1 00:00:02,240 --> 00:00:06,439 Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg 2 00:00:06,519 --> 00:00:11,039 Speaker 1: Radio this weekend. On the podcast, I have an extra 3 00:00:11,080 --> 00:00:13,920 Speaker 1: special guest. His name is John Carrie Row. He is 4 00:00:14,040 --> 00:00:17,439 Speaker 1: a two time Pulitzer Prize winning investigative reporter for The 5 00:00:17,440 --> 00:00:21,279 Speaker 1: Wall Street Journal and author of the book Bad Blood, 6 00:00:21,440 --> 00:00:24,880 Speaker 1: Secrets and Lies in a Silicon Valley Startup. I could 7 00:00:24,880 --> 00:00:28,160 Speaker 1: have spoken to John for another nine hours. I found 8 00:00:28,160 --> 00:00:30,960 Speaker 1: the book absolutely fascinating. I plowed through it on Labor 9 00:00:31,040 --> 00:00:35,559 Speaker 1: Day weekend and really really enjoyed it, not just because 10 00:00:35,680 --> 00:00:38,519 Speaker 1: of how revealing it is of what turned out to 11 00:00:38,560 --> 00:00:43,199 Speaker 1: be a giant pick pick the metaphor and Ron Bertie 12 00:00:43,200 --> 00:00:47,440 Speaker 1: made off whatever, a giant fraud, but it reads like 13 00:00:47,479 --> 00:00:50,319 Speaker 1: a thriller. It's a real page turner. There are some 14 00:00:51,159 --> 00:00:55,040 Speaker 1: giant surprises throughout the book. Lots of people see their 15 00:00:55,040 --> 00:01:00,560 Speaker 1: reputation damaged and destroyed. It's amazing, and as somebody who 16 00:01:00,640 --> 00:01:04,160 Speaker 1: is also an investor, I can't help but notice how 17 00:01:04,160 --> 00:01:07,200 Speaker 1: many times there's red flag after red flag after red 18 00:01:07,200 --> 00:01:14,760 Speaker 1: flag that are excused, rationalized, ignored, somehow put shunted aside, 19 00:01:14,840 --> 00:01:17,679 Speaker 1: instead of hey, that's a big, big red flag. Maybe 20 00:01:17,680 --> 00:01:22,720 Speaker 1: we shouldn't put a billion dollars into this nonsensical company 21 00:01:22,720 --> 00:01:25,120 Speaker 1: that doesn't do any of the things it promises it 22 00:01:25,200 --> 00:01:29,360 Speaker 1: can do. Anyway, I highly recommend the book. Whether you've 23 00:01:29,400 --> 00:01:33,119 Speaker 1: read the book or not, you're gonna find this conversation fascinating. So, 24 00:01:33,520 --> 00:01:37,720 Speaker 1: with no further ado, my conversation with John carry Rout. 25 00:01:41,920 --> 00:01:45,880 Speaker 1: My extra special guest this week is John Carrrew. He 26 00:01:45,959 --> 00:01:51,960 Speaker 1: began his career in journalism in after he graduated from Duke, 27 00:01:52,040 --> 00:01:56,080 Speaker 1: he joined the Dow Jones Newswires. Shortly after, he moved 28 00:01:56,080 --> 00:01:59,160 Speaker 1: to European version of the Wall Street Journal in Brussels, 29 00:01:59,560 --> 00:02:03,600 Speaker 1: event a sually going to Paris to cover French business, terrorism, 30 00:02:03,720 --> 00:02:07,600 Speaker 1: and everything in between. He was appointed deputy Bureau chief 31 00:02:07,680 --> 00:02:11,120 Speaker 1: for Southern Europe and OH three. Eventually he became the 32 00:02:11,120 --> 00:02:15,360 Speaker 1: Wall Street Journals Health and Science Bureau chief in New York. 33 00:02:15,800 --> 00:02:20,000 Speaker 1: He has won numerous awards in journalism, including the Pulitzer 34 00:02:20,040 --> 00:02:23,760 Speaker 1: Prize twice. If this sounds like the perfect background for 35 00:02:23,800 --> 00:02:28,680 Speaker 1: any writer curious about the blood testing start up, there no, nos, Well, 36 00:02:28,760 --> 00:02:32,239 Speaker 1: it turned out that is exactly right. Uh. The Unicorn 37 00:02:32,320 --> 00:02:34,880 Speaker 1: turned out to be a fraud, which was broken by 38 00:02:34,960 --> 00:02:37,680 Speaker 1: Carrirew in the pages of the Wall Street Journal. He 39 00:02:37,760 --> 00:02:41,920 Speaker 1: has written a best selling book, Bad Blood, Secrets and 40 00:02:42,000 --> 00:02:46,200 Speaker 1: Lies in Silicon Valley about the entire Elizabeth Holmes and 41 00:02:46,280 --> 00:02:50,640 Speaker 1: thearaph O saga. John Carrirew, Welcome to Bloomberg. Thank you 42 00:02:50,680 --> 00:02:53,320 Speaker 1: for having me my pleasure. I have to start out 43 00:02:53,320 --> 00:02:55,639 Speaker 1: by saying I love the book. It was on my 44 00:02:55,760 --> 00:02:58,320 Speaker 1: list of ten to read this summer and I just 45 00:02:58,360 --> 00:03:01,240 Speaker 1: plowed through it over Labor Day week. Again, there's so 46 00:03:01,440 --> 00:03:05,720 Speaker 1: much material to cover. It's such a fascinating story. Let's 47 00:03:05,760 --> 00:03:09,160 Speaker 1: just go back to the beginning. How does Sara nos 48 00:03:09,240 --> 00:03:13,240 Speaker 1: and Elizabeth Holmes out in Silicon Valley first come on 49 00:03:13,360 --> 00:03:19,600 Speaker 1: your radar? It was mid December two thousand fourteen, and 50 00:03:19,720 --> 00:03:24,240 Speaker 1: I was on the subway UH commuting back from UH 51 00:03:24,800 --> 00:03:27,359 Speaker 1: my office in Midtown Manhattan to Brooklyn where I live, 52 00:03:27,480 --> 00:03:31,280 Speaker 1: reading the New Yorker magazine, and in that issue was 53 00:03:31,320 --> 00:03:34,360 Speaker 1: a long profile of Elizabeth Holmes by Ken all Letta 54 00:03:35,200 --> 00:03:39,720 Speaker 1: and um, it was a color glowing It was mostly 55 00:03:40,040 --> 00:03:42,760 Speaker 1: mostly glowing, with some, I have to say, with some 56 00:03:42,840 --> 00:03:47,880 Speaker 1: skeptical passages that I immediately picked up on, and UM, 57 00:03:47,920 --> 00:03:49,920 Speaker 1: you know that it was. It was an entertaining read 58 00:03:50,160 --> 00:03:53,280 Speaker 1: and interesting that there were, as I just said some 59 00:03:53,280 --> 00:03:57,720 Speaker 1: some things that struck me as odd in that story. UM. 60 00:03:58,320 --> 00:04:01,680 Speaker 1: One of the ways she she described, you know, how 61 00:04:01,800 --> 00:04:05,160 Speaker 1: her blood testing technology work, or how she worked, how 62 00:04:05,200 --> 00:04:07,800 Speaker 1: she summed it up, UH, sounded to me like a 63 00:04:07,880 --> 00:04:12,200 Speaker 1: high school chemistry student as opposed to sophisticated you know 64 00:04:12,280 --> 00:04:17,040 Speaker 1: lab scientists slash inventor um. But more than any particular thing, 65 00:04:17,080 --> 00:04:21,360 Speaker 1: it was this notion that a college dropout, someone who 66 00:04:21,400 --> 00:04:25,599 Speaker 1: had had two semesters of chemical engineering, had dropped out 67 00:04:26,000 --> 00:04:30,200 Speaker 1: and then gone on and invented groundbreaking new science that 68 00:04:30,279 --> 00:04:34,000 Speaker 1: was going to revolutionize you know, lab testing. So let 69 00:04:34,000 --> 00:04:37,960 Speaker 1: me jump in right here. So she goes to Stanford, finishes, 70 00:04:38,160 --> 00:04:41,560 Speaker 1: drops out after her freshman year. She's got no medical training, 71 00:04:41,640 --> 00:04:46,400 Speaker 1: she's got no organic chemistry, biology, um, blood chemistry, none 72 00:04:46,440 --> 00:04:49,839 Speaker 1: of the things one would normally think would go into 73 00:04:50,520 --> 00:04:55,839 Speaker 1: complex medical device manufacturing. This isn't a software startup where 74 00:04:55,880 --> 00:04:58,440 Speaker 1: you could just hey, anybody could code, and whether you 75 00:04:58,480 --> 00:05:01,680 Speaker 1: have the academic credentials or not as irrelevant. This is 76 00:05:01,720 --> 00:05:06,599 Speaker 1: a serious science, isn't it right. She she had zero qualifications. 77 00:05:06,640 --> 00:05:11,920 Speaker 1: I mean she had had literally had two undergraduate UH 78 00:05:12,120 --> 00:05:15,640 Speaker 1: courses with the same professor Channing Robertson, who ended up 79 00:05:15,720 --> 00:05:19,239 Speaker 1: being you know, her first enabler. Uh, that's an interesting 80 00:05:19,320 --> 00:05:23,000 Speaker 1: choice of words. Why did you select enabler? Well, so 81 00:05:23,040 --> 00:05:26,000 Speaker 1: he was for those listening who aren't familiar with him, 82 00:05:26,120 --> 00:05:29,960 Speaker 1: Channing Robertson was a star, rock star star of this 83 00:05:30,240 --> 00:05:34,080 Speaker 1: of the Stanford Engineering School faculty. Had been an expert 84 00:05:34,200 --> 00:05:37,560 Speaker 1: witness in the late nineties for the state of Minnesota 85 00:05:37,600 --> 00:05:42,120 Speaker 1: and its tobacco litigation, and um, you know, also was 86 00:05:42,200 --> 00:05:44,719 Speaker 1: really popular with students. He had a way with students, 87 00:05:44,720 --> 00:05:48,200 Speaker 1: he connected with them, and um, she had taken to 88 00:05:48,480 --> 00:05:51,239 Speaker 1: two courses with him, and then you know, came back 89 00:05:51,279 --> 00:05:56,800 Speaker 1: with this cockamami patent in UM after her her summer 90 00:05:56,839 --> 00:06:00,480 Speaker 1: in Singapore working at a lab in Singapore. Uh. So 91 00:06:00,680 --> 00:06:03,000 Speaker 1: we're now in in the fall of