diligence extra. It did rent, as I wrote in my guide, a lab advisor named Kevin Hunter who labored for a time period for Walgreens full-time, vetting Theranos. Early on, he smelled a rat and he tried to alert the superiors at Walgreens. Elizabeth and Sunny [Balwani] have been in a position to freeze them out of conferences. After a number of months, he was now not included within the weekly Zoom calls that they had after which the in-person conferences that they had.

And so, Walgreens was ignoring its personal advisor whom it had employed and was paying first rate cash to take care of its personal pursuits. That’s one of the crucial unbelievable components of the story whenever you look again. Then the buyers ought to have achieved extra due diligence, for certain. The board members have been asleep on the swap — in some circumstances, they have been actually asleep. I heard from individuals who attended board conferences that [Henry] Kissinger and George Shultz would typically go to sleep throughout board conferences. So, there’s a variety of blame to put round, a variety of due diligence that ought to have been achieved by numerous events that wasn’t achieved.

Is there an opportunity they may have figured this out, if this factor had simply saved rolling? There’s a component of your story, the primary one within the Journal, that has all the time felt inevitable. The assessments are producing inaccurate outcomes. The outcomes should not the identical for all types of individuals. Ultimately, medical doctors, pharmacists, Walgreens, persons are going to determine this out and possibly shut this down. And so, it might have come out, as a result of the factor wasn’t working. However is there an opportunity they may have pulled it off?

I believe the scandal would have exploded a technique or one other. I believe I hastened it, however I believe that inside a 12 months or two this may have come to mild. There would have been increasingly individuals getting assessments from Theranos, increasingly complaints and sooner or later, somebody would have gone to a different reporter or to a regulator. This home of playing cards would have come tumbling down. However I believe Elizabeth’s wager was that she was ultimately going to get there, she was going to get the final iteration of the gadget to work and that by then nobody can be the wiser. The workaround with the hacked Siemens ADVIA, the malfunctioning Edison — nobody would find out about this stuff as a result of she would have ultimately gotten there.

I believe she was deluded, as a result of I don’t assume she was ever going to get there. First, we talked concerning the technical limitations that to today are nonetheless making this inconceivable — and imagine me, there are lots of people engaged on this downside, it’s not simply Theranos making an attempt to resolve it. However then there’s additionally the tradition of the corporate and the best way she managed the corporate, the best way she and Sunny Balwani managed the corporate. It was a totally dysfunctional place. There was an enormous quantity of turnover, Sunny was firing individuals on a regular basis — it was a really poisonous tradition. And also you don’t provide you with nice improvements, you don’t succeed as an organization with that tradition. I believe this firm was doomed it doesn’t matter what.

One other fixed thread of dialog within the Valley is that persons are typically harsher on feminine founders who’re being demanding or powerful. That to start out an organization and make issues nice and create a imaginative and prescient, it’s a must to be actually powerful, it’s a must to be terribly demanding. I believe possibly the scandal would have damaged by itself as a result of the check outcomes weren’t correct. What we’d not have ever realized about was the tradition of the corporate that was actually explicated in your reporting, actually got here out within the guide. Is it a case that she was simply as demanding as everybody else, however her product was a fraud? Or is the case the place she was that demanding to cowl up the fraud?

She’s an fascinating character in the event you attempt to psychoanalyze her. I’ve typically mentioned in interviews I actually don’t imagine that she dropped out of Stanford at age 19 in 2003, meaning to commit an extended con, meaning to commit fraud. No. She dropped out as a result of she idolized Steve Jobs and different Silicon Valley entrepreneurs, she needed to observe of their footsteps, she had a imaginative and prescient, she pursued her imaginative and prescient, she employed individuals, and raised cash, and so on., did what entrepreneurs do. I believe at a sure level, she did know that she was going too far. If you happen to hearken to my podcast, there’s an episode about this notice she wrote to herself in 2014, as she’s being requested repeatedly by a potential investor, Byron Trott, of BDT Capital, this massive service provider financial institution in Chicago, for audited financials.

