Plain English with Derek Thompson - The Elizabeth Holmes Trial With Rebecca Jarvis of 'The Dropout' Podcast

Episode Date: December 14, 2021

Derek is obsessed with the trial of disgraced Theranos founder Elizabeth Holmes—and he hopes you are too. Days away from the trial's end, Derek and Rebecca review the most jaw-dropping evidence in the case, the cringiest text messages, the biggest wins for the prosecution, the best moments for the defense, and the larger meaning of the tech trial of the century. Host: Derek Thompson Guest: Rebecca Jarvis Producer: Devon Manze Learn more about your ad choices. Visit podcastchoices.com/adchoices

Is there a story that you just can't get enough of? Like, you can read a book about it, you can watch a documentary about it, you can listen to 100 hours of podcasts about it, you can read a thousand articles about it, and you still will not feel over-served? For me, it's obvious. It is the downfall of Theranos and its founder, Elizabeth Holmes. This story is my kettle corn. If you have not been following, here is a brief summary to wet your appetite. In 2003, Elizabeth Holmes was a 19-year-old Stanford dropout.

She founded a company, Theranos, that claimed to revolutionize the blood testing industry. If you've had your blood taken, you know that this experience is terrible. There's a long needle, there's the rubber band around your arm, there's a vial of blood, the whole thing sucks. And Theranos comes along and says, we can do all those same tests for cancer and HIV and cholesterol with a pinprick. No needles. A decade into founding the company early 2010's, Elizabeth Holmes is a rock star. She raises hundreds of millions of dollars. She appears in the cover of Fortune magazine, her iconic red lipstick black turtleneck thing.

She partners with Walgreens to get her tech into dozens, eventually even thousands of stores. The value of the company soars to $9 billion, and she becomes, for a spell, the richest self-made female billionaire in the world. Now it's October 2015. Holmes is at the peak of her wealth and iconic status, and the Wall Street Journal publishes a long article by the investigative reporter John Kerry Rue. The upshot, those magical machines that perform hundreds of tests from a drop of blood

that are all over Walgreens across the country, yeah, they don't work. The tests aren't reliable. The company is basically shipping bricks to health clinics. And we later learned they're not just shipping duds. they are going after former employees, like Tyler Schultz and Erica Chung, names to remember, to keep the truth under wraps. It doesn't work.

Theranos craters, there are civil and criminal investigations, there's a settlement with the SEC, and finally, the Hammer Falls. The Department of Justice sues Elizabeth Holmes for fraud, along with her business partner and boyfriend, Sonny Balwani. Another name to remember. And finally, this brings us to 2021. The United States versus Elizabeth Holmes, the trial. For the last few months, I have been listening and reading and watching, mainlining the story,

and at last it seems to be reaching its final chapter. Closing arguments are likely to begin this very week, and if convicted, Elizabeth Holmes faces up to 20 years in federal prison plus millions of dollars in fines. To talk about this whole story, and especially the trial, we have Rebecca Jarvis, ABC reporter and the host of the extraordinarily addictive podcast, The Dropout. We talk highlights, we talk low lights, we talk bombshells, but at bottom, I am interested in two questions. Number one, if Elizabeth Holmes is convicted of wire fraud in the next few days or weeks, what is the evidence that will be her downfall? And number two, what are the odds

that she pulls another Houdini and is found not guilty. I'm Derek Thompson. This is plain English. Rebecca Jarvis is the host of the Dropout podcast. She is ABC News Chief Business, Technology, and Economics Correspondent. Rebecca, welcome to the podcast. Thank you, Derek. I love what you're doing.

