Vial Ac­cu­sa­tions

STANFORDS DROPOUT THERANOS CEO EL­IZ­A­BETH HOLMES TRIES TO TAKE HER COM­PANY OUT OF THE CROSSHAIRS BY SHEE­LAH KOL­HATKAR AND CARO­LINE CHEN PHO­TO­GRAPH BY BEN­JAMIN RAS­MUSSEN

Bloomberg Businessweek (North America) - - Contents -

The founder of blood test pioneer Theranos an­swers her crit­ics

El­iz­a­beth Holmes rarely slips out of char­ac­ter. When she re­sponds to ques­tions in an in­ter­view or on a con­fer­ence stage, she leans for­ward, leg crossed an­kle over knee in a half-lo­tus manspread power pose. She low­ers her voice an oc­tave or two, as if she’s plumb­ing the depths of the hu­man vo­cal cord. Al­though she hates it be­ing re­marked upon, her cloth­ing, a dis­ci­plined all-black ensem­ble of flat shoes, slacks, turtle­neck, and blazer but­toned at the waist, is im­pos­si­ble not to no­tice. She adopted this uni­form, as she calls it, in 2003, when she founded Theranos, a com­pany seek­ing to rev­o­lu­tion­ize the med­i­cal di­ag­nos­tics in­dus­try by do­ing tests us­ing only a few drops of blood.

“I wanted the fo­cus to be on my work,” she says slowly and de­lib­er­ately. “I don’t want to go into a meet­ing and have peo­ple look­ing at what I’m wear­ing. I want them lis­ten­ing to what I’m say­ing. And I want them to be look­ing at what we do.” She pauses, then adds, “Be­cause when you walk into the room and you’re a 19-year-old girl, peo­ple in­ter­act with you in a cer­tain way.”

All the same, Holmes says, she wasn’t pre­pared for how ea­ger peo­ple would be to tear her down. “Un­til what hap­pened in the last four weeks, I didn’t understand what it means to be a woman in this space,” she says, shak­ing her head. “Ev­ery ar­ti­cle start­ing with, ‘A young woman.’ Right? Some­one came up to me the other day, and they were like, ‘I have never read an ar­ti­cle about Mark Zucker­berg that starts with ‘A young man.’ ”

Holmes, now 31, is sit­ting in her of­fice. The sur­faces are curved and gleam­ing, and the gi­ant, or­b­like light fix­tures seem to have been taken from the Star­ship En­ter­prise as reimag­ined by Jean Nou­vel. The win­dows of­fer panoramic views of the flora of Palo Alto, where Holmes has be­come one of the most ob­sessed-over en­trepreneur­s in Sil­i­con Val­ley. Partly this is a re­sult of her am­bi­tion to make get­ting a blood test as fast and as sim­ple as check­ing your bank ac­count bal­ance. If Theranos suc­ceeds, Holmes says, any­one, any­where, could have ac­cess to in­for­ma­tion about their

health and risk of dis­ease any­time they want, with­out a prescripti­on. Theranos does that, she says, with as lit­tle as a fin­ger prick’s worth of blood, a much smaller amount than tra­di­tional blood tests, and at a frac­tion of the cost. Theranos charges from $2.67 for a glu­cose test to $59.95 for a range of sex­u­ally trans­mit­ted diseases and posts all of its prices on­line, a level of trans­parency no tra­di­tional lab com­pany matches. Holmes says her com­pany can con­duct re­li­able test­ing for 50 per­cent to 80 per­cent less than Medi­care re­im­burse­ment rates, which could lead to as­ton­ish­ing cost sav­ings. She es­ti­mates that $2.2 bil­lion would be saved each year in Ari­zona alone, where the com­pany has a pres­ence in 40 Wal­greens phar­ma­cies.

The Theranos story has also been am­pli­fied by its $9 bil­lion val­u­a­tion, based on its ven­ture cap­i­tal fund­ing, as well as by the ros­ter of pow­er­ful board mem­bers (Henry Kissinger, Wil­liam Perry) and pub­lic supporters (Marc An­dreessen, among oth­ers) Holmes has gath­ered around her. But Holmes her­self is as much a source of fas­ci­na­tion as her com­pany. She has just the right mix­ture of bold­ness and pre­coc­ity that Sil­i­con Val­ley loves. She was only too will­ing to let that pro­pel her through the busi­ness me­dia’s star cham­ber, though she re­fused to let pho­tog­ra­phers use a wind ma­chine to blow her hair.