She is aware of she doesn’t have audited monetary statements to indicate him and this stresses her out. Late one night time at like 4 within the morning, she writes a notice to herself, and in the midst of the notice are these traces, “Smart people picked off Mado, not you.” If you happen to listened to this episode of my podcast, I believe I make a compelling case that this was a reference to Bernie Madoff, and that she’s evaluating herself to Bernie Madoff. To me, that signifies consciousness of guilt. That she wasn’t simply, at that time, an idealistic, hard-driving entrepreneur who was taking pictures for the moon and placing a variety of stress on her staff to make her imaginative and prescient occur. I believe she additionally knew at that time that she was mendacity to buyers. That the hole between what she’d promised them and what she’d advised them she did obtain, and what the reality was, was a yawning hole, and that it couldn’t be reconciled. I believe she knew that.

There’s a story in the New York Times recently about different ladies founders within the exhausting sciences, biology, local weather, and so on., who’re discovering it more durable to get funded due to the legacy of Elizabeth Holmes. How do you assume this trial goes to have an effect on that dynamic? As a result of I don’t assume Elizabeth Holmes needed that to occur, however it’s a clear dynamic that’s taking place now. Buyers normally have been burned. They’re extra skeptical, hopefully, consequently, however we’re seeing particularly that skepticism pointed at different feminine founders.

Properly, if that’s taking place, I believe it’s actually unfair. Why ought to ladies be singled out? This was only one dangerous apple. I believe we’ve been used to frauds being carried out by males as a result of the historical past of capitalism is dominated by males. And it’s solely been lately that ladies are taking an even bigger function in enterprise and entrepreneurship and that’s going to proceed. We’re going to see increasingly ladies turn into founders and CEOs and profitable entrepreneurs. And there’s sure to be dangerous apples amongst ladies too, identical to there are amongst males, however that doesn’t imply that it ought to penalize ladies as a gender. It definitely hasn’t penalized males. So, that basically doesn’t make sense to me, and I actually don’t assume it ought to be taking place.

Earlier than this legal trial that’s occurring proper now, there have been some civil lawsuits from buyers. Give us the recap of these. It appears like buyers are very reticent to sue. They clearly didn’t sue on this case. Do you assume they offered any disincentive from this type of mendacity?

The primary investor to sue was Companion Fund Administration, which is a hedge fund primarily based in San Francisco, which had invested $96.1 million in Theranos. They brought their suit pretty quickly and resolved it pretty quickly, reaching a settlement for $43.5 million with Theranos within the spring of 2016.

The place did that cash come from? I’ve all the time puzzled this.

Properly, once I got here out with my first story in late 2015, Theranos nonetheless had one thing like $600 or $700 million within the financial institution, it had a ton of cash left, and a variety of that cash from that time on went to paying attorneys and went to paying for authorized settlements. One other investor that introduced go well with was a former funding banker named Robert Coleman. His go well with took longer to resolve. He ultimately reached a settlement and was made entire. There was a lawsuit filed by Walgreens. Theranos additionally settled that one, I believe for $30 million, however then ended up not paying the entire sum and was sued once more. There have been a couple of dozen fits filed by sufferers in Arizona that have been consolidated into a category motion. There have been a variety of lawsuits. I believe that they undoubtedly helped the federal government investigation with all the invention, and so they very a lot referred to as consideration to what Theranos had achieved. I’m undecided that prosecutors would have introduced the legal case if it hadn’t been for all these different non-public actions, particularly PFM’s lawsuit in Delaware. I believe they acquired a ton of knowledge from that lawsuit, and I believe that lawsuit and PFM have been instrumental in getting the legal case off the bottom.

That connection between the buyers suing, the civil circumstances, the settlements, and the legal case — why do you assume the federal government wasn’t scorching on the path already? Why do you assume it took that aspect of civil circumstances?

Properly, the SEC subpoenaed Theranos inside per week of my first story in October 2015, so it didn’t take them very lengthy to start out an investigation. It took the DOJ just a little bit longer. The primary subpoena landed in, I believe, early January of 2016, proper after one other massive expose I’d written on the entrance web page of the Wall Avenue Journal. Then I believe it took some time for these probes. This was a posh set of circumstances. It includes lab testing. It’s difficult.

This was additionally the San Francisco US lawyer. This wasn’t the Southern District in Manhattan, which has large assets and actually good and proficient younger prosecutors. They’re normally those that go after high-profile white-collar crime circumstances. This was the San Francisco US lawyer’s workplace, which is far smaller, fewer assets, has had a combined file. If you happen to return a decade and have a look at how they fared with choice backdating investigations, they didn’t do very nicely. And so, this was a very high-profile case dealt with by a small workplace. I believe they took their time to get it proper, and ultimately after three years of investigating, they did deliver fees, they did deliver legal fees.

