This article was published in the first issue of Sanlian Life Weekly, 2019, with the original title "Blood makes gold? "The Entrepreneurship Scam that Teased the Whole United States" is strictly prohibited from being reproduced privately, and infringement will be pursued.
On July 23, 2015, US Vice President Biden (left) visited Theranos' laboratory in California accompanied by Elizabeth. At that time,
"Female Jobs" was born
In May 2015, Dr. Henry Kissinger encountered some trouble.
Several months ago, he personally attended the birthday party of the young man he admired, Elizabeth Holmes, whom he had a lot of appreciation, joined the board of directors of the company she founded, and even organized a plan to introduce her boyfriend with his wife. The grand birthday party in 2014 was held at the home of his old friend, Georg Schultz, who was also former Secretary of State, when Schultz was 94, Kissinger was 92, and Elizabeth was only 30.
But by 2015, everyone began to discover that Elizabeth had hidden too much from these heavyweight supporters. Not only did she already have a boyfriend, she concealed her relationship status, but her startup company worth nearly $9 billion is also a scam. She claimed that she had developed a device that would revolutionize the process of disease diagnosis and prevention. This magical device was eventually proven to not exist, and it was nothing more than a bubble she blew out.
In 2015, Kissinger first quietly withdrew from the board of directors of Elizabeth Company and voluntarily downgraded to "advisor". After that, we completely cut off the connection with this matter and no longer talked about it. As the media focused, the entrepreneur, who was once called "Next Jobs", and her entrepreneurial scam became a topic of discussion on the streets in the United States in late 2018. The books about this were purchased as Christmas gifts, and the entire New York was once out of stock. The protagonist of the story Elizabeth was born in a wealthy family in the United States in 1984. Her father served as vice president of Enron, and later worked in the U.S. government, and her mother worked in the U.S. Congress. Elizabeth has had an extraordinary desire for success since she was a child. At a 9-year-old family gathering, her aunt asked her about her future ideals, and she replied: "Become a billionaire." In public interviews in the future, she also said many times: "When I was very young, I believed that private enterprises were the best way to make influence, and it was a tool to change the world."
For a young man with such ideals, admission to Stanford University is a choice without hesitation. Compared with other schools, Stanford emphasizes the combination of business and technology. It is located in the heart of Silicon Valley, and has nurtured countless companies that have changed the world. They are all founded by Stanford dropouts or young alumni: Yahoo, Google , LinkedIn... In 2002, Elizabeth graduated from high school and entered Stanford to study chemical engineering. She believes that the field of biotechnology is suitable for her, because it can not only promote social welfare but also have broad business prospects.
In August 2016, Elizabeth (first right), who has been questioned but has not yet fully defeated, still appeared on a Women's Leadership Forum in San Francisco. "Elizabeth decided to drop out of school and start a business for just one year after entering school. Her seemingly crazy behavior received strong help from teachers and family - everyone hoped and believed that she would succeed. Channing, a star professor at Stanford Engineering School, Robertson became her company’s first consultant, Channing’s doctoral student became the first employee, and her parents’ friends, classmates’ parents and others became the first investors. Elizabeth raised $6 million with only a 26-page business plan.
Elizabeth’s entrepreneurial slogan is “A drop of blood changes everything.” She claimed to develop a portable device that can be extracted by just a click on her fingertip to extract one or two drops of blood to perform a full range of biochemical information extraction, which is small enough to be placed in a community convenience store or even everyone’s home. The data is wirelessly transmitted to doctors, and it quickly feedbacks back to physical condition reports and treatment plans, which can achieve hundreds of projects including cancer screening. She named the company Theranos, which is a combination of the two words Therapy and Diagnosis.If
is successful, this will greatly improve the efficiency of disease prevention and even fundamentally change the operating model of the medical system, including hospitals and pharmaceutical companies. In countless speeches in the future, she would talk emotionally about her uncle who could screen out skin cancer as soon as possible, she would not have passed away so early. Every day, there are too many people in the world who missed the opportunity to treat due to the inability to afford the cumbersome and expensive blood tests. When it comes to emotional things, she always shed tears. The future she promises is "a world where you don't have to wave goodbye to your loved ones." Many listeners said they were moved by the "that shocking power" in the genius orator.