On a typ­i­cal day, Holmes would be over­see­ing Theranos’s 1,000 or so employees, but on this af­ter­noon in late Novem­ber she’s un­der siege. In her of­fice, she’s joined by Theranos’s gen­eral coun­sel and a newly re­tained pub­lic-re­la­tions cri­sis ex­pert who mon­i­tors ev­ery tic and ut­ter­ance. An aide si­lently en­ters the room and hands Holmes a cup of green liq­uid, which con­tains co­conut wa­ter and kale, along with other or­ganic ex­trac­tions. Stacks of pa­per­work, test data, and U.S. Food and Drug Ad­min­is­tra­tion ap­pli­ca­tions sit on the ta­ble in front of her, all in­tended to prove that Theranos’s prod­ucts work as she says they do.

Af­ter sev­eral years of Holmes telling the largely un­chal­lenged story of how Theranos in­tends to change the world, a blast of cold air came on Oct. 15, when the Wall Street Jour­nal pub­lished the re­sult of a five-month in­ves­ti­ga­tion by John Carreyrou. The piece re­ported that as of the end of 2014, Theranos wasn’t us­ing its own prod­ucts and tech­nol­ogy to an­a­lyze most of the tests it was con­duct­ing for con­sumers. For­mer employees, the ar­ti­cle fur­ther re­ported, claimed Theranos was cheating on rou­tine pro­fi­ciency tests, which help fed­eral reg­u­la­tors de­ter­mine if a par­tic­u­lar lab is pro­duc­ing ac­cu­rate re­sults. The im­pli­ca­tion was that Theranos’s tech­nol­ogy was largely a cha­rade. A se­ries of sim­i­larly crit­i­cal ar­ti­cles fol­lowed. Bloomberg News re­ported that some Theranos part­ners that had signed deals with the com­pany, in­clud­ing Amer­ihealth Car­i­tas and In­ter­moun­tain Health­care, hadn’t ac­tu­ally started us­ing the tech­nol­ogy yet. The bright-eyed woman the me­dia had clam­bered over them­selves to mythol­o­gize was now be­ing picked apart.

On its web­site, Theranos de­nied the ac­cu­sa­tions, then went about try­ing to find peo­ple who could come to its de­fense. “Here’s what hap­pens ev­ery time I have a huge win­ner,” says Tim Draper, found­ing part­ner of ven­ture cap­i­tal firm DFJ and a Holmes loy­al­ist whose $1 mil­lion in­vest­ment made Theranos’s in­cu­ba­tion pos­si­ble. “The first thing that hap­pens is that the com­pe­ti­tion sort of pooh-poohs it. Then the next thing that hap­pens is they go, ‘ Uh- oh, this is threat­en­ing our busi­ness.’ … She’s opened the ki­mono, and it’s scar­ing the pants off the com­pe­ti­tion.”

To the en­trenched mem­bers of the lab test­ing in­dus­try, Theranos’s plans sound like an ex­is­ten­tial threat, and per­haps an ab­surd propo­si­tion. Crit­ics and skep­tics have been com­ing for­ward, suggest­ing that what the com­pany says it’s do­ing is im­pos­si­ble— or, just as bad, that what it’s do­ing right now isn’t that dif­fer­ent from its old- school com­peti­tors. The story may have res­onated be­yond the med­i­cal world be­cause the stakes feel huge, much big­ger than the suc­cess of one com­pany. The tech in­dus­try is in the midst of an­other boom or bub­ble, de­pend­ing on whom you ask. If Theranos, one of the hottest busi­nesses around, isn’t quite what it says it is and ven­ture cap­i­tal­ists are po­ten­tially out hun­dreds of mil­lions of dol­lars, it stands to rea­son that other com­pa­nies are over­val­ued, too.

The so­lu­tion, Holmes says, is less talk and more ac­tion that proves the com­pany can back up all its claims. “What we need to do now is fo­cus on the tech­nol­ogy and fo­cus on the science and the data and put that out there,” she says. “Be­cause that speaks for it­self.”

