WEBVTT 00:00:00.000 --> 00:00:03.040 Welcome back to the Deep Dive. Today we are opening 00:00:03.040 --> 00:00:05.639 a file that frankly feels like it belongs in 00:00:05.639 --> 00:00:07.480 the fiction section, you know, right next to 00:00:07.480 --> 00:00:10.660 the books about dragons and time travel. But 00:00:10.660 --> 00:00:14.300 it is all too real. It's a story about the absolute 00:00:14.300 --> 00:00:18.239 zenith of Silicon Valley ambition colliding with, 00:00:18.320 --> 00:00:21.640 I mean, just the darkest, murkiest depths of 00:00:21.640 --> 00:00:23.859 human deception. It really is. We're talking 00:00:23.859 --> 00:00:27.260 about the meteoric rise and the very long, very 00:00:27.260 --> 00:00:31.620 public and, uh... very complicated fall of Elizabeth 00:00:31.620 --> 00:00:34.020 Ann Holmes. It's a tragedy in the classical sense, 00:00:34.140 --> 00:00:36.259 isn't it? It has all the components. You've got 00:00:36.259 --> 00:00:38.020 the hubris, you've got this fatal flaw, and then 00:00:38.020 --> 00:00:41.000 this catastrophic public unraveling. But unlike 00:00:41.000 --> 00:00:43.740 a Greek play, you know, performed in an amphitheater, 00:00:43.820 --> 00:00:45.539 this happened on the glossy covers of Forbes 00:00:45.539 --> 00:00:48.079 and Fortune, and this is the scary part, in the 00:00:48.079 --> 00:00:51.200 real blood -testing labs of Walgreens where actual 00:00:51.200 --> 00:00:53.560 patients were rolling up their sleeves. Exactly. 00:00:53.679 --> 00:00:55.780 And for everyone listening today, especially 00:00:55.780 --> 00:00:57.619 the learners out there who don't just want the 00:00:57.619 --> 00:00:59.539 headlines but want to understand the mechanism 00:00:59.539 --> 00:01:02.380 of things. We're not just doing a true crime 00:01:02.380 --> 00:01:04.519 rehash here. We aren't just going to say she 00:01:04.519 --> 00:01:07.420 lied. No, that's too simple. We want to understand 00:01:07.420 --> 00:01:10.739 the how. How does a 19 -year -old dropout convince 00:01:10.739 --> 00:01:13.120 Henry Kissinger, George Shultz, and some of the 00:01:13.120 --> 00:01:15.540 world's most powerful investors that she has 00:01:15.540 --> 00:01:18.500 invented a magical box that doesn't actually 00:01:18.500 --> 00:01:20.819 exist? That is the central question. It's the 00:01:20.819 --> 00:01:23.939 paradox of the whole story. And to answer it, 00:01:24.120 --> 00:01:26.780 We've got a massive stack of sources today. We're 00:01:26.780 --> 00:01:29.239 looking at comprehensive biographical data, the 00:01:29.239 --> 00:01:30.859 original reporting from the Wall Street Journal, 00:01:30.920 --> 00:01:33.060 of course. The Bible of this story. For sure. 00:01:33.500 --> 00:01:36.180 Also, court documents from USV Holmes, details 00:01:36.180 --> 00:01:38.500 from the Securities and Exchange Commission charges, 00:01:38.599 --> 00:01:42.799 and crucially, updates on her incarceration as 00:01:42.799 --> 00:01:46.239 of right now, early 2026. Right. And just to 00:01:46.239 --> 00:01:48.040 set the scene for everyone, because context is 00:01:48.040 --> 00:01:49.480 everything here, let's look at the contrast. 00:01:49.719 --> 00:01:52.700 So rewind the clock to 2015. Elizabeth Holmes 00:01:52.700 --> 00:01:55.400 is the world's youngest self -made female billionaire. 00:01:55.599 --> 00:01:58.079 Self -made, key term. Yes, she's valued at $4 00:01:58.079 --> 00:02:00.959 .5 billion personally. Her company, Theranos, 00:02:01.140 --> 00:02:03.819 is valued at $9 billion. She's being hailed as 00:02:03.819 --> 00:02:06.659 the next Steve Jobs. I mean, she is on top of 00:02:06.659 --> 00:02:09.020 the world. And today, as we sit here in January 00:02:09.020 --> 00:02:13.469 2026. Today, that valuation is zero. Actually, 00:02:13.469 --> 00:02:15.090 it's probably less than zero if you count the 00:02:15.090 --> 00:02:17.789 legal debts. And Elizabeth Holmes is inmate number 00:02:17.789 --> 00:02:22.129 24965111 at the federal prison camp in Bryan, 00:02:22.270 --> 00:02:24.689 Texas. Her release date is currently projected 00:02:24.689 --> 00:02:27.689 for 2032. It is a stunning reversal. I mean, 00:02:27.710 --> 00:02:30.129 it's one of the fastest, most spectacular crashes 00:02:30.129 --> 00:02:32.509 in corporate history. And our mission today is 00:02:32.509 --> 00:02:35.199 to unpack the psychology, the culture. And the 00:02:35.199 --> 00:02:37.979 specific mechanics, the physics and the biology 00:02:37.979 --> 00:02:40.379 of the fraud that made this all possible. Because 00:02:40.379 --> 00:02:42.240 this isn't just about one person. It's about 00:02:42.240 --> 00:02:44.759 a culture that sometimes fails to distinguish 00:02:44.759 --> 00:02:48.219 between, you know, optimism and just lying. So 00:02:48.219 --> 00:02:49.939 let's unpack this. We have to start at the very 00:02:49.939 --> 00:02:52.219 beginning. Most people know the black turtleneck, 00:02:52.240 --> 00:02:53.939 the blonde hair, the kind of unblinking stare. 00:02:54.139 --> 00:02:55.960 Right. But they don't know about the yeast empire. 00:02:56.180 --> 00:02:58.800 The yeast empire. Yes. This is such a fascinating 00:02:58.800 --> 00:03:02.090 piece of family history that really. It explains 00:03:02.090 --> 00:03:04.270 the engine driving her. It provides the why. 00:03:04.449 --> 00:03:06.129 It sounds like a bad sci -fi novel, but it's 00:03:06.129 --> 00:03:08.810 real history. Break it down for us. So Elizabeth 00:03:08.810 --> 00:03:11.229 Holmes comes from a lineage that experienced 00:03:11.229 --> 00:03:14.009 a massive fall from grace long before she was 00:03:14.009 --> 00:03:17.550 ever born. Her paternal great -great -great -grandfather 00:03:17.550 --> 00:03:20.669 was an aunt named Charles Louis Fleischman. As 00:03:20.669 --> 00:03:23.280 in Fleischman's East. The little yellow packets 00:03:23.280 --> 00:03:25.219 you buy at the grocery store for baking bread. 00:03:25.360 --> 00:03:28.400 The very same. He founded the company. He revolutionized 00:03:28.400 --> 00:03:31.180 the baking industry. And he built a massive fortune. 00:03:31.479 --> 00:03:33.979 I mean, the Holmes family was at one point true 00:03:33.979 --> 00:03:37.219 American royalty. Wow. They lived in grand estates. 00:03:37.219 --> 00:03:39.860 They had society weddings. They had it all. But 00:03:39.860 --> 00:03:42.439 as often happens over generations, the fortune 00:03:42.439 --> 00:03:45.599 diluted and dissipated. You know, bad investments, 00:03:45.740 --> 00:03:48.840 too many heirs, just time. By the time Elizabeth 00:03:48.840 --> 00:03:51.979 came along, the money was largely gone. Consciousness 00:03:51.979 --> 00:03:54.639 of the money remained. The story of it. That's 00:03:54.639 --> 00:03:56.960 a dangerous mix. Growing up knowing you should 00:03:56.960 --> 00:03:59.240 be royalty, but, you know, shopping at the mall 00:03:59.240 --> 00:04:02.219 like everyone else. Precisely. There is a quote 00:04:02.219 --> 00:04:04.280 in our sources from a family friend, a guy named 00:04:04.280 --> 00:04:06.800 Joseph Fuse, who noted that Elizabeth's parents 00:04:06.800 --> 00:04:09.280 yearned for the days of yore when the family 00:04:09.280 --> 00:04:11.580 was rich. He said they lived with this heavy 00:04:11.580 --> 00:04:14.340 sense of lost legacy. So she grows up with this 00:04:14.340 --> 00:04:16.839 massive chip on her shoulder. It's not just ambition, 00:04:17.040 --> 00:04:19.970 it's... It's a restoration project. She needs 00:04:19.970 --> 00:04:22.759 to put the home's name back on the map. Fuse 00:04:22.759 --> 00:04:25.220 said that Elizabeth channeled that desire for 00:04:25.220 --> 00:04:28.819 restored glory from a very, very young age. She 00:04:28.819 --> 00:04:30.819 wasn't just trying to be successful. She was 00:04:30.819 --> 00:04:33.600 trying to reclaim an empire. And she was intense 00:04:33.600 --> 00:04:35.420 about it. This wasn't a kid playing video games. 