A few months ago, I read John Carreyrou’s Bad Blood: Secrets and Lies in a Silicon Valley Startup about Elizabeth Holmes and the Theranos fraud, and I was very curious to see how the same story would play out in the new documentary The Inventor: Out for Blood in Silicon Valley. (Sidebar: I am truly on the edge of my seat for the forthcoming Adam McKay adaptation starring Jennifer Lawrence – but that’s a whole ‘nother thing). In general, I preferred the book: it has far more detail, and the documentary has little new information to contribute. That said, there was power in the immediacy of actually watching Elizabeth Holmes, hearing her speak, and seeing how people reacted to her. So, below are some of my general thoughts.
First, I’d say the pacing seems off. It’s a nearly two-hour documentary but we don’t really get into the problems with the technology until we’re already over an hour in. Up until then, we just have a lot of shots of Elizabeth Holmes pitching the technology in various interviews, a bit of her family history, and some comments from employees about the level of secrecy and security within the company. One detail I don’t recall reading in the book: Erika Cheung, who would eventually be one of the whistleblowers, mentioned that when she sent an email to someone, even if neither Elizabeth Holmes nor Sunny Balwani (Theranos president and COO) was cc’d, Balwani might send her a response. Cheryl Gafner was a receptionist – not even in a technical job – but they logged her keystrokes.
There is, however, one marvelous payoff to the buildup of endless Holmes television interviews and TED-style talks, which comes right after Cheung describes her realization that Holmes was just putting on a show, but I’ll leave it unspoiled.
Second, as I said above, it’s one thing to know that Holmes inspired nearly cult-like devotion – and to hear about her (maybe?) faked deep voice – and it’s something else again to actually watch it unfold. There’s one especially jarring moment when an Arizona state legislator describes Holmes as “magnificent” during a hearing. Tim Draper proclaims she will change the world. James Mattis sings her praises. A glittering array of politicians and other luminaries surround her and praise her; Stanford’s Phyllis Gardner, who never trusted Holmes or the technology, explains that Holmes “aligned herself with powerful older men who seemed to succumb to a certain charm.” (Andi Zeisler puts it, ahem, more crudely.)
There are other ways that the footage and the audio add depth to the story. For example, one profile of Holmes characterized her description of the Theranos technology as “comically vague”; her quote explaining that “a chemistry is performed” seems so laughable that you wonder how anyone could have been fooled. However, when you actually hear the audio from the recorded interview, her stilted phrasing sounds as though she’s trying to avoid revealing trade secrets; indeed, we hear a lot of interviews where she convincingly dodges pointed questions by creating the impression that she’d like to answer but she can’t quite confirm because of corporate confidentiality issues. It’s a good act, and it’s exactly how she snookered reporters and investors.
There’s actually a very emotional moment in the documentary when Roger Parloff, a Fortune reporter and one of her early boosters, describes what it was like for him when John Carreyrou exposed the fraud in the Wall Street Journal. He’s choked up, to the point of having difficulty maintaining his composure.
That said, the film does not highlight what the book does, namely, that Holmes was never able to con people with actual experience in biotech. VC firms that specialized in medical technology steered clear of her, and her board – while impressive – did not include any medical professionals.
Third, and this is mentioned in the book but it’s worth pointing out, Boies, Schiller & Flexner was one of Holmes’s most rabid defenders. David Boies sat on her board, and his firm aggressively threatened all potential whistleblowers with lawsuits. Tyler Shultz – grandson of George Shultz, another Theranos board member and Holmes defender – was one of those whistleblowers, and when Boies attorneys came to his house, George Shultz described one as a “wild animal” who “assaulted” his grandson and had to be physically separated from him. We hear audio of the meeting where Carreyrou sought to interview Holmes. There were maybe three attorneys in the room with her, and all of them – plus Carreyrou – recorded it. The meeting devolves into something close to a shouting match, with everyone trying to talk over each other as Carreyrou continues to press for answers about the technology and the lawyers insist his questions are improper and unfair.
Notably, Boies Schiller was paid, at least in part, with Theranos stock. And that highlights an apparently mundane, and troubling, issue among Silicon Valley startups: paying firms or lawyers with equity is not uncommon, raising questions about whether such arrangements interfere with attorneys’ ability to maintain their professional objectivity and integrity.
Fourth, when you read the book, you get a sense that Sunny Balwani was a major player in the fraud. He was very much the attack dog of the company, threatening employees and enforcing secrecy rules, and it leaves you wondering if he was simply following Holmes’s orders or if he was somehow orchestrating matters and encouraging her to escalate. Not so in the documentary: He’s a very minor player here, and everything is on her shoulders. The employees who are interviewed certainly felt that way; they make it clear that she was the main force at Theranos.
Fifth, I was struck by Tyler Shultz’s description of Theranos as a company divided between the “carpeted world” (namely, the main offices accessible to politicians, reporters, and celebrity businesspeople) and the “tiled world” (where the laboratory work was done). In the carpeted world, Elizabeth Holmes was a “goddess” who could do no wrong; in the tiled world, the lab was a sinking ship – nothing worked properly, machines were broken, blood tests were inconsistent. Tyler Shultz described how he felt whipsawed between the two, especially because his job was in the tiled world but, due to his family’s connection to Holmes, he often spent time in the carpeted world. He’d hear her pitch and become inspired again, almost to the point where he believed her story even though he knew that the device was not performing as described; later, he would ask himself, “how did she do that?” As he put it, “you want it to be true so badly.” Another employee described how you start to think you’re the one who must be crazy.
And that’s really the story of all of these frauds. Like with Fyre Festival, for example – a charismatic leader pitches a compelling vision, refuses to take no for an answer, and discourages dissent; employees are inspired by the challenge and reluctant to admit that it can’t be accomplished. They all contribute to advancing a positive external image, which ends up helping to prevent even themselves from recognizing the extent of the fraud – until, of course, it can’t.
Indeed, the similarities are also evident in this article describing the downfall of Morris Dees at the Southern Poverty Law Center. According to many employees, the SPLC also cultivates a compelling, mission-driven external image that attracts idealistic workers and donors, and is utterly at odds with the reality within the organization. Employees recognize the dissonance and their own role in perpetuating it, but somehow feel disempowered or disabled from taking any action.
When I reviewed the Fyre Festival documentaries, one of my comments was that you’re left baffled by Billy McFarland’s behavior. In many ways, he seems to have convinced himself of the truth of his lies, or at least convinced himself that truth doesn’t matter, which is precisely how interviewees described Elizabeth Holmes. Reporters who were taken in by the fraud are now convinced that she was so wedded to her vision that she couldn’t tell fiction from reality; Parloff, left truly shocked when she denied things he knew to be true, said there was “something wrong with her mind.”
Which brings me back to where I was with Fyre Festival: I think it’s probably too generous to absolve these fraudsters by proclaiming that they can’t tell truth from lies. The more likely explanation is the least satisfying: They do not think the way ordinary people do. They do not experience the same tension from lying that an ordinary person does, and so they have no need to rationalize it or convince themselves of the truth. They are narcissists who enjoy the spotlight and the glory as much as the material wealth. And I also think they are not particularly good at long-term planning; thus, the inevitability of exposure does not trouble them or factor much into their calculus.