two thousand three, 92 00:06:03,640 --> 00:06:07,479 Speaker 1: and the patent was for this device that she envisioned, 93 00:06:07,520 --> 00:06:10,679 Speaker 1: which was essentially a wrist band that would have micro 94 00:06:10,800 --> 00:06:14,719 Speaker 1: needles that would come out and insert themselves into your 95 00:06:15,279 --> 00:06:20,360 Speaker 1: wrist and draw micro amounts of blood and and then 96 00:06:20,600 --> 00:06:25,839 Speaker 1: uh diagnosed whatever ailed you and cure you simultaneously. Um. 97 00:06:26,000 --> 00:06:28,000 Speaker 1: And it was clear, I mean, this was science fiction 98 00:06:28,080 --> 00:06:32,919 Speaker 1: to anyone involved an engineer or a lab scientist clear 99 00:06:32,960 --> 00:06:36,440 Speaker 1: that it was not feasible and probably ever feasible, at 100 00:06:36,480 --> 00:06:40,279 Speaker 1: least not for for decades. And uh you know, he 101 00:06:40,279 --> 00:06:45,080 Speaker 1: he chose to um go along with it and and 102 00:06:45,640 --> 00:06:48,240 Speaker 1: encouraged her to drop out, or at least didn't discourage 103 00:06:48,240 --> 00:06:51,360 Speaker 1: her to drop out, and then accompanied her on pitches 104 00:06:51,920 --> 00:06:54,360 Speaker 1: to vcs and so he gave her credibility. At that point, 105 00:06:54,400 --> 00:06:57,400 Speaker 1: she's nineteen years old, um, and he's the star of 106 00:06:57,440 --> 00:07:00,560 Speaker 1: the Stanford faculty. And then he joins the board and 107 00:07:00,640 --> 00:07:03,200 Speaker 1: he stays on there with her, accompanies her for the 108 00:07:03,560 --> 00:07:06,760 Speaker 1: next twelve years. Uh you know, he is for sure 109 00:07:06,880 --> 00:07:10,040 Speaker 1: her her original enabler. So one of the questions I 110 00:07:10,080 --> 00:07:12,160 Speaker 1: was going to ask you, but you kind of hinted 111 00:07:12,200 --> 00:07:15,520 Speaker 1: at the answer. Ready, you know, when did you first 112 00:07:15,520 --> 00:07:19,000 Speaker 1: start to smell that something was amiss? But it's pretty 113 00:07:19,040 --> 00:07:22,080 Speaker 1: clear you're you're saying right from the beginning, Well, this 114 00:07:22,120 --> 00:07:27,000 Speaker 1: struck you as a little off, Yes, But to be honest, 115 00:07:27,120 --> 00:07:31,440 Speaker 1: I probably would not have done anything with my intuition 116 00:07:31,640 --> 00:07:35,360 Speaker 1: had I not gotten approached by his source, who was 117 00:07:35,600 --> 00:07:39,720 Speaker 1: a pathologist in the Midwest who had gotten to know 118 00:07:39,800 --> 00:07:42,200 Speaker 1: the year before he moonlighted as the writer of this 119 00:07:42,280 --> 00:07:46,160 Speaker 1: obscure blog called Pathology Blog, which he spelled b L 120 00:07:46,280 --> 00:07:49,440 Speaker 1: A w G. And I had gotten him a year 121 00:07:49,560 --> 00:07:51,960 Speaker 1: prior to explain to me some of the complexities of 122 00:07:52,040 --> 00:07:55,280 Speaker 1: lab billing for a series on Medicare Medicare fraud had 123 00:07:55,280 --> 00:07:57,800 Speaker 1: been doing at the time. And he had read the 124 00:07:57,800 --> 00:08:02,000 Speaker 1: New Yorker story about Elizabeth Holmes too, and had immediately 125 00:08:02,000 --> 00:08:05,480 Speaker 1: been dubious even more than me. Uh in that you know, 126 00:08:05,560 --> 00:08:08,440 Speaker 1: he was much more familiar with with the intricacies of 127 00:08:08,480 --> 00:08:13,760 Speaker 1: lab science than I was. And he wrote a skeptical 128 00:08:13,960 --> 00:08:18,880 Speaker 1: item on his block. And uh, this guy named Richard Fuse, 129 00:08:20,040 --> 00:08:23,240 Speaker 1: who's a pretty big character in my book, by the way, 130 00:08:23,640 --> 00:08:27,040 Speaker 1: had been a childhood neighbor of Elizabeth and her parents 131 00:08:27,600 --> 00:08:31,480 Speaker 1: immediately got in touch with the Pathology blogger and told him, 132 00:08:31,840 --> 00:08:34,080 Speaker 1: you're on the right track. I think the areness as 133 00:08:34,120 --> 00:08:37,840 Speaker 1: a scam. You should keep digging into this. And Fuse 134 00:08:38,160 --> 00:08:42,360 Speaker 1: had been involved in litigation with Elizabeth Holmes. He had 135 00:08:42,440 --> 00:08:47,280 Speaker 1: patented a part of her vision that had caused her 136 00:08:47,400 --> 00:08:51,960 Speaker 1: to sue him, and she had steamrolled him with David Boys. 137 00:08:52,520 --> 00:08:55,840 Speaker 1: David Boys had become her attorney and thereness attorney, and 138 00:08:55,840 --> 00:08:59,160 Speaker 1: and they really steamrolled Fuse in this litigation, and during 139 00:08:59,160 --> 00:09:01,680 Speaker 1: the course of the lime atient, Fuse had become convinced, 140 00:09:02,200 --> 00:09:06,240 Speaker 1: as a actually trained doctor and medical inventor that thereon 141 00:09:06,320 --> 00:09:08,520 Speaker 1: us was a scam. Hold that thought, we're gonna come 142 00:09:08,559 --> 00:09:11,600 Speaker 1: back to that. Let's talk about some of those secrets 143 00:09:11,760 --> 00:09:17,120 Speaker 1: and lies. The question that I still haven't come to 144 00:09:17,480 --> 00:09:21,600 Speaker 1: a solid answer was simply this with was this a 145 00:09:21,679 --> 00:09:26,240 Speaker 1: scam from day one or did this eventually morph into 146 00:09:26,720 --> 00:09:29,679 Speaker 1: a scam? What it was the latter it wasn't a 147 00:09:29,720 --> 00:09:32,480 Speaker 1: scam from day one, and that she didn't drop out 148 00:09:32,480 --> 00:09:37,360 Speaker 1: of Stanford at nineteen and late two thousand three premeditating 149 00:09:37,559 --> 00:09:41,720 Speaker 1: a long con that would defraud investors and eventually put 150 00:09:41,800 --> 00:09:44,520 Speaker 1: patients in harm's way. That that was not in her 151 00:09:44,600 --> 00:09:48,440 Speaker 1: thoughts back then. Even though she's never spoken to me, um, 152 00:09:48,480 --> 00:09:52,360 Speaker 1: I know that she dropped out wanting to become a 153 00:09:52,400 --> 00:09:56,120 Speaker 1: successful Silicon Valley entrepreneur. Her idol was Steve Jobs. She 154 00:09:56,240 --> 00:10:00,920 Speaker 1: worshiped Apple and she wanted to follow in his footsteps. 155 00:10:01,440 --> 00:10:04,480 Speaker 1: And she also had this, you know, this notion that 156 00:10:04,520 --> 00:10:08,240 Speaker 1: she should do good for society because her her father 157 00:10:08,400 --> 00:10:12,080 Speaker 1: had worked at the State Department and various other government 158 00:10:12,120 --> 00:10:16,280 Speaker 1: agencies and and uh provided um, you know, help and 159 00:10:16,280 --> 00:10:19,160 Speaker 1: and disaster torn areas, and there were photos of him 160 00:10:19,200 --> 00:10:22,040 Speaker 1: and and he had raised her, uh with this notion 161 00:10:22,080 --> 00:10:25,079 Speaker 1: that she should live a life of purpose and and 162 00:10:25,600 --> 00:10:28,720 Speaker 1: that she should make her mark and not just by 163 00:10:28,760 --> 00:10:32,840 Speaker 1: getting rich. And so biotechnology, in her mind, was was 164 00:10:32,880 --> 00:10:37,040 Speaker 1: the gateway to achieving both becoming rich like her ancestors, 165 00:10:37,040 --> 00:10:40,400 Speaker 1: the Fleishman's had once been, and also doing good. And 166 00:10:40,440 --> 00:10:42,160 Speaker 1: so that's the way in which she was different from 167 00:10:42,200 --> 00:10:45,120 Speaker 1: Steve's jobs. She wanted a product that would that would 168 00:10:45,160 --> 00:10:49,520 Speaker 1: do good for society. Um. And uh, you know, so 169 00:10:49,559 --> 00:10:52,360 Speaker 1: it wasn't it wasn't a fraud. From the beginning she 170 00:10:52,480 --> 00:10:56,800 Speaker 1: had she had good intentions. It became a fraud with 171 00:10:56,920 --> 00:11:03,280 Speaker 1: the years as she confronted uh, you know, failures and difficulties. 