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Previously on The Dropout, Theronos' alleged deceptive practices had created some terrifying health scares. First thing that came to mind was, oh my god, it's recurring. There could be a tumor growing somewhere. No one from Theronos ever called me to apologize, and in my opinion, that's the least you can do when you mess up so badly. But Elizabeth was now a star. Ladies and gentlemen,
please welcome the only person I know who makes me feel like a lazy bastard, Elizabeth Holmes. And a wealthy one at that, at least on paper, with Theronos' valuation close to $10 billion. It's such a special thing for me to be here, especially with this group of people, and thank you. But those who'd seen Elizabeth up close felt it was only a matter of time before she'd be exposed. I literally would Google Theronos scam, wondering like when that information was
going to come out instead of being up to today. It may not be next week or next year. But the truth will come out. From ABC Radio and Nightline, this is The Dropout. Episode 4. The whistleblower. I was probably the first person to really like drink the cool late. Erica Chung was a senior in college at UC Berkeley when she first heard about Theronos. She was close to graduation with a degree in molecular and cell biology. She went to a career fair on campus, and Theronos was there.
There was this long line for this company, and I really hit it off with the HR recruiter, and she said, you know, if you're graduating, like you're already graduated, you're looking for a job, and you're looking for a research and development position within the sciences, we have spots for you. Erica's now in her mid-twenties with long brown hair. She's laid back and not the kind of person who puts on airs.
A former lab director, I spoke to, says Erica, was one of the smartest people he worked with at Theronos. So I gave her my resume at the career fair, and then almost instantly I got it. I got it in the interview. It was exciting to talk about kind of how you can apply the sciences, and then all changing the world.
Yeah, that was the big pool, was changing the world, and not only that, but making healthcare more accessible, making it more affordable, and doing something that no one had ever done before. Even though Erica had two other offers, she chose Theronos. She really admired Elizabeth in the company's mission. Erica began working at the company as a lab associate in October 2013. Right off the bat, she says you could feel it was an extremely secretive place.
And it was just sort of instilled in us in our onboarding. Like we need to keep certain things secret. You're not allowed to talk to your friends and family about what's going on here. They would barricade certain portions of the lab so you can see. Erica says she wasn't even allowed to tell people where she worked, which didn't matter as the young ambitious staff seemed to be holed up their day and night.
The majority of the people that had actually worked with the technology tended to be recent graduates, tended to be people that didn't have a lot of experience, but many of us worked 12, sometimes 16 hours a day. It was a chaotic environment. As a former lab director puts it, Theronos looked like it was run by mad scientists. There were beakers and chemicals scattered across the labs. And even though the company was now about 10 years old, it still felt like a start-up.
Senior software engineer Michael Craig, who you first met in episode two, remembers frustrations from that time. People I heard a lot of complaints by the project managers about having to change directions constantly, having everyone ever in this and then, oh no, everyone needs to be all on this. And it felt like it was just being mismanaged. But Erica says speaking up wasn't really an option. People were very scared of upsetting Elizabeth Holmes and upsetting Sunny Bawani.
What makes you say that? Why were people afraid? One, people blatantly saying that they were scared of losing their jobs. Two, people working in sane hours. Three, the kind of blame game where when things would go wrong, everyone was looking to point to someone to blame. People aren't trying to understand what's actually going wrong, but people are just getting upset about what's going wrong. Erica, who was working in the lab that processed patient samples, became more and more disheartened.
So you basically start out with a base test. So you know what the expectation is. So you take the sample from that person and you put that base test in your machine just to say, okay, we know that it's working, we know that it's cleared. And what happened? And it felt. And it kept failing. I kept running it over and over and over. And how it was handled totally blew me away. Erica says she told a supervisor things weren't working.
The way she describes it reminds me of a call to the cable company. You know the type where they ask you whether you've unplugged your set top box. When superficial remedies didn't work, this is how Erica says superior suggested resolving the problem. So essentially how it got resolved is they took out data points and they said, oh, well, this is like the best two. Out of six, the way that we kind of average things.
So you're saying essentially that you were cherry picking exactly the information. Right. In order to make the information make sense. Right. This as you may have gathered is a big no no. Here's clinical pathologist Dr. Stephen master explaining why that it would never be appropriate for someone to do that kind of quality control.