Theranos’s “nan­o­tainer” is the most ob­vi­ously dif­fer­ent com­po­nent of its tech­nol­ogy. It’s a tiny vial about the size of a fire­fly that col­lects a few drops of blood from the prick of a fin­ger­tip. Theranos has said that from those mi­nus­cule sam­ples it can test for hun­dreds of diseases and con­di­tions. The com­pany also makes an ex­tra-small nee­dle that goes into a per­son’s arm in a more con­ven­tional fash­ion, al­though it draws a smaller amount of blood than tra­di­tional nee­dles. Fi­nally, it makes the Theranos sam­ple pro­cess­ing unit, or TSPU, a black ma­chine about the size of a printer that acts as a mul­ti­pur­pose blood analyzer. Sam­ples ob­tained by ei­ther method are dropped into a car­tridge that goes into a slot in the TSPU like a VHS tape into a player. The car­tridge con­tains soft­ware pro­grammed to run the de­sired test— for preg­nancy hor­mones, blood sugar, potas­sium lev­els, what­ever the pa­tient wants—us­ing the com­pany’s own chem­i­cal pro­cesses. Or at least that’s the idea.

The po­ten­tial for this to change health care is sig­nif­i­cant. Holmes cites the ex­am­ple of pre­ma­ture ba­bies in hos­pi­tal neona­tal in­ten­sive care units, who have to have blood drawn for rou­tine tests ev­ery day. Be­cause the ba­bies are so small, she says, some­times fit­ting into the palm of one hand, tak­ing mul­ti­ple vials of blood from them means they need con­stant trans­fu­sions. Run­ning the tests us­ing only a few droplets would save some of the most vul­ner­a­ble peo­ple on earth from a great deal of trauma.

Theranos’s low prices could pos­si­bly trans­form the way med­i­cal care is ap­proached al­to­gether, ac­cord­ing to at least one doc­tor who’s looked at the com­pany closely. Dr. Waldo Con­cep­cion, the chief of clin­i­cal trans­plan­ta­tion surgery at Stan­ford Univer­sity Med­i­cal Cen­ter, spends most of his time per­form­ing kid­ney trans­plants on chil­dren, a pro­ce­dure he be­lieves is of­ten pre­ventable. If many of the pa­tients he sees had learned they were at risk of re­nal fail­ure ear­lier, they could have changed their diet and life­style and avoided end­ing up on his op­er­at­ing ta­ble as teenagers. Theranos’s prom­ise of low-cost test­ing, he says, would open doors to low-in­come pa­tients.

“We can’t fo­cus with the dol­lars we have in health care just on diseases,” he says. Con­cep­cion, who’s just signed on as med­i­cal con­sul­tant for Theranos, had thrown a tweed jacket on over his scrubs and raced from the hos­pi­tal to Theranos’s of­fices to make his point. “We have to fo­cus on pre­ven­tive health. We spend all of the money at the top of the pyra­mid, when we need to fo­cus it down here,” he says, draw­ing a tri­an­gle in the air in front of him.

Of all the ad­vis­ers Bloomberg Busi­ness­week in­ter­viewed, Con­cep­cion was the most can­did in say­ing the tests’ ac­cu­racy isn’t yet guar­an­teed. Based on the data he’s seen, though, he says he’s “en­cour­aged” that the tech­nol­ogy is fea­si­ble. The first step is, “Does it work?” he says. “And if it does not work, can we tweak it un­til it does work?”

He’s work­ing with the com­pany to set up a real-world aca­demic study, com­par­ing fin­ger-prick tests against tra­di­tional ve­nous draws in hos­pi­tals, to prove “once and for all” that the tech­nol­ogy ful­fills its prom­ises. If it isn’t per­fect, he says, the so­lu­tion isn’t to pile on Theranos. It just means the com­pany needs to work harder. He adds: “There are mil­lions of peo­ple out there who need this to work.”

