Start with the face. There’s an emptiness, a blankness. Her lawyers argued for her right to remove her mask before the jury, but her face can itself seem like a mask. It’s a generic face, an American plainness; as open as the prairies is how they’d describe it in my English class at New Trier High School in Winnetka, Illinois. It’s a perfect face for projection, for seeing whatever you want to see in it, and that’s what people—me, you, he, him, she, her, they, them, us—have done.
At first, looking at that face, we saw a young genius, a whiz kid, Steve Jobs come back as just what the moment needed: a woman in the age of the woman (“the future is female”), the Internet’s first female start-up billionaire, a Stanford dropout with an idea that could change the world; those who recognized its brilliance early would make a fortune.
Like all brilliant ideas, it was simple. Good for pitch meetings. Like all brilliant ideas, it came out of her own experience and desire. If I want it, millions of others will want it, too—that’s the assumption our economy is based on. And “disruption.” Identify a thing we are doing in the same way it was done when you were a child—that’s a practice or product ripe for disruption. The letter, the phone call, the alarm clock, the glass of water—all have been successfully “disrupted.”
Those who disrupt shall inherit the earth.
The U.S. Attorney’s Office began making its case against Elizabeth Holmes this past week following a short delay resulting from a coronavirus scare on the jury, a reminder that we are living not in a normal time but in a time of pandemic, climate change, wild politics, and wild storms, in “these dread latter days of the old violent beloved U.S.A.,” as Walker Percy put it.
Like all brilliant ideas, it was simple. Good for pitch meetings.
Prosecutor Robert Leach opened not with a well-known witness, one of the wise old men who sat on the Theranos board—Henry Kissinger, David Boies, Jim Mattis (notice how none of them have any experience in science or medicine)—but with Danise Yam (legal name So Han Spivey), who worked as the company controller from 2006 to 2017. It’s not blood Yam knows about—it’s money, the incoming and the outgoing.
Yam testified that Theranos never seemed to have enough revenue to cover its expenses. It was part of her job to shift it all around, to decide which vendors would get paid that month, and which would get stiffed. It was in part this pressure, the prosecution argued, that caused Holmes to lie to potential investors—she needed cash.
In 2014, a year in which Theranos reported a revenue of just $150,000, Holmes told investors that the company was projected to earn $990 million the following year. Meanwhile, she was living like a billionaire, expensing shopping sprees, luxury-hotel stays, and travel on private jets.
In explaining all this to the jury, Yam set the greater context. Holmes and Sunny Balwani, her former business partner and boyfriend, who, she now alleges, was abusive—he is 20 years her senior—built the company into a hall of mirrors. No one other than Holmes and Balwani knew the full story at Theranos; you were never sure what you were looking at, or what was really going on. If you complained, you were threatened; if you persisted, you were fired; if you blabbed, you were sued.
Yam was followed on the stand by Erika Cheung, who worked at Theranos in 2013 and 2014. Cheung came in as a true believer and thus felt doubly scorned when she learned the truth about the Theranos device, known as the Edison Machine. It could test accurately for a handful of conditions, and only one at a time, not for the hundreds that had been advertised. Employees are alleged to have secretly sent blood to an outside lab for processing when demonstrating the Edison to partners and investors. This would be like discovering that Pizza Hut had been ordering Domino’s to serve its customers.
It was Cheung (who had been forced out when she complained) who sounded the first warning, in 2015, when she sent an 1,800-word letter to the Centers for Medicare & Medicaid Services, in which she accused Theranos of various kinds of misconduct, the consequences of which was a device with “major stability, precision and accuracy problems.”
In 2014, a year in which Theranos reported a revenue of just $150,000, Holmes told investors that the company was projected to earn $990 million the following year.
Cheung will be followed in the coming weeks by former board members and former Theranos employees—those who have had a fit of conscience and those who are cooperating to save themselves. There will also be civilians, 11 patients (average schnooks who claim they were damaged by inaccurate results they got from Theranos) and nine doctors who sent those schnooks to be tested.