So I think before we get into the sort of details in the legal nitty-gritty, the first thing I want to observe is that this case is box office. Like every day of the trial, you've had to crush reporters at the courthouse, people lining down the block at 4 a.m., people coming to the trial dressed as Elizabeth Holmes, the blonde wig, red lipstick, black turtleneck. And I'm seeing these reports thinking like, this sounds like a Star Wars premiere, not a trial for wire fraud in the biotech space. So lots of questions for Rebecca Jarvis, the star ABC reporter. But first, I want to ask you, Rebecca,

the person, what is it about this story that you think makes it so blockbuster? Well, I think it's Elizabeth Holmes herself, the fact that people would actually dress up as her. And I've also seen a woman who was selling the full Elizabeth Holmes look for $100 outside the courthouse, the blonde wig, the black turtleneck and the red lipstick, as well as some like blood energy drink that she was selling. I did not drink it. I don't know about that. But I think it's the fact that Elizabeth Holmes, is such an enigma. But she's also an outlier. She's someone who was able to raise almost a billion dollars when most women are really struggling to raise any kind of money from the venture capital

world. And it's also a technology that found its way into the mainstream. It was inside of Walgreens. And so the stakes are really high and you start to see as a consumer that this is something you might have come in contact with and the fact that it got out in front of all these populations and now suddenly is, is allegedly a fraud, is really scary. Someone once told me there are only three stories in the world, up, down, and up and down. I think they're all up and down, right? I mean, don't they all end up doing that at some point? Right. So up would be like the classic hero's journey, right? It's like, you know, Harry Potter, Luke Skywalker, Orphans Rising. Down is the great tragedy. You know, King Lier, Othello, Hamlet,

basically royalty falling. And then up and down is the Icarus. plot, that underdog rises and rises and then falls. And I feel like in this third genre, the Elizabeth Holmes story is narratively perfect in a way that few real-life stories are perfect. Like, it's almost too clean. There's a Hollywood sheen to her Icarus plot that probably explains why Adam McKay and Jennifer Lawrence are teaming up to make it a Hollywood movie anyway. But so you've been following this blockbuster for years on your fabulous podcast, The Dropout. you have spoken to former Theranos employees, biotech experts, patients of the thousands of hours of tape that you've recorded. What is the interview that stuck with you the most?

I think there's two. One is Sunny Belwani's attorney, Jeffrey Cooper Smith, because when I spoke to Cooper Smith, this is when Elizabeth and Sunny Belwani were charged together. And since then, their trials were severed. And what I find fascinating about this is that back in 20, 2019, Cooper Smith was adamant that this was the two of them in it together, that Sunny Belwani wasn't duped by Elizabeth Holmes, that there was nothing there that seemed consequential in their relationship in the interview that I did with Cooper Smith. Now, of course, that's Sunny Belwani's attorney, but as people who have been following this, know at this point, the relationship is really a big part of the defense's argument. What, what? Yeah, and just give us 30 seconds on that relationship between Holmes and Sunny Belwani? So the allegation is that he was physically,

mentally, and sexually abusive towards Elizabeth Holmes over their 10-year relationship. That's what they have put forward in court. That is what Elizabeth Holmes testified to on the stand. It is also something that Sunny Belwani firmly denies. He's not being called in this criminal trial. He'll have his own criminal trial. He said through his attorneys that he would plead the fifth if he was called to testify at all in this trial. So, We haven't heard from him yet, but to me, it is pretty interesting that his attorney didn't, he didn't touch anything relating on any level whatsoever to their relationship. And then I think the other interview that really stands out, Derek, is Erica Chung, who she was one of the original whistleblowers.

People might remember her name with Tyler Schultz. Tyler Schultz, of course, the grandson of George Schultz, who was chronicled in the Wall Street Journal articles by John Kerry Rue. So Erica Chung. George Schultz, former Secretary of State, and this is his son who worked for Theranos. Grandson, yeah. His grandson, excuse me. And George Schultz, of course, was a very famous board member of Theranos. And so what stood out to me with Erica is that Erica Chung was afraid when we first met.

And this is now many, many years ago. But she believed everything that she was saying was accurate about Theranos that there was. were problems inside the company that they were not following the protocols. Of course, Erica Chung was fresh out of school, a student who wanted to do the right thing and was only employed at Theranos for a handful of months. But in her eyes, she saw a lot of things that were questionable. But this interview that she and I did together now many years ago, she was fearful. And part of that fear came from the fact that Theranos went after her. When they found out that she was speaking to the press, she received.

notices from David Boyes, a very powerful attorney who also was on Theranos's board, who also was a major legal counsel to both Elizabeth Holmes, as well as the company, Theranos. And just, I think that fear, you know, people might speak out against their companies. They might have something to say that they think is happening inside that's questionable. You don't hear that degree of fear and English. usually from an employee. So we're in 2021, the trial, the United States versus Elizabeth Holmes. I want to start at the very beginning, opening statements.