Theranos first en­tered the pub­lic con­scious­ness in 2013, when it an­nounced a part­ner­ship with Wal­greens. Be­fore that, Holmes and her com­pany had been work­ing away for 10 years, hir­ing sci­en­tists and build­ing pro­to­types, al­most en­tirely in se­cret. Com­pet­i­tive para­noia reigns in most tech­nol­ogy in­dus­tries,

and as a pri­vate com­pany, there was no rea­son for Theranos to ad­ver­tise what it was do­ing or how it was do­ing it. Once the com­pany set­tled on a plan to sell test­ing di­rectly to con­sumers, it had to put it­self out there and be­come a brand that pa­tients would rec­og­nize. The com­pany lob­bied the Ari­zona State Leg­is­la­ture to make it le­gal for in­di­vid­u­als to or­der lab tests with­out a prescripti­on. Theranos started in­tro­duc­ing its “well­ness cen­ters” in­side Phoenixare­a Wal­greens stores, where pa­tients can get tests done, with or with­out a doc­tor’s or­der.

The idea, Holmes says, is for the ex­pe­ri­ence of hav­ing a blood test to be “won­der­ful,” rather than like vis­it­ing a me­dieval tor­ture cham­ber. The cen­ters fea­ture high- def­i­ni­tion video screens that play un­du­lat­ing con­cen­tric pat­terns that can also be seen on dis­play around Theranos head­quar­ters. “In math­e­mat­ics there’s a term called the golden ra­tio,” Holmes says, ex­plain­ing that it can be

found in seashells and tree trunks or da Vinci’s Vitru­vian Man. “That ra­tio is the foun­da­tion of our logo, which is the cir­cle, which is the sim­plest form of what’s called the flower of life.”

Even­tu­ally, the com­pany and its back­ers hope to bring the Theranos con­cept to the rest of the coun­try. “When you’re get­ting your blood test, it needs to be cool,” she says. “We’re in the re­tail busi­ness. Peo­ple need to be able to go in and have an ex­pe­ri­ence and be like, ‘That was awesome.’ ”

But Theranos isn’t run­ning a restau­rant or pro­vid­ing taxi rides. It’s pro­vid­ing a med­i­cal ser­vice, and a good cus­tomer ex­pe­ri­ence alone isn’t go­ing to make the com­pany vi­able. It has to work with the FDA, which is try­ing to in­crease its over­sight of the med­i­cal test­ing in­dus­try. Even by the fed­eral gov­ern­ment’s bu­reau­cratic stan­dards, reg­u­la­tion in the busi­ness has been com­plex and in­con­sis­tent.

Most blood work in the U.S. is run on analyzer ma­chines made by com­pa­nies such as Siemens, Roche

Di­ag­nos­tics, and Olym­pus. The labs that buy th­ese ma­chines don’t need the FDA’S OK to use them, but the man­u­fac­tur­ers need it to sell them. Siemens and the oth­ers are re­quired to sub­mit data to the agency show­ing that the tests run­ning on the ma­chines are safe and ac­cu­rate.

Theranos has had cer­ti­fi­ca­tion from the Cen­ters for Medi­care and Med­i­caid Ser­vices to op­er­ate its labs since 2011. Be­cause it wasn’t sell­ing its de­vices or any other equip­ment to third par­ties, the com­pany tech­ni­cally didn’t need FDA ap­proval for its tests. Holmes says she wanted to seek it any­way, be­cause she con­sid­ers the FDA’S to be the “gold stan­dard” of reg­u­la­tory ap­provals. Theranos sub­mit­ted its first test, for her­pes, to the FDA in 2013, and it was cleared this past July.

In the mean­time, the FDA has de­ter­mined that the nan­o­tainer is a Class II med­i­cal de­vice, mean­ing it must be cleared if Theranos wants to use it with any test other than the her­pes test, ac­cord­ing to the agency. The com­pany says it’s sub­mit­ted data that show test re­sults on blood col­lected from fin­ger­tips into the nan­o­tainer are the same as those ob­tained with larger sam­ples taken through a vein. While the com­pany waits for the FDA to clear the nan­o­tainer, it has stopped do­ing fin­ger-prick draws for all its cus­tomers, ex­cept for those get­ting only the her­pes test, be­cause the FDA had ap­proved the use of the nan­o­tainer for that spe­cific use.

The FDA doesn’t con­sider the analyzer, or TSPU, to be an el­e­ment that needs to be ap­proved on its own. But if Theranos sub­mits a test to the agency for clear­ance, the TSPU, as a com­po­nent of the test, will be re­viewed in the process. “Theranos has cleared one test, HSV1, [aka her­pes] for use with the TSPU,” FDA spokesman Eric Pa­hon con­firms. “If other tests sub­ject to pre­mar­ket re­view were in­tended to be used with the TSPU, ad­di­tional clear­ance or ap­proval would be re­quired.”