John P. A. Ioannidis, a professor of medicine at Stanford University who has been following Theranos several years ago, told this magazine that in theory, a drop of blood does contain enough biochemical information, and the idea of simplifying the diagnosis and treatment process is not new, and there are theoretical possibilities for Elizabeth's idea. However, if you insist on reducing the amount of blood withdrawal, shortening the data analysis process, miniaturizing the equipment, etc., you will face a series of difficult technical problems that are difficult to solve and are difficult to achieve, or the accuracy of the detection will be reduced. The current blood tests seem cumbersome and inconvenient, and there are technical reasons, and it is by no means a medical institution deliberately makes things difficult for patients. "What is important is that no matter how much praise or deduction of business logic is praised by mainstream media or deduction of business logic for the medical technology industry, it cannot replace the value of a peer-reviewed experimental data paper published in authoritative academic journals, which is exactly what Theranos has never been able to produce," said Yoanidis.
American legendary lawyer David Boyce. It is his legal threat to Theranos employees that made the scam for a long time, but the difficulty of R&D does not mean the difficulty of financing. There is a saying that is prevalent in Silicon Valley, "Investing is largely people, not projects." Elizabeth is the person who seems extremely suitable in all aspects. With the label of "Stanford dropout and start a business", a good story and family background, Elizabeth attracted the initial funding and began to superimpose resources and endorse each other when equipment research and development is slow. At an investor meeting when the company was valued at about $16 million, she claimed that five companies would purchase Theranos products in the next year, bringing revenue of $100 million to $300 million. This information was made up by her, but she successfully defrauded the investment. She then used the investment she had just obtained to really lobby for purchase orders from several companies, and the fake turned into real.
In the field of venture capital, there is a mentality called FoMO, Fear of Missing Out, that is, "fear of missing out." The larger the company, the higher the opportunity cost. Once an emerging technology is missed, the gap will be wider and wider with the opponent. Elizabeth successfully exploited this mentality of senior executives of Walgreen, the largest pharmacy chain in the United States, suggesting that if she does not invest as soon as possible, she will work with CVS, the second largest pharmacy chain. If her technology can be realized, it will be a core competitiveness of chain pharmacies. After all, it has huge market prospects to be able to provide customers with all-round physical testing anytime and anywhere. In 2010, before seeing a solid demonstration of core technology, Walgreens signed a $50 million order and borrowed $25 million in loans, planning to open a small testing center in the online pharmacy stores nationwide.
Around 2010, the investment market in Silicon Valley was also at a high level. After the financial crisis, a large amount of capital was withdrawn from the real estate market, stock market, etc., looking for new places to go. This is also the year when Facebook 8 creates a miracle. It is valued at $23 billion in the middle of the year, and it doubled to $50 billion by the end of the year. Many capitals hope to replicate the legend of investing in the next Facebook . Elizabeth intends to create an atmosphere where she will achieve great things.
is like a snowball, Elizabeth blows the bubble bigger and bigger, and has gained high attention from mainstream society. She began to frequently appear on the covers of magazines such as " Forbes " and "Fortune", and was selected on the list of various "Top Ten Entrepreneurs of the Year that changed the world", and was also appointed as the US Global Entrepreneur Ambassador by then President Obama.Schultz, who loves her very much, even introduced a group of old friends to join her board of directors to endorse her. In addition to Kissinger, there are also former Marine General, James Mattis, who later became the Secretary of Defense of the Trump administration, and former Senate Majority Leader Bill Frist.
