Before the Miniseries: Rebecca Jarvis on Understanding Elizabeth Holmes

In this Motley Fool Money podcast, Rebecca Jarvis, chief business correspondent at ABC News and host of the podcast The Dropout, discusses the story of Elizabeth Holmes, founder of Theranos. Jarvis talks with Motley Fool editor Olivia Zitkus and shares her thoughts on:

  • What made Holmes tick.
  • The nuance of “faking it ’til you make it.”
  • Whether Silicon Valley could produce another Theranos.

To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on Feb. 27 2022.

Rebecca Jarvis: You have these SEC depositions versus Elizabeth Holmes on stage where Elizabeth Holmes on stage knows every answer. There’s certainty we will be in Walgreens around the world, these giant claims. Whereas when the SEC confronts her with direct questions her answer is so frequently, I don’t know or I don’t recall.

Chris Hill: I’m Chris Hill and that was Rebecca Jarvis, Chief Business correspondent at ABC News and host of the hit podcast, The Dropout, which followed the story of Elizabeth Holmes and Theranos. That podcast is the basis for the new Hulu mini-series, also called The Dropout, which starts on March 3rd. Motley Fool editor Olivia Zitkus caught up with Rebecca Jarvis, they talked about the environment in Silicon Valley that elevated Holmes and how she got away with fraud for so long.

Olivia Zitkus: There are so many stories and tellings about Elizabeth Holmes and the Theranos saga. You have John Carreyrou’s, Bad Blood book and podcast, The Dropout podcast of your creation, and now the Hulu show The Dropout. Why is this story that we keep coming back to?

Rebecca Jarvis: I think you have the woman at the heart of the story, Elizabeth Holmes, who is a fascinating individual. She’s an enigma, she’s an outlier. You also have the whole ecosystem surrounding her story from Silicon Valley to the media, to the world that she really grew up inside of, at a time when she went out to raise funding around the same time as Mark Zuckerberg when suddenly venture capital and other investors were for the first time in really large numbers starting to bet millions or even billions of dollars on these young founders without significant track records. I think there’s also the fact that this is a technology that could have become more ubiquitous. It was certainly inside of many Walgreens stores and was poised to be in many places and anyone can imagine the idea of walking into a store to get a blood test, and if that blood test isn’t reliable, then wow, what are we supposed to rely on? Where does the trust come from in our medicine in our care. I think those three things together were something that certainly drew me to this story and something that I think make a lot of people give a pause and a beat and want to understand more because they recognize. Or as I felt, that this is something that can have implications for the much broader world.

Olivia Zitkus: I’m curious about her early life and her relationship with money. Like how do you think her relationship with her family and her upbringing influenced how she interacted with, viewed, and used money? Because she went right from being a teen to being a CEO?

Rebecca Jarvis: Well, that’s a question as a journalist that I asked a lot of the people in her orbit, the people who family, friends who knew her early on, trying to understand what they believed was part of her psychology. Why she was doing the things that she is doing, why she was such a motivated person, why she believed that she could change the world? I think that’s something that every parent, I’m a parent and became a parent through the process at the time that I was creating this podcast a few days later gave birth to my first child. I think as every parent you want your child to believe that they can change the world, that they could make the world a better place. Something that I think that the series really delves into that Liz Meriwether and the team spent a lot of time investigating and using the podcasts as sourced material, but speaking to sources and thinking more deeply and digging even further into it is what those early years, what those formative years meant for her in creating who she was as a leader and the person that we all got to know on stages and TED Talks and then later on through SEC depositions in the trial.

Olivia Zitkus: Her time at Stanford in particular and the way it’s portrayed in the show it wasn’t just a blip on her radar. She went to Stanford for a time and then eventually her family put what was supposed to be her tuition money toward Theranos, in the early days and I’m wondering like, do you think that Theranos was going to come about no matter what because Elizabeth was who she was or whether Theranos was like a product of that privilege, like of Stanford and of her family’s ability to support her?