What is the prosecution's case? What is the defense? Well, the prosecution's case is that when Elizabeth Holmes was running out of money, she lied. That's the gist of it. The defense's case is that this is a young woman and they continuously hammer home this idea that she was 19 years old when she found it there. Of course, she's 37 years old today, and there were many years that she ran the company,

but the defense continues to go back to this idea that she was 19 years old. She founded a company. She's a true believer in that company. And if anything went wrong, and yes, there were mistakes at the company, that she was doing those things not because she knew or intended to defraud anybody, but because she was potentially misled by people like Sunny Belwani and many others. and what we've seen throughout this case is that almost everybody in Elizabeth's orbit

somehow misled her if you're listening to what the defense's argument is. So she is charged with wire fraud and conspiracy to commit wire fraud. And I just wanted to do a quick plain English definition on what that means. Wire fraud basically means lying for money using interstate communications technology.

So like if you want to steal some money from your neighbor and you lean across the porch and you shout like, hey, neighbor, I invented a miracle drug that promises eternal life, give me $1,000 a month. That is fraud, but if you start emailing people around the country about your fraudulent miracle drug thingy, that is wire fraud. So, lying bad, lying for money with technology, federal offense, and you will be prosecuted by the Department of Justice. So I want to talk about the four key moments of the trial here. Number one, Denise Yam, she was one of the first witnesses for the prosecution. She was the corporate controller of Theranos. That means the financial eyes and ears

with the company. She said Elizabeth was well aware of the financial state of the company. Why is that a big deal for the prosecution? Well, it's a big deal because it links Elizabeth to the actual finances of the company, which were grossly misrepresented if you follow the allegations of the prosecution to investors. People like investor Brian Grossman, who through PFM, put $100 million into Theranos and allegedly was told by Elizabeth that the company was banking $200 million in revenue from the DOD, and that revenue was allowing the company to continue moving forward. revenue that the company never earned. There's also so many places where you see that the company is claiming in various communications

with investors that they're making huge amounts of revenue or that they're forecasting huge amounts of revenue to some investors. They said they portrayed themselves as being able to make a billion dollars by the next year from pharma companies and hospitals. Well, that actual number was zero. So where did these projections come from? And Denise Yam is the person who qualifies what actually was happening inside the company and that it would appear the actual numbers were coming out of thin air.

Now, of course, anybody in Silicon Valley is potentially going to say things get fast and loose with numbers and projections can be somewhat pie in the sky. But there are places where Denise really called out and other investors along the way where there was no there there. There's not even a speck of it. You've also pointed out that Theranos didn't have an outside auditor for the last four or five years of the company. That's a little strange for a $9 billion company in terms of its valuation.

And it goes again to your first point. Intent, if Elizabeth knew she was lying about the company and knew that the company desperately needed money, you can connect the lies to motivate the fraud. She's not just a booster, going around making random, grandiloquent promises about what her magical technology can do. She's making these promises

knowing that the company is running out of money, and that seems to go to the prosecution's case. So the second biggest whopper that I've taken from your reporting, you've already mentioned it, it's the Pentagon promise. So the Board of Theranos had several high-ranking State Department and Defense Department figures, and Elizabeth was very fond of telling investors

that the technology was being used by the Pentagon overseas, for example, in Afghanistan, in Medevac helicopters. How true were these claims that Theranos was anywhere close to having military contracts? Well, Elizabeth Holmes, in her own words, has said it is not true, that it was never used on a Medevac helicopter. It was never deployed to Afghanistan. And yet, as you say, person after person from investors to people like Safeway. At one point, Theranos was attempting to be placed inside of Safeway. Steve Bird, the former CEO of Safeway, took the stand and was, I mean, so complimentary of Elizabeth on the stand. And yet, as it turned out, there were tons of things that she had told him, this is one of them, or that she had allegedly told him that were inaccurate.

it. He made this idea. He said this, and I'm trying to remember exactly what he said in his words. It was something like she insinuated that it was being used in places that Americans weren't even aware of, this idea that like she couldn't even fully disclose to him where it was because it was secretive. And you heard this. In this case, Elizabeth, in this case, Elizabeth might have accidentally told the truth, right? I can't even tell you where these medical technologies are being used. Yes, because the places in which they're being used are a fantasy world in your own head. Well, and I was going to say Roger Parloff also, who is the writer who wrote a really beautiful story in Fortune magazine about Theronos in 2014 that turned out to mostly be untrue.