We’re a few weeks into the trial. The jury has been chosen. There’ve been opening arguments. We’re beginning to hear testimony from witnesses. Clarify what this trial appears like. Elizabeth Holmes is having one trial. Her associate, in all senses of the phrase, Sunny Balwani, is having a unique trial; they’re each being criminally prosecuted. What’s Holmes on trial for? What’s Sunny on trial for?

They’ve been charged with 10 counts of wire fraud and two counts of conspiracy to commit wire fraud. Why wire fraud? As a result of it’s really a very simple cost to show. Mainly, all you’ll want to present to the jury is that Elizabeth and Sunny have been mendacity after they solicited cash from buyers and acquired them to wire this cash throughout state traces to Theranos’s checking account. The opposite side of those wire fees is definitely just a little bit extra uncommon. It includes the blood check outcomes that have been wired electronically throughout state traces from California to Arizona. That’s one thing you don’t see as typically.

So why is Elizabeth being tried now, and why is Sunny not there along with her within the courtroom? Properly, really, that’s as a result of, as we realized lately, a part of her protection goes to contain blaming Sunny and alleging that he abused her, that he held her in his psychological grip, successfully depriving her of free will and company. Consequently, the choose had no alternative however to sever their circumstances, and so Sunny goes to be tried early subsequent 12 months. That is going to be, I believe, one of many pivotal points of the trial, and I believe, by the best way, she’s going to testify, as a result of for the jury to imagine this, I believe they’re going to wish to hear from extra than simply her psychologist. They’re going to wish to hear from her. I believe her protection crew realizes that, and so they’ve already just about telegraphed that she’s going to testify.

That is going to be a very pivotal second on the trial, as a result of she’s an awesome actress. She’s proven in spades that she will get individuals to imagine her, and I anticipate her to go on the stand and play the a part of this naive younger lady who was manipulated by this older man. The query goes to be, is the jury going to go for it? Is the jury going to imagine it? Is the jury going to go for it to the extent of excusing the whole lot else, mainly, to the extent of discarding all that mountain of proof that the prosecution could have offered it? I believe the trial might very a lot experience on that. It’s going to be fascinating.

You’ve been to the courthouse already, you’ve seen the trial take form, over the primary few days. What’s the temper of the trial? Does it really feel just like the prosecution is already forward as a result of the story is so well-known, or is Holmes and her crew mounting an efficient protection?

It’s fascinating, the trial’s happening in San Jose, which, to not offend anybody in Silicon Valley, is type of a sleepy metropolis. It’s not San Francisco. It’s definitely not New York. I’ve coated white-collar legal trials in New York, and you’ve got these century-old courtroom buildings and these cavernous courtrooms. That is like this contemporary courthouse that was in-built 1990. The courtroom is fairly small. It feels very cramped in there. The jurors should not very removed from Elizabeth. They have been like a few arms’ lengths away from her. A few of the jury spills out of the jury field due to the COVID protocols, due to the social distancing. So far as the way it’s going, I used to be there for opening statements. I believed the prosecution did a good job of explaining what occurred. I believed the protection lawyer, Lance Wade, was very polished in his opening assertion, in humanizing Holmes and in elevating a number of the traces of protection, resembling the truth that she by no means offered a single share of inventory, so how might this be a fraud if the primary perpetrator of this fraud by no means profited? He additionally planted the seeds of what I name the Svengali protection, which goes to be blaming Sunny, saying that Sunny was the villain, however in latest weeks since opening statements, I believe if I needed to handicap it proper now, I believe the prosecution is forward as a result of the proof is starting to mount.

We’ve heard from whistleblowers, we heard from Erica Cheung, who’s really a supply of mine on the Journal, who testified about how she tried to alert lots of people to the unreliability of the blood check. We heard from one other lady who was head of assay validation, who had labored there for eight years and who resigned proper earlier than they went dwell with the blood check as a result of she had main misgivings concerning the reliability of the blood check and she or he advised Elizabeth so in a one-on-one assembly. We’ve heard from Basic Mattis about how he initially thought that this had large promise and step by step, he misplaced religion in Elizabeth and the corporate. And right now on the stand, there’s the lab director. I believe he’s going to be a very necessary witness. So I believe that each one the federal government’s proof is de facto beginning to amass and by the tip of the trial, I believe it’s going to be exhausting for the protection to account for all of it.