00:04:35.540 --> 00:04:37.800 She wrote her first computer program in high 00:04:37.800 --> 00:04:40.060 school. She learned Mandarin while still in high 00:04:40.060 --> 00:04:42.379 school, attending a summer program at Stanford. 00:04:42.680 --> 00:04:46.259 She was selling C++ compilers to Chinese universities 00:04:46.259 --> 00:04:50.620 as a teenager. That is just wild. you know playing 00:04:50.620 --> 00:04:52.680 video games and trying to avoid homework and 00:04:52.680 --> 00:04:54.519 she's out there selling compilers to universities 00:04:54.519 --> 00:04:57.399 in china right there's another detail about her 00:04:57.399 --> 00:05:00.420 father christian holmes iv that feels like i 00:05:00.420 --> 00:05:02.920 mean it's such heavy foreshadowing it's almost 00:05:02.920 --> 00:05:05.759 too perfect for a movie script yes he was a vice 00:05:05.759 --> 00:05:10.300 president at a subsidiary of enron enron you 00:05:10.300 --> 00:05:12.519 literally cannot make this up her father worked 00:05:12.519 --> 00:05:14.740 for the absolute symbol of corporate fraud in 00:05:14.740 --> 00:05:17.829 the 90s the company that defined accounting tricks 00:05:17.829 --> 00:05:22.389 and fake value. And his daughter grows up to 00:05:22.389 --> 00:05:25.089 create the symbol of corporate fraud for the 00:05:25.089 --> 00:05:28.209 2010s. It really connects to that fake it till 00:05:28.209 --> 00:05:30.149 you make it mentality, doesn't it? It's almost 00:05:30.149 --> 00:05:32.750 generational. But we have to give credit where 00:05:32.750 --> 00:05:35.149 it's due. Elizabeth was clearly brilliant in 00:05:35.149 --> 00:05:38.029 her youth. She gets into Stanford in 2002, studying 00:05:38.029 --> 00:05:40.490 chemical engineering. Top school. Top school. 00:05:40.670 --> 00:05:42.769 She's named a President's Scholar, which is a 00:05:42.769 --> 00:05:45.269 huge honor. She gets a grant for research. She 00:05:45.269 --> 00:05:48.480 is on the fast track. But then something happens 00:05:48.480 --> 00:05:50.959 in her freshman year, or rather the summer after, 00:05:51.100 --> 00:05:54.120 that changes her trajectory completely. And this 00:05:54.120 --> 00:05:57.319 is a darker and more sensitive part of the story. 00:05:57.379 --> 00:06:00.819 It is. In 2003, Holmes reported being raped while 00:06:00.819 --> 00:06:03.740 at Stanford. This is a critical part of the narrative 00:06:03.740 --> 00:06:07.120 because years later during her trial, she testified 00:06:07.120 --> 00:06:09.459 that this trauma was a real pivot point for her. 00:06:09.579 --> 00:06:11.699 She said she was questioning how to process that 00:06:11.699 --> 00:06:13.759 experience, how to move forward. She testified 00:06:13.759 --> 00:06:15.560 she decided she didn't want to go to class. She 00:06:15.560 --> 00:06:17.620 wanted to build something. She wanted to build 00:06:17.620 --> 00:06:20.300 a life by building a company. It was her way 00:06:20.300 --> 00:06:23.139 of processing. So she drops out. She's 19 years 00:06:23.139 --> 00:06:26.240 old. She takes her tuition money, which at Stanford 00:06:26.240 --> 00:06:28.779 is not a small amount of cash, and she founds 00:06:28.779 --> 00:06:31.389 a company called Real Time Tours. Which is a 00:06:31.389 --> 00:06:33.230 terrible name, by the way. It's a little on the 00:06:33.230 --> 00:06:35.250 nose, isn't it? Real -time cures. It sounds like 00:06:35.250 --> 00:06:37.810 a scam immediately. Chuckles. It does. She later 00:06:37.810 --> 00:06:40.490 changed it to Theranos, which is a combination 00:06:40.490 --> 00:06:46.490 of therapy and diagnosis. Much sleeker. But the 00:06:46.490 --> 00:06:49.759 pitch, the core idea, remained the same. She 00:06:49.759 --> 00:06:52.160 was terrified of needles. Which is a brilliant 00:06:52.160 --> 00:06:54.319 marketing hook. I mean, everybody hates needles. 00:06:54.540 --> 00:06:56.500 I hate needles. If you tell me I can tell you 00:06:56.500 --> 00:06:57.939 everything about your health without sticking 00:06:57.939 --> 00:07:01.000 a giant needle in your arm, I am listening. 100%. 00:07:01.000 --> 00:07:03.560 She claimed she wanted to democratize health 00:07:03.560 --> 00:07:06.120 care by running hundreds of tests on just a few 00:07:06.120 --> 00:07:08.459 droplets of blood from a finger prick. No big 00:07:08.459 --> 00:07:10.759 vials, no scary veins, no tourniquets. Yeah. 00:07:10.839 --> 00:07:13.300 Just a pinprick, a drop, and you know if you 00:07:13.300 --> 00:07:15.579 have cancer, diabetes, high cholesterol, anything. 00:07:15.959 --> 00:07:17.920 Here's where it gets really interesting to me. 00:07:18.319 --> 00:07:21.079 and where we need to dig into the science because 00:07:21.079 --> 00:07:24.480 usually in these founder stories you know think 00:07:24.480 --> 00:07:26.560 of the wright brothers or steve jobs there's 00:07:26.560 --> 00:07:30.579 an aha moment where the genius inventor proves 00:07:30.579 --> 00:07:34.120 the skeptics wrong the experts say you can't 00:07:34.120 --> 00:07:37.240 fly and then the wright brothers fly but in this 00:07:37.240 --> 00:07:41.699 story the experts were just right That is the 00:07:41.699 --> 00:07:44.139 reality check that she completely ignored. Before 00:07:44.139 --> 00:07:46.600 she dropped out, she pitched this idea to Phyllis 00:07:46.600 --> 00:07:48.660 Gardner, who is a professor of medicine at Stanford, 00:07:48.800 --> 00:07:51.899 a total legend. She went to Gardner and said, 00:07:52.000 --> 00:07:54.019 I want to build a patch or device that takes 00:07:54.019 --> 00:07:56.319 a tiny drop of blood and tests for everything. 00:07:56.600 --> 00:07:59.339 And Gardner didn't say, that's hard. She said. 00:07:59.680 --> 00:08:01.939 That's impossible. Correct. And this is where 00:08:01.939 --> 00:08:03.860 we need to explain why it's impossible, because 00:08:03.860 --> 00:08:05.939 this isn't just Gardner being a naysayer or, 00:08:05.980 --> 00:08:08.300 you know, stuck in her ways. It comes down to 00:08:08.300 --> 00:08:11.060 basic fluid dynamics and biology. OK, lay it 00:08:11.060 --> 00:08:12.800 on us. Why can't I just use a drop of blood? 00:08:13.000 --> 00:08:14.839 All right. So think about how you get blood from 00:08:14.839 --> 00:08:17.920 a finger prick. You aren't tapping a big, clean 00:08:17.920 --> 00:08:20.620 vein. You're breaking capillaries in the tissue 00:08:20.620 --> 00:08:23.600 of your fingertip. When you squeeze that finger. 00:08:24.189 --> 00:08:26.610 To get the blood out, you aren't just getting 00:08:26.610 --> 00:08:29.430 pure blood. You're getting what's called interstitial 00:08:29.430 --> 00:08:31.550 fluid. Okay, that's the fluid that sits between 00:08:31.550 --> 00:08:34.409 your cells. Exactly. It's the water, the lymph, 00:08:34.629 --> 00:08:37.789 the tissue fluid, and it all mixes with the blood. 00:08:38.110 --> 00:08:41.289 So right off the bat, your sample is diluted 00:08:41.289 --> 00:08:44.809 and contaminated. It's not pure blood like you 00:08:44.809 --> 00:08:46.789 get from a vein. So if you're trying to measure 00:08:46.789 --> 00:08:49.470 a very specific level of a chemical like potassium 00:08:49.470 --> 00:08:52.480 or something, and your sample is already watered 00:08:52.480 --> 00:08:55.379 down with other fluids, your measurement is going 00:08:55.379 --> 00:08:57.539 to be wrong. It's going to be wildly inconsistent. 