In that case, he also testified that she told him, I can only tell you this off the record, but we are very secretively using our devices in Afghanistan. So it was always this idea that, you know, I'm going to let you in on this little piece of information, at least the way that everybody has testified, I'm going to let you in on this little piece of private information about how special our devices are. So we have whoppers about revenue.

We have whoppers about where the technology is being used. That brings us to number three, the Pfizer logo. Yeah. And I did not know about this from reading the journal or other reports. I learned about it from your podcast. And this is astonishing. So 2010, Theranos creates a 55-page report about its technology. And it prominently displays the logos of pharma companies like Pfizer, like that the imprimatur is in like the top left or top right corner of the page. And investors said that these reports helped to persuade them to invest in the company. Rebecca, did these reports, in fact, come from Pfizer? And if not, who put the logo there? This was, I would say this was one of the biggest bombshells sitting in the courtroom because Elizabeth testified she put the logo there. In the top corner, she put the Pfizer logo, she put the Shearing Plow logo.

And later in her testimony, it turned out she also put the GlaxoSmithKline logo. And it wasn't just the logos. She also changed some of the language inside the reports. So just to back up a second, Derek, these reports, you did a great preamble about what they were. Theranos had sent these reports originally to Pfizer, originally to Shearing Plow. When these companies reviewed them, they didn't come back and say yes, yes, yes. They just reviewed them and there was no further anything. But it came from Theranos.

When Elizabeth then sent this out to investors, when she shared it with other interested parties, she added the company logos to them suggesting that it was coming directly from the company. Now, on the stand, and you could even feel, I'm going to back up here for a second, Derek. In the courtroom, it's really interesting to see the jury, these 12 people who are mostly hearing the story for the very first time. And then you have all the journalists sitting on the other side. And the journalists have reactions. Not, you know, we can't, people aren't reacting in scoffs and coughs and whatever else. But you can feel the shifts in people's seats.

And this was one of those moments where the eye rolls, you could just feel the eye rolls in the audience. Because Elizabeth described to her attorney that she had no idea that anybody would perceive it in such a way that it came from Pfizer or that it came from Shearing Plow. And I think where, to me, where it gets really hard in a case like this is I look at the jury and I say, okay, these people are supposed to simultaneously believe that Elizabeth Holmes was savvy enough to raise almost a billion dollars and start a company and do all these things that the average person could never do. But at the same time they have to hold in their head that she's naive enough to believe that putting a logo on the top of a page, altering the language in a document wouldn't insinuate that it came from that

organization. I just want to make sure I understand what you said, because that's really important detail. She sent these documents attesting to the quality of Theranos technology to Pfizer and to GSK and, you know, these large pharmaceutical companies, they did not respond to those emails and then she put the logos on them. Like, this is like in my first terrible, ridiculous, laughable example of, you know, having a miracle drug and shouting at my neighbor across the porch,

do you want to give me $1,000 a month? If I just send an email to Moderna, you know, to Pfizer-Biantec and say, hey, I invented this miracle drug, What do you think about it? And don't get a response because why in the world do they respond to a random person sending miracle drug at the stations? I could just – well, no, could. This is akin to me just putting the Pfizer-Moderna-Biontech logo on a piece of paper and handing it out to my neighbors and emailing it out to people across the country. I mean, it's – it is.

It is. To say that no response equals you have our validation. Right. Well, and look, I'll take a step back. She was having conversations. I think that's also where the defense is, they constantly return to this idea that there's a kernel of truth in things. So Theranos had been having conversations with Pfizer and GSK and sharing Plow. That is not consummating anything. That is, and this is also where a lot of

biotech investing experts will come in and say, in its early years, Theranos was having lots of early stage conversations with pharma companies. That's what pharma companies do, by the way. They go out and they meet 100,000 Theranoses every year in the hopes that they will find the diamond in the bunch, and then they'll proceed with business. Theranos, a lot of these business ventures that began as a sort of feeling out didn't amount to much after that. Number four, the final key piece of evidence that I see for the prosecution is the testimony of Adam Rosendorf. Adam Rosendorf is the former lab director of Theranos. Tell us a little bit about who Rosendorf is and what he said on the stand.

