How Elizabeth Holmes sold the idea of Theranos to employees, investors: Nightline Part 1/2

this policy has raise your right hand do you swear to tell the truth the whole truth and nothing but the truth I do this is Elizabeth Holmes once the youngest female self-made billionaire in this never-before-aired deposition she sits across from 12 attorneys under investigation for an alleged years-long fraud did it concern you that a number of tests weren't working on fairness assist devices now facing up to 20 years in prison it's a stunning fall from grace for the woman who is once poised to change the world this is a revolutionary company to fetes to change healthcare if she had made this work she would have been the next Steve Jobs we made it possible to eliminate the tubes and tubes of blood her technology promised to run hundreds of tests from a tiny finger prick a promise she would never fulfill this is not Vega team I did this thing's product it didn't work did miss Holmes know that their nose could not do all those tests she yeah she knew it's a story of greed and it's a story of incredible deception [Music] [Music] it all started here at Stanford University the birthplace of so many tech icons in Silicon Valley one of the things that people brag about is that they drop out of college Steve Jobs dropped out of college Mark Zuckerberg dropped out of college Bill Gates dropped out of college after less than two years here Elizabeth dropped out to was at a point where another few classes in chemical engineering it was not necessary for what I wanted to do in 2003 she launched her company which she would come to name Thera knows it's about keeping that conviction in yourself Elizabeth wanted nothing less than to be the apple of healthcare insiders say she was obsessed with Steve Jobs and that she wanted to mimic him at every turn from those signature black turtlenecks to recruiting his former head of software avi to vein Ian's this seems like a really bright young lady who is very driven has a really interesting idea but he quickly started seeing red flags she prick her finger and then she would put blood on something and then she put it in the machine and then sometimes she would say this part doesn't work anymore which was a little bit odd but some of that you expect again from a start-up that has a product that's not done right but the problem was it never got any better avi quit after a year but Elizabeth kept going eventually getting an enormous loan from a former software executive named sunny bhiwani I think it was about twenty million dollars but sunny a flashy entrepreneur who drove a Porsche 911 and a black Lamborghini wasn't just offering a lifeline he was also joining fairness as CEO oh did he have any qualifications in the lab testing does you did nine or in pathology or anything like that not to my knowledge he seemed an odd choice to employees but he became Elizabeth's number two and together they went after their biggest collaboration yet with Walgreens as seen here in this Theron o--'s tweet Walgreens at that point had more than a thousand stores in the US so you can imagine that the Thera knows blood test would have been available in almost every street corner so they cut a 140 million dollar deal on the heels of that news she assembled an all-star Board of government heavyweights the piece that really vaulted her to fame and stardom was the cover story in Fortune magazine the article states that Theron os-- offers more than 200 blood tests without a syringe but precisely how Theron os-- accomplishes all these amazing feats as a trade secret you saw her almost once a week either gracing a magazine cover or attending a tech conference or healthcare conference or going on TV Thank You incredibly we did this you founded this company twelve years ago right tell them how old we were I was 19 by 2014 Thera Knossos valued at nearly 10 billion dollars the founders of Walmart invest 150 million media mogul Rupert Murdoch 125 million and the DeVos family including now Education Secretary Betsy DeVos another hundred million dollars but for all the hype on the outside on the inside things weren't going as planned employees like Erika Chung we're dealing with a product that still wasn't working at what point do you start to think something isn't right here I think the transition happened is when I started processing patient samples so you basically start out with a base test yep and it kept failing I kept running it over and over and over and how it was handled who totally blew me away they took out data points so you're you're saying essentially that you were cherry-picking exactly information right but the thing is is we were still processing patients patience like sherry Eckert this is the Walgreens where I had the infamous blood draw as a breast cancer survivor' sherry needed to get tested regularly but things took a terrifying turn when she got her results I saw that the estradiol amount was over 300 I hugged my oncologists office and the nurse called me back and she said I am so sorry that's not good there could be a tumor growing somewhere I will never forget that day the doctor told sherry to go in for more tests but this time recommended a non Thera no slab it was about a week later I got the call from my doctor and he said congratulations your estrogen is basically non-existent