After John Carreyrou’s book, an Alex Gibney documentary, an episode of 20/20, and multiple podcasts and articles, it wouldn’t be crazy to think that the story of Elizabeth Holmes and Theranos has been pretty well covered. That would be true for most stories, but Theranos, seemingly the perfect nexus of unchecked crony-capitalism and Silicon Valley’s techno-utopianist cult of buzzword libertarians, isn’t most stories. A personal angle always adds perspective, especially when that person is Tyler Shultz, one of Theranos’s first and arguably its most prominent whistleblower.
Shultz, the grandson of Theranos board member and former secretary of state under Reagan, George Shultz, had little to gain, and almost everything to lose in 2014, when he brought his concerns about the company he worked for first to a regulatory body and later to Wall Street Journal reporter John Carreyrou. Carreyrou broke the story in a bombshell investigative series that he turned into book (I interviewed him here). This week, Shultz, now 30, Carreyrou’s most important on-the-record source, tells his own story firsthand in Audible’s new podcast, Thicker Than Water: The Untold Story Of The Theranos Whistleblower.
Revelations from Shultz and others, that Theranos was a $10 billion company whose central product (blood testing machines that were hyped as being able to perform a battery of tests using only a drop of blood) didn’t work, ended up taking down the company. Theranos’s eccentric CEO, Elizabeth Holmes, with her canned anecdotes and thousand-yard stare, a Frankenstein’s monster seemingly fabricated from inspirational quote books and pop biographies of Steve Jobs to bilk money from starry-eyed old men like Shultz’s grandfather, is currently awaiting trial.
Yet for all that to happen, a number of people, and Shultz especially, had to act almost perfectly against their own interests. It would’ve been so much easier to just shut up and go along, or quietly get a new job, than try to expose a deep-pocketed company that had effectively turned his aged grandfather against him. Not only did Tyler’s parents have to spend $400,000 to $500,000 of their own money on lawyers, Theranos’s own lawyers, led by the (in)famous David Boies, seemed to be using some of the same hardball tactics Boies had used in defending Harvey Weinstein, which in that case included hiring Black Cube, a “secretive investigative agency that used undercover operatives” (per the New York Times).
Shultz believes he had private investigators tailing him for more than a year. In one instance, one of Shultz’s lawyers had their car broken into and notes from their private meeting were stolen. Throughout the story, two huge hypotheticals echo through your brain: What would’ve happened if Tyler Shultz hadn’t been in the almost cosmically unique position of being able to defend himself? And, if I were Shultz, would I have put myself through all this grief just to expose the truth?
I talked to Shultz this week about his motives, Elizabeth’s voice, what his grandfather saw in Theranos, and what it was like being on an island.
So I take it your parents didn’t actually end up selling the house. How much do you think they ended up having to spend on lawyers?
We ended up spending, I think it was between $400,000 and $500,000 in lawyers. Thank God, they did not have to sell their house. That was really a situation specific to me actually going to court. We were told that if I was sued and I did have to go into a courtroom to fight this thing out, a good case scenario would be we spend $2 million and win. A bad case scenario would be obviously worse than that. Luckily, it didn’t come to that. So no, they still have their house that they’ve had for 30 years now, the house that I grew up in.
And that was in Los Gatos?
Yeah. Down in Los Gatos.
Talk about some of the harassment that Theranos was doing to you.
They bullied me around in a variety of different ways. One of the big ones was I felt I was entrapped in my grandfather’s home. They had lawyers hiding upstairs that I did not know were there when I went to go have an open, honest conversation with my grandfather, and then those lawyers were kind of sprung on me as a bit of a surprise. Then they had private investigators following me. I received a tip that, whether I was aware of it or not, that I was being watched about 80 to 90% of the time that I was in public places. Then probably about a year after that, I met up with John Carreyrou, for the first time in a very long time, on the Stanford campus. The Theranos lawyers let me know, I think just a few days afterwards, that they were aware that I was in contact with the reporter again. So I reached out to John, I said, “Hey, did you tell Theranos that we’re talking again?” And of course he said no. I don’t know how else they would have known that I had a lunch with the reporter unless they had someone watching either him or I. So we’re talking for a fairly long period of time someone was being followed.
It seems like it’s a pattern for Boies and his law firm. Is there any legal recourse for that? Are law firms just allowed to send private investigators to harass private citizens if they want?
