Theranos founder Elizabeth Holmes
A 2003 interview on CBS’s “60 Minutes” with former New Republic journalist Stephen Glass explained how the journalistic fraud that got him fired from the magazine began with one fake quote to spruce up a story and gradually snowballed into articles that were entirely fabricated.
I couldn’t help but think back to Glass’s comments as I watched Alex Gibney’s new documentary about blood-testing startup Theranos and its founder, Elizabeth Holmes. Titled “The Inventor: Out for Blood in Silicon Valley,” it airs March 18 on HBO. On the whole, “The Inventor” is well worth its approximately two-hour length and shows the same high quality as Gibney’s previous films. However, it does have a couple of flaws that stuck out to me, in particular the use of a naturopath for an interview to provide physician perspective, but more on those later.
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Holmes founded Theranos the same year “60 Minutes” interviewed Glass, embarking on a dark evolution that is a persistent theme in the film and reminiscent of the writer’s, albeit far more profound and destructive. Summing up the single-mindedness underlying that evolution, Duke University behavioral economist Dan Ariely says in the film, “We have to understand that this is all about wanting the world to be a certain way and basically being able to rationalize our actions to try and make it true.”
New York Post columnist Jonathon Trugman called Holmes a “millennial Bernie Madoff.” And the documentary’s airing follows Netflix and Hulu documentaries about another infamous fraud, the Fyre Festival, and promoter Billy McFarland. But in “The Inventor,” Holmes appears to be something more than a mere con artist motivated by greed. It seems she really did endeavor, like her hero Steve Jobs, to create something that would change the world.
As is now well-documented, Holmes bewitched Silicon Valley, politicians and the press with her charisma and promise to make blood testing more accessible. Theranos’s valuation soared to $9 billion, and Holmes became the youngest-ever female billionaire, before Wall Street Journal reporter John Carreyrou exposed them in a series of articles starting in October 2015. She now faces 20 years in prison on charges of fraud and conspiracy, to which she has pleaded not guilty.
Holmes had the engineer’s drive to identify and solve a problem; the entrepreneur’s determination to succeed despite the odds; and the amateur’s desire to change the roles without mastering them. She was aided and abetted by journalists and investors’ fetishization of “disruptive” technology and the ethos of “fake it until you make it” common in Silicon Valley.
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But while Glass was conscious of his wrongdoing, Holmes continued believing in Theranos’s mission even as it became clear its blood-testing device, the Edison, wouldn’t work. She relentlessly pursued her vision, disregarding experts’ warnings that what she was attempting was impossible. Narrating the film, Gibney asks toward the beginning, “Was Elizabeth lost in a landscape between what she could make real and the world of make-believe?”
A Feb. 20 article in Vanity Fair by Nick Bilton indicates just how lost in that landscape Holmes may have been. As everything crashed down around her, Bilton wrote, Holmes continued to believe Theranos could be redeemed.
Yet, whatever Holmes’s state of mind when she founded Theranos or when it was finally dissolved in September 2018, “fake it until you make it” was central to the business.
That she named her company’s device after Thomas Edison leads Gibney to a historical anecdote about the light bulb inventor: He may have invented the practice of “fake it until you make it” along with the light bulb itself. Concocting an image of himself as an indefatigable genius, Edison strung along investors and journalists for years with fake demonstrations and stock giveaways before finally perfecting his creation. Observing Holmes’s rise, that story looks awfully familiar.
But where Edison’s Wizard of Oz act really did result in an invention that changed the world, Holmes’s put people’s lives at risk. It’s when human life is at stake, Gibney says, that such an act goes from innocuous to potentially catastrophic.
And as Theranos presented its spectacle from behind the curtain of bullet-proof glass on its headquarters’ facade, it skipped down the yellow-brick road of an investment culture that subjected it to little, if any scrutiny. Early-stage investing, the film points out, is often done based on gut instinct rather than a comprehensive examination of a startup’s finances. It also notes that the company’s board of directors included politically connected dignitaries like former secretaries of state George Schultz and Henry Kissinger and attorney David Boies. But it lacked members with qualifications in life sciences or medicine.
However, the film overlooks one important fact, which is that while Theranos was raking in hundreds of millions of dollars from figures like early-stage investor – and Holmes family friend – Tim Draper, along with Larry Ellison and Rupert Murdoch and others, life sciences venture capital was conspicuously absent.
This was no accident. Life sciences investing tends to require more in the way of due diligence than investment in technology products. Attracting those investors would likely have required piercing the veil of extreme secrecy around the Edison and providing something in the way of data to support Theranos’s claims. Indeed, Google’s venture capital arm, GV, notably passed on investing in Theranos, in part because of the lack of biotech venture capitalists involved in it. That should have received greater attention in the film.
Nonetheless, I can’t give Gibney too hard a time for overlooking that. After all, an important ingredient in Theranos’s success was journalism’s failure. Despite the red flags, the company was the subject of generally positive coverage in publications like Fortune and The New Yorker, whose respective writers, Roger Parloff and Ken Auletta, are interviewed in the film. That’s an easy observation to make in hindsight, but an important one if journalists and investors are to stop future bad-faith startups from mushrooming as Theranos did.
A much more problematic oversight comes when the film discusses Theranos’s 2013-2016 partnership with Walgreens. Thanks to lobbying from Holmes, Arizona changed its laws to allow consumers to directly order lab tests instead of having to go through a doctor, which Gibney says drew concern from Arizona’s medical community. To speak for that community, the film’s producers enlisted one Stephanie Seitz, ND. In other words, a naturopath, who even refers to herself in the film as a “physician” despite lacking a medical degree.
Soliciting commentary from a naturopath, especially in this context, is a bizarre departure from what is otherwise a superb documentary. Letting someone whose profession one former naturopath called “essentially witchcraft” speak for the medical community is at odds with the film’s purpose of elucidating an infamous healthcare fraud, not to mention unlikely to get a warm reception from actual medical doctors. Although 20 states, the District of Columbia and two territories license naturopaths, their efforts to gain licensure or expand their scope of practice have drawn opposition. That’s because their practices – including ones in which Seitz boasts “extensive training” like homeopathy and acupuncture – are generally considered pseudoscientific. The prominent inclusion of a naturopath thus raises the question of whether the documentary’s producers knew the difference between “ND” and “MD.” And if they did, it raises the further question of why they chose a naturopath instead of a medical doctor, nurse practitioner or other credible healthcare professional. It’s like a documentary about ancient Egypt featuring remarks from an amateur treasure hunter instead of an archaeologist.
Gibney’s company, Jigsaw Productions, did not respond to requests for comment.
All in all, people who have read Carreyrou’s 2018 book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” won’t see much in the way of factual information that they didn’t already know. Instead, “The Inventor” puts a face on the whole affair in the way that only the moving picture can. Despite the two aforementioned flaws, the documentary complements the book well.
To borrow a phrase from Holmes in Auletta’s December 2014 New Yorker profile of her, a chemistry was performed when Holmes’s single-minded drive and the various factors that enabled her combined with piles of cash affording her an opulent lifestyle of luxury homes, private jets and bodyguards. The scandal that unraveled the myth of Elizabeth Holmes and Theranos was the end result of that chemistry. And “The Inventor” provides a high-resolution electron microscope through which to observe it.
Photo: Courtesy of HBO