If you cherry pick the data and only pick the quality controls that look like they fit so that you can just keep going without actually doing anything to fix the fundamental problem, then you are again not doing quality control in the correct way. Erica says she raised these issues directly with Sonny who oversaw the lab operations. And he would get enraged. He had asked me, so how do you like working for this company and how are things going for you so far?
And I said, I really enjoy working for this company, but there are a lot of problems. We're having a lot of issues with our quality controls. And then he just sort of lost it at that point. And he's like, well, what makes you think that we have problems? What was your training and statistics? I'm tired of people coming in here and starting fires where there are no fires. And problems when there are no problems.
What really unsettled Erica was the fact that Erinos was running these tests on real people. She could have given all these different excuses, but the problems weren't being fixed. And we kept continuously processing patients. Meaning those patients were taking information that you were providing to them and making medical decisions. With that information. Correct. Erica wasn't the only one who noticed issues.
Just before she started, a new employee with close ties to Elizabeth joined the company. I met Elizabeth and my grandfather's living room, which is on Stanford campus. That was the fall of 2011. That's Tyler Schultz speaking here in a deposition. He's the grandson of Theranos Board member George Schultz, the former secretary of state. Tyler, who's about six years younger than Elizabeth, remembers the first time he met her back when he was a junior at Stanford.
I was in love with her vision. I thought she was brilliant. I was totally sold on the idea of changing the way blood testing has done. Tyler is now in his mid-20s. He has sandy-blonde hair and looks like the kind of all-American kid you'd find on a college campus. He's friendly and affable. And after a summer internship at Theranos, he was eager to work their full time. My first day was the day after they opened the first Walgreens Wellness Center.
Just like Erica, Tyler started out bright-eyed and enthusiastic about Theranos' vision. But on his very first day, Tyler says the head of assay or blood test development was fired on the spot by Elizabeth after asking too many questions. That kind of set the tone for the entire scientific community within Theranos, where working smart was not valued but working hard was. It's worth reminding here. Tyler's grandfather, George Schultz, was extremely close to Elizabeth.
He's the one who helped bring so many heavy hitters to her board of directors. She would go have lunches or dinners with my grandfather all the time and I was there for some of them. The former Secretary of State and Elizabeth met through a mutual friend at the Hoover Institution. As soon as she started talking, I did a double take. As he would later tell it, he could see the momentous potential for her technology right away. We think that there's going to be a revolution in preventive medicine.
And that is going to have a big impact on quality of life and on the cost of the healthcare system. He and Elizabeth would connect regularly. In the first year of knowing each other, he says they met almost 30 times. And Elizabeth became the sort of family friend who comes to Thanksgiving dinner. It wasn't uncommon for Elizabeth to talk up Theranos at these celebrations. She came to our family Christmas dinners or other family events like that.
She would always talk about how Theranos was more accurate than existing methods. But Tyler says his experience at the company didn't match the image Elizabeth was selling his family. He especially didn't like what she was peddling to his then 93-year-old grandfather. My grandfather would go get Theranos' test done and he would have a needle in his arm. And there would be some excuse about why they needed to take a Venus draw for him.
But for everybody else, it's a finger prick and he continued to buy into that. I also told him that most of the tests weren't even run on the Theranos platform. So not only were they, you know, it couldn't run 300 tests in one single drop of blood. But they weren't even running most of the tests on the Theranos devices. He told me that Elizabeth told him that the only reason they have third-party devices is to validate their own technologies, but that no blood tests were run on those devices.
You know, I worked there and while I was working there, we only ran seven tests on the Theranos devices. She also made it sound like the devices could simultaneously run multiple tests. But in reality, each device was, you know, calibrated to run one thing at a time. Listening to Tyler speak, you can imagine the frustration. How difficult it would be to convince a grandparent they're wrong, especially when that grandparent has money and reputation on the line.
You also said that Ms. Holmes was manipulative. What do you mean by that? I think she's really good at telling you what you need to hear to keep going. I mean, she did that with me to some degree, but she did that a lot with my grandfather, I felt. She became really close with my grandfather and I felt like she just, she used her personal relationship with him to, I guess, a business advantage.
And, you know, she would just like feed him and, you know, was feeding me, basically feeding everybody things that were just completely, factually not true. There's a point in Tyler's deposition where he describes a lengthy list of the problems he says he witnessed happening with the Theranos machines. From what he says, the devices sounded more like a failed science experiment than a state of the art medical invention.