00:08:58.080 --> 00:09:01.000 But it gets worse. To get enough blood from a 00:09:01.000 --> 00:09:03.679 finger prick for even one test is hard. To get 00:09:03.679 --> 00:09:06.360 enough for hundreds of tests, like Holmes was 00:09:06.360 --> 00:09:08.779 promising, you have to squeeze the finger really 00:09:08.779 --> 00:09:11.200 hard. You have to milk it. Right. And when you 00:09:11.200 --> 00:09:13.259 squeeze a finger that hard to force blood out, 00:09:13.299 --> 00:09:15.820 you cause something called hemolysis. Which is 00:09:15.820 --> 00:09:18.559 what, exactly? It's breaking the blood cells. 00:09:18.700 --> 00:09:20.519 We're literally exploding the red blood cells 00:09:20.519 --> 00:09:22.639 because of the physical pressure. Red blood cells 00:09:22.639 --> 00:09:25.159 are these fragile little sacks. If you smash 00:09:25.159 --> 00:09:28.220 them, they burst. And once they burst, the contents, 00:09:28.399 --> 00:09:31.460 all the potassium, iron, enzymes, and sides spill 00:09:31.460 --> 00:09:34.200 out into the plasma. So now your soup is completely 00:09:34.200 --> 00:09:36.519 ruined. You've got things floating in the plasma 00:09:36.519 --> 00:09:39.120 that shouldn't be there because the cells popped 00:09:39.120 --> 00:09:42.159 and everything you're trying to measure is diluted. 00:09:42.279 --> 00:09:44.580 Exactly. So you're starting with a contaminated, 00:09:44.740 --> 00:09:48.460 diluted heme. Normalized sample. Phyllis Gardner 00:09:48.460 --> 00:09:50.899 knew this. Every single pathologist in the world 00:09:50.899 --> 00:09:53.059 knows this. It's not an engineering problem you 00:09:53.059 --> 00:09:55.820 can solve with a better microchip. It is a physics 00:09:55.820 --> 00:09:58.539 problem. Yeah. You cannot change the structural 00:09:58.539 --> 00:10:01.259 integrity of a red blood cell just because you 00:10:01.259 --> 00:10:03.419 have a startup and a good story. But Holmes didn't 00:10:03.419 --> 00:10:05.480 listen. She didn't say, oh, good point, Professor 00:10:05.480 --> 00:10:08.500 Gardner. She just. Went to someone else. She 00:10:08.500 --> 00:10:10.659 went around her. She went to Channing Robertson, 00:10:10.659 --> 00:10:13.080 who was the dean of engineering at the time. 00:10:13.120 --> 00:10:15.279 Now, Robertson is a brilliant engineer, but he's 00:10:15.279 --> 00:10:17.299 not a medical doctor. He's not a pathologist. 00:10:17.519 --> 00:10:20.379 And he backed her. Why? I mean, why would the 00:10:20.379 --> 00:10:23.039 dean of engineering back her if the medical professor 00:10:23.039 --> 00:10:25.679 said it was physically impossible? I think it 00:10:25.679 --> 00:10:27.899 really speaks to the hubris of Silicon Valley 00:10:27.899 --> 00:10:30.299 at that time. There was this pervasive belief 00:10:30.299 --> 00:10:33.419 that engineering could conquer biology. You know, 00:10:33.440 --> 00:10:35.299 oh, doctors are just stuck in their ways. We're 00:10:35.299 --> 00:10:38.019 engineers. We solve problems. Disruption mindset. 00:10:38.299 --> 00:10:41.200 Totally. Plus, Elizabeth was incredibly charismatic. 00:10:41.519 --> 00:10:43.659 She had that reality distortion field that people 00:10:43.659 --> 00:10:46.639 talk about with Steve Jobs. Robertson was captivated. 00:10:46.720 --> 00:10:48.879 He became a board member. He introduced her to 00:10:48.879 --> 00:10:51.759 VCs. And he essentially gave her the academic 00:10:51.759 --> 00:10:54.360 stamp of approval she needed to bypass all the 00:10:54.360 --> 00:10:56.889 metal. And that becomes the pattern, doesn't 00:10:56.889 --> 00:10:59.529 it? She bypasses the medical community entirely. 00:11:00.149 --> 00:11:02.029 She goes straight to the money and the power. 00:11:02.909 --> 00:11:04.970 So she starts this company. She's in stealth 00:11:04.970 --> 00:11:08.529 mode for a decade, from 2003 to 2013. And during 00:11:08.529 --> 00:11:10.830 this time, she builds what has been called the 00:11:10.830 --> 00:11:13.830 most illustrious board in U .S. corporate history. 00:11:14.070 --> 00:11:17.149 It really was a who's who of American geopolitical 00:11:17.149 --> 00:11:19.570 power. But if you look at the names closely, 00:11:19.929 --> 00:11:21.850 you start to see the trick. Okay, I'm looking 00:11:21.850 --> 00:11:23.690 at the list here. We have George Shultz, former 00:11:23.690 --> 00:11:25.809 Secretary of State. We have Henry Kissinger, 00:11:25.950 --> 00:11:28.149 former Secretary of State. We have James Mattis, 00:11:28.190 --> 00:11:30.210 a four -star general and future Secretary of 00:11:30.210 --> 00:11:33.250 Defense. Sam Nunn, Bill Frist. Do you notice 00:11:33.250 --> 00:11:35.370 a pattern there, other than them being famous? 00:11:35.590 --> 00:11:38.230 They are all incredibly powerful. They're all 00:11:38.230 --> 00:11:43.210 men. And they're all very old. Chuckles. Well, 00:11:43.330 --> 00:11:46.669 yes. But more importantly, they are military 00:11:46.669 --> 00:11:48.629 and political strategists. They're not medical 00:11:48.629 --> 00:11:51.049 diagnostic experts. There's not a single doctor 00:11:51.049 --> 00:11:53.669 from Johns Hopkins on that list. I won. George 00:11:53.669 --> 00:11:56.129 Shultz joined the board after a two hour meeting 00:11:56.129 --> 00:11:59.889 with Elizabeth. Two hours. And suddenly he's 00:11:59.889 --> 00:12:02.330 backing a revolutionary medical device company. 00:12:02.409 --> 00:12:04.750 It's insane. What did she do in those two hours? 00:12:04.830 --> 00:12:06.690 Did she hypnotize him? She charmed him. She sold 00:12:06.690 --> 00:12:09.690 a vision. You have to remember, these men, Kissinger, 00:12:09.909 --> 00:12:12.090 Schultz, they were in their 80s and 90s. They 00:12:12.090 --> 00:12:14.409 were thinking about their legacy. And this young, 00:12:14.690 --> 00:12:17.169 brilliant woman comes to them with a technology 00:12:17.169 --> 00:12:19.830 that she says could save lives on the battlefield, 00:12:20.129 --> 00:12:22.610 could save the American health care system that 00:12:22.610 --> 00:12:24.509 appealed to them. They wanted to be part of the 00:12:24.509 --> 00:12:26.629 next big thing. It's the halo effect, right? 00:12:26.830 --> 00:12:30.330 If I'm a regular investor, or even a sophisticated 00:12:30.330 --> 00:12:33.529 one like the Waltham family or Betsy DeVos, and 00:12:33.529 --> 00:12:36.070 I see Henry Kissinger and George Shultz on the 00:12:36.070 --> 00:12:39.710 board, I just assume the due diligence has been 00:12:39.710 --> 00:12:43.149 done. Of course. I assume Kissinger had his people 00:12:43.149 --> 00:12:45.490 check the tech. But Kissinger assumed Schultz 00:12:45.490 --> 00:12:48.149 checked the tech. And Schultz assumed Mattis 00:12:48.149 --> 00:12:50.809 checked the tech. It was this circle of assumptions. 00:12:51.350 --> 00:12:53.409 Nobody actually wanted to be the one to admit 00:12:53.409 --> 00:12:55.529 they didn't understand the science. So they all 00:12:55.529 --> 00:12:57.450 just deferred to each other's credibility. And 00:12:57.450 --> 00:12:59.870 nobody looked inside the box. Nobody looked inside 00:12:59.870 --> 00:13:03.070 the box. And she secured massive amounts of money 00:13:03.070 --> 00:13:06.289 this way. The Walton family, Betsy DeVos, Rupert 00:13:06.289 --> 00:13:09.429 Murdoch. These people put in hundreds of millions 00:13:09.429 --> 00:13:12.980 of dollars. And lost. Every single penny. We 00:13:12.980 --> 00:13:15.000 have to talk about the persona she built during 00:13:15.000 --> 00:13:17.279 this time. Because it wasn't just the board. 00:13:17.419 --> 00:13:19.460 It was the character of Elizabeth Holmes that 00:13:19.460 --> 00:13:22.440 she created. The whole Steve Jobs cosplay. It 00:13:22.440 --> 00:13:24.519 was absolutely deliberate. It was a costume. 