the Thera nose tests had been off by hundreds of points no one from fairness ever called me to apologize no one not okay so many inside the walls of Thera nose see they were too scared to speak up but there was one unlikely whistleblower willing to take the risk a research engineer named Tyler Schultz he also happened to be the grandson of former Secretary of State George Shultz a board member at Theron OHS you also said that in his homes was manipulative what did he mean by that she's really good at telling you what you need to hear to keep going she definitely did that a lot with my grandfather she would just like feed him things that were just completely factually not true people can come in and do full-service laboratory testing with a stick from a finger as opposed to having the tubes and tubes taken from your arm can you recall any of the factually not true things that Miss Holmes told you the big ones are being able to run hundreds of blood tests from a single drop of blood my grandfather would go get a fair nose test done and he would have a needle in his arm you know it's like well I thought this was a single drop of blood and there'd be some you know excuse about why they needed to take a venous draw for him but you know for everybody else it's a finger prick and you continued to buy into that they weren't even running most of the tests on the thier nose devices while I was working there we only ran seven tests on the ther nose devices most the tests are being run on third-party machines did miss Holmes know at the time that their nose could not do all those tests yeah of the few tests they were running on Thera nose devices Tyler says the results were often not accurate I think at the end of the day everyone was concerned that we weren't giving patients the right results Tyler eventually decided he would raise his issues directly with the CEO herself Elizabeth responded by email later that evening to rights Tyler these are very very serious comments and allegations you're making and then she says that she's gonna have to go how the teams go through this line by line so we'll take some time before I get back to you on this but rather than a follow up from Elizabeth he received this email from sunny bhiwani that reckless comment based on absolute ignorance is so insulting to me but had any other person made these statements we would have held them accountable in the strongest way the only reason I have taken so much time away from work to address this personally is because you are mr. Schultz's grandson the only email on this topic I want to see from you going forward is an apology instead Tyler gave his two weeks notice he says he went to go meet with his grandfather at his home later that day Tyler tried to make him realize that this was a fraud and his grandfather had sided with Elizabeth Holmes and didn't believe him he said they're trying to convince me that stupid but they can't do that they can't however convince me that you're wrong and in this case I do believe you're wrong and my grandfather said that the ther knows devices were currently being used in medevac helicopters he said he said did he tell you who had pulled in that he didn't say who told him that but I have a really good guest [Music] he also said they're being used in operating rooms I remember saying that that couldn't possibly be true because the devices were barely working within the walls of their nose having made no progress with his grandfather Tyler eventually took his concerns to Wall Street Journal investigative reporter John Kerry Roux Kerry Roux authored the first of many explosive articles in The Wall Street Journal that stated among other claims that the company isn't using its technology for all the tests it offers but instead was using traditional machines bought from companies like Siemens to run the majority of its tests following the article a defiant Elizabeth appeared on Mad Money with Jim Cramer this is what happens when you work to change things and first they think you're crazy then they fight you and then all of a sudden you change the world Elizabeth continued to deny deny deny but when we come back under the harsh glare of a different kind of spotlight she'd find it harder to avoid the mounting evidence I know that and for the first time ever you'll hear from the defense attorney for the CEO of Thera knows stay with us hi everyone George Stephanopoulos here thanks for checking out the ABC News youtube channel if you'd like to get more video show highlights and watch live event coverage click on the right over here to subscribe to our channel and don't forget to download the ABC News app for breaking news alerts thanks for watching

Channel: ABC News

Views: 2,823,291

Rating: 4.8493352 out of 5

Keywords: Elizabeth, Anne, Holmes, former, CEO, Theranos, Sunny, Balwani, revolutionary, blood, tests, alleged, fraud, pleaded, not, guilty, criminal, trial, health, abc, abcnews, Theranos documentary, blood test, Theranos investors, drop of blood, scam, Walgreens, Theranos CEO, movie, podcast, ABC, The Dropout, scandal, book, Elizabeth Holmes, 2019, today, voice, what is, interview, ted talk, the drop out podcast, elizabeth holmes voice

Id: 87SWZ0Pna8k

Length: 11min 50sec (710 seconds)

Published: Thu Jan 24 2019

Reddit Comments

[u/[deleted]]

I wouldn’t call her a Stacy tbh..