172 00:11:03,320 --> 00:11:06,480 Speaker 1: Because science is hard. Medicine is hard. Science is hard. 173 00:11:06,600 --> 00:11:09,720 Speaker 1: So let let me ask you about that. A number 174 00:11:09,720 --> 00:11:12,040 Speaker 1: of people that you write about in the book point 175 00:11:12,080 --> 00:11:15,760 Speaker 1: out that the reason we do venus drawing, the reason 176 00:11:15,840 --> 00:11:18,160 Speaker 1: we take blood from your arm and fill three big 177 00:11:18,280 --> 00:11:21,960 Speaker 1: vials is that's a clean sample of blood. When you 178 00:11:22,000 --> 00:11:25,200 Speaker 1: do a pin prick, you're damaging tissue. Even if you 179 00:11:25,280 --> 00:11:28,880 Speaker 1: clean the surface of the skin. It's not as clean 180 00:11:28,920 --> 00:11:32,280 Speaker 1: a sample of of blood. So it makes makes me 181 00:11:32,400 --> 00:11:35,280 Speaker 1: raise the question, isn't it kind of reckless to say, oh, 182 00:11:35,320 --> 00:11:38,000 Speaker 1: I could you know, I could run into medicine and 183 00:11:38,000 --> 00:11:42,880 Speaker 1: figure this out despite lacking a background. I mean, it's 184 00:11:42,920 --> 00:11:47,600 Speaker 1: hubris and arrogance. It's incredibly naive to think that people 185 00:11:47,640 --> 00:11:52,040 Speaker 1: hadn't tried capillary blood draws. They had, and and one 186 00:11:52,080 --> 00:11:54,960 Speaker 1: of the problems with them, The biggest problem is is 187 00:11:55,000 --> 00:11:57,960 Speaker 1: what you say, which is that the risk UH that 188 00:11:58,440 --> 00:12:02,120 Speaker 1: basically capillary drop capillary blood is not as pure as 189 00:12:02,200 --> 00:12:07,679 Speaker 1: venus blood. It's polluted by tissue from cells and and 190 00:12:07,760 --> 00:12:12,640 Speaker 1: from skin, and UH that that stuff interferes with the 191 00:12:12,679 --> 00:12:17,120 Speaker 1: blood tests and so UH one of the biggest problems 192 00:12:17,320 --> 00:12:20,560 Speaker 1: when you try to do a blood test. UH, the 193 00:12:20,559 --> 00:12:23,560 Speaker 1: biggest problem is the potassium blood test, because what happens 194 00:12:23,600 --> 00:12:28,680 Speaker 1: is when you milk blood from the finger, you cause 195 00:12:29,400 --> 00:12:32,959 Speaker 1: the red blood cells in the blood to burst, and 196 00:12:33,080 --> 00:12:36,520 Speaker 1: the bursting UH causes a release of potassium, and so 197 00:12:36,600 --> 00:12:41,920 Speaker 1: it increases the concentration of potassium in your sample. And 198 00:12:41,920 --> 00:12:45,560 Speaker 1: and the concentration of potassium becomes artificially high, and that 199 00:12:45,600 --> 00:12:48,440 Speaker 1: little blood sample and In fact, that is one of 200 00:12:48,640 --> 00:12:52,000 Speaker 1: the problems that UH the ants ran into when it 201 00:12:52,080 --> 00:12:54,880 Speaker 1: started going live with its blood tests and Walgreen stores 202 00:12:54,920 --> 00:12:58,280 Speaker 1: in late two thou thirteen, was this hemolysis problem. And 203 00:12:58,360 --> 00:13:01,720 Speaker 1: this is in hindsight bias that was well known for decades. 204 00:13:01,800 --> 00:13:04,800 Speaker 1: This is not a new discovery, right, I mean, the 205 00:13:06,000 --> 00:13:09,680 Speaker 1: problems with capillary blood draws were well known among lab 206 00:13:09,760 --> 00:13:13,320 Speaker 1: scientists for sure. And then there's another problem that you 207 00:13:13,320 --> 00:13:15,680 Speaker 1: haven't talked about, which doesn't have to do necessarily with 208 00:13:15,720 --> 00:13:17,800 Speaker 1: the fact that it was blood pricked from the finger 209 00:13:18,440 --> 00:13:21,720 Speaker 1: that her vision revolved around. It's it's the how small 210 00:13:21,760 --> 00:13:24,760 Speaker 1: the sample was. She she wanted, you know, to be 211 00:13:24,800 --> 00:13:26,960 Speaker 1: able to do hundreds of tests from a drop or 212 00:13:26,960 --> 00:13:30,640 Speaker 1: two of blood, and no one had figured out how 213 00:13:30,679 --> 00:13:34,200 Speaker 1: to do that many tests from that small sample. The 214 00:13:34,360 --> 00:13:37,280 Speaker 1: basic reason is that there are about half half a 215 00:13:37,320 --> 00:13:41,360 Speaker 1: dozen big classes of blood tests, and each one of 216 00:13:41,400 --> 00:13:46,280 Speaker 1: these classes blood tests requires completely different laboratory techniques and 217 00:13:46,360 --> 00:13:49,640 Speaker 1: laboratory instruments. And so once you've done a couple of 218 00:13:49,679 --> 00:13:54,200 Speaker 1: blood tests that are saying immuno assays, and you try 219 00:13:54,360 --> 00:13:58,280 Speaker 1: to do blood tests from a different category, such as 220 00:13:58,520 --> 00:14:01,520 Speaker 1: general assays or hematasergy tests. You no longer have any 221 00:14:01,520 --> 00:14:05,480 Speaker 1: blood left because you've used your small sample to do 222 00:14:06,120 --> 00:14:08,719 Speaker 1: the test, and then you need more blood because the 223 00:14:09,240 --> 00:14:12,480 Speaker 1: other tests required completely different methods and completely different instruments. 224 00:14:12,559 --> 00:14:15,080 Speaker 1: And so no one had been able to crack that nut. 225 00:14:15,120 --> 00:14:17,040 Speaker 1: They've been trying to do so for more than two 226 00:14:17,040 --> 00:14:21,840 Speaker 1: decades an industry and uh in universities, and she came 227 00:14:21,880 --> 00:14:24,200 Speaker 1: along and claimed that she had solved all these problems, 228 00:14:24,240 --> 00:14:26,960 Speaker 1: even though she hadn't solved a single one of these problems. 229 00:14:27,000 --> 00:14:30,160 Speaker 1: She just stated her intention to solve them, and money 230 00:14:30,160 --> 00:14:33,440 Speaker 1: flowed in. Is that is that a fair? Well? She not, 231 00:14:33,800 --> 00:14:35,760 Speaker 1: I mean it's not quite. I mean that that would 232 00:14:36,000 --> 00:14:38,640 Speaker 1: that would be more accurate than what she did. Had 233 00:14:38,760 --> 00:14:43,040 Speaker 1: had she stated her intention to solve them, she asserted 234 00:14:43,080 --> 00:14:46,400 Speaker 1: that she had solved them. She said, I have solved 235 00:14:46,920 --> 00:14:50,080 Speaker 1: this nut that no one on earth has solved until now. 236 00:14:50,120 --> 00:14:54,640 Speaker 1: I have cracked it. And it was it was completely untrue. 237 00:14:54,960 --> 00:14:58,920 Speaker 1: So back to the question about not a fraud From 238 00:14:58,920 --> 00:15:03,120 Speaker 1: the beginning, when did it become clear that none of 239 00:15:03,160 --> 00:15:09,120 Speaker 1: their products worked? And they started lying to partners, potential investors, 240 00:15:09,440 --> 00:15:13,080 Speaker 1: even employees that hey, we we got a dead parrot 241 00:15:13,120 --> 00:15:16,240 Speaker 1: on our hands here right, So the lying actually started 242 00:15:16,320 --> 00:15:20,040 Speaker 1: very early on. I mean the book opens the prologue 243 00:15:20,080 --> 00:15:22,160 Speaker 1: is a scene that takes place in late two thousand 244 00:15:22,160 --> 00:15:25,720 Speaker 1: and six, and it's the CFO, the chief financial officer 245 00:15:25,720 --> 00:15:27,800 Speaker 1: if there on us at the time, learning that these 246 00:15:27,840 --> 00:15:32,200 Speaker 1: demos that he's bringing, he's been bringing perspective investors around 247 00:15:32,360 --> 00:15:37,800 Speaker 1: four for about eight months, are not really real. There's 248 00:15:37,840 --> 00:15:40,520 Speaker 1: a fake machine, it spits out a fake piece of paper. Right. 249 00:15:40,600 --> 00:15:42,760 Speaker 1: Part of the demo is real, the micro fluid ix 250 00:15:42,800 --> 00:15:44,640 Speaker 1: part of the demo is real, but then the result 251 00:15:44,680 --> 00:15:47,320 Speaker 1: at the end as a prerecorded results, so it's essentially 252 00:15:47,360 --> 00:15:49,560 Speaker 1: not the result from the blood that you see flowing 253 00:15:49,560 --> 00:15:51,680 Speaker 1: through the cartridge. And so he goes to her and 254 00:15:51,680 --> 00:15:53,640 Speaker 1: he says, you know, we can't keep doing this. The 255 00:15:54,000 --> 00:15:56,520 Speaker 1: investors I'm bringing around are under the impression that this 256 00:15:56,600 --> 00:15:59,440 Speaker 1: is totally real, and it's not. It's half fake. So 257 00:16:00,120 --> 00:16:02,760 Speaker 1: you know, that's essentially securities fraud. That's lying to investors. 258 00:16:02,840 --> 00:16:05,800 Speaker 1: We have to stop. And she turns ice cold and 259 00:16:05,840 --> 00:16:08,560 Speaker 1: says to him, you know you're not a team player. 260 00:16:08,960 --> 00:16:12,160 Speaker 1: I think you should leave right now. And it's very 261 00:16:12,200 --> 00:16:14,400 Speaker 1: clear from her demeanor and from her tone of voice 262 00:16:14,440 --> 00:16:16,640 Speaker 1: that she doesn't just mean leave leave her office, she 263 00:16:16,720 --> 00:16:19,960 Speaker 1: means leave the company. And he's just been fired, and 264 00:16:19,960 --> 00:16:23,560 Speaker 1: and so the the the unethical behavior, and the line 265 00:16:24,040 --> 00:16:27,640 Speaker 1: goes back as far as easily two thousand six, meaning 266 00:16:28,400 --> 00:16:30,080 Speaker 1: you know, less than two years into the life of 267 00:16:30,080 --> 00:16:33,320 Speaker 1: the company. And just to to elaborate a little bit 268 00:16:33,560 --> 00:16:37,000 Speaker 1: the technology, there were three iterations of the technology. There 269 00:16:37,040 --> 00:16:40,080 Speaker 1: was a real attempt at micro using micro fluid ix, 270 00:16:40,640 --> 00:16:44,640 Speaker 1: which is uh the repurposing of the micro fabrication techniques 271 00:16:44,680 --> 00:16:49,800 Speaker 1: that the computer computer chip industry pioneered. Lab scientists realized 272 00:16:49,800 --> 00:16:53,320 Speaker 1: they could use those microfabrication techniques to create tiny channels 273 00:16:53,520 --> 00:16:56,640 Speaker 1: through which you could put minute amounts of liquids. She 274 00:16:56,640 --> 00:16:58,640 Speaker 1: she made a real effort in the early years of 275 00:16:58,640 --> 00:17:02,320 Speaker 1: her company at doing