A beguiling, blonde 31-year-old entrepreneur sat onstage with former US President Bill Clinton and laid out her ambition for a future where diseases could be detected before they took hold. With her long hair, black turtleneck and slim-leg pants, Elizabeth Holmes was a refreshing anomaly on a panel of men in grey suits. Her large blue eyes remained unblinking as she sold a vision that was full of promise.
"To me, nothing matters more than the reality in our healthcare system today, which is, when someone you care about gets really sick, by the time we find out about it, it's often too late to do anything," she explained in her deep, sonorous voice.
The audience burst into applause. What Elizabeth was promising at that conference in January 2015 was nothing short of a healthcare revolution: cheaper, faster, less painful blood tests – detailed results with just the prick of a finger – providing more people with better health information earlier. This could save lives.
Bill Clinton beamed with paternalistic pride as he explained that Forbes magazine had crowned Elizabeth the youngest ever self-made woman billionaire. Her start-up, Theranos, was valued at US$9 billion. Yet she appeared humble, bashful almost, and reiterated that she just wanted to make a difference in the world.
"It was trying … to open the doors to a new understanding of how to diagnose people," former Theranos employee Erika Cheung tells The Weekly. "You could take a finger-stick of blood to run all your diagnostic tests. It would be affordable. It would have price transparency. It was less painful. There was this idea that if you tested people more frequently you could get a better understanding of what was going on inside their bodies, so you could prevent disease before you started seeing symptoms. This was a moon-shot that I wanted to be a part of."
When Erika joined Theranos in 2013, Elizabeth's desire to use Silicon Valley innovation to alleviate the intractable problems of the American healthcare system seemed a noble and exciting pursuit. There was just one problem. It was all a dangerous lie.
This is the story of how one young woman used her connections to trick some of America's most powerful people into bankrolling a $9 billion healthcare lie, and how another young woman, with courage and integrity, brought her down.
Theranos' steel and glass headquarters were located in a Californian research park that is synonymous with visionary thinking. Erika arrived for her first day brimming with optimism, eager to work hard for her inspiring new boss. Elizabeth had built Theranos from scratch after dropping out of Stanford University when she was just 19.
"To me it was a signal of, you know, it didn't matter what your background was, as long as you committed to hard work and intelligence – that was enough to make an impact on the world," Erika would later say.
Not that Elizabeth had a humble upbringing. A waspy, waifish, straight-A student, she carried herself with the uninhibited air of the well-born and used her parents' business connections to help raise the early capital to create her company. These deals attracted other, more powerful allies.
Bill Clinton first met Elizabeth at former Secretary of State Henry Kissinger's 90th birthday party in the rooftop ballroom of New York's St Regis Hotel. The black-tie event had been attended exclusively by America's power elite. Publishing maven Tina Brown, politician and diplomat John Kerry, designer Oscar de la Renta were all there. Social columns breathlessly reported the ballroom was scented with gardenias and lit by hundreds of votive candles. Kissinger was an investor in Theranos, as was Rupert Murdoch.
Erika, in comparison, grew up in a one-bedroom trailer with six family members. The opportunities and expectations in her immediate circle were far less illustrious, but she was bright and she aspired to apply her talents to something that would make a contribution to the world. She had her heart set on attending university at Berkeley, California, a leafy Eden of innovation that encourages disruptive thinking. When she told people that's what she wanted, they said, "Well, I want to be an astronaut, so good luck."
WATCH: Theranos CEO Elizabeth Holmes hits back at doubters in 2015. Story continues after video.
However, she worked hard and she was accepted into a double degree in linguistics and cell biology. College life was tough. Erika was robbed at gun point and sexually assaulted on three separate occasions. She started having severe panic attacks and dropped out. But, ever tenacious, she regrouped and graduated. At a college recruitment fair, Erika was invited to attend an interview with Elizabeth Holmes herself. She was, understandably, awe-struck.
"Going into the company, I had no idea what I was getting myself into," Erika says. "I had no transparency into the technology, no transparency into what we were building. I attempted to ask those questions in the interview, but it wasn't very clear what was happening."
At the time she could see Theranos' potential and wanted to be a part of it. The point-of-care diagnostics Elizabeth was promising did exist, just not at the level Theranos claimed to provide. Its product, the Edison, was a machine about the size of a desktop computer which they claimed could perform hundreds of diagnostic tests from a single pinprick of blood.