Unfortunately, I think it is not. My understanding is that whatever you do in public, anyone can watch you. So it’s not illegal to hire private investigators to follow somebody around and watch where they go. Yeah, it’s kind of crazy, but I don’t think that it’s actually illegal.
I guess the big question is, if you hadn’t been in this incredibly unique position of having a board member in your family and being able to pay for all these legal fees, does Theranos ever get caught? If they don’t, what are the consequences?
They definitely would have gotten caught sooner or later. I probably expedited things, but they were in the process of really expanding their testing services and patients were already getting incorrect results, so I think the medical community was kind of on their trail already. When I left Theranos and I went and got a new job, I remember the COO telling me that they had a stack of resumes from people trying to leave Theranos this high. Then at one of my first lunches at that company, I sat down, and there was an employee there who was like, “Oh, where’d you come from?” I said, “Theranos.” And he just goes, “I could bullshit forever too if I had a board like that.”
[At one point, Theranos’s “all-star board” included William Perry (former U.S. Secretary of Defense), Henry Kissinger (former U.S. Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman of the board and former CEO at Bechtel Group)]
When the Edison machine was like finally revealed to you, I got the sense that it was like when Scientologists finally get to that level when the whole story gets revealed, and they’re like, “…Wait, this is it?” What were the most absurd examples of what you guys were having to do to make these things work?
Oh my God. So, I mean, the list is fairly long. Right off the bat, you could tell that this thing does not do hundreds of tests from a single drop of blood. This device can only run one test at a time. So if you came in and ordered 300 tests, even if those tests could be run on the Theranos platform, you’d have to run them on 300 different devices. And then on top of that, you can tell that there’s nothing revolutionary about it. There’s no microfluidics. There was no revolutionary signal transduction method. It was just a pipette inside of a box. And even though it was that simple, it didn’t work that well. When you’re pipetting in really small amounts, you need to be very accurate or you’ll end up with a lot of variation. And my understanding was that the Theranos device wasn’t accurate enough to do those small pipetting steps. So we had to run the samples through a third-party piece of equipment that we bought from a company called Tecan. It’s basically this fancy pipetting robot that would do that first pipetting dilution step, and then we would put it into the Theranos device. So it wasn’t even a standalone platform.
So, we would have problems where the door wouldn’t close. You’d stick the cartridge in and the door wouldn’t shut, so we would literally tape the door shut. I don’t think we ever tested to see whether or not the taped devices worked as well as the ones that were not taped. Then there was a barcode scanner in there that would scan a barcode on the cartridge, and it would know what tests to run, but oftentimes that barcode scanner wouldn’t work. So I would peel the barcodes off of the cartridges and put them on a pair of scissors and stick it into the device and kind of wiggle it around until it would finally scan.
They were also very temperature sensitive. They would complain that they were too hot. You’re on a schedule and you’re trying to get these experiments done, and I would actually just open the door and wave with my hand to try to cool it off. But it seemed like there was a delay between the thermometer and actual temperature, so it would immediately go from too hot to too cold. So then you’d have to shut the door and wait for it to heat up. If it took too long to heat up, we had these little kind of like blanket things in the lab that you would put over the machine to warm it back up.
The tips on the pipettes were constantly falling off. And they could get stuck in the gears and then it would jam. So we had, I think it was either literally a clothes-hanger or something very similar to a clothes-hanger that we had around, where you could kind of reach into the bottom of the Edisons and fish out the pipette tips that had fallen off.
It was such a disaster that I always thought that if we ever had to go to court, like if they sued me for violating trade secrets or whatever, I was going to demand that if this thing worked in a medevac helicopter it should work in that courtroom. The judge should prick his finger, and in four hours he should get 300 test results downloaded to his phone. And if it didn’t work, I should be able to leave. If Theranos was real, they could have proven it. In my mind, it was so easy to see if it worked or not. It’s amazing that here we are in 2020, and the story is seemingly still ongoing, you know? Elizabeth is still walking around a free woman.
How much of her success do you think came from being an old person’s vision of a young person?
What do you mean?
I mean, you had that scene in the podcast where it’s her birthday or something. And everyone there is over 50. It kind of seems like she was what an old person wanted to think a young person was like.
Yes. Well, I think Elizabeth represented a lot of good things. She represented the future, one that was… the future is female, you know? She embodied that. She was super sharp. She was a Stanford dropout. She fit all the criteria of being a Steve Jobs or Mark Zuckerberg. She was very charismatic. She was, quote-unquote “doing well by doing good.” So in some ways, she would be even above a Mark Zuckerberg. How much good does a Facebook really do versus how much good could Theranos do? So, she just had an amazing story that I think hooked a lot of people, and that included older men, who were probably also a little bit extra enchanted by the blonde hair, the blue eyes and kind of the attention they were getting from this young up-and-coming entrepreneur.