You have got clearly been as deep within the story as anybody can presumably be for years. There’s a mountain of proof, of texts, of notes. You’ve talked about emails, advertising and marketing displays, monetary statements, no matter you possibly can consider. A few of it’s allowed and a few of it isn’t. How is that breaking down?

Most of it’s coming in, really. At one level a pair months in the past, the protection had objected to the textual content messages coming in, saying that the federal government hadn’t proved that they have been genuine. So the federal government went again and located the PricewaterhouseCoopers forensic safety professional who’d really taken Elizabeth Holmes and Sunny Balwani’s telephones and mainly made tapes of them. He was a witness who was referred to as to the stand this week and the prosecutors had him learn the texts to the jurors, and I’m advised by my colleague, Emily Saul, who’s within the courtroom, that they have been riveted by these texts.

So the texts are in. The protection additionally tried to repeatedly get the testimony from sufferers and from medical doctors excluded, to no avail. The one factor the choose agreed to do was to restrict the sufferers’ testimony to the information, to, mainly, the blood check outcomes that they acquired from Theranos and the next blood assessments they acquired from elsewhere that confirmed that the Theranos outcomes have been false. The sufferers should not in a position to testify concerning the emotional turmoil they skilled from their inaccurate assessments. However apart from that, the choose is letting a variety of what the prosecution desires to return in in, and that’s an actual downside for the protection.

That limitation on the sufferers is so humorous to me as a result of it assumes the jury has no human empathy. If you happen to hear a girl say, “This test told me my pregnancy was going to miscarry and that was a lie,” you don’t actually need her to complete the thought with “and that made me feel bad.” Is there any motive why they fought over that?

As a result of the protection is deathly afraid that these affected person sob tales are going to prejudice the jury towards Elizabeth Holmes. They wish to maintain that testimony from every of these sufferers very quick and so they then wish to counter it by saying that these are only a handful of sufferers and that Theranos performed greater than 8 million blood check outcomes and that the federal government is barely presenting 20 or so sufferers with inaccurate outcomes. In fact, the federal government will have the ability to rebut that by pointing to the truth that Theranos needed to void almost 1,000,000 blood check outcomes after the federal inspectors went in and located all the issues on the lab.

However, you’re proper. I believe the jurors should not dumb; they will learn between the traces. One of many sufferers that’s going to testify had a false HIV consequence from Theranos telling her she had AIDS when actually, she didn’t. All it’s going to take for jurors to place themselves in her sneakers, and to be appalled, goes to be simply to listen to that she acquired a false HIV consequence. They don’t want to listen to her say how she spent weeks agonizing over this earlier than she might afford to get retested. They’ll know that’s outrageous and I believe that’s an actual downside for the protection.

Do you anticipate being referred to as as a witness? You’re a central character on this story.

I really do, however sarcastically, I don’t anticipate to be referred to as by the prosecution as a result of I’m not on their witness checklist. I’m, nevertheless, on the protection’s witness checklist. I’m No. 6 on the protection’s witness checklist and so I’m anticipating a subpoena any day, and I’m anticipating the protection to name me throughout their case in chief, and if that occurs, I believe that one of many traces of protection can be that Carreyrou was this rabid reporter who had it in for Elizabeth Holmes. That this was a witch hunt, that he contacted regulatory companies and biased them, that they went in and inspected and got here down extra harshly on Theranos than they may in any other case have due to my intervention and due to my reporting.

I believe there’s solely to date you possibly can go along with this line of protection as a result of in the end, when the regulators went in, they discovered what they discovered. I had nothing to do with what they discovered on the bottom in that facility in Newark, California, and at Theranos’s headquarters in Palo Alto. So I’m skeptical that it’s going to work. After which in the event you’re the protection and also you name me to the stand, then you definately open the door for the prosecution to ask me questions and to elicit from me testimony about what I went by means of once I tried to show the scandal. The scorched earth marketing campaign that Theranos performed to attempt to quash my story: the best way they employed non-public investigators to observe my sources; the best way David Boies and Heather King, the Theranos basic counsel, despatched threatening letters to me and to the Journal threatening to sue us; the best way Sunny flew out to Phoenix to intimidate medical doctors who’d spoken to me on the file to attempt to get them to recant; the best way Elizabeth privately lobbied Rupert Murdoch — who owns the Journal and who was an enormous Theranos investor — to kill my story. I believe the protection will open the door to all of that being talked about in the event that they name me to the stand. So I believe it’s dangerous.