a my micro fluidic device and 276 00:17:02,480 --> 00:17:05,000 Speaker 1: hit a wall. They just needed many more years, and 277 00:17:05,040 --> 00:17:07,080 Speaker 1: she didn't have the patients, and she was probably under 278 00:17:07,119 --> 00:17:11,160 Speaker 1: pressure from investors, and so they stopped that effort about 279 00:17:11,200 --> 00:17:13,760 Speaker 1: a year after that scene where she fires the CFO 280 00:17:14,119 --> 00:17:17,400 Speaker 1: and pivoted to the second iteration of the technology, which 281 00:17:17,480 --> 00:17:21,040 Speaker 1: was a converted glue dispensing robot. It was it was 282 00:17:21,080 --> 00:17:23,960 Speaker 1: a glue dispensing robot that a Theranos engineer had had 283 00:17:24,000 --> 00:17:26,479 Speaker 1: purchased from a company called piston Or in New Jersey 284 00:17:26,880 --> 00:17:30,320 Speaker 1: and essentially repurposed to be a blood testing machine. He 285 00:17:30,400 --> 00:17:33,960 Speaker 1: affixed a pipette to the robotic arm which had three 286 00:17:33,960 --> 00:17:37,760 Speaker 1: degrees of motion, and then he reprogrammed it to to 287 00:17:38,520 --> 00:17:41,080 Speaker 1: mimic what a lab scientist would do to test blood 288 00:17:41,080 --> 00:17:44,560 Speaker 1: at the bench. And she disguised it with the sleek 289 00:17:44,800 --> 00:17:47,800 Speaker 1: black and white case that she got a well known 290 00:17:48,320 --> 00:17:51,480 Speaker 1: industrial engineer to design, and that was called She called 291 00:17:51,520 --> 00:17:55,520 Speaker 1: it the Edison, named it after Thomas Edison, and um 292 00:17:55,640 --> 00:18:00,440 Speaker 1: the instrumentation basically the techniques of the editor and were 293 00:18:00,760 --> 00:18:03,760 Speaker 1: there was nothing new. It was something you know, uh 294 00:18:04,080 --> 00:18:09,200 Speaker 1: kemmy Luminescent immuno essays was a lab testing technique that 295 00:18:09,240 --> 00:18:11,359 Speaker 1: had been pioneered in the early eighties and that was 296 00:18:11,600 --> 00:18:15,439 Speaker 1: what the Edison did. And the third generation so the 297 00:18:15,560 --> 00:18:17,719 Speaker 1: Edison could only do immuno essays, which are this one 298 00:18:17,760 --> 00:18:21,080 Speaker 1: class of blood test. And of course, you know, she 299 00:18:21,119 --> 00:18:23,359 Speaker 1: wanted something because she was beginning to claim that she 300 00:18:23,480 --> 00:18:26,080 Speaker 1: had something that could do all the blood tests, so 301 00:18:26,119 --> 00:18:27,959 Speaker 1: she needed a machine that could do more than just 302 00:18:28,000 --> 00:18:30,439 Speaker 1: one class of blood tests. So the work on what 303 00:18:30,600 --> 00:18:33,280 Speaker 1: she called the Mini Lab, began in late two thousand ten, 304 00:18:33,840 --> 00:18:37,880 Speaker 1: and that work, you know, continued until recently. Um and 305 00:18:38,080 --> 00:18:40,479 Speaker 1: they've never gotten the mini lab to work. It's it's 306 00:18:40,520 --> 00:18:43,240 Speaker 1: a bigger machine than the Edison, and it's an attempt 307 00:18:43,560 --> 00:18:46,800 Speaker 1: to miniaturize all these laboratory instruments that are used to 308 00:18:46,800 --> 00:18:49,760 Speaker 1: do these different classes of blood tests. And they've not 309 00:18:49,920 --> 00:18:52,800 Speaker 1: never gotten it to work. What about the commercial stuff? 310 00:18:52,840 --> 00:18:56,000 Speaker 1: They were buying the commercial machines and then deluding the 311 00:18:56,200 --> 00:19:00,280 Speaker 1: full blood samp And so that became necessary because think 312 00:19:00,320 --> 00:19:04,480 Speaker 1: normal people if they haven't gotten their device to work 313 00:19:04,560 --> 00:19:07,399 Speaker 1: yet or will wait until they get it to work 314 00:19:07,440 --> 00:19:10,640 Speaker 1: to commercialize it. Right when you agree that that most 315 00:19:10,720 --> 00:19:13,760 Speaker 1: most people would do that, especially especially in the realm 316 00:19:13,760 --> 00:19:16,400 Speaker 1: of medicine where where your product actually you know, has 317 00:19:16,440 --> 00:19:19,040 Speaker 1: an impact on people's lives. Well, she didn't do that. 318 00:19:19,160 --> 00:19:24,720 Speaker 1: She went live with her vaunted fingerstick blood tests in 319 00:19:24,880 --> 00:19:28,000 Speaker 1: the fall of two thirteen in Walgreen stores in northern 320 00:19:28,040 --> 00:19:31,359 Speaker 1: California and Arizona. And because the mini Lab was just 321 00:19:31,400 --> 00:19:34,720 Speaker 1: a prototype that didn't work at the time, what she did, 322 00:19:34,840 --> 00:19:38,000 Speaker 1: what she and her boyfriend ordered Thereness employees to do, 323 00:19:38,119 --> 00:19:45,080 Speaker 1: was her boyfriend, her number two executives. They ordered people 324 00:19:45,119 --> 00:19:48,280 Speaker 1: in the lab to to hack machines made by the 325 00:19:48,320 --> 00:19:52,800 Speaker 1: German company siemens Um and UH to adapt them to 326 00:19:53,040 --> 00:19:56,399 Speaker 1: small fingerstick samples. And one of the steps that was 327 00:19:56,480 --> 00:19:59,800 Speaker 1: needed to to do this hacking was to dilute the 328 00:20:00,040 --> 00:20:03,080 Speaker 1: tiny fingerstick samples to create more volume in the cup. 329 00:20:03,600 --> 00:20:07,440 Speaker 1: Because these regular machines from from good old Seamans could 330 00:20:07,600 --> 00:20:12,119 Speaker 1: only test a normal sized sample of blood, and so 331 00:20:12,160 --> 00:20:15,040 Speaker 1: you need a lot more sample for the machine to work. 332 00:20:15,160 --> 00:20:19,080 Speaker 1: And so they diluted the fingerstick blood to create more volume, 333 00:20:19,400 --> 00:20:23,199 Speaker 1: which itself caused all sorts of problems. Let's talk a 334 00:20:23,240 --> 00:20:26,360 Speaker 1: little bit about the process that it took to get 335 00:20:26,400 --> 00:20:29,080 Speaker 1: people to speak to you, and the threats of litigation 336 00:20:29,200 --> 00:20:34,040 Speaker 1: and everything against the journal. Um. How challenging was it 337 00:20:34,119 --> 00:20:37,840 Speaker 1: to bring this story to light and ultimately to get 338 00:20:37,840 --> 00:20:40,840 Speaker 1: it in print at the Wall Street Journal? By far 339 00:20:41,000 --> 00:20:43,760 Speaker 1: the toughest story that I've ever done in twenty years, 340 00:20:43,880 --> 00:20:48,480 Speaker 1: twenty plus years of reporting. Um that the challenge was twofold. 341 00:20:48,520 --> 00:20:52,240 Speaker 1: It was getting sources to trust me and to talk 342 00:20:52,280 --> 00:20:57,480 Speaker 1: to me, Um, which was was very hard because uh, 343 00:20:57,119 --> 00:21:01,040 Speaker 1: uh Elizabeth Holmes. Uh, they knew that Elizabeth Holmes and 344 00:21:01,040 --> 00:21:03,840 Speaker 1: her company were very litigious, and they knew that the 345 00:21:04,119 --> 00:21:09,040 Speaker 1: company's outside council was was David Boys, America's premier litigated. 346 00:21:09,560 --> 00:21:13,040 Speaker 1: And and when you say litigious, not just you know, 347 00:21:13,200 --> 00:21:16,199 Speaker 1: everybody knows people who litigious. These people were seemed to 348 00:21:16,240 --> 00:21:23,520 Speaker 1: be extremely aggressive and used all sorts of questionable approaches. Right. 349 00:21:23,520 --> 00:21:26,680 Speaker 1: Elizabeth Holmes had sued former employees early on in two 350 00:21:26,880 --> 00:21:30,000 Speaker 1: as far back as two thousand seven for supposedly stealing 351 00:21:30,040 --> 00:21:34,159 Speaker 1: trade secrets. And then she had sued her childhood neighbor, 352 00:21:34,560 --> 00:21:38,119 Speaker 1: Richard Fuse, who had patented a part of her vision 353 00:21:38,800 --> 00:21:41,639 Speaker 1: um that and that infuriated her, so she came up 354 00:21:41,720 --> 00:21:44,840 Speaker 1: with a story that he and his son had had 355 00:21:44,840 --> 00:21:49,960 Speaker 1: basically colluded to steal proprietary thereinos patent information from a 356 00:21:50,040 --> 00:21:53,600 Speaker 1: law firm where where the Sun was working. But there 357 00:21:53,680 --> 00:21:57,959 Speaker 1: was never any proof whatsoever uh that that that ever happened. 358 00:21:57,960 --> 00:22:00,440 Speaker 1: And and personally, based on all my report, I believe 359 00:22:00,480 --> 00:22:03,240 Speaker 1: that it never did happen and that those were false accusations. 360 00:22:03,359 --> 00:22:07,440 Speaker 1: When you mentioned trade secrets, what trade secrets that they 361 00:22:07,440 --> 00:22:10,680 Speaker 1: had nothing? No, technically was what were there any trade secrets? 