Rebecca Jarvis: Well when I look at all of the available information that I’ve learned about Elizabeth Holmes over the years. This was a woman who was clearly on a mission who wanted to do big things, with her life. Now, what design those things might create you could say it was the time that she spent in the laboratories as an undergraduate studying in China and the work that she did there that became formative. She told the story as we saw over and over again about her uncle and his cancer and that being part of the genesis of her story. I think for people who will watch this series, who listened to the podcast, I still think it’s a fascinating thing that she still is very much this enigma with all the material, with everything answered, with all of her exposure, people still struggled to really understand what was actually going on there.

Olivia Zitkus: I still can’t decide whether or not Elizabeth understood the science or rather the extent to which she understood or didn’t understand. Do you think she understood what was happening and was just willfully ignorant of the fact that it didn’t support her vision, the big word she likes to use. Do you think she knew the science herself? I’m curious of your opinion there.

Rebecca Jarvis: Well from talking to, I don’t know the science. For example, I didn’t study science for years and years of my career. But people like Phyllis Gardner, the Stanford professor who met with Elizabeth Holmes very early on, who Gardner has dedicated her entire life to the science, to understanding medicine. You look at that and the people who win Nobel Prizes for truly changing the world. For the most part these are not people who spent a handful of years or even a handful of semesters in college. These are people who dedicated their entire lives to it and had breakthroughs after decades of work. From the standpoint purely of how does one achieve the medical revolutionary breakthrough that Elizabeth purportedly had achieved. Well, you take years and years, decades of your life and you dedicate yourself to that. There were people who were on Elizabeth Holmes’ team who had that background like Adam Rosendorff the Lab Director and others. But they still along the way said this was a very difficult thing. That the idea of getting to the other side of this innovation was a very complicated journey. Something that came out at the trial was that this test that she had said so many times over and over again in speeches a few drops of blood can run hundreds of test that. At no point in time could these devices ever run more than 12 tests.

Olivia Zitkus: I want to talk a little bit about pivot points in the story of Theranos. Like in my mind, a big one comes up first and that’s Theranos’ “demo” to Novartis Ag in 2006. I wonder, is there a moment that stands out to you as being pivotal in that it set Elizabeth and her company down a path that they couldn’t turn back on even if they wanted to. I know there are so many. That’s probably a difficult question, but I’m curious if anything stands out to you.

Rebecca Jarvis: The government’s case was fundamentally when Elizabeth Holmes was out of money and out of time, she decided to lie. Where Sunny Balwani really enters the Theranos story as a player that goes beyond Elizabeth’s love interest, or even a friend is around 2009 when Theranos is burning through money and needs, essentially a bailout, which at that time would have been a really complicated thing because the economy was coming right out of the great recession and it was really hard to get access to credit and Sunny comes in and gives them this lifeline in the form of a loan. Then they start going out and pitching Walgreens. What we saw at trial and what has been exposed over the time that I’ve investigated this, were the source documents that Theranos originally presented to Walgreens, which in 2010 suggested that their technology was ready. It was ready to be rolled out and deployed, in stores. It had been independently validated by 10 of the 15 largest pharmaceutical companies. 

This is the material that Walgreens saw. This is the material that a lot of investors testified that they saw and yet there was no way that they were ready to roll that out in Walgreens in 2010 because they not only couldn’t, but they didn’t roll anything out until 2013 and as we now know through the trial and through years of reporting, they never got their machines inside of Walgreens. These wellness centers that were supposed to be doing the onsite testing relied on central labs that they sent the samples to. You have this picture of a giant ambitious goal that so many people supported along the way and in the early days, the Avie Tevanian’s of the world supported at the right-hand man to Steve Jobs at Apple. Even in those early years as Avie Tevanian told us when I interviewed him, he didn’t feel that he was getting the full picture and he didn’t feel that Theranos and Elizabeth Holmes were taking the steps that if they were truly serious and committed to having this product be ready for market that they would be taking.

Olivia Zitkus: The SEC depositions which happened obviously years ago, well, before her trials started, you’ve come through those very finally, I’m wondering what you think was the most important thing they showed us and told us about the person Elizabeth Holmes that we hadn’t seen or heard before? What was the most revolutory thing?