It’s all the time been fascinating to me that Rupert Murdoch, within the context of this story, comes off as having a really excessive set of beliefs about journalism, as a result of he was an investor in Theranos, however he didn’t do something on the Journal so far as I’ve heard or has in any other case been reported.

That’s proper. He had invested $125 million in Theranos. I really didn’t know this once I was reporting my story. I solely discovered about it a 12 months after my first Theranos story was revealed. And it’s true, he didn’t intervene. So this isn’t to absolve him utterly, however definitely within the case of Theranos, he behaved rather well as a steward of the paper.

I wish to discuss Sunny. His identify has come up a number of occasions as a result of Holmes goes to make this Svengali protection. He’s being tried individually. Who’s Sunny? What’s he like, and do you purchase this Svengali protection?

Sunny is a Pakistani man who got here to the US within the ’80s throughout faculty and stayed and made a profession in Silicon Valley. He labored for 10 years at Lotus and Microsoft, after which he joined an e-commerce startup within the late ’90s, on the prime of the dot-com bubble, and he and his associate offered it for some huge cash and he cashed out. A pair years later he met Elizabeth Holmes after they have been each a part of a Stanford Mandarin program. They met in Beijing on this program after which they saved in contact, and when she dropped out of Stanford a 12 months and a half later in late 2003, she acquired again in contact with him and he gave her recommendation. He turned kind of a mentor. Ultimately, that morphed right into a romantic relationship. In 2009, about 5 years into the lifetime of Theranos, Theranos was working out of cash. Sunny stepped in and assured a financial institution mortgage along with his private wealth.

And at that time he joined the corporate and from 2009 onwards, he helped run the corporate and so they actually ran the corporate as a partnership. He was the COO and president whereas she was CEO. I don’t purchase their line of protection that he was her Svengali, that he manipulated her, that she was beneath his psychological grip. The texts don’t again it up. The handfuls and dozens of staff I interviewed for the guide and for the podcast who labored with them say that this was a partnership of equals. If anybody had the final say, it was Elizabeth, and that she was firmly in command of the corporate. Let’s not overlook, she had 99.7 % of the voting rights. She was the founder and CEO. This was her firm. Was Sunny influential? Certain. Did he assist her run it? Certain. However was he the puppeteer and was she the puppet? No, I don’t purchase that.

They have been romantically concerned as nicely, yeah?

They have been romantically concerned. They lived collectively in an enormous home Sunny owned in Atherton. So yeah, it was a partnership at work and it was a partnership at house. They have been sleeping collectively.

And he’s a lot older than her.

He’s 19 years older.

So that is notably dicey territory within the context of this trial, proper? He’s an older man, she’s a youthful lady. There is a gigantic quantity of contextual strife about ladies founders, ladies executives, in tech particularly. Her protection cuts towards the whole grain of ladies in management positions. She’s saying, “I was controlled by this older man.” Do you assume that works right here?

It utterly contradicts her demeanor, and by the best way, prosecutors are going to play movies of her on the top of her fame when she was chatting with audiences and looking out extremely assured and self-possessed. The jury’s going to see these movies and I believe it’s going to be extraordinarily exhausting to reconcile this new picture she’s making an attempt to place forth with what they’ll see on their video display screen. The opposite actually dicey factor about that is that she’s mainly accusing a brown man of sexually and psychologically abusing her, and he’s not there to defend himself. Who is aware of how that performs with the jury? It’s actually delicate stuff.

One of many issues that has occurred to us as we have been getting ready for this interview is that she goes in charge Sunny and say that it was all his fault and he was the puppet grasp, and she or he would possibly get acquitted. After which Sunny’s going to have a trial and say, “I was under her spell. She was this radiant, compelling figure,” after which he’s going to get acquitted. After which nobody is accountable. Is {that a} chance right here?

It’s definitely a chance. You by no means know with a jury trial. I don’t assume that’s going to occur. I nonetheless assume the chances are that Elizabeth will get convicted. And I believe in some methods the case is even stronger towards Sunny as a result of he straight oversaw the lab and he was the one who interacted straight with a number of the whistleblowers, and so she’s just a little bit extra insulated than he’s. I believe he’s going to have a harder time rebutting all the federal government’s proof. So I believe what can be extra lifelike is that she will get acquitted and he will get convicted, somewhat than each of them get acquitted. However once I have a look at all that authorities proof, I nonetheless assume that each of them get convicted.