362 00:22:10,840 --> 00:22:13,760 Speaker 1: And by the way, I'm relying primarily on your book. 363 00:22:13,800 --> 00:22:16,720 Speaker 1: When I say I don't see any trade secrets here, 364 00:22:16,760 --> 00:22:20,280 Speaker 1: am I rong? No? There were There weren't really any 365 00:22:20,280 --> 00:22:24,560 Speaker 1: trade trade secrets. Was is a technical definition of that 366 00:22:24,680 --> 00:22:28,840 Speaker 1: is it was basically a way to to say, you know, a, 367 00:22:29,080 --> 00:22:31,679 Speaker 1: we can't tell you what we have because if we 368 00:22:31,760 --> 00:22:35,040 Speaker 1: tell you about it, our big competitors, Quest and lap 369 00:22:35,080 --> 00:22:39,680 Speaker 1: Corps are going to copy us um and and be uh, 370 00:22:39,760 --> 00:22:42,399 Speaker 1: you know, you all of your reporting. You have to 371 00:22:42,840 --> 00:22:46,960 Speaker 1: either destroy it or or return it to us. Uh, 372 00:22:47,280 --> 00:22:49,280 Speaker 1: you know, because it's sensitive and it could do us 373 00:22:49,359 --> 00:22:52,280 Speaker 1: great harm. These were the arguments that that Saronis and 374 00:22:52,359 --> 00:22:55,560 Speaker 1: David Boys used to try to get us to kill 375 00:22:55,720 --> 00:22:58,840 Speaker 1: my reporting and to not publish the story. Well, they 376 00:22:58,840 --> 00:23:00,960 Speaker 1: were right, it was sense of and it could do 377 00:23:01,040 --> 00:23:05,159 Speaker 1: them great harm. However, there were no It doesn't seem 378 00:23:05,200 --> 00:23:08,439 Speaker 1: like there was anything other than the bad behavior and 379 00:23:08,600 --> 00:23:12,200 Speaker 1: fraud in the company that you revealed, right, And so 380 00:23:12,240 --> 00:23:15,640 Speaker 1: it gave rise to a surreal five hour showdown at 381 00:23:15,640 --> 00:23:18,720 Speaker 1: one point in in June of two fifteen at the 382 00:23:18,800 --> 00:23:22,919 Speaker 1: journal's offices in a conference room, uh pitting me and 383 00:23:23,040 --> 00:23:25,919 Speaker 1: my editor of mix A Canolfi and and our lawyer 384 00:23:26,040 --> 00:23:28,760 Speaker 1: Jake Conty on one side of the table, and David 385 00:23:28,800 --> 00:23:31,639 Speaker 1: Boys and two of his associates, and and his former 386 00:23:32,359 --> 00:23:34,600 Speaker 1: boys Schiller partner Heather King, who had become the General 387 00:23:34,640 --> 00:23:38,520 Speaker 1: council of Theonis, And we went around in circles for 388 00:23:38,600 --> 00:23:41,520 Speaker 1: hours because um, you know, I had sent them a 389 00:23:41,520 --> 00:23:43,280 Speaker 1: list of questions ahead of time, and I was trying 390 00:23:43,320 --> 00:23:45,720 Speaker 1: to get answers to these questions, and they would say, well, 391 00:23:46,160 --> 00:23:48,760 Speaker 1: we can't answer that question because it's a trade secret, 392 00:23:48,960 --> 00:23:53,639 Speaker 1: covers trade secrets, and and of course, uh, my questions 393 00:23:54,160 --> 00:23:57,480 Speaker 1: went to the essence of weather THEONIS really had technology 394 00:23:57,480 --> 00:24:00,560 Speaker 1: and really was using proprietary technology to do it's blood 395 00:24:00,600 --> 00:24:04,240 Speaker 1: tests based on my sources, my confidential sources, it wasn't. 396 00:24:04,440 --> 00:24:07,439 Speaker 1: So I would ask things like, how many of the 397 00:24:08,520 --> 00:24:12,480 Speaker 1: blood tests on your menu are you doing right now 398 00:24:12,680 --> 00:24:16,800 Speaker 1: with para nos proprietary technology? And they would say, we 399 00:24:16,840 --> 00:24:20,080 Speaker 1: can't answer that. That's a trade secret. And I said, well, 400 00:24:20,119 --> 00:24:23,760 Speaker 1: are you and using any third party machines by the 401 00:24:23,840 --> 00:24:26,679 Speaker 1: likes of Semens to do any of these tests? We 402 00:24:26,680 --> 00:24:29,080 Speaker 1: can't answer that, that's a trade secret. And it got 403 00:24:29,119 --> 00:24:32,679 Speaker 1: to a point where I said, well, you know, how 404 00:24:32,760 --> 00:24:36,120 Speaker 1: can how can you using a third party machine made 405 00:24:36,160 --> 00:24:40,520 Speaker 1: by another company? And modifying it be a trade secret. 406 00:24:40,760 --> 00:24:44,960 Speaker 1: That's not inventing anything, that's not doing anything new. And again, 407 00:24:45,119 --> 00:24:47,639 Speaker 1: you know, we'd go around in circles. I described the 408 00:24:47,680 --> 00:24:50,080 Speaker 1: scene in the book, and I think it's chapter twenty one, 409 00:24:50,800 --> 00:24:53,159 Speaker 1: and I felt like I was watching a performance of 410 00:24:53,200 --> 00:24:56,760 Speaker 1: the theater of the absurd um And and towards the 411 00:24:56,840 --> 00:24:59,400 Speaker 1: end of that meeting, Boys let us know that that 412 00:24:59,440 --> 00:25:02,960 Speaker 1: he'll he would be sending us correspondence written correspondence. Oh, 413 00:25:03,000 --> 00:25:05,480 Speaker 1: I've gotten written a correspondence from him. Let me share 414 00:25:05,480 --> 00:25:08,080 Speaker 1: a quick story. So I write a review of the book, 415 00:25:08,119 --> 00:25:11,040 Speaker 1: and I talked about all the red flags for investors, 416 00:25:11,920 --> 00:25:18,119 Speaker 1: not really concerned so much about um the details of 417 00:25:18,119 --> 00:25:22,320 Speaker 1: the litigation. Now, I do say that some people's reputation shafferd. 418 00:25:22,359 --> 00:25:25,720 Speaker 1: I mentioned George Schultz, I mentioned David Boyce. We get 419 00:25:25,720 --> 00:25:30,320 Speaker 1: a nasty graham from Boys and his legal um firm. 420 00:25:30,359 --> 00:25:34,160 Speaker 1: And I have to tell you, I was genuinely shocked 421 00:25:34,320 --> 00:25:39,920 Speaker 1: that my opinion column based on your book, uh, generated 422 00:25:39,960 --> 00:25:44,600 Speaker 1: this intellectually disingenuous thing full of like you made all 423 00:25:44,640 --> 00:25:46,600 Speaker 1: that stuff up. I had to go through your book 424 00:25:46,720 --> 00:25:49,280 Speaker 1: page by page. This is page to seventy eight. This 425 00:25:49,320 --> 00:25:51,879 Speaker 1: is page to sixty three is a page. It was 426 00:25:52,040 --> 00:25:56,040 Speaker 1: a very bizarre experience. What was the rest of your experiences? 427 00:25:56,160 --> 00:26:01,159 Speaker 1: Like fighting boys. He's got a reputation as literally the 428 00:26:01,200 --> 00:26:05,000 Speaker 1: premier litigator in the country, right. And so after that 429 00:26:05,320 --> 00:26:09,000 Speaker 1: five hours showdown, we got a first letter that hinted 430 00:26:09,040 --> 00:26:13,640 Speaker 1: at litigation threats if we didn't immediately return or destroy 431 00:26:13,840 --> 00:26:17,280 Speaker 1: the supposed trade secrets that I had obtained through my reporting. 432 00:26:17,680 --> 00:26:20,959 Speaker 1: And then a few days later a I believe it 433 00:26:21,000 --> 00:26:27,240 Speaker 1: was a twenty six page letter that was just this 434 00:26:27,240 --> 00:26:31,520 Speaker 1: this assault on my journalistic integrity and this attempt to 435 00:26:31,920 --> 00:26:35,840 Speaker 1: portray me as a rogue reporter, that that the journal 436 00:26:35,840 --> 00:26:39,560 Speaker 1: should disown and um. And at the end of that letter, 437 00:26:39,720 --> 00:26:42,920 Speaker 1: it was very explicit that if we continued to proceed 438 00:26:42,960 --> 00:26:46,840 Speaker 1: with my reporting that the journal would be sued. And 439 00:26:47,240 --> 00:26:53,000 Speaker 1: even as these increasingly threatening letters land, um, some of 440 00:26:53,000 --> 00:26:57,960 Speaker 1: my sources start either going dark or calling me petrified 441 00:26:58,119 --> 00:27:01,560 Speaker 1: because they tell me they're being followed um and they're 442 00:27:01,600 --> 00:27:04,680 Speaker 1: being threatened as well. One of my sources, it has 443 00:27:04,720 --> 00:27:08,720 Speaker 1: since emerged, was Tyler Schultz, a young man who was 444 00:27:08,760 --> 00:27:12,120 Speaker 1: the grandson of the former Secretary of State George Schultz, 445 00:27:12,200 --> 00:27:15,560 Speaker 1: who was a member of the theraness board. Tyler is 446 00:27:15,640 --> 00:27:18,119 Speaker 1: essentially the hero of He's a hero. I wouldn't say 447 00:27:18,119 --> 00:27:20,200 Speaker 1: he's the only hero, Okay, I would I would say 448 00:27:20,400 --> 00:27:23,639 Speaker 1: another guy whom I referred to as Alan Beam in 449 00:27:23,640 --> 00:27:27,000 Speaker 1: the book, who's the ex lab director. That's a pseudonym. 