00:13:24.679 --> 00:13:27.840 It was theater. The black turtlenecks. She claimed 00:13:27.840 --> 00:13:29.340 she'd been wearing them since she was eight years 00:13:29.340 --> 00:13:31.980 old. Oh, yeah. That was her story. That was the 00:13:31.980 --> 00:13:35.049 myth. But our sources show that an employee actually 00:13:35.049 --> 00:13:38.049 suggested she cost Steve Jobs signature is see 00:13:38.049 --> 00:13:41.570 me off. They look back in 2007. She adopted the 00:13:41.570 --> 00:13:44.990 uniform to create a visual shorthand for genius. 00:13:45.590 --> 00:13:47.789 You see the black turtleneck. You think of Apple. 00:13:47.909 --> 00:13:49.929 You think of innovation. And then, of course, 00:13:50.009 --> 00:13:53.409 the voice, the deep baritone. I think everyone 00:13:53.409 --> 00:13:55.250 who followed this story remembers the voice. 00:13:55.710 --> 00:13:58.610 It was incredibly deep, almost. Unnaturally so 00:13:58.610 --> 00:14:01.690 for a woman in her 20s. It was a huge point of 00:14:01.690 --> 00:14:04.110 contention for years. Family members insisted 00:14:04.110 --> 00:14:06.909 it was her real voice, but former colleagues, 00:14:07.049 --> 00:14:09.429 one after another, said she would slip. They 00:14:09.429 --> 00:14:11.309 said if she got excited or had a few drinks at 00:14:11.309 --> 00:14:13.850 a party or was just caught off guard, her voice 00:14:13.850 --> 00:14:16.330 would jump up an octave into a much more typical 00:14:16.330 --> 00:14:18.950 young woman's range. And we finally got the truth. 00:14:19.360 --> 00:14:22.120 In a New York Times interview in May 2023, this 00:14:22.120 --> 00:14:24.279 was right before she went to prison, she admitted 00:14:24.279 --> 00:14:27.019 it. She said the low voice was an affectation. 00:14:27.179 --> 00:14:29.500 Which is a very polite way of saying fake. It 00:14:29.500 --> 00:14:32.360 is. Why do that? Why consciously lower your voice? 00:14:32.419 --> 00:14:34.559 What is the psychology there? It's all about 00:14:34.559 --> 00:14:36.240 authority. I mean, there's plenty of research 00:14:36.240 --> 00:14:39.659 showing that deeper voices are perceived as... 00:14:39.980 --> 00:14:43.799 more authoritative, more leader -like, more trustworthy. 00:14:44.279 --> 00:14:47.039 As a 20 -something young woman in a room full 00:14:47.039 --> 00:14:49.700 of old men and venture capitalists, she was playing 00:14:49.700 --> 00:14:52.059 a role. She wanted to sound older. She wanted 00:14:52.059 --> 00:14:54.740 to sound like a CEO. She was literally method 00:14:54.740 --> 00:14:57.379 -acting her way through a billion -dollar fraud. 00:14:57.820 --> 00:15:02.029 And it worked. By 2014... The hype is at a fever 00:15:02.029 --> 00:15:05.230 pitch. She is on the cover of Fortune, Forbes, 00:15:05.490 --> 00:15:08.429 Inc. President Obama names her the presidential 00:15:08.429 --> 00:15:11.190 ambassador for global entrepreneurship. She's 00:15:11.190 --> 00:15:13.350 getting honorary degrees. It's peak hype. And 00:15:13.350 --> 00:15:15.570 that hype was dangerous because it acted as a 00:15:15.570 --> 00:15:17.769 shield. It shielded the company from scrutiny. 00:15:17.929 --> 00:15:20.049 When you are the golden child, when you're on 00:15:20.049 --> 00:15:22.549 the cover of Forbes wearing the black turtleneck, 00:15:22.629 --> 00:15:25.750 people are afraid to ask tough questions. Yeah, 00:15:25.769 --> 00:15:27.289 you don't want to look stupid. You don't want 00:15:27.289 --> 00:15:30.039 to look stupid by questioning the genius. But 00:15:30.039 --> 00:15:32.240 the tough questions needed to be asked because 00:15:32.240 --> 00:15:35.539 inside the Theranos lab, things were, well, they 00:15:35.539 --> 00:15:37.500 were absolutely chaotic. Let's talk about the 00:15:37.500 --> 00:15:40.759 technology, the Edison. This was the little black 00:15:40.759 --> 00:15:42.639 box that's supposed to change the world. The 00:15:42.639 --> 00:15:45.049 Edison. It was roughly the size of a desktop 00:15:45.049 --> 00:15:48.250 printer. The claim, the big promise, was that 00:15:48.250 --> 00:15:51.470 you put the nanotainer, that tiny little vial 00:15:51.470 --> 00:15:54.190 of fingerprick blood, into the machine, and it 00:15:54.190 --> 00:15:57.690 runs hundreds of assays. Chemistry, a venoassay, 00:15:57.789 --> 00:16:00.909 the works. And the reality. The reality was that 00:16:00.909 --> 00:16:03.590 the Edison was a complete disaster. It was mechanically 00:16:03.590 --> 00:16:06.570 unreliable. The little centrifuge inside spun 00:16:06.570 --> 00:16:09.629 so fast that parts would literally fly off and 00:16:09.629 --> 00:16:12.250 break the casing. It got too hot, which destroyed 00:16:12.250 --> 00:16:14.590 the sample. And fundamentally, because of the 00:16:14.590 --> 00:16:16.490 science we discussed earlier, the hemolyzed blood, 00:16:16.629 --> 00:16:19.049 the small volume, the results were just all over 00:16:19.049 --> 00:16:21.929 the map. So if I tested my potassium on an Edison, 00:16:22.210 --> 00:16:25.110 it might say I'm fine on Monday, and then on 00:16:25.110 --> 00:16:27.070 Tuesday it might say I'm about to have a heart 00:16:27.070 --> 00:16:29.370 attack purely by chance. Correct. It was basically 00:16:29.370 --> 00:16:31.330 a random number generator. But here's the problem. 00:16:31.960 --> 00:16:34.480 They had already signed a massive company -making 00:16:34.480 --> 00:16:36.779 partnership with Walgreens. They had promised 00:16:36.779 --> 00:16:39.080 to put these wellness centers in stores across 00:16:39.080 --> 00:16:42.480 Arizona and California. So how do you fulfill 00:16:42.480 --> 00:16:44.700 the contracts if your magical machine doesn't 00:16:44.700 --> 00:16:47.580 work? You cheat. You cheat on an industrial scale. 00:16:48.080 --> 00:16:50.700 The investigation by John Kerry Rue revealed 00:16:50.700 --> 00:16:53.279 that Theranos was secretly buying commercially 00:16:53.279 --> 00:16:56.460 available blood analyzers from companies like 00:16:56.460 --> 00:17:00.330 Siemens. These are big, standard... FDA -approved 00:17:00.330 --> 00:17:02.830 lab machines that every other hospital in the 00:17:02.830 --> 00:17:04.690 country uses. And they just hid them in the back 00:17:04.690 --> 00:17:06.430 room? They hid them in the back room. They called 00:17:06.430 --> 00:17:10.009 the project the Shire internally. But here's 00:17:10.009 --> 00:17:12.910 the next problem. The Siemens machine is designed 00:17:12.910 --> 00:17:16.150 for a big vial of venous blood drawn from your 00:17:16.150 --> 00:17:20.329 arm. Theranos only had the tiny nanotainer from 00:17:20.329 --> 00:17:23.119 the finger prick. The sample was way too small 00:17:23.119 --> 00:17:25.579 for the Siemens machine to even recognize it. 00:17:25.680 --> 00:17:27.079 So they couldn't even use the cheating machine 00:17:27.079 --> 00:17:29.440 properly. Exactly. It's like trying to put a 00:17:29.440 --> 00:17:31.759 thimble full of gas in a car. The sensor won't 00:17:31.759 --> 00:17:33.900 even register it, so they had to hack the sample. 00:17:34.180 --> 00:17:36.640 They would take that tiny drop of blood and dilute 00:17:36.640 --> 00:17:39.480 it. They would add water or saline to bulk up 00:17:39.480 --> 00:17:41.259 the volume so the Siemens machine would accept 00:17:41.259 --> 00:17:44.920 it. But if you dilute the blood, you dilute all 00:17:44.920 --> 00:17:47.099 the markers you're looking for. If I take a shot 00:17:47.099 --> 00:17:48.960 of espresso and dump it in a gallon of water, 00:17:49.079 --> 00:17:51.809 it's not espresso anymore. Precisely. If you're 00:17:51.809 --> 00:17:54.130 looking for a specific protein and you water 00:17:54.130 --> 00:17:56.529 the sample down 10 to 1, the machine is going 00:17:56.529 --> 00:17:58.910 to report a number that is way, way too low. 00:17:59.089 --> 00:18:01.170 So Theranos engineers had to come up with these 00:18:01.170 --> 00:18:03.569 secret correction factors. They were essentially 00:18:03.569 --> 00:18:06.849 doing math on a napkin to guess what the real 00:18:06.849 --> 00:18:08.970 number should have been. That is absolutely terrifying. 