There was this mechanical arm that had a pipette on the end that would go and suck up different reagents. Oftentimes it either went pick up the right tips and then they'll usually fall off sometimes during the test, fall into the bottom of the machine and it would get in the gears. This like wire, I think it was just like a closed hanger and the doors went closed so you'd have to take the shot to see if taping it shut. Change the result.
The other one was temperature sensitivity, so it was all asked to be used. Tyler says most employees were well aware of the problems. A lot of people would pretty much joke about how awful they were. I went out with some of my housemates and I saw some of the product managers there. One of them was hitting on one of my friends, was saying that he was clean, SDD free. We were making jokes about how we didn't actually know because he was tested with a Theranos device.
Joking aside, there were real stakes here. People were getting inaccurate results and potentially making dangerous decisions about their health. I think at the end of the day everyone was concerned that we weren't giving patients the right results. To your knowledge, did Ms. Holmes know that Theranos could not do all those tests? She knew. Erica says she began documenting the problems she encountered. She was really concerned with quality control failures. These were happening really frequently.
I remember she was keeping a pretty precise tally of how often these were failing. I would put up error reporting sheets by the machines and they would be taken down. People didn't want to actually know the number of times that we were having issues. It was probably because they were starting to realize we were having them so frequently. Erica says a manager cautioned her against reporting the issues. She told me that he told her, don't speak up. If you speak up, then you're on their radar.
You don't want to be on their radar. Did you form an impression that it was not acceptable or encouraged to ask questions? That was the culture people knew they would say, don't speak up or you get fired. There was definitely a culture of fear. I don't know exactly how it started, but it was definitely there. Erica says Sunny got wind of the fact she and Tyler were talking. So Sunny confronted her. The reception that I got was basically you need to sit down and keep your mouth shut.
You don't know what you're talking about and you need to do the job that I hired you for, which is process patient samples. That was when I was like, this is not an environment. This is not a culture where they really care about, you know, what consequences this might have on patients. Erica felt her concerns were falling on deaf ears, but Tyler knew he was in a unique position given his family connections.
Even with some political cover, he wanted to be absolutely certain his concerns were valid before raising them with Elizabeth. So under an alias, he reached out to the New York State Department of Health. I didn't even say where I worked initially.
I wanted to get the information from somebody who really understood it about whether what we did was, okay, and I wanted it to be not from somebody inside Theranos, but from somebody who didn't have skin in the game, essentially, who knew what they were talking about. Tyler described what he and Erica had been seeing at Theranos. And sure enough, the regulators told him it didn't sound right. They advised him to file an anonymous complaint.
They said that they would like to know the name of the company that I work with so that it could work with them to improve the practices. So then I gave them the name. Theranos gave them the list of the tests we'd been running. Tyler says you flagged the issues in an email to Elizabeth. Actually, I liked Elizabeth, and I thought we could make changes, but I knew it would be a hard conversation to have.
She wrote back, Tyler, these are very, very serious comments and allegations that you're making. She went on to say she'd have the teams go through this line by line, so it would take some time before I get back to you on this. But rather than a follow-up from Elizabeth, what Tyler got was a response from Sonny. I think sending an email like this from Elizabeth would not look good for her image.
And I think her relationship with my grandfather was so really important to her, so it made more sense to have Sonny respond. Take a listen to this excerpt. Sonny writes, quote, quote, Tyler was done. Instead of an apology, he gave us two weeks notice. It's here. The stock up in Save Sale is on this week at Lens, till you're pantry with deals by the dozen, including savings on your favorite food club items and more.
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He was told security would come to ask or to mount. But they never did. Eventually, he just stood up and left on his own. Then, he broke the news to his grandfather. He said that Elizabeth told him that I had quit in a really dramatic and unprofessional and inappropriate way. He said, they're trying to convince me that you're 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.
Later that night, Tyler went to his grandfather's for dinner and invited Erica. Erica was really frustrated about how this was handled as well because she had similar concerns. And so she was trying to basically find a voice. And I said, I don't know if anything will happen, but I know my grandfather will at least listen to you. George Schultz's home is on the Stanford campus in a row of faculty houses.