450 00:27:27,640 --> 00:27:30,679 Speaker 1: I would say he's arguably the bigger hero because he 451 00:27:30,720 --> 00:27:32,359 Speaker 1: was the first to to talk to me and to 452 00:27:32,760 --> 00:27:35,760 Speaker 1: and to launch my investigation. But Tyler is absolutely a 453 00:27:35,800 --> 00:27:39,679 Speaker 1: hero in this. And Tyler had worked at the company 454 00:27:39,720 --> 00:27:43,240 Speaker 1: for eight months, become convinced during his stint there, based 455 00:27:43,240 --> 00:27:45,959 Speaker 1: on what he saw, seen and heard, that the company 456 00:27:46,000 --> 00:27:49,359 Speaker 1: was a fraud, tried to alert his grandfather, tried to 457 00:27:49,359 --> 00:27:51,840 Speaker 1: talk sense into him, hadn't been able to and then 458 00:27:51,880 --> 00:27:54,199 Speaker 1: had had had to keep that all bottled up for 459 00:27:54,240 --> 00:27:57,160 Speaker 1: a year until I came along and made contact with him, 460 00:27:57,200 --> 00:28:00,760 Speaker 1: and then he became croberating source. And after that five 461 00:28:00,760 --> 00:28:03,960 Speaker 1: hour meeting um or in fact it was, it was 462 00:28:03,960 --> 00:28:07,720 Speaker 1: a little bit before even but unbeknownst to me, uh, 463 00:28:07,960 --> 00:28:13,080 Speaker 1: two boys Schiller attorneys ambushed Tyler at his grandfather, George's 464 00:28:13,119 --> 00:28:16,760 Speaker 1: house off the Stanford campus and tried to get him 465 00:28:16,760 --> 00:28:21,399 Speaker 1: to sign documents. Essentially, uh, you know, acknowledging that he 466 00:28:21,400 --> 00:28:25,240 Speaker 1: had been a source for the journal and naming other 467 00:28:25,480 --> 00:28:29,560 Speaker 1: journal sources. And at that point began a a three 468 00:28:29,680 --> 00:28:34,359 Speaker 1: or four month campaign of threats and intimidation against Tyler Um. 469 00:28:34,560 --> 00:28:39,280 Speaker 1: He had to hire his own counsel up him. They 470 00:28:39,760 --> 00:28:43,160 Speaker 1: at one point, a a lawyer for boys Schiller named 471 00:28:43,200 --> 00:28:49,440 Speaker 1: Mike Brill, threatened to uh bankrupt Tyler Schultz's entire family 472 00:28:49,840 --> 00:28:52,959 Speaker 1: if he didn't sign the documents that Sarons wanted him 473 00:28:52,960 --> 00:28:56,600 Speaker 1: to sign. And the documents were an affidavit where he 474 00:28:56,720 --> 00:29:00,800 Speaker 1: basically acknowledged having talked to me and and and said 475 00:29:01,080 --> 00:29:04,400 Speaker 1: it was an essentially essentially a recanting of everything he 476 00:29:04,480 --> 00:29:06,840 Speaker 1: told me. And then they also wanted him to to 477 00:29:06,960 --> 00:29:09,840 Speaker 1: name my sources. And and Tyler never signed any of 478 00:29:09,840 --> 00:29:15,240 Speaker 1: these documents despite these these outrageous threats uh that were made, 479 00:29:15,800 --> 00:29:17,920 Speaker 1: and uh, you know, stood firm and in large part 480 00:29:17,960 --> 00:29:19,640 Speaker 1: thanks to him, I was able to go to print 481 00:29:19,720 --> 00:29:22,480 Speaker 1: months later with my first story which broke the scandal 482 00:29:22,560 --> 00:29:29,080 Speaker 1: open that Yet, let's continue discussing the fall. So you 483 00:29:29,120 --> 00:29:32,520 Speaker 1: have a couple of people who were insiders, Um, George 484 00:29:32,520 --> 00:29:36,160 Speaker 1: Schultz's grandson Tyler. There was a woman who worked with 485 00:29:36,240 --> 00:29:39,840 Speaker 1: him who worked in the lab. Chung who who apparently 486 00:29:39,960 --> 00:29:42,760 Speaker 1: was scared out of her mind? Right, what what happened 487 00:29:42,760 --> 00:29:45,479 Speaker 1: with her? What did she do? What was she sharing 488 00:29:45,520 --> 00:29:49,480 Speaker 1: with you? And what happened? Why? What were the intimidation attempts? 489 00:29:49,680 --> 00:29:54,080 Speaker 1: So boys and his henchmen came to the Journal's offices. 490 00:29:54,120 --> 00:29:56,880 Speaker 1: I think I believe it was on Tuesday in late June, 491 00:29:57,160 --> 00:30:00,959 Speaker 1: and that Friday, three days later, h Erica was working 492 00:30:01,000 --> 00:30:03,360 Speaker 1: at her new employer. She had left the as she 493 00:30:03,400 --> 00:30:05,560 Speaker 1: had left Aaroness in fact, the day after Tyler had 494 00:30:05,600 --> 00:30:07,680 Speaker 1: left Theariness a year prior, and she was now working 495 00:30:07,760 --> 00:30:10,520 Speaker 1: at a new company. So it's a year after she quit, right, 496 00:30:10,800 --> 00:30:13,480 Speaker 1: and she's working late at this new company, and I 497 00:30:13,520 --> 00:30:16,360 Speaker 1: think it was Sunny Veil, California, and one of her 498 00:30:16,400 --> 00:30:18,840 Speaker 1: colleagues taps around the shoulder and says, you know, there's 499 00:30:18,880 --> 00:30:21,800 Speaker 1: a man who's been waiting outside for a long time, 500 00:30:21,840 --> 00:30:24,360 Speaker 1: saying he wants to talk to you. And so her 501 00:30:24,520 --> 00:30:27,040 Speaker 1: sort of alarm bell start ringing in her head because 502 00:30:27,080 --> 00:30:31,720 Speaker 1: the the head of human resources at UH, Saraonis Uh, 503 00:30:31,760 --> 00:30:35,400 Speaker 1: this woman Mona, who was uh you know, part of 504 00:30:35,400 --> 00:30:39,840 Speaker 1: the inner circle UH with with Elizabeth Holmes and Sunny 505 00:30:39,840 --> 00:30:43,400 Speaker 1: Bowani had been trying to reach her and leaving increasingly 506 00:30:43,440 --> 00:30:47,600 Speaker 1: frantic messages that day, and so immediately Erica was on 507 00:30:47,640 --> 00:30:50,640 Speaker 1: her guards, and so she asked the colleague who had 508 00:30:50,640 --> 00:30:52,880 Speaker 1: tapped her on the shoulder, to accompany her to her 509 00:30:52,920 --> 00:30:56,400 Speaker 1: car as she left the office, which the colleague did, 510 00:30:56,560 --> 00:30:59,600 Speaker 1: and when they walked out of the building, a young 511 00:30:59,720 --> 00:31:02,760 Speaker 1: man came out of a black suv and made a 512 00:31:02,800 --> 00:31:07,720 Speaker 1: beeline toward them and handed to Erica an envelope uh 513 00:31:07,720 --> 00:31:12,080 Speaker 1: and the envelope contained a letter, very aggressive letter assigned 514 00:31:12,080 --> 00:31:15,440 Speaker 1: by David Boys, threatening to sue her for disclosing trade 515 00:31:15,440 --> 00:31:18,280 Speaker 1: secrets and giving her an ultimatum, which is that she 516 00:31:18,320 --> 00:31:21,840 Speaker 1: had to meet with him and his boy scheller associates 517 00:31:22,120 --> 00:31:24,080 Speaker 1: by a certain day and a certain time or she 518 00:31:24,080 --> 00:31:26,880 Speaker 1: would be sued. But before she even got to the letter, 519 00:31:27,000 --> 00:31:29,640 Speaker 1: what freaked her out the most was that the envelope 520 00:31:29,920 --> 00:31:35,040 Speaker 1: had her name and an addressed typed on it, and 521 00:31:35,080 --> 00:31:39,840 Speaker 1: the address was a house in East Palo Alto of 522 00:31:39,880 --> 00:31:43,120 Speaker 1: a colleague at her new company that she had been 523 00:31:43,200 --> 00:31:46,360 Speaker 1: staying at for less than two weeks. Because Erica had 524 00:31:46,360 --> 00:31:49,360 Speaker 1: planned on moving to China and so she had given 525 00:31:49,440 --> 00:31:53,240 Speaker 1: up the lease on her place in Oakland just a 526 00:31:53,240 --> 00:31:56,200 Speaker 1: couple of weeks prior, and started staying with a colleague, 527 00:31:56,240 --> 00:31:59,880 Speaker 1: basically shocking at a colleague's house. UH and niece Palo Alto, 528 00:32:00,080 --> 00:32:03,080 Speaker 1: and no one knew she was staying there except for 529 00:32:03,120 --> 00:32:06,120 Speaker 1: the colleague. Her mother didn't even know she was staying there, 530 00:32:06,400 --> 00:32:09,720 Speaker 1: so there was absolutely no way to have known this 531 00:32:09,760 --> 00:32:13,280 Speaker 1: were this was her new address without having followed her. 532 00:32:13,840 --> 00:32:17,000 Speaker 1: And so so she goes home that that evening Friday 533 00:32:17,040 --> 00:32:20,880 Speaker 1: evening petrified and stays inside this this house in East 534 00:32:20,880 --> 00:32:23,480 Speaker 1: Palo Alta with the blind closed all weekend, doesn't dare 535 00:32:23,520 --> 00:32:25,880 Speaker 1: go out. And then first thing on Monday morning, she 536 00:32:25,960 --> 00:32:28,920 Speaker 1: calls me and she's terrified, and she tells me what 537 00:32:29,160 --> 00:32:32,600 Speaker 1: has happened, And UM, I'm in my car at that point, 538 00:32:32,640 --> 00:32:36,240 Speaker 1: double parked on a street in Brooklyn, waiting for the 539 00:32:36,280 --> 00:32:39,400 Speaker 1: street sweeping truck to go by. That's one of the 540 00:32:39,440 --> 00:32:44,840 Speaker 1: better aspects of UH living in New York City. Uh, 541 00:32:44,920 --> 00:32:48,960 Speaker 1: I'm being ironic. Um, And uh so I answered the 542 00:32:48,960 --> 00:32:51,320 Speaker 1: phone and it's her and we talk and I realized 543 00:32:51,360 --> 00:32:53,760 Speaker 1: that she's right. There's no way. I try to run 544 00:32:53,760 --> 00:32:56,600 Speaker 1: through the scenarios and the permutations, there's no way anyone 545 00:32:56,640 --> 00:32:59,800 Speaker 1: could have known that was her address without having her followed. 