"To me it was like, well, there's some truth to the things she's trying to build. Maybe she found that missing piece in order to figure out how to run a multitude of diagnostics in a particular machine or particular device?"
However, Erika quickly realised something wasn't right. "It's really about the fundamentals of science," she says. "We would have blood samples where we knew it to be true that there was 20 nanograms per mil of vitamin D, and you would run it on these machines and it could come out at 52 or it could come out five. It had so much variability and irregularity. It was bizarre. This was causing different types of clinical diagnoses."
At the time, she took the view that she had been hired to help identify and raise these issues so they could be corrected. But when she tried to report the problems, her concerns fell on deaf ears. Being a young graduate surrounded by experienced clinicians, she told herself she must have been missing something. But Theranos was entering a boom period and Erika would be horrified by what she was about to witness.
Erika's time at Theranos coincided with a major expansion period for the company. Theranos had signed a much-lauded deal with the country's second largest pharmacy chain, Walgreens, to roll out testing to their stores. But the reality inside the company was very different to the slick "care" the marketing material promised. The picture that Erika paints is of a ruthless, hostile and paranoid environment where employees were intimidated into fudging data.
Elizabeth and the company's Chief Operating Officer, Ramesh "Sunny" Balwani, were pushing their employees harder and harder to get the troubled Edison machine working.
"We would say: 'We don't have the staff capacity to do this'. They would say: 'I don't want to hear it. You need to just get it done'," Erika explains. "There was an extreme amount of pressure to produce things in a short amount of time constantly. Whole departments ended up just not doing their jobs and jumping onto the Edison machine."
Up close, the founder wasn't the visionary that she had first appeared to be. Elizabeth kept the Theranos headquarters at a frosty 15°C so that she could comfortably wear her signature black Issey Miyake turtleneck, made famous by Steve Jobs. She reportedly owned 150 of them.
"All my focus is on the work. I take it so seriously. I'm sure that translates into how I dress," she said in an interview with Glamour, echoing comments made by Facebook founder Mark Zuckerberg.
Elizabeth had bulletproof glass installed in her office. Security guards would erect barriers to prevent employees from seeing what the others were doing. The software that they used prevented sharing of information between departments.
This, Erika believes, is how Elizabeth and Sunny were able to conceal the truth about their faulty device as effectively as they did. "In scientific products you need cross-communication," she says.
Scientific rigour wasn't one of the values the Theranos leaders held close. Erika explains: "There was a lot of pressure to get the results specifically that Sunny and Elizabeth wanted at any cost, and a sentiment that if you didn't produce perfectly accurate results there was something wrong with you. There was nothing wrong with the technology, nothing wrong with the chemistry, it was [that] you were not performing well."
Sunny would prowl the corridors at all hours and bark orders at his staff. The feverish push to deliver the Edison is how Erika came to be working the night shift with another young biology graduate named Tyler Shultz, the grandson of George Shultz, who was one of Elizabeth's top investors, as well as a member of the Theranos board. George Shultz is an example of the calibre of people Elizabeth had drawn around her to form her veneer of success. He had served as Secretary of State to Ronald Reagan.
But Tyler, like Erika, saw that something was very wrong. "Pieces of the [Edison] machine would literally fall off in the middle of testing. Centrifuges would come flying off," he told the HBO documentary The Inventor. When he raised this with other Theranos workers, "I realised it was an open secret that it wasn't real."
It was a very stressful and uncomfortable time, Erika says. "Despite the fact that the machines weren't accurate, they were still trying to test them on patients and were getting progressively more aggressive with pushing out these machines to test more and more patients.
"I would work sometimes 16 hours a day aggregating evidence just to get people to understand this is the reality of the situation. We're seeing sometimes more than a 50 per cent failure rate on the quality controls. These are for samples that I know what the answer is. There's no guessing games. That's wild. It just doesn't make sense."
Seventy per cent of medical decisions come from diagnostics, Erika says, and Theranos was distributing a diagnostic tool that failed half of the time.
Erika was doing everything she could to improve the device, or bring its shortcomings to light, but she kept hitting brick walls. Desperate, she approached Sunny.
"I thought, maybe I'm just not getting through to the right people," she says. "Maybe it's that I need to take it all the way to executive level management because, for some reason, maybe he just doesn't fully understand the full extent of the issue." Erika was nervous but she expected Sunny would want to hear what she had to say. Instead, he told Erika that she wasn't qualified to make such claims and needed to shut up and do her job.