Rosendorf is an incredibly well-pedigreed scientist who worked for Theranos for a number of years as the lab director oversaw what was happening inside the company before the rollout happened inside of Walgreens. So Theranos originally started talking to Walgreens in 2010. In 2013, towards the end of the year, that's when Theranos started rolling out these wellness centers. and they ultimately got into 41 Walgreens locations, predominantly in Arizona, one location in California. But Rosendorf was there.

So he's overseeing everything behind the scenes. And he is saying, I told Elizabeth directly. I met with Elizabeth directly. I also sent emails to Elizabeth. I flagged over and over again that there were problems and we were not ready for this rule out. and the message I got back from her was that we needed to move forward because promises had been made to Walgreens. He's somebody who has legitimate pedigree and is there in a knowing capacity. And he testified to a meeting, for example, that he had face-to-face with Elizabeth where she seemed very nervous in that conversation before the rollout.

And she had the countdown clock going on the window inside of the office. So he really places what's happening internally and all the problems the company is having internally. And he juxtaposes that with the external rollout and what Theranos and Elizabeth were projecting at the time, which was a completely different picture. Give us one quick example of what Rosendorf saw internally that made him so concerned about the technology. Well, the tests just weren't ready to go. They were getting feedback from the labs that tests were coming back in. accurate, that their protocols weren't panning out, that the proficiency testing wasn't working. So right from the very early point, they were able to say, this cannot be rolled out in a clinical

capacity. Right. So basically, they have this box, the Edison, which is running these tests on the small drops of blood. The company is representing to Walgreens that these are magical boxes that can run these extraordinary tests, hundreds of tests on, like I said, everything from, you know, cancer, HIV, cholesterol. And here's Adam Rosendorf, the lab director, saying, no, they can't. They can't run these tests. We're having all sorts of failures in our validation studies.

I think this is a good time to bring in the defense. So the defense says Elizabeth Holmes is an ambitious young woman who tried to change the world, and she failed. And failure isn't a crime. And she relied on experts like Rosendorf to fix the technical aspects of the product that she, a 19-year-old Stanford dropout, could never have had the ability to do on her own. How important was the cross-examination of former lab director Adam Rosendorf? It was very important. Look, every cross-examination of a credible witness is important, especially in this trial. and the defense did a successful job in Rosendorf, unlike, for example, Safeways Steve Bird, they made him look a little more like he had a bone to pick with Elizabeth, like there was something more personal there.

They also really suggested over and over again that he's the guy who was supposed to be validating things, and he had, in fact, validated some things. And that's also something that came up with a lot of witnesses. The idea that if you're the expert internally who's supposed to own this singular process and you validated it, whether it was financial or scientific, Elizabeth was relying on you as the person she hired to make decisions. So they were successful. But I do also think, and I've talked to a lot of legal analysts, he was able to

to share with the jury a good picture. Again, that juxtaposition of the picture, at a minimum, there were certain things that were coming up inside of Theranos that were really antithetical and opposite from the message that Theranos was conveying outwardly to Walgreens and the public. And that is the really, when we get to closing arguments, that's going to be a very important piece of what the prosecution does to show how, different these two things were. So now we have the blockbuster moment of the trial. The defense calls Elizabeth Holmes to the stand to testify. What was the reaction of the courtroom when Elizabeth is called to testify in her own defense? Well, first of all, the fact that they called her at the very end of the day with

one hour left, no one was expecting that. And I was in New York at the time. So my reaction was booking a to San Francisco immediately. It was a Friday afternoon. My colleague Miles Cohen was in the courtroom in Dia Athin, both exceptional producers who have worked throughout this trial with our team with the podcast. But everyone was shocked, and I'll tell you, as soon as that next Monday rolled around, everybody's waiting in line to get into the courtroom. And that's where the really crazy circus and long lines really started to begin when everyone knew she was going to be on the stand. I think there's this moment of First of all, the voice, people talk about her voice. We had yet to hear her voice at this trial, so there were people who wanted to know how

is she going to talk. But really, the question was, what is she going to say? And now we have an answer. And what did she say? Well, she was on the stand for seven days. So she said a lot. She said a lot. I think that the key points are both what she said, her allegations about Sunny Balwani,