The FDA has re­cently said it wants to reg­u­late so- called lab­o­ra­to­ry­de­vel­oped tests, but that isn’t a pol­icy yet. Theranos says it’s vol­un­tar­ily sub­mit­ting 120 ap­pli­ca­tions for in­di­vid­ual tests that run on its analyzer.

All of this puts Theranos in an awk­ward sit­u­a­tion. The com­pany has to show that it’s us­ing its own tech­nol­ogy some­how— the whole prom­ise of Theranos’s multi­bil­lion- dol­lar val­u­a­tion is that its tech­nol­ogy is ex­po­nen­tially cheaper and eas­ier to use than that of ex­ist­ing play­ers, and not just for one her­pes test. On the other hand, if Holmes wants to hold her com­pany to the FDA’S higher stan­dards, as she claims, that means wait­ing for fed­eral clear­ance on all of its tests be­fore us­ing them. While Theranos works its way through this tran­si­tion pe­riod, it is un­clear whether the com­pany is run­ning any tests on its own ma­chines at all.

Holmes re­fuses to an­swer the ques­tion. When asked if Theranos is ac­tu­ally run­ning any pa­tient sam­ples on its own an­a­lyz­ers to­day, as op­posed to de­vices made by Siemens or an­other man­u­fac­turer, she will only say, “We can run them on our analyzer, but it de­pends on the test or­der.”

A few days later, when she’s asked again, her re­sponse is still non­com­mit­tal: “De­pend­ing on the or­der, it can hap­pen on the TSPU, with our chemistrie­s, and it can hap­pen on con­ven­tional ma­chines, just us­ing tra­di­tional ve­nous draw.” It can. But is it? She points out that other labs don’t pub­lish such in­for­ma­tion, which is true. But then, other labs don’t usu­ally de­clare them­selves med­i­cal rev­o­lu­tion­ar­ies.

FDA clear­ance alone may not be enough to con­vince physi­cians that the tests can be used for all pa­tients, ac­cord­ing to John Ioan­ni­dis, a pro­fes­sor of medicine at Stan­ford who’s best known for his crit­i­cism of the way sci­en­tific re­search is con­ducted, in par­tic­u­lar for a 2005 pa­per ti­tled “Why Most Pub­lished Re­search Find­ings Are False.” In Fe­bru­ary he au­thored an opin­ion piece in the Jour­nal of the Amer­i­can Med­i­cal As­so­ci­a­tion ques­tion­ing Theranos’s lack of pub­lished data.

When it comes to “tests that may be more com­pli­cated, the level of re­port­ing for FDA clear­ance won’t be enough,” says Ioan­ni­dis. While the FDA’S in­creased fo­cus on di­ag­nos­tic tests is wel­come, the agency has less ex­pe­ri­ence in re­view­ing tests than drugs, he says, and its ap­pli­ca­tions don’t give as many de­tails as doc­tors would like to see.

To Ioan­ni­dis, only a peer-re­viewed jour­nal ar­ti­cle that lays out the full method­ol­ogy and in­ner work­ings of the Theranos tech­nol­ogy can an­swer th­ese ques­tions in a sat­is­fac­tory man­ner. The com­pany has said it hasn’t done this, so far, out of con­cerns that its pro­pri­etary tech­nol­ogy could be copied by com­peti­tors. Ioan­ni­dis re­sponds by say­ing, “This is what patents are for. They should make sure they have patent pro­tec­tions. We need to have ev­i­dence in the sci­en­tific lit­er­a­ture to scru­ti­nize what they do.”

Other ex­perts echo his point. “Typ­i­cally com­pa­nies will show their prod­uct at a pro­fes­sional meet­ing, talk about it, their sci­en­tist will present data. Theranos has cho­sen not to do that, which in my mind is du­bi­ous,” says David Koch, pres­i­dent of the Amer­i­can As­so­ci­a­tion for Clin­i­cal Chem­istry and a pro­fes­sor at Emory Univer­sity. “That’s why a num­ber of us sci­en­tists in the field are skep­ti­cal. Why be so se­cre­tive about it? If it works, tell the world and we’ll use it.”