Rebecca Jarvis: I think I had dreams about the depositions. I think one stark contrast and we make this point in the podcast is that, you have these SEC depositions versus Elizabeth Holmes on stage where Elizabeth Holmes on stage knows every answer, there’s certainty we will be in Walgreens around the world, these giant claims whereas, when the SEC confront her with very direct questions for answer is, so frequently, I don’t know, or I don’t recall. We calculated it, we sifted through all of it that was more than 600 times as we say in the podcast. The contrast of this just incredibly confident character individual with a woman who suddenly just can’t put our finger on a lot of things. I think that’s there was so much opposition there in terms of what we were presented versus what ultimately materialized when push came to shove and it was under deposition on your oath

Olivia Zitkus: I want to ask a question that hearkens back to where we started, which is about why the story so interesting. You mentioned the ecosystem and the culture that is Silicon Valley in which, fake it till you make it and big promises are the norm to a point. Do you think that ecosystem is primed to produce another Theranos? Like what helped Elizabeth Holmes produce another Elizabeth Holmes?

Rebecca Jarvis: I’ve asked a lot of people in Silicon Valley what they make of this and if they think so, and answers are divided. There’s a lot of people in Silicon Valley who are very quick to say, “She wasn’t one of us. That’s not how we operate here.” But there’s another group in Silicon Valley who will say that there is that ethos of having to show hockey stick growth. Even if the VCs and the other companies somehow were able to manage to take that away, I had this interesting conversation with Adam Grant at Wharton and he said he sees it a lot coming from the individuals themselves. They look around at their classmates and their classmates are all high performers and they want to perform too and there’s this push right now to show what you’re so capable of. You even look back to Elizabeth’s own story in the timing of when she founded Theranos, right around the time that Facebook was being founded across the country by Mark Zuckerberg. Never before in the degree that what we’ve seen since Theranos have we seen so many young people with predominantly untested ideas, getting millions or even billions of dollars to do those things. That can feed into a system and especially in a time when the interest rates are zero percent. The cost of money is virtually free if you have access to capital. I talked to venture capitalist and I talked to investors and outside of the bounds of an interview they will say, well, to not invest, to not put your money at some semblance of risk is actually the bigger risk when money costs nothing.

Olivia Zitkus: We like risk at the Motley Fool on healthy amounts [laughs] for sure. I think fake it till you make it wasn’t created by Elizabeth Holmes, although her face is now certainly attached to that saying.

Rebecca Jarvis: I just want to point out one thing because a number of people in Silicon Valley have said one thing that’s really important to distinguish. The idea of faking the future, there’s a big difference between saying we’re going to the moon, and I feel confident that we can get there versus we’ve been to the moon, and to say that your technology was deployed on the battle field when your technology never was deployed on the battle field, or to say that you can run hundreds of tests when in actuality, at the very most you can run a dozen test, 12 tests. Those are very different things than suggesting audacious forecasting goals for yourself.

Olivia Zitkus: It’s we need healthy idealism [laughs] and we need goals that we’d want to reach. But the idea of faking the past, I guess that’s right. That’s what’s so troubling about it. Awesome. If we were to imagine a world, just for a moment, in which Theranos didn’t deal with blood and healthcare and patient testing, but that they were accompany like let’s say Uber 2.0 or Lyft 2.0, do you think the fallout would have been nearly this bad? What’s your opinion on that?

Rebecca Jarvis: I think people would’ve looked at it differently because many times over the years, as we’ve interviewed people, they will say, well, this wasn’t a cellphone, this wasn’t an app. This was something that can impact people’s lives and I think it’s certainly as part of what drew people to this story, this idea. You want to be able to trust your healthcare and if you can’t, my goodness, what is that mean? If somebody is faking your healthcare so that they could make huge amounts of money, well, what does that say for the world? I think that really drew people to this story.

Olivia Zitkus: We’ve imagined it as Uber 2.0, as it wasn’t healthcare. But if Theranos did succeed, if it had succeeded as a healthcare company, had rolled its revolutionary blood tests out in Walgreens and pharmacies, and on battlefields. Would people still be upset even if the means by which they reached their end were the same as they were in reality?