So here’s a query I’ve been dying to ask you this whole time. You began reporting the story in 2015. You have got skilled each up and down, from high-powered attorneys marching into the places of work of the Wall Avenue Journal to yell at your employers and attempt to shut this down, to the primary story breaking, which should have been an emotional excessive, to the guide popping out, to now there’s investigations and lawsuits. There’s a trial. Now you’re doing a podcast about it. Are you uninterested in this?

A part of me is uninterested in this story. It’s consumed the previous six and a half years of my life and I’m looking forward to it to be over. I need this trial to be over. I wish to have closure. I wish to see justice achieved. On the similar time, I really feel like I opened this will of worms, I began this, I felt like I owed it to myself to cowl the story till the tip. I felt like I owed it not simply to myself, however to everybody who’s been following the story. I owed it to them to cowl it.

Since I’d left the Wall Avenue Journal, I felt like the very best medium to do this was a podcast. And so therefore the podcast and therefore the identify of the podcast, Dangerous Blood: The Remaining Chapter. That is the ultimate chapter of the story that I used to be not in a position to write once I wrote the guide as a result of its occasions hadn’t occurred, and I’m writing it now, or somewhat I’m narrating it now, within the podcast.

What have you ever realized that has modified your opinion of the occasions of the guide or has strengthened these issues?

There’s nothing that’s materially modified the arc of the story that I advised within the guide. I’ve gotten my arms on much more paperwork and emails and texts, a variety of them are SEC case displays that I acquired my arms on. They solely make it worse. They solely make it clear to me that there was certainly fraud right here and that she was certainly mendacity to buyers. For example, I’d heard a small investor who invested in Theranos — and really, he was a personality within the guide — had advised me that he heard from the pinnacle of the VC agency he invested in, Don Lucas, that Elizabeth was saying that the Theranos machines have been being utilized by the army within the area. So I knew that from speaking to him once I was writing the guide, however I didn’t know she was saying this to nearly everybody. She was saying it to the CEO of Safeway, Steve Burd. She was saying this to the CFO of Walgreens, and Sunny was saying it too. There’s authorities proof now that reveals that, at one level, they have been strolling round Theranos headquarters and Sunny factors out one of many Edison gadgets to Wade Miquelon, the Walgreens CFO, and tells him, “That’s the model that’s on the Apache helicopters in Afghanistan.” She was telling this to buyers, to Betsy DeVos’s individuals, to a hospital chain referred to as Dignity Well being. Once I was writing the guide, I didn’t fairly know the extent of the mendacity. And it’s now turn into extra obvious to me with all of the proof that’s come out.

You have got an fascinating podcast technique right here. There’s Dangerous Blood: The Remaining Chapter, which is a free podcast that everybody can go hearken to. It’s nice, it is best to hearken to it. Then you’ve got “This Week In Court,” which is a paid product. How’d you make that call?

Early on, we determined that we needed to do a story podcast with excessive manufacturing values. And we needed to not simply regurgitate the guide, however to essentially add new components, break information. And on the similar time, we knew that individuals would wish to know what occurred throughout the trial. And so the system we got here up with is a free podcast, that ought to be composed, by the tip, of 12 episodes, which might be scripted and which might be narrative-based. After which bonus episodes that come out each Monday which might be referred to as “This Week In Court,” that recap what went on in courtroom that week. That manner you get the very best of each worlds. And to date it’s been actually profitable.

Do you’ve got any numbers to share with us? Are a lot of individuals shopping for the paid podcast?

I don’t know if I’m purported to say this, however I believe the narrative podcast, the one which’s free, is approaching 2 million downloads and we’ve acquired about 6,000 subscribers to the bonus episodes, who’re paying $3.99 a month for that premium content material.

It’s powerful being on the opposite aspect of a reporter’s questions, isn’t it?

It’s.

Properly, the explanation I ask is as a result of we speak to a variety of creators on the present. We’ve talked to a variety of media individuals. Adam McKay is making a film starring Jennifer Lawrence primarily based in your guide, and you’re one of many writers of this film. What you’ve got right here is a very helpful piece of mental property that simply occurs to be now turning into a real crime story. And I’m questioning if you’re fascinated about it that manner, or if you’re a journalist who, as a result of the story is so sensational, is being thrust right into a world of leisure.