Again, Theranos isn’t the only di­ag­nos­tic com­pany to pro­vide scant de­tails on its tech­nol­ogy. “The process has been sub­op­ti­mal across the in­dus­try, but now I think we’re at the cross­roads,” Ioan­ni­dis says. “Theranos caught my at­ten­tion early on be­cause they had such vi­brant me­dia sto­ries. Other com­pa­nies just don’t make such claims. To­day it’s Theranos. Tomorrow it may be an­other com­pany.” He adds: “If you get the wrong test re­sult, you could go down a path that could really de­stroy your life.” Holmes says the com­pany’s era of se­crecy is over, and it’s invit­ing out­siders, in­clud­ing re­porters, to try the tests for them­selves. (For the record, the fin­ger prick feels like a fin­ger prick.) In De­cem­ber, she says, a group of in­de­pen­dent med­i­cal ex­perts will spend two days in Theranos’s lab to ex­am­ine the tech­nol­ogy, the data, and the reg­u­la­tory fil­ings, and can then talk pub­licly about what they found. The Cleve­land Clinic is run­ning a study com­par­ing Theranos’s re­sults with tra­di­tional blood draws

and will pub­lish the find­ings. Holmes is also putting to­gether a med­i­cal ad­vi­sory board that will bring more sci­en­tific and reg­u­la­tory ex­per­tise. She says Theranos is preparing “manuscript­s” con­tain­ing the test­ing data that’s been sub­mit­ted to the FDA, which it plans to pub­lish in a med­i­cal jour­nal (she won’t say when or which jour­nal). Its main com­peti­tors, Quest and Labcorp, have done no such thing, she points out.

Ac­cord­ing to Holmes, all the re­cent neg­a­tive at­ten­tion has acted as free ad­ver­tis­ing, and walk-ins at Theranos’s well­ness cen­ters in Ari­zona are up. “I mean, is it in­cred­i­bly painful to see peo­ple say this kind of stuff about us? Of course it is,” she says. “But is it a cri­sis? No. We’ve built some­thing that’s in­cred­i­ble, and we have now the op­por­tu­nity to show­case it.”

In Sil­i­con Val­ley, bankers like to call star­tups that sur­pass $1 bil­lion in val­u­a­tion “uni­corns.” Airbnb, Uber, Pin­ter­est, Snapchat, and Zen­e­fits all fall into the cat­e­gory. It’s quite pos­si­ble for one of th­ese flush star­tups to sus­tain dam­age and re­cover. Both Airbnb and Uber have weath­ered scan­dals with their uni­corn­hood in­tact. Theranos could prove all the naysay­ers wrong.

Holmes cer­tainly has plenty of true be­liev­ers in her cor­ner. From the mo­ment she got to Stan­ford, in 2002, she demon­strated a tal­ent for cul­ti­vat­ing pow­er­ful men­tors, be­gin­ning with an engi­neer­ing pro­fes­sor named Chan­ning Robertson. He didn’t need an un­der­grad, much less a fresh­man, work­ing in his lab, but Holmes ba­si­cally squat­ted out­side his of­fice un­til he let her in. She soon im­pressed him. “I think there are peo­ple who are the Mozarts and the Beethovens and the New­tons, the Lavoisiers and the Einsteins and the da Vin­cis, who come along rarely in a gen­er­a­tional sense,” he says. “Th­ese peo­ple who be­come sci­en­tists and artists and mu­si­cians, I think, possess a very spe­cial ca­pa­bil­ity. It was be­com­ing more and more clear to me that she had it. I was in the pres­ence of some­body who was un­like any­thing that I had seen be­fore.” Other mem­bers of the El­iz­a­beth Holmes fan club in­clude David Boies, the ac­claimed lawyer; for­mer Se­nate Ma­jor­ity Leader Wil­liam Frist; and for­mer Sec­re­tary of State Ge­orge Shultz, all of whom are on Theranos’s board.

As scores of ar­ti­cles have re­counted, Holmes dropped out of col­lege in her sopho­more year to file her patent and start her com­pany with two for­mer mem­bers of Robertson’s lab. Robertson be­came Theranos’s ad­viser and helped her raise money.