It's three stories slightly set back from the road with green bushes framing the entrance of a stone walkway leading to a blue front door. Tyler and Erica made their case over dinner. Erica shared what she'd seen happening with real patient samples. George Schultz's response was startling. My grandfather said that the thermos devices were currently being used in metabac helicopters. He said that. He said that. He didn't say who told him that, but it happened really good.
Guess what? Who do you believe told him that? I would assume that Elizabeth told him that. He also said they were being used in operating rooms. Well, I remember Erica and I saying that that couldn't possibly be true because the devices were barely working within the walls of Theronos. He said that highly, highly qualified people are telling him that Theronos is the real deal and that this is going to revolutionize medicine. Erica and Tyler left the dinner feeling defeated.
Erica quit the next day. It was seven months after she'd started at Theronos. While the two were crestfallen, what they didn't know was that someone outside Theronos was taking the first critical look at the company. Dr. John Ionitis is a professor of medicine at Stanford University. He lives and works near Theronos' headquarters. He literally walked by the building one day and saw the sign, wondered what it was. I was just passing by its headquarters practically.
Being of Greek origin, Theronos sounded like a Greek term that was very weird. The terms that come to mind are Tyrannos, which is Tyrant and Thanatos, which is Death. So I said, why should a company want to have such a name? I first met Dr. Ionitis at his office at Stanford. There are books and stacks of paper everywhere you look. There's a whiteboard scribbled with math problems. He's got a mustache and a big smile.
And the day we met, he was wearing a white blazer, white shirt and dress pants with a red and gray tie. Google him. It's the same outfit that comes up in most the images. So, after randomly passing the Theronos headquarters, he says he couldn't help but dig deeper. Basically, I'm looking for papers that have been peer reviewed, that have been published in respectable journals, and that convey how this is done. And what did you find? Practically I found nothing.
Dr. Ionitis tells me why that's such an issue. So, the very basic premise of science is that you need to have scientific documentation of the evidence that supports your claim. And if you have extraordinary claims, or extravagant claims, like in the case of Theronos, that they were promising that they have something that would revolutionize the entire healthcare system, and it would be a completely disruptive type of innovation that the world had not seen before. You ask for even more evidence.
You're not happy just to see a few papers with very questionable evidence and lots of question marks. And what is typical when it comes to the amount of papers that you would see just on that one thing alone? For some test, there's like tens of thousands of papers. So, he took an extraordinary step. So, I wrote a paper in a scientific journal, the Journal of the American Medical Association, where I just presented my experience.
This is a startup that is promising to disrupt the entire medical care world, and the CO is highly respected, and everybody thinks that this is the way to go. But our scientific literature doesn't include any evidence, and it was published early in 2015. At a time when no one to my knowledge had really questioned Theronos. His colleagues applauded the move. Theronos exacts on the other hand, weren't happy. Dr. Ionitis says he promptly got a call from Theronos' General Counsel.
I think that they were trying to win me over to their side. And I was actually in Rome, and it just happened that I was outside the tempieto of Bramante, a masterpiece of the Renaissance, but it is hidden within a larger structure. So, you can't really see it from the outside. You go inside, and then you see a spectacular building.
So, it seemed very similar that Theronos was saying that, if you come inside, if you become an insider, you will see this masterpiece that is the best thing that has happened to diagnostic testing. But if you're an outsider, you will not see anything, and you're not allowed to see anything. How did you leave the conversation?
On friendly terms, with a plan that we will keep in touch, have me meet with Elizabeth Holmes and try to discuss further, try to convince them that they need to publish in the scientific literature, and maybe try to convince me that I should co-author a paper with them. What happened next? That didn't materialize. Practically, there was no follow-up to that suggestion that that meeting would happen.
Around the same time, John Kerry Rue, a Wall Street Journal reporter in New York, was getting interested in Theronos too. John is a dogged investigative journalist with a 20-year track record. He's broken all kinds of stories about financial malfeasance.
I read Profile of Elizabeth Holmes in December 2014 written by Ken Oletta and the New Yorker, and one of the first things that struck me as off in that story was this notion that she had dropped out of Stanford with just two semesters of chemical engineering classes under her belt and gone on to pioneer groundbreaking new medical science.
To really add value in medicine, you have to have the formal training, which often means going to medical school, and sometimes it means getting a PhD afterwards. And there's a reason that most Nobel winners in medicine are in their 60s when they win the Nobel. John had a feeling something was seriously amiss, but it was tough to get sources to talk on the record.