Rebecca Jarvis: I think that’s a very interesting question because it’s that you can’t handle the truth type of idea. It would still be illegal. The question is, what price would Elizabeth Holmes have paid? I do think it’s an important question for people to think about, and something that I’m sure a lot of founders are contemplating as they look at her story.

Olivia Zitkus: I want to zoom out to the larger picture and ask, what are one or two things that you think investors, and just like normal retail investors, I want to point out for our listeners that Theranos was never a public company. But just for the average investor, what are one or two things that you think normal people can do to avoid investing in the next Theranos? Even if we’re not tossing VC money at Theranos like Elizabeth Holmes was enjoying.

Rebecca Jarvis: Frankly, a lot of the money that went to Elizabeth Holmes came more from family offices than the biotech venture community. The biggest checks came from Rupert Murdoch and the DeVos family and The Waltons. But I think the lesson here is to be skeptical and groupthink can work in some really negative ways, especially when it comes to investing, and a lot of this time when it comes to investing, it works out initially and yet the truth generally does catch up with companies and various other asset classes. I think it’s really important to be skeptical to know what you’re investing in and not to just take the tip from whoever it is. Bernie Madoff, even he relied heavily on affinity fraud, as in your friend says it’s good, so you believe it without doing a lot of your own research. That’s the thing that’s actually quite simple, but it defies in some ways the way we behave as humans. If you can tap into that and remind yourself not to just jump on the train because everybody else is on it, you probably are going to save yourself some money.

Olivia Zitkus: I like that. Be skeptical, do the individual work, do the research, and you will hopefully be better off for it.

Rebecca Jarvis: You want to believe in the thing actually independently of what someone else has told you.

Olivia Zitkus: Yes, I agree. What are you hoping that people get out of the retailing of the story on the screen in this format. You’ve already created a podcast. What are you hoping for now that people can watch it on their televisions?

Rebecca Jarvis: I feel so proud of the podcast and the work that we put in and the depth that we were able to go into in the story. For me, the number one thing that guides all of my work is truth and the pursuit of the truth and curiosity and asking questions. I hope that people who have read everything under the sun and listened to the podcast and watched all of the documentaries, I hope that they watch this and I hope that they enjoy it, and I hope that they feel like maybe they learn something new because Liz Meriwether and her team did so much individual in new research and I hope that they see Amanda Seyfried and see what I saw when I walked into the very first shoot with her, which was just a complete awe-inspiring moment of her really inhabiting this human being. When I first walked in, Amanda had her back to me, and after spending so much time watching Elizabeth Holmes and depositions and interviews and speeches, I got chills because even the mannerisms of Amanda Seyfried from the back reminded me so much of Elizabeth Holmes.

Olivia Zitkus: Her embodiment is terrifying. I’ve had the chance to watch some screeners, and man, it is unsettling in a fantastic way.

Rebecca Jarvis: I’m so glad to hear you think so.

Olivia Zitkus: It’s going to be great. Last Elizabeth Holmes question, after all this time and now as an expert on the woman, I would dare to say, what is the biggest misconception out there about Elizabeth Holmes?

Rebecca Jarvis: I have never been asked that question. I think to me, the lesson in this story is to never assume, and it’s something that drives the work that I do to never go into a story with assumptions that you know. Because if you look at the story, there were so many assumptions, the ability to cast off things that were complicated or didn’t quite make sense. For me, it’s looking at everything in, again, back to that idea of being skeptical and looking at the world and trying to see the world without just completely seeing it through the eyes of groupthink and really saying if something doesn’t make sense, then maybe it doesn’t make sense even though everyone else might be telling you it does and it should.

Olivia Zitkus: Thanks so much. I had such a great time talking with you today, Rebecca.

Rebecca Jarvis: Likewise.

Olivia Zitkus: Thank you so much, really appreciate your time.

Chris Hill: That’s all for today. But coming up this week, we’ll be talking inflation, real estate, stock investing, and more. As always, people on the program may have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. I’m Chris Hill. Thanks for listening. We’ll see you tomorrow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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