When these political and business elites gathered at Elizabeth's 30th birthday party in 2014, Elizabeth ushered in the peak of her life. Perhaps the only shortcoming is that the technology she promised to "a drop of blood changes everything" has not been developed.
《Blood into Gold》 Author John Carrieyou, whose series of investigative reports published in the Wall Street Journal revealed the inside story of Elizabeth's entrepreneurial scam
destroyed
October 15, 2015 became a turning point in Theranos's fate. The Wall Street Journal published the first report revealing the inside story of Theranos: "The Struggle of a High Valuation Startup", subtitled "Silicon Valley lab Theranos is valued at $9 billion, but does not use its own technology in all tests." This report with a restrained tone but surprising information kicks off the demise of Theranos.
The Wall Street Journal reporter John Carreyrou, who exposed the Theranos bubble, told the magazine that he initially noticed Theranos and found that it was strange in the end of 2014, when he read a positive report from the New Yorker about Elizabeth and his company. "The most conspicuous thing is that she dropped out of school and started a business at the age of 19. People will naturally compare Bill Gates and Mark Zuckerberg, who dropped out of school and started a business at a similar age, but they are engaged in different industries. Computers are a field where teenage geniuses can appear, but biomedicine is not. My intuition tells me that it is not right."
Carrieu himself is an investigative journalist with a high reputation in the U.S. press, with rich experience in reporting in the medical field, and has won the Pulitzer Prize twice. After conducting an in-depth investigation of Theranos, he found that not only did the research and development of Theranos not go smoothly, but they also used a series of fraudulent means to deceive investors and the public, and even directly purchased Siemens' large analyzers, disguising the output results as data of their own small equipment. Since the end of 2015, Carrieyou has released dozens of reports on Theranos and Elizabeth in the Wall Street Journal, and in 2018 it supplemented it to form the book Bad Blood. It was the book’s hot sale that made Theranos’ amazing scam attract the attention of the American public in 2018.
With the follow-up of other media and the entry of official investigative agencies, a series of absurd scenes that occurred in Theranos were disclosed. In July 2015, then-Vice President Joe Biden was invited to visit Theranos' laboratory. In order to create a cutting-edge company R&D image for Biden, Elizabeth actually directed his men to forge a fake laboratory to make it look fully automated. To avoid the risk of exposure, she even asked non-confidant staff in the lab not to come to work on the day of Biden's visit. After rushing to take Biden to see the very high-end instruments in visual effects, she organized a roundtable discussion to elaborate on her health and medical philosophy, which is what she is best at. Biden was really "into the trap". After the visit, he sighed: "This is a laboratory that represents the future."
As early as 2006, Theranos' chief financial officer (CFO) Henry Mosley discovered the company's strangeness. Elizabeth and his team went to Swiss to demonstrate prototype equipment to pharmaceutical giant Novartis. Although Mosley himself did not go to Switzerland and did not understand the technical details, he discovered an abnormality. Unlike Elizabeth's demonstration, colleagues in the technical team seemed very depressed. After some inquiries, he realized that the equipment had a temporary failure in Switzerland and Elizabeth fooled it with fake data. He was fired on the spot when he made it clear to Elizabeth and advised her not to do so again.
How could a fraud of such a scale be suppressed within the company? "David Boies is one of the most critical figures in the whole scam that lasts for such a long time," Carriyo told the magazine.Boyce is a legend in the American lawyer industry. He has been well-known throughout the United States since he represented the Justice Department in the 1990s in the antitrust lawsuit against Microsoft . He also defended the presidential candidate Gore (Al Gore) in the Supreme Court for the presidential election lawsuit against Bush Jr., and participated in credit card lawsuits involving billions of dollars. Under the American judicial system where the role of lawyers is extremely critical, Boyce gained the reputation of "it is best to withdraw the lawsuit directly when he sees his name." Elizabeth hired Boyce as legal counsel for $4.5 million and gave him shares, Boyce has attended all board meetings of Theranos since 2013.