546 00:33:00,000 --> 00:33:02,280 Speaker 1: How many people in the book felt like they were 547 00:33:02,320 --> 00:33:05,360 Speaker 1: being followed? How many participants in the book or that 548 00:33:05,400 --> 00:33:09,560 Speaker 1: you didn't might not have printed? At least three? Alan Beam, 549 00:33:09,840 --> 00:33:13,600 Speaker 1: the ex lab director Again that's a pseudonym. Uh, Tyler, 550 00:33:13,680 --> 00:33:16,760 Speaker 1: Schultz and Erica all either got word that they were 551 00:33:16,800 --> 00:33:19,840 Speaker 1: being followed or strongly suspected they were being followed, or 552 00:33:19,880 --> 00:33:22,160 Speaker 1: had evidence or had reason to believe that they were 553 00:33:22,160 --> 00:33:24,560 Speaker 1: being followed. And what about the fuses did was there 554 00:33:24,520 --> 00:33:28,200 Speaker 1: any any suspicions? Right? The Fuses had been had come 555 00:33:28,280 --> 00:33:31,040 Speaker 1: to the conclusion that they were being followed by p 556 00:33:31,200 --> 00:33:35,360 Speaker 1: I s. But that was several years prior, during the 557 00:33:35,400 --> 00:33:38,920 Speaker 1: patent litigation that had pitted them against their nos. So 558 00:33:39,640 --> 00:33:43,200 Speaker 1: something interesting that was brought up from that boys won 559 00:33:43,240 --> 00:33:47,760 Speaker 1: the patent litigation and was paid not in cash but 560 00:33:47,880 --> 00:33:50,520 Speaker 1: in pharan no stock. I was very surprised by that. 561 00:33:50,680 --> 00:33:54,760 Speaker 1: Is that common in legal circles or Silicon I know 562 00:33:54,800 --> 00:33:59,000 Speaker 1: in Silicon Valley it's not unusual, but in patent litigation 563 00:33:59,080 --> 00:34:01,880 Speaker 1: how how common or common is that? I mean, I 564 00:34:01,920 --> 00:34:06,120 Speaker 1: don't think it's very common. Um and uh for me 565 00:34:06,200 --> 00:34:09,160 Speaker 1: when I learned about it. I learned about it. I 566 00:34:09,200 --> 00:34:12,600 Speaker 1: think it was in the in the winter of two 567 00:34:12,600 --> 00:34:15,440 Speaker 1: thousand sixteen, a couple of months after my first story 568 00:34:15,560 --> 00:34:17,960 Speaker 1: was published. I thought it was a huge conflict of 569 00:34:17,960 --> 00:34:21,600 Speaker 1: interest because here you had a lawyer and his law 570 00:34:21,680 --> 00:34:26,400 Speaker 1: firm that owned almost five million shares, you know, a 571 00:34:26,520 --> 00:34:31,520 Speaker 1: five million dollars worth of shares UM, and so he 572 00:34:31,680 --> 00:34:35,960 Speaker 1: was no longer just the legal advocate of Pharaos. He 573 00:34:36,120 --> 00:34:41,040 Speaker 1: also um had skin in the game financially, and I 574 00:34:41,080 --> 00:34:44,360 Speaker 1: felt self interest, not mere advocacy on behalf of client, 575 00:34:44,480 --> 00:34:47,799 Speaker 1: and and uh, you know, I I strongly felt that 576 00:34:47,800 --> 00:34:51,160 Speaker 1: that was a conflict of interest. And I wonder if 577 00:34:51,200 --> 00:34:53,799 Speaker 1: that I wonder if that clouds a lawyer's judgment in 578 00:34:53,960 --> 00:34:57,160 Speaker 1: some of the things you described, if people do that 579 00:34:57,200 --> 00:35:00,000 Speaker 1: when they're representing clients as opposed to I don't see. 580 00:35:00,520 --> 00:35:01,960 Speaker 1: I don't see how can they can say that it 581 00:35:01,960 --> 00:35:04,440 Speaker 1: doesn't And I don't see how it doesn't it it 582 00:35:04,920 --> 00:35:09,759 Speaker 1: has to. I mean, you're you're protecting a pile of 583 00:35:09,880 --> 00:35:13,239 Speaker 1: five million dollars that, by the way, you accepted in 584 00:35:13,320 --> 00:35:16,680 Speaker 1: lieu of of regular compensation because you expected that pile 585 00:35:16,719 --> 00:35:18,960 Speaker 1: to grow as the stock and the evaluation of the 586 00:35:19,000 --> 00:35:22,319 Speaker 1: company grew to to hear them if they come out 587 00:35:22,360 --> 00:35:26,399 Speaker 1: and say so, um, you know, say that that this 588 00:35:26,440 --> 00:35:30,000 Speaker 1: didn't influence how they behaved and and and how they 589 00:35:30,040 --> 00:35:33,360 Speaker 1: worked for Thearonis, I think I would maintain as hawkwash. 590 00:35:33,800 --> 00:35:36,279 Speaker 1: So here let's talk to put some flesh on on 591 00:35:36,320 --> 00:35:40,759 Speaker 1: the bones about the dollar value of Tharonis and what 592 00:35:40,800 --> 00:35:43,239 Speaker 1: people why people thought it could go to the moon? 593 00:35:43,880 --> 00:35:46,640 Speaker 1: Um at its peak, what was the most of the 594 00:35:46,680 --> 00:35:49,920 Speaker 1: company was worth ten billion dollars? And how much money 595 00:35:50,000 --> 00:35:53,720 Speaker 1: had investors put into it. So if you count the 596 00:35:53,719 --> 00:35:57,640 Speaker 1: the money that was loaned by the private equity firm 597 00:35:57,760 --> 00:36:01,720 Speaker 1: Fortress Investment Group eight last year to keep their US afloat, 598 00:36:01,800 --> 00:36:05,280 Speaker 1: that was million dollars. If you count that cash injection, 599 00:36:06,080 --> 00:36:10,040 Speaker 1: almost a billion dollars. And so that's a you immediately 600 00:36:10,200 --> 00:36:13,359 Speaker 1: you're talking about a ten x return if it if 601 00:36:13,400 --> 00:36:17,399 Speaker 1: it keeps going. The thing that keeps coming up as 602 00:36:17,440 --> 00:36:20,280 Speaker 1: I was working my way through the book was there's 603 00:36:20,320 --> 00:36:23,480 Speaker 1: no there there there's there's really there was this initial 604 00:36:23,560 --> 00:36:27,080 Speaker 1: idea and then there was no new science developed, There 605 00:36:27,120 --> 00:36:32,560 Speaker 1: was no new technology developed. It was shocking. At what 606 00:36:32,719 --> 00:36:38,640 Speaker 1: point did the outside world before your columns start to think, hey, 607 00:36:38,680 --> 00:36:41,560 Speaker 1: there's a fraud here. Where where did the red flags 608 00:36:41,600 --> 00:36:47,279 Speaker 1: start appearing outside of the John Carrrews, No, there were 609 00:36:47,320 --> 00:36:53,080 Speaker 1: grumblings among people in the laboratory science profession. In fact, 610 00:36:53,239 --> 00:36:58,040 Speaker 1: one of the early voices was a guy at Stanford 611 00:36:58,320 --> 00:37:06,080 Speaker 1: UM UH John Ionitus UH Laboratory UH Medicine UM professor 612 00:37:06,120 --> 00:37:08,880 Speaker 1: at at Stanford. And in fact, he and I recently 613 00:37:08,880 --> 00:37:11,719 Speaker 1: had a test the exchange by email because he was 614 00:37:11,800 --> 00:37:15,080 Speaker 1: angry that I hadn't mentioned him in my book um 615 00:37:15,200 --> 00:37:18,160 Speaker 1: and and I told him that that I apologize for 616 00:37:18,200 --> 00:37:20,920 Speaker 1: the omission, but I said, at the same time, you 617 00:37:20,920 --> 00:37:24,040 Speaker 1: know he he had essentially written an opinion piece in 618 00:37:24,400 --> 00:37:30,800 Speaker 1: the journal of the Association for the American Medicine Medical 619 00:37:30,840 --> 00:37:34,520 Speaker 1: Association JAMMA UM and I believe it was in February 620 00:37:34,560 --> 00:37:38,319 Speaker 1: or March of two thousand fifteen. Um and I had 621 00:37:38,360 --> 00:37:40,880 Speaker 1: become aware of it about a month into my reporting 622 00:37:40,880 --> 00:37:43,200 Speaker 1: on the company. And really what he does in this 623 00:37:43,280 --> 00:37:46,319 Speaker 1: piece is is UH he raises the question of whether 624 00:37:46,400 --> 00:37:50,200 Speaker 1: theariness should be allowed to do what he termed stealth 625 00:37:50,280 --> 00:37:55,320 Speaker 1: research UH and and UH and he posed hard questions 626 00:37:55,360 --> 00:38:00,680 Speaker 1: about UH this trend toward companies in Silicon Valley Uh, 627 00:38:00,840 --> 00:38:06,360 Speaker 1: bypassing the traditional system of peer reviewed publication, which was 628 00:38:06,480 --> 00:38:09,160 Speaker 1: totally valid. And and you know, he put his finger 629 00:38:09,239 --> 00:38:12,920 Speaker 1: on something. But what I did respond to him was, 630 00:38:13,000 --> 00:38:15,320 Speaker 1: you know, it's one thing to raise some of these questions, 631 00:38:15,360 --> 00:38:17,480 Speaker 1: another thing to prove that the company was a fraud. 632 00:38:18,040 --> 00:38:21,279 Speaker 1: And I think he he could agree that. Um that 633 00:38:21,400 --> 00:38:23,360 Speaker 1: you know, I did the heavy lifting to to to 634 00:38:23,440 --> 00:38:26,279 Speaker 1: prove that. The two biggest red flags that leapt out 635 00:38:26,320 --> 00:38:29,239 Speaker 1: to me from the book the initial board of directors 636 00:38:29,719 --> 00:38:34,200 Speaker 1: nobody from medicine, blood sciences lab. It's all, it's two 637 00:38:34,320 --> 00:38:38,000 Speaker 1: Secretary of States, it's people from the defense. But it's 638 00:38:38,000 --> 00:38:42,560 Speaker 1: like a run of crazy things. Nobody from medicine, right, Um. 639 00:38:42,680 --> 00:38:45,520 Speaker 1: And eventually they had somebody years later. But there were 640 00:38:45,560 --> 00:38:48,200 Speaker 1: there were two out of I think twelve old men, 641 00:38:48,920 --> 00:38:51,879 Speaker 1: old white men on the board. Uh. There were two 642 00:38:52,040 --> 00:38:55,680 Speaker 1: had some connection to medicine. One was Bill Frist, who 643 00:38:55,680 --> 00:38:58,880 Speaker 1: had once been a transplant surgeon before becoming a politician. 