Draper, the ven­ture cap­i­tal­ist and early Theranos in­vestor, says he’s known Holmes since she was 6 years old and a friend of his daugh­ter. When she de­cided to start her com­pany, she ap­proached him. He called her par­ents to make sure they were OK with her plan to drop out of school. Then he gave her $1 mil­lion.

Holmes, brainy as she is, lacked for­mal sci­en­tific train­ing. She made up for it with her mes­sianic pas­sion and abil­ity to per­suade peo­ple to join her cause. “We needed really good chemists. We needed really good bi­ol­o­gists. We needed really good en­zy­mol­o­gists, really good bio­chemists,” Robertson says. “I mean, it was sort of like Ocean’s 11. I would call some of my bud­dies that I’d worked with in pre­vi­ous com­pa­nies and drag them down out of the hills and say, ‘ You know, let’s try one more time.’ ”

De­spite the cur­rent con­tro­ver­sies around Theranos, Robertson stands by his for­mer stu­dent. “She’s as as­tute as she ever was. She’s as charm­ing as she ever was,” he says. “She is one of the sweet­est peo­ple I know.” He de­clined to com­ment on the com­pany’s mar­ket­ing claims or busi­ness model, say­ing he was never in­volved on the busi­ness side of things. But he vig­or­ously re­futed any al­le­ga­tions that Theranos’s tests may be in­ac­cu­rate.

“On the pre­ci­sion and ac­cu­racy is­sue, that is our holy grail,” he says. “We would have to be cer­ti­fi­able, you know, to go out and put out a prod­uct that peo­ple’s lives are go­ing to de­pend on. That’s not who we are.”

While Draper isn’t a board mem­ber or of­fi­cial ad­viser, he says he sees Holmes fre­quently. He’s puz­zled by Theranos’s trou­bles and wasn’t aware the com­pany isn’t cur­rently us­ing its famed nan­o­tainer for any­thing but a her­pes test. The idea of paus­ing the re­lent­less push for­ward to wait for fusty gov­ern­ment ap­provals doesn’t seem to make sense to one of the in­vestors in Twit­ter and Skype. “So they’re go­ing to have to go through each one of those tests be­fore they can even use the nan­o­tainer?” he says, sound­ing hor­ri­fied. “You can run tests; you just say they are not Fda-ap­proved,” Draper con­tin­ues, re­fer­ring to the nan­o­tainer. “If that’s not the way it’s hap­pen­ing, I’m definitely go­ing to give El­iz­a­beth a call about this.” He pauses the in­ter­view to pull out his phone.

“I would think they can still use the nan­o­tainer and just have some word­ing,” he says, typ­ing out a text mes­sage to Holmes. “I would think you just put a lit­tle warn­ing la­bel on the thing and say the FDA has not agreed to the ac­cu­racy of th­ese things.”

An­other ad­viser and board mem­ber, Richard Ko­vace­vich, a for­mer CEO of Wells Fargo, says some of the bumps Theranos has en­coun­tered are spe­cific to pri­vate com­pa­nies, which aren’t usu­ally pre­pared to deal with such in­tense pub­lic crit­i­cism. Re­spond­ing to a sit­u­a­tion like this, “you need speed, you need ev­i­dence, it’s a full- court press,” he says. Theranos “doesn’t have the in­fra­struc­ture to re­spond, in a way, and so that prob­a­bly led peo­ple to think, ‘Oh God, there must be some truth to this.’ It’s been be­hind, in my opin­ion, up un­til lately, in re­fut­ing the al­le­ga­tions and not fo­cus­ing on test re­sults.”

Holmes vows to keep up the fight. She de­cided when she was a teenager that she was will­ing to sac­ri­fice ev­ery­thing for her call­ing. She has no per­sonal life to speak of. She doesn’t watch movies or read books. She used to run but mostly gave it up. When she started her com­pany, she says, she re­searched diet and nu­tri­tion and mon­i­tored her blood chem­istry. She de­ter­mined that a ve­gan, mac­ro­bi­otic life­style would al­low her to “train” her body to work all the time and to func­tion on very lit­tle sleep, like an an­droid. “Af­ter a while you just get so deep into it,” she says. “In the nor­mal sense, I could take a va­ca­tion, but this is where I want to be.” <BW>

The half-inch­tall nan­o­tainer The TSPU blood an­a­lyzer

Holmes (left) with Ther­a­nos re­searchers in Palo Alto

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