Since joining the company, Theranos employees have been trapped by layers of legal provisions and have been forced to accept strict confidentiality agreements. So there are only two ways out: join hands with the company's management and commit fraud; or leave the company, but do not disclose any relevant information to the outside world, otherwise Boyce's team will go bankrupt.
but without airtight walls, Carrieyu's investigation was made, and it was the material that Theranos internal employees took great pressure and risks to provide. The most critical information comes from Tyler Schultz, who is only 25 years old. His identity is also very special. He is the grandson of George Schultz, a member of the board of directors of Theranos and former US Secretary of State. He was moved by Elizabeth's entrepreneurial vision and joined Theranos as soon as he graduated until he discovered the fraud. "Taylor made great efforts to remind his grandfather, but it didn't work very well. In his feelings, Schultz seemed to regard Elizabeth as his closer granddaughter, and Schultz's belief that science can change the world, which made him believe more confident in Elizabeth's words," said Carrieu. When Taylor began to oppose Elizabeth, Boyce's team even sent him legal threats. Taylor's parents used various relationships and spent $400,000 in attorney fees to calm down, and Schultz's family was also in a state of chaos.
In a three-and-a-half-year investigation, Carrieyou interviewed more than 60 former Theranos employees. The book "Blood into Gold" fully tells the story of Elizabeth's dropout in school in 2003 to the lawsuit filed by the U.S. government in 2018. Because of the legendary elements of the story itself and Carrieu's excellent writing skills, it became popular throughout the United States once it was launched. Bill Gates also regards this book as one of the five recommended books of the year.
At the same time, the situation in Elizabeth and Theranos took a sharp turn. In 2017, Arizona sued Theranos, accusing it of selling unqualified blood test products in the state, and the Walgreens chain unilaterally investing more than $140 million, also filed a lawsuit. David Boyce's team eventually announced that it would give up acting for the corresponding case. In March 2018, Elizabeth was accused of "massive fraud" by the Securities and Exchange Commission. In June, federal prosecutors filed a criminal lawsuit against him. In September, Theranos was officially dissolved, and the remaining assets were used to repay debts. The relevant cases are currently under trial.
completed this marathon report under tremendous pressure. Carrieyu said that looking back on the whole process, besides the previous hardships and current honors, there is a person who complicated his feelings - his boss Murdoch (Rupert Murdoch). Elizabeth also fascinated media tycoon Murdoch and received an investment of up to $125 million, which is not only the largest personal investment Theranos has received, but also the largest investment Murdoch himself has made outside the media field. In September 2015, Carrieyu's first report was about to be published, and Murdoch was the owner of the Wall Street Journal's parent company. Elizabeth has found Murdoch many times and asked to suppress this "error" report. Murdoch's reply was: he would not interfere with the independent judgment of the editorial department.
Huangliang Silicon Valley Dream
Why did such an absurd scam happen? After being exposed, how can Elizabeth himself explain?
Cario said Elizabeth himself refused to have any contact with him. “But from other information I learned, she would defend herself in court in the future: this is just another story of failure in entrepreneurship.90% of Silicon Valley startups have failed. Although the billions of dollars invested by various players have been wasted, she has not been listed to cash out and there is no fraud. "Cario thinks this is a complete quibble. "The medical industry is different from the Internet. If you make a software that can be launched when you are immature, it will eventually 'fail', but what involves the life and health of patients is different." Because of Theranos' immature detection technology, some patients delayed their condition for a while.
"But I am also very sure that when she dropped out of school from Stanford 15 years ago, she really wanted to change the world, not deliberately fraud from the beginning. But when the progress was not going well, her desire for success blinded herself and led her to the path of no return. Many people are using her to push her into the abyss step by step. "Carriyyu said.