What about the voice? I know John Carreyrou hinted that the deep voice might be a put on.
I don’t know. I never heard her really slip out of that voice. Occasionally, if she were laughing at something and trying to talk at the same time, her voice did seem to maybe revert to a higher pitch, but, really, I don’t know for sure if the voice is fake or not. Her younger brother has maybe the deepest voice I’ve ever heard in my life, so it wouldn’t surprise me if Elizabeth’s voice also skewed that direction. But I wouldn’t be surprised either way. I am starting to wonder if she really speaks Mandarin though. I’m questioning that one.
The big sticking point between you and your grandfather was him wanting you to sign the affidavit that said that you had never talked to the Wall Street Journal after you already had. They were trying to catch you in perjury, essentially. Do you think that there was a real threat of them actually using that to charge you? Or was that just something that they were using to discredit John Carreyrou? I other words, were they just trying to get you to sign that so they could say like, “Oh, John Carreyrou invented this source and so all of his reporting is in dispute?”
Probably both. I think that if I had signed that document and lied under penalty of perjury, that would have been fantastic ammunition for them on many different fronts. Either they could come after me personally, or they could have used that to discredit me as a source and discredit the Wall Street Journal’s reporting. Looking back, that’s one of the best decisions I made, not signing that despite being under immense pressure to.
It seems like all the incentives were in place for you to just go along. Do you think that contributes to the cultishness of tech? Because everyone’s incentive was just to either believe in this or pretend to. And to go against it seemed like it would just get you nothing but trouble.
I mean, they were bullies. To go against them, they would just cause trouble for you. Right after that first Wall Street Journal came out, Elizabeth went on Mad Money, and I think we have a clip of this in the Audible Original. But she says that all of the sources have said that the Journal misquoted them or they demanded payment from Theranos just to have a conversation. She sounds very convincing, but what she doesn’t say is the circumstances under which those people retracted their statements. It was people like me, who all of a sudden were fighting David Boies and had no legal counsel, who were thrown into a situation they never anticipated being in, who were put under extreme pressure and felt like their livelihoods were endangered. And then they may have retracted their statements. I don’t know all the sources, and I don’t know who retracted or who didn’t, but knowing the circumstances I was under, I can only imagine that the circumstances were similar for other sources. Yeah. They were bullies, and they got away with being bullies for a really long time.
What were your grandfather’s incentives? You kind of went against your incentives because you felt it was right. But his incentive seems to be to just keep pretending everything was great. What were all the forces there that were pushing him in that direction?
One, I think was just pride. And I remember in one instance, him telling me that he was 90-years-old and he had seen a lot of stuff and he knew what he was looking at. Basically, he was saying, he’s been right so many times that it’s impossible for him to be wrong at this point in his life. Another part of it was that he was infatuated by Elizabeth. He really treated her like she was part of the family. She was coming to Christmas celebrations, birthday celebrations. He would invite her to Family Day at his fancy country club. They were very, very close, but I think that was also part of it. And then the other piece of it was financial incentive. I know that at one time he told his family that he had created a trust fund for his great-grandchildren, who would be my children, who do not exist by the way, that consisted 100% of Theranos stock. So there’s a trust fund for my future children somewhere with 500,000 shares of Theranos stock in it. I was definitely financially incentivized to make Theranos a success. My grandfather was definitely financially incentivized to make Theranos a success. But I think he had much more invested than just that trust fund.
How’s your grandpa doing now?
He’s doing great. He definitely sees that he was lied to by Elizabeth. He definitely is proud of me for doing what I did. He’s in good health for someone who is about to turn 100-years-old in a few months. I think just like everyone, he and his wife are getting antsy sheltering in place in California. But overall, he’s still working, he recently published a book. He does Zoom calls. He used to go into work at the Hoover Institute every day. Now he has someone come in and set up his computer so he can do Zoom calls all day long. So in a lot of ways, he’s just like you and me, chugging along, doing Zoom calls every day.
My grandpa’s going to be 103 in December, and he’s definitely not doing any Zoom calls.
Oh my God. That’s wild. Hopefully, you got those genes.
Tyler Shultz’s Audible Original, ‘Thicker Than Water,’ premieres August 4th. Vince Mancini is on Twitter.