00:18:09.210 --> 00:18:12.319 So to recap. They were taking a bad sample, diluting 00:18:12.319 --> 00:18:14.500 it to make it even worse, running it on a machine 00:18:14.500 --> 00:18:16.700 it wasn't designed for, and then just guessing 00:18:16.700 --> 00:18:18.940 the result using a multiplication table. And 00:18:18.940 --> 00:18:21.819 then sending that result to a real patient who 00:18:21.819 --> 00:18:24.039 might be changing their chemotherapy dosage or 00:18:24.039 --> 00:18:26.160 their blood thinner medication based on it. Yes, 00:18:26.200 --> 00:18:28.380 that is exactly what they did. Unbelievable. 00:18:28.480 --> 00:18:30.759 And the financial fraud was just as blatant. 00:18:30.839 --> 00:18:32.740 I'm looking at these numbers from the indictment. 00:18:33.640 --> 00:18:36.839 In 2014, they told investors they had $100 million 00:18:36.839 --> 00:18:40.460 in revenue. And the actual real revenue that 00:18:40.460 --> 00:18:43.859 year was roughly $100 ,000. That isn't rounding 00:18:43.859 --> 00:18:46.359 up. That isn't optimistic accounting. That is 00:18:46.359 --> 00:18:49.579 a lie of a thousandfold magnitude. It's pure 00:18:49.579 --> 00:18:51.740 fiction. And they also lied about the military. 00:18:51.960 --> 00:18:54.019 This is the one that really, I think, angered 00:18:54.019 --> 00:18:56.940 people on a gut level. Holmes repeatedly claimed 00:18:56.940 --> 00:18:58.619 her technology was being used by the Department 00:18:58.619 --> 00:19:02.279 of Defense in combat situations, in medevac helicopters 00:19:02.279 --> 00:19:05.519 in Afghanistan. She told investors this over 00:19:05.519 --> 00:19:09.119 and over. And was it? Never. Not once. Not for 00:19:09.119 --> 00:19:11.920 a single test. It was a complete fabrication 00:19:11.920 --> 00:19:14.799 to gain this kind of patriotic credibility and 00:19:14.799 --> 00:19:17.119 make the technology seem battle tested. So how 00:19:17.119 --> 00:19:19.960 do they keep this quiet for so long? hundreds 00:19:19.960 --> 00:19:22.319 of employees, someone has to know the machine 00:19:22.319 --> 00:19:24.940 is a dud. Someone has to see the Siemens machines 00:19:24.940 --> 00:19:27.099 hidden in the back. This brings us to the culture 00:19:27.099 --> 00:19:29.960 of fear inside the company and specifically to 00:19:29.960 --> 00:19:33.079 a man named Ramesh Sunny Balwani. The mysterious 00:19:33.079 --> 00:19:35.700 Sunny. We need to unpack this relationship because 00:19:35.700 --> 00:19:37.980 it's at the core of everything. Sunny Balwani 00:19:37.980 --> 00:19:40.259 was the president and chief operating officer 00:19:40.259 --> 00:19:43.519 of Theranos. But more importantly, he was Elizabeth's 00:19:43.519 --> 00:19:46.900 secret romantic partner. They met in 2002 on 00:19:46.900 --> 00:19:49.569 a trip to China. She was 18, just graduated high 00:19:49.569 --> 00:19:52.410 school. He was 37 and married at the time. They 00:19:52.410 --> 00:19:54.650 started a romantic relationship that they kept 00:19:54.650 --> 00:19:57.250 secret from the board, the investors, and almost 00:19:57.250 --> 00:19:59.930 every employee for over a decade. That power 00:19:59.930 --> 00:20:02.490 dynamic is, I mean, it's incredibly complex. 00:20:02.710 --> 00:20:06.049 An 18 -year -old and a 37 -year -old. And then 00:20:06.049 --> 00:20:08.769 he comes to work as her number two. It's extremely 00:20:08.769 --> 00:20:12.170 complex. He came on officially as COO in 2009, 00:20:12.369 --> 00:20:14.930 and the culture they created together was described 00:20:14.930 --> 00:20:18.859 by prosecutors as a folie a deux. a shared madness. 00:20:19.200 --> 00:20:21.460 They reinforced each other's delusions. Right. 00:20:21.559 --> 00:20:25.099 But inside the company, Balwani was the enforcer. 00:20:25.200 --> 00:20:27.539 He was the muscle. He was the bad cop? He was 00:20:27.539 --> 00:20:30.559 the terrifying cop. The testimony from former 00:20:30.559 --> 00:20:33.380 employees is chilling. He monitored their emails. 00:20:33.740 --> 00:20:35.839 He tracked when people swiped their badge to 00:20:35.839 --> 00:20:37.920 enter or leave the building. He would roam the 00:20:37.920 --> 00:20:40.519 hall shouting at people. If you raised a concern, 00:20:40.619 --> 00:20:42.640 if you asked a simple question like, hey, why 00:20:42.640 --> 00:20:45.140 are the quality control results failing? You 00:20:45.140 --> 00:20:46.880 were marginalized, you were shouted at, or you 00:20:46.880 --> 00:20:49.480 were fired on the spot. So they built these information 00:20:49.480 --> 00:20:51.980 silos. Nobody in the chemistry department knew 00:20:51.980 --> 00:20:54.480 what the engineering department was doing. Dysfunctional 00:20:54.480 --> 00:20:56.980 doesn't even begin to cover it. It was a surveillance 00:20:56.980 --> 00:21:00.039 state within a startup. They bullied anyone who 00:21:00.039 --> 00:21:02.200 tried to speak up. It was this intense pressure 00:21:02.200 --> 00:21:04.579 cooker designed to keep the truth from ever escaping. 00:21:04.880 --> 00:21:07.099 But the truth always escapes eventually. Physics 00:21:07.099 --> 00:21:09.759 always wins. And in this case, the truth escaped 00:21:09.759 --> 00:21:12.579 via a tip to a reporter named John Kerry Roo 00:21:12.579 --> 00:21:14.539 at The Wall Street Journal. This is the turning 00:21:14.539 --> 00:21:16.960 point. This is where the story shifts from a 00:21:16.960 --> 00:21:20.680 rise to a fall. A medical expert, a blogger actually, 00:21:20.819 --> 00:21:23.740 suspected the Edison device was suspicious because 00:21:23.740 --> 00:21:26.859 the results were just medically implausible. 00:21:26.980 --> 00:21:29.859 He tipped off Kerry Roo. Kerry Roo started digging. 00:21:30.220 --> 00:21:32.980 He found and talked to whistleblowers, including 00:21:32.980 --> 00:21:35.359 a young man named Tyler Schultz, who was George 00:21:35.359 --> 00:21:38.279 Schultz's own grandson. He had worked at Theranos 00:21:38.279 --> 00:21:40.880 and saw the fraud firsthand and tried to warn 00:21:40.880 --> 00:21:42.759 his grandfather, who didn't believe him. And 00:21:42.759 --> 00:21:44.819 Holmes didn't take this lying down. She didn't 00:21:44.819 --> 00:21:47.140 just ignore it. She went to war. Oh, absolutely. 00:21:47.500 --> 00:21:50.319 She and her superstar lawyer, David Boies, one 00:21:50.319 --> 00:21:53.079 of the most famous and feared litigators in America, 00:21:53.299 --> 00:21:55.579 went on the offensive. They threatened the journal 00:21:55.579 --> 00:21:57.819 with massive legal action. They threatened the 00:21:57.819 --> 00:22:00.400 whistleblowers with financial ruin. They hired 00:22:00.400 --> 00:22:02.880 private investigators to follow Tyler Schultz. 00:22:02.920 --> 00:22:05.500 They tried to intimidate everyone into silence. 00:22:05.819 --> 00:22:08.900 But the Wall Street Journal is a tough nut to 00:22:08.900 --> 00:22:13.420 crack. And on October 15, 2015, the bombshell 00:22:13.420 --> 00:22:16.759 dropped. The article was published, laying it 00:22:16.759 --> 00:22:19.180 all out. And the house of cards began to collapse 00:22:19.180 --> 00:22:21.819 almost overnight. I remember seeing her on TV 00:22:21.819 --> 00:22:24.099 that very day. It was incredible. She didn't 00:22:24.099 --> 00:22:26.039 hide. She went on Mad Money with Jim Cramer. 