Among the people who pushed Elizabeth into the abyss, there was her boyfriend Sunny (pseudonym), whom she concealed from Kissinger, a Pakistani-American man 19 years older than her. During the Internet bubble around 2000, he founded an e-commerce company that had no actual profit, cashing out more than $40 million. Carriyyu analyzed that Sariyyu was keen on speculation, but his "old", "male" and "minority" status made it impossible for him to gain the favor of white men who control political and business resources, so he formed a pair of partners with Elizabeth, a young, beautiful, mainstream society. A former Theranos employee described their relationship as "folie à deux), which is medically referred to two people with similar paranoia, confirming and encouraging each other, which constantly aggravated the relationship between the disease. When Theranos showed signs of collapse in 2016, Sani withdrew from the company, but he was still listed as the defendant in the relevant lawsuit by the US government.
Interestingly, Elizabeth and Sani first met in Beijing. Elizabeth, who was still in high school at the time, came to participate in the summer camp for exchange students. She and her parents believed that learning Chinese would be useful in the future. She also said she had considered selling software and hardware services for computer programming to China because there is a technical gap between China and the United States and China has huge existence. The area of big demand was just a short time to realize it later. Sani happened to be engaged in business activities in Beijing at that time, and the two were able to get to know each other. It may not be accidental that two speculators met in a country called "huge market". If Theranos' scam was exposed later, would it also enter the Chinese market?
After Carrieyou's article was published in 2015, Elizabeth tried to attack him for suffering from "misogyny", and he was slandered by the fact that she could not see women's success. But it is undeniable that she was indeed using her gender identity, such as deliberately trying to speak out with Hillary Clinton (Hillary) Clinton, mother and daughter are approaching and attending events together to create their own image as a female spokesperson. American society is indeed generally looking forward to such people. There has never been a woman among the entrepreneurial geniuses emerging in Silicon Valley. Even if there are Facebook Chief Operating Officer Sheryl Sandberg (Sheryl Sandberg), former Yahoo CEO Marissa Mayer and other successful female entrepreneurs, but none of them were the original founders of the company.
Elizabeth even linked herself to Jobs’ image. According to former Theranos employee, she not only clearly stated that the company’s products are “iPods in the medical field”, but also imitated Jobs in a series of behaviors, such as wearing black jackets and black jumpers all year round, and the office air conditioner must lower the temperature to match her outfit, because Northern California, where Silicon Valley is located, does not need to wear jackets all year round.
Derek, a contributor to Forbes who has specialized in the culture of startups. Lidow told the magazine that Elizabeth used his imitation of Jobs to gain a series of "immunity", such as his seemingly perfectionist style, mystery, arbitrary governance style, and not allowing products to appear until the last moment, because people think that Jobs was like this and eventually changed the world. "But this is people's misunderstanding of Jobs. Elizabeth is different from Jobs on too many fundamental levels.For example, Jobs did not actually run the Apple company himself. He has a dedicated management team, while Elizabeth manages it himself, but she has no relevant experience. For example, Jobs respects technical experts and will put higher design requirements on the products on the market, rather than trying to create a product that has not yet been realized in the underlying technology. "Derek said. What can be proved is that among the investors in Silicon Valley who are suspicious and cautious about Theranos are a group of former employees who have worked closely with Jobs. Perhaps they know better what the real Jobs means.
"Like many people, I also hope Elizabeth can succeed. Today's United States needs such a person to set an example for young women. But the reality is that without management capabilities and technological breakthroughs, it is impossible to succeed in entrepreneurship. "Derek said.
The drama has ended, but its aftermath will continue. The film adaptation rights of this true story have also been bought by Legend Pictures. Oscar winner and director of "Big Short" Adam McKay will be the director, and Jennifer Lawrence will play Elizabeth.
In this live drama, Elizabeth is not the only protagonist. Sani, who fuels the fire, the blinded elderly Schultz, Walgreens Pharmacy who is anxious to get on the car because of his anxious mentality, speculators who see the flaws but still "pass the flowers", media and people who are looking forward to a new era idol...everyone is an actor.