"That's when I understood: They know the extent of the problems. They are just not going to do anything about it. They don't care about the consequences.
"Nothing can prepare you for that degree of dissonance. It's crazy to think you start a healthcare company, you're harming patients, but you decide to experiment on them anyway without any care or concern and promote yourself as this great hero."
The day after speaking with Sunny, Erika resigned from Theranos. But far from being over, things were about to get a whole lot worse.
Erika found a new job and moved to San Francisco. Theranos kept calling her, but she refused to pick up. Then, one night when she was working late, two of her colleagues found her and said, "There's this guy who's been sitting in this SUV all day. We don't want you to walk to your car alone. Finish whatever you're doing. We're going to walk you to your car …
"I start walking to my car," Erika says. "This guy jumps out of the van and then he hands me this letter."
Theranos was threatening to sue Erika but the thing that really made her blood run cold was that the letter was addressed to a friend's house where she was sleeping on the couch until she found a place to live.
"I freaked out because now I had confirmation that they were following me. I didn't know when that had begun, I didn't know when it would end, and it was terrifying to think that someone is out to get you because you are trying to get them to stop testing patients with this terrible device."
Court documents later revealed that Elizabeth had paid a private investigator US$150,000 to follow and intimidate Erika and Tyler. But the menacing letter gave Erika reason to speak to a lawyer who suggested she file a complaint with the regulator. Her father proudly refers to this move as her dragon-slayer moment, but she felt anything but courageous.
"If everyone's telling you that you, in fact, are the one who is wrong, of course I'm going to have some degree of doubt. Why am I going through all this pain? It really does a number on your own psychology. It was immensely lonely. It was even getting hard to trust myself at certain moments," she says.
But Erika was compelled to do what she could to stop Theranos. She wrote to the regulator with a cover letter that stated: "Theranos takes confidentiality and secrecy to an extreme level that has always made me scared to say anything." Then she provided a detailed outline of all the wrongdoing she had witnessed.
Suddenly Theranos had bigger problems than Erika Cheung. After she alerted the regulator, she says, "it was found [Theranos] had so many deficiencies ... It was an interesting cascade from that point."
WATCH: Elizabeth Holmes says 'I don't know' 600+ times in deposition tapes. Story continues after video.
As Theranos began to implode, more scandalous details emerged. The Wall Street Journal reporter John Carreyrou had been speaking with former employees and his damning articles helped seal Elizabeth's fate. Elizabeth brushed off the accusations, saying, "We're doing things differently. We're working to make a difference and that means people raise questions and that's okay." This bought her a little more time.
"She does have a lot of natural charisma and the ability to sense what people want to hear and she will say those things whether they're factual or not," says Erika, "whether it's a full-blown lie."
But the lie couldn't last forever. In 2018, Elizabeth and Sunny were charged with fraud. Theranos' value plummeted to zero and it was dissolved.
After much delay, Elizabeth Holmes faced an 11-week trial in 2021 for the crimes of deceiving investors and patients. She arrived at court every day, flanked by supporters, as her defence team sought to convince the jury that she was simply a naïve businesswoman whose company had failed. CNN reported that, even under oath, she insisted she had never lied to investors about the efficacy of Theranos' technology.
In January she was found guilty of four counts of fraud. She now faces up to 20 years behind bars. Sunny is yet to face trial, and Erika doesn't want to comment on Elizabeth's verdict until sentencing is complete as she is still likely to be called to give evidence. But in a broad sense, her feelings are mixed.
"As much as it feels validating that we were able to stop processing patient samples – there's no more harm being done to patients – it didn't have to get this bad. It didn't need to happen."
She shudders to think what damage could have been done if Elizabeth had carried on, unchecked, offering diagnostic tests with a 50 per cent fail rate during a global pandemic. Erika's role in bringing Theranos down was critical, and she is glad that she spoke up. "There's no more of that self-doubt," she insists finally. "I definitely think there is a feeling like, Erika, you did the right thing."
If you or someone you know has been affected by any of the issues raised in this article, help is always available. Call 1800 RESPECT on 1800 737 732 or Lifeline on 13 11 14.
You can read this story and many more in the March issue of The Australian Women's Weekly - on sale now.