The threat of litigation was always in the air when you worked at Theronos, and employees knew it was not an empty threat because Elizabeth had sued former employees in the early years of the company. They also knew that starting in 2011, the outside council for Theronos was David Boyz. David Boyz, by the way, is one of the leading trial attorneys of his time. He represented Al Gore in the presidential recount of 2000.
He later helped pioneer the legalization of gay marriage, but he's also known as an intimidating corporate litigator, and he was the long-time attorney of Harvey Weinstein. For Theronos employees, he was a scarecrow. They thought that if they expressed their misgivings either internally or after they left to a regulator or a reporter that it would be David Boyz in his law firm that would be coming after them. Employees like Tyler Schultz knew the stakes of talking.
He was seriously worried when he crossed John Kerry Roo's radar. I noticed that he checked out my profile on LinkedIn. He must have heard from other employees that I was beginning to poke around and make calls, so I in-mailed him. I ignored it for a few weeks. I didn't hear back for four weeks. Why did it take you so long? I was afraid all this would happen. Then eventually I got really curious about what he knew. And then one day I pick up the phone and it's Tyler. And then I got sucked in.
He was terrified as well and was calling me from a burner phone, because he didn't want our communications to be traced. Tyler says John was very convincing. John had a lot of information and the right track record. So I felt like giving him more information would go towards correcting a lot of the problems that I saw while I was there, which would ultimately save some patients from getting incorrect medical results. I guess I felt like John would actually ask the right questions.
And it wasn't long before Theranos' legal team sprung to action. In late June 2015, he was preparing to publish his first article about the company. When Attorney David Boyce came in for what John recalls was a marathon five-hour meeting at the Wall Street Journal. They came and we had a meeting with them in which their demeanor was very aggressive. They proceeded to tell us that I had misappropriated Theranos trade secrets and that I needed to destroy them or return them immediately.
Did you respond to that? I mean, we made clear that that wasn't going to happen. We tried to keep things cordial, even though they were pretty aggressive. Eventually, we started going through these 80 questions that I had sent them in advance. And the basic question was, do you use commercial machines made by third parties for some, if not most of your tests? And if the answer was yes, then they've been lined up everyone.
How many tests do you use proprietary Theranos technology for and are the tests reliable? And when I started asking those questions, they wouldn't answer invoking trade secrets. And so we kind of went around in circles for hours. A five-hour meeting. And they wouldn't tell you whether they were using outside machines to do what they claimed Theranos machines were doing.
All they would concede to is that they did own some commercial machines and they claimed to use them only for comparison purposes internally, essentially for research. But they wouldn't comment on whether they used them to test patient samples. It was frustrating, but the stone walling was also a sign that I was on the right track. And so I came out of that five-hour meeting feeling like we were on the something big and I was just going to redouble my efforts.
So the meeting ends. They haven't answered your questions completely. Is there still a threat hanging over your head? Well, David Boyz lets us know during the meeting that we're going to be receiving a letter pretty soon making explicit Theranos' legal stance. We sure enough we get that letter a couple days later. It again reiterates that I've essentially stolen Theranos trade secrets and that I need to destroy them or return them 23-page long letter comes a few days after that.
That letter is essentially a searing indictment of me as a journalist and of my methods as a journalist. It's an attempt to really get the journal to disavow me. And at the end of that letter, the threat is very explicit that Theranos is going to sue if we proceed with the story. Elizabeth was applying her own pressure, even publishing an op-ed in the Wall Street Journal before John could publish his story. In it, she wrote Theranos was ushering in a new era of preventative care.
She argued all lab tests should undergo review by the Food and Drug Administration, though ironically, just a single Theranos test, the one for herpes, was actually approved by the FDA.
I think it was that day pretty much that I had already filed my story to my editor and I went to his office and I said, you know, I think we need to speed up the process here because not only is she continuing to give interviews and use our own newspaper as her mouthpiece, but we knew that she was putting this pressure, all this pressure on some of my confidential sources and I felt very concerned. John's anonymous sources, Tyler and Erica, say they were also feeling Theranos' heat.