00:22:26.160 --> 00:22:27.759 She looked right in the camera, totally calm. 00:22:28.299 --> 00:22:30.200 And she said something that I think perfectly 00:22:30.200 --> 00:22:32.519 encapsulates the Silicon Valley martyr complex. 00:22:32.900 --> 00:22:34.960 I know the exact quote you mean. It's iconic 00:22:34.960 --> 00:22:37.920 now. She said, this is what happens when you 00:22:37.920 --> 00:22:39.839 work to change things. First, they think you're 00:22:39.839 --> 00:22:41.960 crazy. Then they fight you. And then all of a 00:22:41.960 --> 00:22:44.670 sudden you change the world. It is a brilliant 00:22:44.670 --> 00:22:48.210 deflection tactic. It's genius in a way. She 00:22:48.210 --> 00:22:50.829 framed the legitimate exposure of criminal fraud 00:22:50.829 --> 00:22:54.109 as the innovator's dilemma. She tried to align 00:22:54.109 --> 00:22:58.430 herself with Galileo or Einstein. These geniuses 00:22:58.430 --> 00:23:00.329 who are persecuted by the establishment. They're 00:23:00.329 --> 00:23:02.029 just attacking me because I'm disrupting the 00:23:02.029 --> 00:23:04.569 system. Exactly. The big labs are scared of us. 00:23:04.829 --> 00:23:07.829 But the problem was Galileo's telescope actually 00:23:07.829 --> 00:23:10.349 worked. Juckles. Right. That's a key difference. 00:23:10.430 --> 00:23:12.490 You can't use the they're fighting me defense 00:23:12.490 --> 00:23:16.029 if your product is fake. If you claim you can 00:23:16.029 --> 00:23:18.730 fly and you jump off a cliff and fall, gravity 00:23:18.730 --> 00:23:20.789 isn't persecuting you. Gravity is just holding 00:23:20.789 --> 00:23:23.130 you accountable. Exactly. And the accountability 00:23:23.130 --> 00:23:25.509 came fast. After that article, the regulatory 00:23:25.509 --> 00:23:27.970 collapse was swift. The Centers for Medicare 00:23:27.970 --> 00:23:30.930 and Medicaid Services, or CMS, inspected their 00:23:30.930 --> 00:23:33.450 lab in Newark, California. And they didn't find 00:23:33.450 --> 00:23:36.109 innovation. They found an immediate hazard. What 00:23:36.109 --> 00:23:39.349 did they find, specifically? They found massive 00:23:39.349 --> 00:23:43.130 irregularities, uncalibrated machines, unqualified 00:23:43.130 --> 00:23:46.490 staff, and a complete failure in quality control. 00:23:47.069 --> 00:23:50.130 Their report said the lab posed immediate jeopardy 00:23:50.130 --> 00:23:53.130 to patient health and safety. They banned Holmes 00:23:53.130 --> 00:23:56.390 from operating a lab for two years. And once 00:23:56.390 --> 00:23:59.450 the regulator stepped in, Walgreens bolted. They 00:23:59.450 --> 00:24:01.730 had to. They terminated the partnership immediately. 00:24:02.210 --> 00:24:04.849 The state of Arizona sued Theranos for selling 00:24:04.849 --> 00:24:08.289 1 .5 million fraudulent tests to their citizens 00:24:08.289 --> 00:24:10.589 while concealing the facts. And this is the part 00:24:10.589 --> 00:24:12.410 that just hurts to think about. They had to void 00:24:12.410 --> 00:24:14.349 two years of blood test results. Think about 00:24:14.349 --> 00:24:17.130 that for a second. Real people made real medical 00:24:17.130 --> 00:24:19.369 decisions based on those tests. It's the human 00:24:19.369 --> 00:24:22.240 cost. Imagine you're a cancer patient. You take 00:24:22.240 --> 00:24:23.960 a test to see if your tumor markers are rising. 00:24:24.140 --> 00:24:26.220 The Theranos test comes back and says, you're 00:24:26.220 --> 00:24:28.500 fine, your numbers are low. So your doctor doesn't 00:24:28.500 --> 00:24:30.559 change your chemo regimen. But actually, your 00:24:30.559 --> 00:24:32.380 numbers are high, the cancer is growing, you 00:24:32.380 --> 00:24:34.819 lost precious time. Or the reverse, you get a 00:24:34.819 --> 00:24:37.019 false positive for HIV or syphilis, and your 00:24:37.019 --> 00:24:38.839 entire life falls apart for a week until you 00:24:38.839 --> 00:24:41.119 can get a retest from a real lab. The emotional 00:24:41.119 --> 00:24:44.299 damage is immense. That is the difference between 00:24:44.299 --> 00:24:47.160 this and just a regular financial scam like FPX 00:24:47.160 --> 00:24:50.079 or Bernie Madoff. This wasn't just money disappearing 00:24:50.079 --> 00:24:52.039 from a spreadsheet. It was people's physical 00:24:52.039 --> 00:24:54.200 health and well -being on the line. Exactly. 00:24:54.460 --> 00:24:56.420 And that leads us to the inevitable conclusion, 00:24:56.779 --> 00:25:03.579 the trial. In June 2018, a federal grand jury 00:25:03.579 --> 00:25:07.759 indicts Holmes and Balwani. Two counts of conspiracy 00:25:07.759 --> 00:25:10.660 to commit wire fraud and a whole bunch of counts 00:25:10.660 --> 00:25:12.880 of wire fraud itself. The trial didn't start 00:25:12.880 --> 00:25:15.559 until 2021, though. It was delayed by the COVID 00:25:15.559 --> 00:25:18.380 -19 pandemic and then by Holmes' first pregnancy. 00:25:18.759 --> 00:25:21.519 But when it did, the defense strategy was fascinating. 00:25:21.619 --> 00:25:23.539 And I want to spend a moment on it because legally, 00:25:23.759 --> 00:25:27.000 it was a real high wire act. The Svengali defense, 00:25:27.259 --> 00:25:28.839 that's what people called it. Essentially, yes. 00:25:29.019 --> 00:25:31.319 Holmes took the stand for seven days, which is 00:25:31.319 --> 00:25:34.000 very rare for a defendant in a major fraud trial. 00:25:34.339 --> 00:25:36.140 Usually, your lawyers tell you to stay quiet. 00:25:36.319 --> 00:25:38.240 But she's incredibly charming. She thinks she 00:25:38.240 --> 00:25:40.259 can talk her way out of anything. So what was 00:25:40.259 --> 00:25:42.960 her story? She admitted she was misled by some 00:25:42.960 --> 00:25:45.140 of her staff, but the core of her defense was 00:25:45.140 --> 00:25:47.559 placing the blame squarely on Sunny Balwani. 00:25:47.700 --> 00:25:49.839 She testified that he was controlling and sexually 00:25:49.839 --> 00:25:52.880 abusive. She said he wanted to kill the person 00:25:52.880 --> 00:25:56.099 she was in order to create a new Elizabeth. It 00:25:56.099 --> 00:25:58.799 was harrowing testimony. She described a decade 00:25:58.799 --> 00:26:01.059 of psychological dominance, controlled schedules, 00:26:01.259 --> 00:26:04.779 dictated diets, isolation from her family. Her 00:26:04.779 --> 00:26:07.420 argument was essentially, I didn't have the specific 00:26:07.420 --> 00:26:10.059 intent to defraud because I wasn't in control 00:26:10.059 --> 00:26:13.480 of my own mind. I was his puppet. It's a strategy 00:26:13.480 --> 00:26:17.079 to negate intent, which is a key element of fraud. 