And then in addition to that, how she said a lot of what she said about her company and what was happening. There were so many, first of all, when you go to the defense and the defense is direct, a lot of it was the origin story and then the Sunny Belwani defense. When you go to the cross and the prosecution's questions, it returns to everything we heard in the SEC deposition. I don't know. I can't recall. I don't remember. in the rare cases where Elizabeth could recall and could remember something, there was a lot of, I wish I had done it differently. And this is the real question when it comes to a jury trial.

And it's also a question that legal experts look at and say, why do you put a defendant on the stand? The question suddenly is not beyond a reasonable doubt. Suddenly it is, do I trust this person? And I think one of the real questions I've had being in the courtroom and looking at the jury is, is do they trust Elizabeth Holmes? When they listen to her, they're getting this fraction of the story. Everybody else, people who are listening to this podcast, you probably know way more about Elizabeth Holmes or you've read way more about Elizabeth Holmes than perhaps what's been presented inside of the courtroom. And that, so I do wonder, as I look at this jury, I constantly am in wonder how their perception of her is. Are they going to feel,

because they've sat in front of this woman for three months straight, almost four months now. How are they going to feel when it comes to judgment day, which is right around the corner, are they going to be comfortable putting guilty on a person who has sat in front of them with her family every day? They've been told by that that was in the opening statements. The defense said she's here with her family. She's a new mom. She's here with her partner. she's had a big crowd sitting behind her every day of this trial.

Right. So she's testifying that her partner, boyfriend, Sunny Balwani, was manipulative, that he was emotionally abusive, even sexually abusive. That was the core of the defense, in addition to, as you said, humanizing this person, showing her biography. This is not a monster. This is an ambitious person who made mistakes. On the other hand, you have the cross-examination from the prosecution that is just one,

I don't remember after another. Plus a lot of mistakes were made, and I don't remember the details. There is one exchange that you described in your podcast that literally made me spit out my coffee. And I just want to read it out. I think it really goes to how deep the, I don't remember, I can't recall defense,

how deep it went. So Elizabeth is on the stand, and the prosecutor Bob Leach is trying to establish the fact that she was in charge of an effort to block the Wall Street Journal expose. And this is a critical point to make. because there's something you've said. It's hard for Holmes to claim.

I was just trying to do the right thing, but also I try to destroy everybody who pointed out that my technology was a piece of junk. So the prosecutor asks Elizabeth about the journal Exposé, and he says, quote, you wanted to get ahead of the story, didn't you?

Elizabeth, I'm not sure what that means. Prosecutor, you wanted to get ahead of this story. Elizabeth, I don't know what you mean by ahead of it. Bob Leach here brings the receipts. He hands Elizabeth a charge of her. transcript of her own text messages to Sunny Balwani, and one of them reads, Need to Get Ahead of All of it. Leach, does that refresh your memory that you were trying to get ahead of it? Elizabeth. It doesn't. Prosecutor, reading these words, need to get

ahead of it, doesn't refresh your memory, parentheses, that you needed to get ahead of it. Elizabeth, I have a memory, but I don't know what I meant. So, like, I'm not a lawyer, but my God, the legal term for this has to be steaming pile of BS. As a reporter, I wonder, you know, taking stock of this moment as a piece of evidence and being able to see the jury, feel the weight of the courtroom, what do moments like this capture? I, it is such a struggle because I read it and I feel the exact same way about you. And I hear it and I feel the exact same way. And there were so many times prosecutor Leach said during the cross, let me refresh your memory. And he had the receipts. He had other emails like this one. This jury has sat day after day silently without any emotion whatsoever