The defense will get its chance to re-frame and remake the picture. They do not have to prove she was right—only that she did not know she was wrong, and thus did not lie.
Maybe the bigger question, a question no jury or judge can decide, is this: Why? Why this case? The Justice Department brings thousands of white-collar criminal cases every year. Why has this one captured our imagination? Why has it become one of those once-in-a-decade trials that seem to stand for the entire era? The Scopes trial … Well, O.K., that’s obvious. It was Genesis v. Darwin, Religion v. Science, Spirit v. Material, Future v. Past. And it had eminent lawyers, Clarence Darrow and William Jennings Bryan. The Menendez case? Well, everyone worries about being killed by their own kids, don’t they? The O.J. trial is obvious, too. Race and murder, bloody footprints, a missing knife, a famous defendant. That case had everything.
But what is it about the Holmes trial?
Maybe it’s that the fate of Theranos seems to justify our mistrust of cutting-edge technology and overvalued start-ups that appear like mushrooms in the morning. Maybe it’s that the fate of Theranos gets at a bigger issue, the sense that the edifice of our entire nation, the corporations and the government, are hollow, puffed up by bullshit and sales talk. Holmes told a story same as the generals did about Afghanistan. She made up the numbers same as Trump did in the early days of the virus. She sold us a lemon, which we did not need and which did not work. It’s not only this person who is on trial in California. It’s the system.
According to Holmes, her founding idea arose from her earliest fear: the doctor’s office, the needle that awaits, the spike that, driven into your arm, draws out vial after vial of blood. What if she could disrupt that process? What if, instead of vial after vial, she could run all the tests with a single drop of blood, or maybe two? What if, instead of driving a spike into your vein, as if you were a street addict, a nurse could take all the needed blood via a single finger prick, or maybe two? And what if you didn’t even have to go to the doctor’s office? What if this device were small enough to sit on a desk, like a printer, and could be accessed in a Walgreens, or a CVS, or even in your own home?
Meanwhile, she was living like a billionaire, expensing shopping sprees, luxury-hotel stays, and travel on private jets.
That was the pitch that attracted the investors who ponied up the millions to organize the company—Theranos—that hired the engineers to build the machine—the Edison—that never really worked, resulting in a hemorrhaging of cash that required still more fraudulent pitch meetings, followed by the unreliable tests that stirred the consciences of certain employees, who complained to Holmes, were fired, then became whistleblowers, contacting first the government, then John Carreyrou at The Wall Street Journal, who, being between assignments, made the inquiries that led to the exposé that brought down the edifice (Carreyrou may be called as a witness for the prosecution), a collapse that has cast a bad light on a market that valued Theranos, a company with little revenue and no working product, at $9 billion.
Nine billion dollars?
For what? The idea? The potential? She wanted to disrupt the blood test? Great. I want to disrupt death. That doesn’t mean I can do it. Maybe it’s the process of disruption that needs disrupting.
Whenever a new personality appears on the scene, the press immediately moves to peg it, to define it, to show that this is not a new person but a known quantity with a different face. They turn the new person into an old story—Elizabeth Holmes is Steve Jobs—and go with that story—Theranos is the next Apple Computer—until it hits a wall. At which point we get a new old story, which they go with—Elizabeth Holmes is Bernie Madoff; Theranos was a Ponzi scheme—until the two stories clash, or, better yet, meet in court.
Elizabeth Holmes is the best of America. She is the hope and dream. And, yes, her dream came up short—but even Lee Iacocca produced the Ford Pinto. We didn’t put him in prison for it! That’s one story, the defense’s.
Elizabeth Holmes is the worst of America. She is the scammer, the con artist, the King or the Duke from Huckleberry Finn. Her company was a shibboleth, a false front, a Potemkin village. It’s just what many of us think about all those Silicon Valley start-ups: there’s nothing there. Put her in prison, because that’s where she belongs, and as a warning to others—that’s the other story, the prosecution’s.
Rich Cohen is a Writer at Large for Air Mail