00:26:17.299 --> 00:26:20.140 To be guilty, you have to knowingly lie. If you 00:26:20.140 --> 00:26:22.519 can convince the jury you were brainwashed, maybe 00:26:22.519 --> 00:26:25.140 you didn't know. But the prosecution countered 00:26:25.140 --> 00:26:27.380 with a mountain of receipts. They showed texts 00:26:27.380 --> 00:26:29.460 and emails where she was clearly the one directing 00:26:29.460 --> 00:26:31.680 the fraud. They showed that when she was lying 00:26:31.680 --> 00:26:34.079 to investors or putting fake Pfizer logos on 00:26:34.079 --> 00:26:37.240 reports, Sonny wasn't even in the room. She was 00:26:37.240 --> 00:26:39.119 the one in charge. And the jury had to make a 00:26:39.119 --> 00:26:42.180 decision. In January of 2022, the verdict came 00:26:42.180 --> 00:26:44.859 down. And it was mixed. It was complicated. It 00:26:44.859 --> 00:26:47.279 was a split verdict. And this confuses a lot 00:26:47.279 --> 00:26:50.200 of people. She was found guilty on four counts 00:26:50.200 --> 00:26:52.559 of defrauding investors, but she was found not 00:26:52.559 --> 00:26:54.839 guilty on the four counts related to defrauding 00:26:54.839 --> 00:26:57.920 patients. OK, let's break that down. If the patients 00:26:57.920 --> 00:27:00.660 were the ones who were physically hurt, why is 00:27:00.660 --> 00:27:03.220 she not guilty of that, but guilty of taking 00:27:03.220 --> 00:27:05.700 Rupert Murdoch's money? It comes down to the 00:27:05.700 --> 00:27:08.359 technicality of the wire fraud statutes and the 00:27:08.359 --> 00:27:11.539 burden of proof. The investors were pitched directly 00:27:11.539 --> 00:27:14.539 by Holmes. She looked them in the eye or sent 00:27:14.539 --> 00:27:17.579 them an email and lied to get their money. That's 00:27:17.579 --> 00:27:20.559 a very clear, direct line of deception. Okay. 00:27:20.740 --> 00:27:23.220 The patients, she never met them. They interacted 00:27:23.220 --> 00:27:26.079 with a Walgreens or a website. The chain of deception 00:27:26.079 --> 00:27:29.140 was longer and more indirect. It doesn't mean 00:27:29.140 --> 00:27:31.000 the jury thought she didn't hurt patients. It 00:27:31.000 --> 00:27:33.380 just means the strict legal bar for criminal 00:27:33.380 --> 00:27:36.119 wire fraud, specifically targeting those individual 00:27:36.119 --> 00:27:38.839 patients, wasn't met beyond a reasonable doubt 00:27:38.839 --> 00:27:41.640 for the prosecution. So she is convicted on the 00:27:41.640 --> 00:27:44.480 investor fraud. She's sentenced to 11 .25 years 00:27:44.480 --> 00:27:47.880 in federal prison and ordered to pay $452 million 00:27:47.880 --> 00:27:50.640 in restitution. Jointly with Balwani, I should 00:27:50.640 --> 00:27:53.299 add. He was convicted in a separate trial on 00:27:53.299 --> 00:27:55.619 all 12 counts, actually. He got a slightly longer 00:27:55.619 --> 00:27:58.119 sentence. So let's fast forward. We are now in 00:27:58.119 --> 00:28:01.880 the present day, January 2026. Where is Elizabeth 00:28:01.880 --> 00:28:04.539 Holmes? What's happening? Physically, she is 00:28:04.539 --> 00:28:07.720 in Bryan, Texas. She reported to the federal 00:28:07.720 --> 00:28:11.220 prison camp there on May 30th, 2023. It's a minimum 00:28:11.220 --> 00:28:13.720 security facility. And she didn't go quietly. 00:28:14.250 --> 00:28:16.410 Before prison, she went through a bit of a rebrand. 00:28:16.549 --> 00:28:19.230 The Liz rebrand. It was remarkable. As soon as 00:28:19.230 --> 00:28:21.609 the company officially collapsed, the black turtlenecks 00:28:21.609 --> 00:28:24.170 vanished. She started wearing soft pastels, let 00:28:24.170 --> 00:28:27.069 her hair down, and started going by Liz. She 00:28:27.069 --> 00:28:29.670 met a man named Billy Evans, a hotel heir, at 00:28:29.670 --> 00:28:31.710 a party. They got married pretty quickly. And 00:28:31.710 --> 00:28:34.190 they had two children, one born in 2021 and another 00:28:34.190 --> 00:28:37.049 in 2023, just months before she was due to report 00:28:37.049 --> 00:28:39.569 to prison. And there was a lot of cynicism about 00:28:39.569 --> 00:28:42.549 those pregnancies. Prosecutors argued in court 00:28:42.549 --> 00:28:44.420 filings that she was tough. Timing them to delay 00:28:44.420 --> 00:28:46.680 her prison sentence, they basically said, she's 00:28:46.680 --> 00:28:48.579 having babies to stay out of jail. Which she 00:28:48.579 --> 00:28:51.279 denied, of course. She did. But it certainly 00:28:51.279 --> 00:28:53.980 complicated the sentencing optics. It's a much 00:28:53.980 --> 00:28:56.079 harder thing for a judge to send a mother of 00:28:56.079 --> 00:28:59.380 a newborn to prison than a single CEO. But the 00:28:59.380 --> 00:29:02.359 judge, Edward Davla, eventually ruled she had 00:29:02.359 --> 00:29:05.339 to surrender. So she has been in prison for over 00:29:05.339 --> 00:29:08.119 two and a half years now. What is the status 00:29:08.119 --> 00:29:10.559 of her fight for freedom? Because she hasn't 00:29:10.559 --> 00:29:12.460 stopped fighting. It is not going well for her. 00:29:12.559 --> 00:29:14.799 Her lawyers appealed to the Ninth Circuit Court 00:29:14.799 --> 00:29:17.200 of Appeals. They argued there were all these 00:29:17.200 --> 00:29:19.359 legal errors in the trial, specifically about 00:29:19.359 --> 00:29:22.039 which expert witnesses were allowed and the exclusion 00:29:22.039 --> 00:29:24.420 of some of Balwani's testimony regarding the 00:29:24.420 --> 00:29:26.630 abuse. And what happened with that appeal? As 00:29:26.630 --> 00:29:29.750 of February 2025, so almost a year ago now, those 00:29:29.750 --> 00:29:32.130 appeals were rejected. The conviction stands. 00:29:32.450 --> 00:29:35.089 The appellate court essentially said the trial 00:29:35.089 --> 00:29:37.269 was fair. The evidence was overwhelming. The 00:29:37.269 --> 00:29:39.730 conviction holds. So she's stuck. She's running 00:29:39.730 --> 00:29:42.299 out of road. Mostly. Her sentence was shortened 00:29:42.299 --> 00:29:44.579 slightly due to federal good conduct guidelines. 00:29:45.180 --> 00:29:47.920 Prisoners rarely serve 100 percent of their sentence 00:29:47.920 --> 00:29:50.539 if they behave. The Bureau of Prisons currently 00:29:50.539 --> 00:29:53.299 projects her release for some time in 2032. So 00:29:53.299 --> 00:29:55.680 she has about six more years to go. But she hasn't 00:29:55.680 --> 00:29:57.400 given up on the public eye, has she? She's not 00:29:57.400 --> 00:30:00.359 just, you know, quietly serving her time. Not 00:30:00.359 --> 00:30:03.220 at all. In August 2025, she started posting on 00:30:03.220 --> 00:30:06.529 social media via third parties. Obviously, inmates 00:30:06.529 --> 00:30:08.430 don't have iPhones, but she communicates out 00:30:08.430 --> 00:30:10.789 to her family. And then there was a report in 00:30:10.789 --> 00:30:13.410 December of 2025 that she was campaigning for 00:30:13.410 --> 00:30:16.109 a presidential pardon from Donald Trump. Of course 00:30:16.109 --> 00:30:18.269 she is. She's trying to bypass the legal system 00:30:18.269 --> 00:30:20.230 again, just like she bypassed the medical system. 00:30:20.289 --> 00:30:22.470 Go straight to the top. But the most shocking 00:30:22.470 --> 00:30:24.630 thing to me, and this really gets to the core 00:30:24.630 --> 00:30:27.230 psychology of it, is the interview she gave from 00:30:27.230 --> 00:30:31.750 prison in 2025. Yes, I read this. It made my 00:30:31.750 --> 00:30:34.589 jaw drop. After years of silence and after the 00:30:34.589 --> 00:30:36.789 trial where she basically had to admit to all 00:30:36.789 --> 00:30:39.430 this fraud, she gave an interview where she stated 00:30:39.430 --> 00:30:42.190 that she still intends to revolutionize the medical 00:30:42.190 --> 00:30:44.630 testing industry. She said she has ideas for 00:30:44.630 --> 00:30:46.990 new patents she's working on. Wait, wait, really? 