looking at this case. And I've talked to you, I haven't covered any other trials in my, in my career in the way that I've covered this one, actually sitting in the courtroom. I've been told by a lot of journalists that jurors typically fall asleep. And this is a dense, dense trial. So you could see how day after day they might fall asleep. I've never seen that once in this courtroom. This jury is attentive, but they're not emotive. There's no leaning in. It's not leaning back. It's just sitting there and taking it all in. And that makes it really hard for me to determine what the outcome is going to be. Now, one thing I do think, as a small diversion here, one thing I think is interesting is at the early days of this trial, again, people who may have listened to the podcast will remember,

one of the jurors excused herself on religious grounds from the trial because she said, my religion, I'm Buddhist, and I can't pass judgment on someone, I can't put someone in jail. Your job as a juror, as Judge Davila explained to her, is not to determine whether someone's in you're just, you're looking at the verdict as guilty or not guilty. Still, the fact that there was an individual, at least in the early days of this trial, who felt that she would potentially be in a situation she didn't want to be in, to me, that's telling. That says she felt things were leaning in the direction of guilty, that she felt, at least from the early days of testimony, and again, sitting across from Elizabeth Holmes,

that there was going to be a punishment for this. Interesting. I want to touch on one more point that the defense has made a lot, which is stated plainly, the investors were a bunch of idiots. Yeah. A lot of firms fell for this scam. And I think we can say it was, it was scammy,

whether or not, you know, it is found to be legal wire fraud. A lot of firms fell for it, but a lot of investors that you've spoken to did not fall for it. And they're very critical of the investors who gave Elizabeth Holmes eventually hundreds of millions of dollars. Say a little bit more about that. Why do sources from the latter group, the investors who didn't invest in Theranos, what do they say about the people who did throw their money behind Elizabeth? Well, there's a lot of follow the leader. there's a lot of lemmings, and they talk about that as part of the culture, potentially, inside of Silicon Valley. But also, a lot of the individuals who ultimately put money

with Theranos were not traditional biotech VCs. They were family offices, wealthy people, Rupert Murdoch, the DeVos family, the Walton family. So they weren't your traditional specialists who invest. At the same time, the specialists who do this for a living, talk about the checks and balances. You could have called up Pfizer and asked them, what did they think? You could have called up Walgreens at some point. There were things that investors might have been able to do that they didn't do. At the same time, one thing that the defense actually has done is they've insinuated

that a lot of these investors were really good investors, that they should have known better. And the idea is more, Elizabeth, again, 19-year-old founder, didn't know that all of these things, these statements that she was making or the statements coming out of Theranos could be confusing, could be misconstrued. But these investors who have hundreds of millions of dollars at their disposal, they should have known better. And so it's this playing off of the idea of her as sort of this unknowing, hopeful, optimistic founder, and they should have dug in and done their job better. I think of all the investors, to take the stand, Brian Grossman, who I mentioned earlier, he was a specialist, and he did a lot of

the things that you would do as a specialist. And according to his testimony, he was just completely misled, the $200 million coming from the DOD that was not actually there. Looking very specifically at the science, his team did reach out to Walgreens and got positive feedback. So it's more confusing when you look at someone like him. Yeah, and I want to do a little bit of a little little bit of a breakdown here and say a bit more about how unusual this company was and how unusual the investors were. Like, there is a vein of criticism that says Theranos is the story of Silicon Valley. It is the typical story of Silicon Valley. And I want to interrogate that a little bit. If it were true that Theranos attracted the investment of mostly major venture capitalist firms

that specialize in biotech, then yeah, you could say, this just goes to show that Silicon Valley is BS. But as you pointed out, Theranos did not get the backing, mostly from venture capitalists. It relied on individual investments from the Murdoch family, the Walton family, the DeVos family, Betsy DeVos, former education secretary, the Cox family of Cox Enterprises. You, they, the people who did invest, invested in the later rounds in a company that did not have audited financial reports. You look at the Board of Directors. Henry Kissinger, former Secretary of State, Jim Mattis, former Secretary of Defense, George Schultz, former Secretary of State, William Perry, former Secretary of Defense.