Yeah. You make an awesome level. This story has simply fascinated individuals for 5, six years now. It simply appears to by no means cease fascinating individuals, and it additionally doesn’t appear to cease. I imply, the wheels of justice flip very slowly on this case, and it’s solely now that the trial is occurring. In order that has kind of expanded the lifespan of the story. It’s been actually unusual. It’s good in some ways, however Dangerous Blood is kind of like a franchise at this level. However yeah, a part of me is type of hoping that it ends quickly in order that I can transfer on to one thing else lastly.

Is that in your plan? One of many questions I’ve all the time had for individuals on this state of affairs is: you’ve got been very profitable with Dangerous Blood. The guide was profitable. One anticipates the Jennifer Lawrence film can be profitable. The podcast looks as if it’s profitable. Are you achieved? Do you’ve got a subsequent undertaking in your head after this? Or are you simply transferring to a spot with out blood testing in any respect and also you’re simply going to wrap it up?

After the podcast I’m achieved. I’m not doing any extra Theranos-related tasks. I’ll seek the advice of on the film and I’ve excessive hopes for it. So I’ll be watching that carefully. However after that, I’m achieved. I wish to do one thing else. I don’t wish to be pigeonholed because the Theranos reporter for my complete profession. I’d love to do different issues, and that could be, you realize, writing one other guide, in all probability includes doing extra journalism, however yeah, after this podcast I’m achieved.

So that you have been an investigative reporter on the Wall Avenue Journal, which I believe is truthful to characterize as one of the crucial conventional newsrooms in media, with actually one of the crucial conventional distribution channels, a print newspaper, and a paywalled digital product. When that is throughout and you consider doing journalism once more, are you going to return to the standard newsroom? Have you ever realized one thing about the place journalism ought to go now? How does that look to you?

I don’t know what the longer term is manufactured from at this level. I do really feel like I’m a journalist at coronary heart. And I’d wish to maybe write one other guide. If I do one other guide, it’ll be a nonfiction guide. It’ll be a journalistic guide. If I do one other podcast, it’ll be nonfiction, will probably be journalism. So I really feel like no matter it’s that comes subsequent can be an extension of my journalism profession. It will not be as conventional as working for a web-based newspaper, however I believe that coaching has served me nicely. And I believe reporting is what I’m good at, so I intend on persevering with to report.

Do you’ve got any tasks at the back of your thoughts that you simply’re considering, “Oh, that’s the next one?”

I’ve acquired some concepts there. They’re not well-formed but. And I believe it might be untimely to get into any of them, however I’ll discuss it once I’m prepared.

You’re not making an attempt to tip off your targets. I do know what you’re doing. You’re being cagey.

What’s subsequent within the Holmes trial, within the Holmes story? Individuals are watching this, our deputy editor, Liz Lopatto, is at that trial — she’s going to be there for months, it looks as if. You’re doing this podcast whereas we wait to see the conclusion. Then Sunny Balwani goes to be on trial. However for people who find themselves type of casually watching this, what are the moments to look out for?

This week, right now, and probably going into subsequent week, the lab director testimony, I believe he’s going to be an important authorities witness. I believe it’s additionally going to be fascinating to see how the protection tries to question him. I believe one of many many traces of protection goes to be that he was the man that Elizabeth trusted to verify issues within the lab have been beneath management. And so to the extent that they weren’t, then it’s his fault. It’s not her fault. One other necessary second, I believe, goes to be when Brian Grossman takes the stand. He’s the portfolio supervisor at Companion Fund, the San Francisco hedge fund that sued Theranos. He took notes throughout his conferences with Elizabeth and Sunny. And he really did do a good quantity of due diligence. And I anticipate his testimony to probably be devastating.

He’s a wise man. I believe he’s articulate. And I believe he’s going to spell out to the jury precisely the methods by which Elizabeth lied. I’ll have an interest to see if Rupert Murdoch is a witness. I’ll be fascinated to see whether or not David Boies will get referred to as to the stand, whether or not Heather King, his former regulation agency associate, who for a 12 months there was Theranos’s basic counsel who I did battle with, whether or not she’s going to go on the stand, and what all of them should say. After which in fact, the massive second goes to be if and when Elizabeth testifies. I believe that’s going to make for superb theater. Talking of Hollywood, that’s going to be a Hollywood second.

Yeah. Properly, John Carreyrou, it has been an absolute pleasure to speak to you. Thanks a lot for approaching Decoder.

Thanks for having me.

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