They had someone sit outside my work, your new job, at my new job and it scared my own co-workers. They were curious like, why has this guy just been sitting outside of our lab for such a long time that they had waited to walk me to my car because I was the last one working that night? As Erica left the office, she says a man walked out of an SUV and handed her a threatening letter from David Boyz. The letter that they had addressed was an address no one knew I was living at.
It was a temporary home, so it freaked me out. Like, are they following me? How did they figure out where I lived? Because even my own mother had not known this address. The letter said Theranos had reason to believe Erica was disclosing, quote, trade secrets and they threatened to sue if she didn't stop. She consulted a lawyer who advised her to report what she'd witnessed to regulators. And Erica wasn't the only one on the company's radar.
Did Theranos have a private investigator follow you at any time to knowledge? Yes. Over the summer, maybe like starting in June 2015? Yeah. Tyler, already facing pressure from Theranos and his grandfather, says when his parents found out he'd been speaking to a reporter, they were furious. My dad was on the phone with my grandfather and then got off the phone and he asked me, have you been speaking with Wall Street Journal reporter? And I said yes. And he said, they know you're totally f***ing.
And he was more angry with me than I'd ever seen him in my life. He said, they know you did it. Like, why would you, you know how aggressive they are? Why would you do this? They're going to ruin your life, basically. Tyler then called his grandfather. And he said, well Theranos knows that you've been speaking to a Wall Street Journal reporter and I said, I don't know why they think that.
And he said, well, in any case, there's a one-page confidentiality agreement and if you sign it, it will make everything go away. So how about you meet with the Theranos lawyers tomorrow morning and you sign this agreement? And I said, that sounds fine, but can I come talk to you in person first without any lawyers around? And he said yes. That evening, Tyler stopped by his grandfather's house on Stanford's campus. He wanted to reiterate his concerns about the company.
According to Tyler, George Schultz said Theranos had undeniable proof his grandson was leaking information. He's telling me that there's complete sentences that they know came from my email so I'm saying, I don't know how that could possibly be true. And then he just says, well, again, whatever the case may be, will you just sign this one-page document to make everything go away? And I said, yeah, I will definitely sign that. And then things took a shocking turn.
And then he said, there are two Theranos lawyers here right now. Can I go get them? And I said, sure, yeah, go get them. I'll sign the one-page. And there's just having to be two lawyers hidden somewhere in the house? Yeah. Okay. What was the reaction to learning that? I was totally surprised. They come down and they don't come with a one-page confidential agreement. They come with a notice to appear in court on the two mornings later, I think. A letter signed by David Boyz.
His step-grandmother became uncomfortable, thinking her grandson was being ambushed. George Schultz escorted the lawyers away, but the drama wouldn't end there. My grandfather would say, like, things like, your career will be ruined if this article comes out. As all of this was happening, there was chaos back at Theranos, according to employees. I definitely think that that was a very unexpected surprise for them. And definitely not something good to put it lightly.
Early on a Tuesday morning in August 2015, FDA agents descended on Theranos for a surprise inspection of its labs. Employee Michael Craig was in the building as it all went down. They came in through the door and someone from the legal department was notified and came out and escorted them quickly into a room where they were, you know, I showed them in to one of the conference rooms.
Some employees who were there were called the heart-pounding moment when the agents entered looking very official and determined. But there was one person at Theranos who did seem to take the whole thing and stride, at least on the surface. It was Elizabeth. One of my friends from there said to me, you know, if you really want to believe something, you will do all the necessary gymnastics you need to do in order to believe it.
And I kind of feel that that's completely apropos of Elizabeth Holmes. After almost two weeks of top to bottom inspections, the FDA found 14 compliance issues. Theranos said it would resolve most of them in seven days. Whether they actually did, the FDA will not confirm. But while Theranos was dealing with the FDA, Tyler was still dealing with Theranos. He hired lawyers to fight it out with the company's attorneys, costing his parents close to half a million dollars in legal fees.
And he kept talking to John Kerryrup despite the tremendous stakes, family relationships, his career, his future. And in the end, I'm able to publish in large part thanks to Tyler. On October 15, 2015, the Wall Street Journal ran the first of many explosive Theranos articles, with John reporting that the company was not using its own technology for all the tested offers.