This is a fantastic Board of Directors if your startup idea is to fund an anti-socialist coup in Latin America in 1977 or like plan a light bombing campaign of the Middle East. Like, Henry Kissinger is not an expert in the scientific frontier of phlebotomy. certainly at some point that must have come up at the trial the bizarre discrepancy between the expertise

of the board of directors and the actual work of the company. It did, and yet again, the way that it has come up at the trial is more to validate that Elizabeth Holmes, it's come up from the defense,

it's more to validate in the same way that it publicly validated Elizabeth in articles on big stages in front of giant audiences, they've actually, it's not, they didn't use it in the way that you're saying it, Derek.

And it's, but the way that you're saying it is the way that anybody in the science, uh, tech, Silicon Valley business press talks about it. But this is again, this is where I have these moments throughout this trial where I look at it through the spectrum and the prism of my own experience covering it, but also how the jury is seeing a really different picture in some respects. Yeah, I think that's so interesting. And you're right. It goes back to one of the first things we said.

This is not a trial about whether Elizabeth Holmes is a good person. It's not a trial about whether the Edison, the tech box, is a piece of brick or a good technology. It is about wire fraud. And when the question is about wire fraud, it holds on, did she, with intent, lied to investors for money? And so the composition of the board of directors, while interesting to a journalist like me, might not go as directly to the prosecution's case here as it goes to my case, which is that journalists should have known in 2013, 2014, that something was up because this was a biotech company that did not have the backing of largely, the biotech industry. So I want to round this out. Finish the sentence. I want to play a game of finish the sentence. Finish the sentence number one. If Elizabeth Holmes gets off, if she is found not guilty, the most important moment of this trial will have been what? Elizabeth Holmes taking the

stand. Say more. Look, my belief and having spoken to numerous legal experts on this topic is that this trial was always going to come down to Elizabeth Holmes. And it was a question of whether the defense wanted to put her on the stand or not. But if she takes the stand, it is either Elizabeth Holmes selling the jury in the same way that she was able to sell investors, able to sell her board of directors, and able to sell the public, or it is the post-theranos downfall story, which is if you poke enough holes inside of it, people start to see the truth. And that to me is like ultimately what the question is here. Are people going to look at her as a sympathetic character who is out to do the right thing?

Or will they see her as a manipulator as somebody who couldn't possibly, it's this idea that you have to hold these two very different people in your head. Someone who can somehow suddenly manage to raise a billion dollars, get a company off the ground, do the unthinkable. and at the same time be so naive that they make many, many errors along the way that misrepresent and make people think one thing when something else is true. And now the converse. Finish the sentence. If Elizabeth Holmes is convicted, the most powerful piece of evidence will have been what? Again, I think that Elizabeth Holmes being on the stand again is the reason.

at the same time, that people would poke holes, that the jury doesn't believe her, that there's too many inconsistencies. At the same time, I do think that the 29 witnesses who the prosecution put forward from Brian Grossman, the investor, who really knew his stuff and somehow still got duped, to Steve Byrd, the Safeway CEO, who was complimentary of Elizabeth, but still showed over and over again through emails that he, was being misled about what was actually happening to Rosendorf, the lab director, who, it is undeniable that there were red flags that he raised in writing. He also did them in person. And then Erica Chung, who is a very valuable employee, worked hard, tried to do the right thing. And not only was Erica Chung, who worked hard, tried to do the right thing. And as a result, was punished by Theranos. And she told that story.

And it's very hard, again, to see Elizabeth Holmes as an individual who just wanted to do the right thing, was a true believer, but also hired David Boyes, who then went after a 20-something-year-old employee who just was trying to make sure that the company was doing the right thing. Right. Rebecca Jarvis, the dropout is a must listen for me every single Tuesday. It is a really special honor, honestly, to be able to talk to the voice that has narrated my coffee making for the last three months. Thank you so much for your work, and I will continue to listen to you every week. Thank you, Derek. That really means a lot. I will continue to listen to you. I love your work, written, and podcasts. And I hope you continue to do it because it's important service to our world. Thanks, Rebecca. Be well.

Thanks. You too. Planning this with Derek Thompson is produced by Devin Manzi. We definitely want to shout out the dropout. Elizabeth Holmes on trial. It posts Tuesdays throughout the trial. Listen wherever you get your podcast. Thank you so much for listening to this show. If you like us, follow us on Spotify.

Rate and review on Apple Podcasts. We will be back with our second episode this week on Friday. We will see you then.