MIB: How to Uncover a Massive Tech Scam

Not everyone who reads a glowing write up about a young and feted entrepreneur gets their “Spidey-sense” tingling. But John Carreyrou, two-time Pulitzer Prize winning investigative journalist for the Wall Street Journal is not your average reader. The then chief of Journal’s Health and Science Bureau was struck by Blood, Simpler, Ken Auletta’s column on Theranos and its charismatic founder, Elizabeth Holmes.

The story of how Holmes dropped out of Stanford University after her freshman year to launch blood-testing start up Theranos did not make much sense. Carreyrou notes her “cockamamie patent” for a wrist band with micro-needles to draw blood and then cure you was the stuff of science fiction. Holmes had “Zero qualifications” for this venture – no medical training, no health science or medical device background, no blood chemistry or biology experience – was a giant red flag that much of Silicon Valley seemed to miss.

Some other skeptical observers raised early doubts — a pathologist in the midwest with an expertise in lab science was highly dubious about Theranos’ claims (writing at the now defunct PathologyBlawg.com). Holmes’ childhood next door neighbor, Richard Fuisz, a medical doctor and inventor of medical devices, also smelled a rat, and encouraged the pathologist to keep probing.

Carreyrou tells how he broke the story in 2015, despite huge pressure from Theranos and its phalanx of lawyers, who claimed the Journal would reveal “Trade Secrets.” As Carreyrou describes it, the only secret was that Holmes, Theranos, and its employees were perpetrating a fraud. Holmes even lobbied Journal owner Rupert Murdoch to kill the story, perhaps believing his $125 million-dollar stake might influence him. The entire adventure is told in his NYT best seller, Bad Blood: Secrets and Lies in a Silicon Valley Startup.

His favorite books are referenced here; our conversation transcript is published here.

You can stream/download the full conversation, including the podcast extras on iTunesBloombergOvercast, and Stitcher. Our earlier podcasts can all be found on iTunesStitcherOvercast, and Bloomberg.

Next week, we chat Rob Arnott of Research Affiliates.




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