Instead, according to the article, Theranos was using traditional machines bought from companies like Siemens to run the majority of its tests. Once we published the story, it was pretty much bullet proof. It withstood the counterattacks and then regulators acted. And eventually everything that we written was proven right. Back at Theranos, Elizabeth called in all hands meeting. Employees crowded into the cafeteria, packing into booths, leaning against whatever they could.
Michael Craig remembers Elizabeth and Sonny standing in the center of the room with a microphone and speakers. They told employees they were under attack. John Kerryrup was enemy number one, they said. He was doing the bidding of big corporations. She definitely did that thing where you unite people in common opposition against someone else, which is, you know, probably can read in the art of war. Then a chant broke out. You Kerryrup is what we chanted. I joined in kind of like tongue and cheek.
And what did you think when you were chanting? I believed it. When you're really committed to something and you really want to believe something, you'll do whatever you need to do. Did you apologize? Oh, I guess I haven't. Sorry, John. Some Theranos employees even created a video game. John was the villain. I'm playing Space Invaders Theranos edition.
Here's Sound of Him playing it in this video from the Wall Street Journal. Shooting his own likeness over and over again with little nano-tainer bullets. The invader in this version of the game is me, along with some Zika viruses. And the machine gun at the bottom of the screen is Theranos' mini lab blood testing device. And the bullets that it's shooting are its little nano-tainer vials.
You know, it's another one of the crazy twists in this crazy story that has essentially consumed the past three and a half years of my life. Sure, the troops were behind her. But after such a crushing blow of bad publicity, other CEOs might have stepped down or been forced out. But not Elizabeth. Ever defiant she went on Jim Kramer's mad money in her signature black turtle neck to make her case.
Thank you, Elizabeth. I have to tell you, in all my years, I can't recall a private company that I have to candlely many have never heard of getting this kind of attention and scrutiny. What do you think is going on here? This is what happens when you work to change things. First they think you're crazy, then they fight you, and then all of a sudden you change the world. But Elizabeth's next battle wouldn't be in the court of public opinion.
No, the next phase of this fight was about to go down in the court of law. This is an investigation by the Securities and Exchange Commission and the matter of Theranos' Inc. to determine whether there have been violations of certain provisions of the federal securities laws. In next week's episode of The Dropout, Elizabeth and her partner, Sunny, are finally forced to answer tough questions under oath. Did it concern you that a number of tests weren't working on Theranos' devices?
I know that we made mistakes. And for the first time ever, you'll hear from Sunny's attorney with a glimpse into the defense's argument. I think this was no secret that Theranos was doing traditional blood testing. Except for the fact that the advertising itself suggested you could have your test done with a prick of blood. Well, it never said that's the only way it would go. When it comes to our health, people want to know it's 100% accurate day one.
They don't want to feel like the technology that they're using is going to work 10 years from now. They want to know that what's inside of a Walgreens or at their doctor's office can actually do what it says it will do. Rebecca, of course, that's true. I think, though, the unfortunate thing is there's no perfect answer. There's mistakes that are made every day, but that's not fraud.
Elizabeth Holmes, David Boyz, Tyler Schultz and Sunny Bawani did not respond or declined to comment for this podcast. George Schultz sent us a response in January 2019, more than three years after the events described in this episode. He said, quote, Tyler had navigated a very complex situation in ways that made me proud. Some material, including court depositions, were edited for clarity and time. The dropout is written and produced by Taylor Dunn, Victoria Thompson, and me.
Our editors are Chris Baroube and Evan Viola, who also created our theme song. Our researchers are Victor Erdonia's and Lane Win. Our artwork is by Teddy Blanks at Chips NY. The dropout is a production of Nightline ABC Radio and ABC's Business Unit. For Nightline, Jenna Melman is the supervising producer and Stephen Baker is the executive producer. Eric Auburn runs ABC's Specialized Units.
Thanks to the team at ABC Radio and to the Wall Street Journal's John Kerry Room, author of Bad Blood, who's investigative reporting first exposed this remarkable story. Be sure to subscribe to the dropout podcast, and if you like what you heard, leave us a review. Listen to new episodes every Wednesday. Plus, join us this Saturday for a special Behind the Scenes look at the dropout.
We'll be speaking with ABC's Daily News Podcast Start here, explaining exactly how we put this show together, and revealing some of the reactions we've gotten so far, including people who worked with Elizabeth. So if you want to hear that, subscribe to Start Here, and they'll also include an exclusive clip of next week's show.