00:30:47.410 --> 00:30:49.910 She's sitting in a prison cell convicted of a 00:30:49.910 --> 00:30:52.230 massive fraud for a medical testing company that 00:30:52.230 --> 00:30:54.529 didn't work. And she says, I'm still going to 00:30:54.529 --> 00:30:56.730 do it. That is the persistence of the vision 00:30:56.730 --> 00:30:59.450 or the delusion, depending on how you see it. 00:30:59.720 --> 00:31:02.319 It suggests that on some deep level, she doesn't 00:31:02.319 --> 00:31:05.019 see herself as a criminal. She sees herself as 00:31:05.019 --> 00:31:07.200 a failed visionary who just ran out of time and 00:31:07.200 --> 00:31:10.220 money. She still thinks if she just had a bit 00:31:10.220 --> 00:31:12.700 more, she could have made the Edison work. That 00:31:12.700 --> 00:31:15.200 is deeply unsettling. It's like she hasn't learned 00:31:15.200 --> 00:31:17.420 the fundamental lesson. Or maybe the lesson she 00:31:17.420 --> 00:31:19.559 learned is just don't get caught next time. It 00:31:19.559 --> 00:31:23.119 raises the question, did she ever truly believe 00:31:23.119 --> 00:31:26.380 the lie? And I think in a twisted way, she believed 00:31:26.380 --> 00:31:28.559 in the mission so much that the lying was just 00:31:28.559 --> 00:31:31.160 a necessary stepping stone. She thought, I'll 00:31:31.160 --> 00:31:34.400 lie now. But once the tech works, the lie retroactively 00:31:34.400 --> 00:31:37.819 becomes truth. But the tech never worked. Let's 00:31:37.819 --> 00:31:40.299 talk about the crater she left behind. The cultural 00:31:40.299 --> 00:31:43.160 impact of this story is just massive. It's not 00:31:43.160 --> 00:31:44.920 just a business story anymore. It's become a 00:31:44.920 --> 00:31:47.230 legend, a myth. It really has. We have the book 00:31:47.230 --> 00:31:49.470 Bad Blood by John Carreyrou, which is just a 00:31:49.470 --> 00:31:51.970 masterpiece of investigative journalism. Then 00:31:51.970 --> 00:31:54.029 we have the Hulu series The Dropout, where Amanda 00:31:54.029 --> 00:31:55.990 Seyfried won an Emmy for her portrayal of Holmes. 00:31:56.069 --> 00:31:58.349 It became a cultural touchstone. Seyfried was 00:31:58.349 --> 00:32:01.089 so good that Jennifer Lawrence, who was supposed 00:32:01.089 --> 00:32:04.150 to play Holmes in a big movie directed by Adam 00:32:04.150 --> 00:32:07.619 McKay, dropped out. She said. We don't need to 00:32:07.619 --> 00:32:09.859 redo that. She did it. But there's a darker side 00:32:09.859 --> 00:32:12.119 to this cultural impact. It's not just entertainment. 00:32:12.359 --> 00:32:16.099 It had a real tangible negative effect on women 00:32:16.099 --> 00:32:18.259 trying to make it in the tech world. Absolutely. 00:32:18.359 --> 00:32:20.640 The female founder stigma. Before Holmes, it 00:32:20.640 --> 00:32:22.960 was already incredibly hard for women to get 00:32:22.960 --> 00:32:26.359 venture capital funding. The stats are just abysmal. 00:32:26.400 --> 00:32:29.740 Something like 2 % of all VC money goes to companies 00:32:29.740 --> 00:32:32.480 founded solely by women. Just 2%. After Holmes, 00:32:32.579 --> 00:32:35.279 it got worse. Female entrepreneurs, especially 00:32:35.279 --> 00:32:38.089 in biotech or Health Tech, reported that investors 00:32:38.089 --> 00:32:40.390 were bringing up Theranos constantly in pitch 00:32:40.390 --> 00:32:42.910 meetings. They'd pitch a legitimate company with 00:32:42.910 --> 00:32:44.910 real science and the investor would say, wait, 00:32:44.990 --> 00:32:47.049 is this another Theranos? Are you the next Elizabeth 00:32:47.049 --> 00:32:50.529 Holmes? That is so deeply unfair. Yeah. Nobody 00:32:50.529 --> 00:32:53.150 looks at Sam Bankman -Fried from FTX and says 00:32:53.150 --> 00:32:55.769 to every male crypto founder, are you the next 00:32:55.769 --> 00:32:58.869 SPF? Nobody looks at Adam Neumann from WeWork 00:32:58.869 --> 00:33:02.200 and judges all male real estate guys. But because 00:33:02.200 --> 00:33:04.920 Elizabeth Holmes was so singular, so visible, 00:33:05.079 --> 00:33:08.559 she became the archetype. It's a pernicious comparison, 00:33:08.700 --> 00:33:11.559 as the New York Times put it in an article. She 00:33:11.559 --> 00:33:14.220 became the face of the female fraudster, and 00:33:14.220 --> 00:33:16.500 innocent women trying to build legitimate science 00:33:16.500 --> 00:33:19.440 companies paid a real price for her crimes. And 00:33:19.440 --> 00:33:22.200 the irony is, she launched that initiative, hashtag 00:33:22.200 --> 00:33:25.440 Iron Sisters, specifically to help women in STEM. 00:33:26.029 --> 00:33:28.269 And in the end, she might have done more damage 00:33:28.269 --> 00:33:30.609 to women in STEM than almost anyone else in that 00:33:30.609 --> 00:33:33.269 decade. She completely poisoned the well. So 00:33:33.269 --> 00:33:36.130 to wrap this all up, what does this all mean? 00:33:36.809 --> 00:33:39.109 We have a woman who wanted to be the next Steve 00:33:39.109 --> 00:33:41.730 Jobs, who wanted to build a yeast empire of her 00:33:41.730 --> 00:33:44.190 own and ended up in a minimum security prison 00:33:44.190 --> 00:33:47.170 in Texas. I think the core tragedy is the corruption 00:33:47.170 --> 00:33:49.670 of a good idea. Democratizing health care is 00:33:49.670 --> 00:33:52.529 a noble goal. Fear of needles is real. Cheap, 00:33:52.549 --> 00:33:54.630 accessible blood tests would save millions of 00:33:54.630 --> 00:33:57.500 lives. If Theranos had actually worked, it would 00:33:57.500 --> 00:33:59.579 have been a miracle. The tragedy isn't that she 00:33:59.579 --> 00:34:02.619 failed. It's that she refused to admit she failed. 00:34:02.819 --> 00:34:05.980 She chose to fake the success rather than do 00:34:05.980 --> 00:34:09.000 the hard, grueling work of solving the problem 00:34:09.000 --> 00:34:11.760 or, you know, admitting it couldn't be solved 00:34:11.760 --> 00:34:14.400 with her approach. It's the ultimate cautionary 00:34:14.400 --> 00:34:17.000 tale of that specific Silicon Valley culture. 00:34:17.280 --> 00:34:19.599 Fake it till you make it works for a dating app. 00:34:19.719 --> 00:34:22.039 If the app crashes, nobody dies. You just reboot 00:34:22.039 --> 00:34:24.119 the server. But it doesn't work for medicine. 00:34:24.400 --> 00:34:26.780 It can't work for medicine. Medicine is biology. 00:34:27.019 --> 00:34:29.940 And biology doesn't care about your reality distortion 00:34:29.940 --> 00:34:33.219 field. Biology is physics and chemistry. You 00:34:33.219 --> 00:34:35.400 can't charm a red blood cell. You can't negotiate 00:34:35.400 --> 00:34:37.960 with a protein. Chuckles. You can't charm a red 00:34:37.960 --> 00:34:41.039 blood cell. I love that. They should be on a 00:34:41.039 --> 00:34:42.780 T -shirt. And here's a final thought to leave 00:34:42.780 --> 00:34:44.400 you with, which is something that keeps me up 00:34:44.400 --> 00:34:47.119 at night. Elizabeth Holmes is projected to get 00:34:47.119 --> 00:34:50.840 out of prison in 2032. She will be 48 years old. 00:34:51.099 --> 00:34:53.820 She is still clearly ambitious. She still believes 00:34:53.820 --> 00:34:56.920 she has a destiny to fulfill. Oh, boy. I see 00:34:56.920 --> 00:34:58.639 where you're going with this. In a world that 00:34:58.639 --> 00:35:01.420 loves a redemption arc and in a world where truth 00:35:01.420 --> 00:35:05.019 is increasingly subjective, have we truly heard 00:35:05.019 --> 00:35:08.289 the last of Elizabeth Holmes? Or is this just 00:35:08.289 --> 00:35:10.889 the intermission before the second act? That 00:35:10.889 --> 00:35:13.429 is a terrifying thought. If she comes back with 00:35:13.429 --> 00:35:16.789 a new startup in 2033, I'm not investing. I don't 00:35:16.789 --> 00:35:19.230 care who is on the board. Henry Kissinger's ghost 00:35:19.230 --> 00:35:21.349 could be on the board. Chuckles. I think I'll 00:35:21.349 --> 00:35:23.469 keep my money in the mattress for that one. Thank 00:35:23.469 --> 00:35:25.269 you for listening to this deep dive into the 00:35:25.269 --> 00:35:27.929 rise and fall of the unicorn. We hope this gave 00:35:27.929 --> 00:35:29.869 you a clear picture of the mechanics behind the 00:35:29.869 --> 00:35:32.030 curtain. We'll catch you on the next one. Stay 00:35:32.030 --> 00:35:34.110 curious and maybe double check your lab results. 00:35:34.449 --> 00:35:35.750 Indeed. Goodbye.