644 00:38:59,040 --> 00:39:01,839 Speaker 1: Not from the beginning, right, wasn't he a later addition? No? No, no, 645 00:39:01,880 --> 00:39:04,680 Speaker 1: he was there from the beginning. Not from the beginning. 646 00:39:04,680 --> 00:39:07,120 Speaker 1: But the board changed over the years, and the last 647 00:39:07,120 --> 00:39:10,600 Speaker 1: iteration of the board essentially dated back to uh two 648 00:39:10,640 --> 00:39:14,880 Speaker 1: thousand eleven, two thousand twelve, so almost a decade after 649 00:39:14,920 --> 00:39:19,160 Speaker 1: they started. It's like she she acquired this new board 650 00:39:19,920 --> 00:39:23,759 Speaker 1: UM because she felt that it would help her. It 651 00:39:23,880 --> 00:39:27,000 Speaker 1: was sort of an exercise and reputational laundering, you know. 652 00:39:27,040 --> 00:39:30,520 Speaker 1: She attracted these larger than life figures with fantastic resumes. 653 00:39:30,640 --> 00:39:32,560 Speaker 1: And then the other thing that was a giant red 654 00:39:32,560 --> 00:39:37,720 Speaker 1: flag was all of the healthcare, medical sciences, medical device 655 00:39:37,800 --> 00:39:40,880 Speaker 1: venture capitalists. Every one of them took a pass. Not 656 00:39:41,000 --> 00:39:43,160 Speaker 1: a one put any money in this right because either 657 00:39:43,560 --> 00:39:46,880 Speaker 1: because either she wouldn't meet with them or when she 658 00:39:46,960 --> 00:39:50,080 Speaker 1: did accept meetings, and and some of these people started 659 00:39:50,120 --> 00:39:56,160 Speaker 1: asking hard questions. UM, her interest in continuing to meet uh, 660 00:39:56,200 --> 00:40:00,120 Speaker 1: you know, waned and and basically evaporated. We're speaking to 661 00:40:00,239 --> 00:40:03,480 Speaker 1: John Carrirew. He is the author of Bad Blood, Secrets 662 00:40:03,480 --> 00:40:07,320 Speaker 1: and Lies in a Silicon Valley Startup. If you enjoy 663 00:40:07,440 --> 00:40:09,799 Speaker 1: this conversation, well be sure and come back for the 664 00:40:09,800 --> 00:40:13,200 Speaker 1: podcast Astras, where we keep the tape rolling and continue 665 00:40:13,239 --> 00:40:18,400 Speaker 1: to discuss all things fraudulent at saranos. You can find 666 00:40:18,440 --> 00:40:23,200 Speaker 1: that wherever your final podcasts are sold Apple, iTunes, Stitcher, Overcast, 667 00:40:23,320 --> 00:40:26,120 Speaker 1: and of course Bloomberg dot com. Be sure and check 668 00:40:26,120 --> 00:40:28,400 Speaker 1: out my daily column. You can find that on Bloomberg 669 00:40:28,440 --> 00:40:31,799 Speaker 1: dot com. Follow me on Twitter at Rich Halts. I'm 670 00:40:31,840 --> 00:40:35,920 Speaker 1: Barry Rihults. You're listening to Masters in Business on Bloomberg Radio. 671 00:40:49,600 --> 00:40:51,799 Speaker 1: Welcome to the podcast, John, Thank you so much for 672 00:40:51,840 --> 00:40:55,560 Speaker 1: doing this. I have to tell you I really enjoyed 673 00:40:55,719 --> 00:40:59,000 Speaker 1: reading the book. It retreats like a thriller as you're 674 00:40:59,040 --> 00:41:03,600 Speaker 1: going through it. It's just what that that's just astounding. 675 00:41:04,360 --> 00:41:07,640 Speaker 1: It's mind blowing. Um. I'll come back to some of 676 00:41:07,680 --> 00:41:10,080 Speaker 1: the red flags. I have a ton of other questions, 677 00:41:10,280 --> 00:41:12,719 Speaker 1: but I have to ask you how much fun was 678 00:41:12,760 --> 00:41:16,080 Speaker 1: this to write? You know, it was a lot of fun. 679 00:41:16,520 --> 00:41:19,000 Speaker 1: It was the most fulfilling thing I've ever done in 680 00:41:19,040 --> 00:41:24,120 Speaker 1: my life, uh, professionally or or probably otherwise. Um, it 681 00:41:24,239 --> 00:41:28,319 Speaker 1: was nerve racking at the very beginning because you know, 682 00:41:28,360 --> 00:41:32,239 Speaker 1: I had a book deal and a movie deal to wait. 683 00:41:32,280 --> 00:41:35,320 Speaker 1: When did the movie deal before the book was written? Right? 684 00:41:35,400 --> 00:41:38,319 Speaker 1: Because the I reached my deal with Knopp to do 685 00:41:38,400 --> 00:41:41,319 Speaker 1: the book, I think it was in March, uh late 686 00:41:41,400 --> 00:41:43,640 Speaker 1: March of two thousand sixteen, and then the movie deal 687 00:41:43,719 --> 00:41:46,560 Speaker 1: came less than three months later, and I only went 688 00:41:46,600 --> 00:41:48,760 Speaker 1: on book leave and started writing the book and around 689 00:41:48,800 --> 00:41:52,200 Speaker 1: October of two thousand sixteen. So I had this pressure 690 00:41:53,160 --> 00:41:55,160 Speaker 1: from these two deals and from the fact that I 691 00:41:55,160 --> 00:41:58,200 Speaker 1: had never written a book before. And uh, you know 692 00:41:58,239 --> 00:42:00,520 Speaker 1: that's easy. You just keep going. You've had a column, 693 00:42:00,560 --> 00:42:03,439 Speaker 1: but you don't stop till you got a hundred words. Yeah. 694 00:42:03,480 --> 00:42:07,319 Speaker 1: So anyways, it wasn't easy staring at a blank word 695 00:42:07,320 --> 00:42:09,239 Speaker 1: document at first. But once I got a couple of 696 00:42:09,280 --> 00:42:12,120 Speaker 1: chapters in UM and I got the I felt like 697 00:42:12,160 --> 00:42:14,839 Speaker 1: I was in a rhythm and I was immersed. Uh. 698 00:42:14,880 --> 00:42:16,360 Speaker 1: And by the way, I was continuing to do a 699 00:42:16,360 --> 00:42:18,840 Speaker 1: lot of reporting, because the first three quarters of the 700 00:42:18,920 --> 00:42:21,440 Speaker 1: book are told in the third person and or the 701 00:42:22,080 --> 00:42:24,239 Speaker 1: what happens at the company until I come along, and 702 00:42:24,280 --> 00:42:27,400 Speaker 1: I had to re report a lot of that. Uh. 703 00:42:27,640 --> 00:42:30,680 Speaker 1: Tons of new material came out of that reporting process. 704 00:42:30,680 --> 00:42:32,960 Speaker 1: So I was really reporting and writing at the same time. 705 00:42:33,520 --> 00:42:39,040 Speaker 1: And it was just uh so fun and fulfilling. And 706 00:42:39,040 --> 00:42:41,239 Speaker 1: and I'm glad that to hear you say that it 707 00:42:41,280 --> 00:42:43,600 Speaker 1: read like a thriller, because I tried to to make 708 00:42:43,640 --> 00:42:47,359 Speaker 1: it read, uh like a page turner. I'm I'm a 709 00:42:47,360 --> 00:42:52,560 Speaker 1: big fan of Agatha Christie and UM Uh you know, 710 00:42:52,719 --> 00:42:56,400 Speaker 1: I I also uh read people like Michael Crichton and 711 00:42:56,600 --> 00:43:00,399 Speaker 1: and Dan Brown, um, and uh you know, I've picked 712 00:43:00,480 --> 00:43:03,200 Speaker 1: up on some of their some of their techniques to 713 00:43:03,400 --> 00:43:05,920 Speaker 1: to to keep the reader interested, and I channeled some 714 00:43:06,000 --> 00:43:07,879 Speaker 1: of that as I was writing this book, no doubt 715 00:43:07,920 --> 00:43:10,960 Speaker 1: about it. The um I got more questions I want 716 00:43:10,960 --> 00:43:14,719 Speaker 1: to circle back to, but I have to get into 717 00:43:15,400 --> 00:43:18,160 Speaker 1: the whole back and forth with the Wall Street Journals 718 00:43:18,840 --> 00:43:22,240 Speaker 1: editors and the threats of litigation and then the last 719 00:43:22,239 --> 00:43:26,040 Speaker 1: minute hail Mary Elizabeth Holmes polled with Rupert Murdoch of 720 00:43:26,080 --> 00:43:29,040 Speaker 1: all of old people, who who owns the Wall Street Journal. 721 00:43:29,120 --> 00:43:32,520 Speaker 1: So so let's talk a little about that. Your editors 722 00:43:32,760 --> 00:43:36,400 Speaker 1: sound like they're great. They seemed really stand up and 723 00:43:36,440 --> 00:43:39,040 Speaker 1: there was never any Carrie, what the hell are you 724 00:43:39,040 --> 00:43:40,799 Speaker 1: doing to us? You're gonna get a suit? Come on, 725 00:43:41,160 --> 00:43:44,000 Speaker 1: this is crazy. Tell us what the process was like 726 00:43:44,360 --> 00:43:47,799 Speaker 1: in the newsroom. Right. So my editor is a guy 727 00:43:47,880 --> 00:43:51,680 Speaker 1: named Mike Sikonolfi, who who's been old school, right, Yeah, 728 00:43:51,680 --> 00:43:53,359 Speaker 1: he's been at the Wall Street Journal since I think 729 00:43:53,400 --> 00:43:57,840 Speaker 1: the eighteen hundreds. I'm kidding, I didn't start till the 730 00:43:58,960 --> 00:44:01,239 Speaker 1: can't tease him a lot about how long he's been 731 00:44:01,280 --> 00:44:02,960 Speaker 1: at the journal. I think he actually joined the Wall 732 00:44:02,920 --> 00:44:06,560 Speaker 1: stret Journal in nur UM. But he's a legend at 733 00:44:06,600 --> 00:44:10,600 Speaker 1: the journal, and he is loved and admired UM. And 734 00:44:10,640 --> 00:44:16,000 Speaker 1: it's for good reason. He's a real journalist. UH loves 735 00:44:16,040 --> 00:44:20,440 Speaker 1: to do hard hitting stories and to back reporters who 736 00:44:20,520 --> 00:44:24,080 Speaker 1: are onto hard hitting stories. UM. And he's also great 737 00:44:24,120 --> 00:44:28,000 Speaker 1: in the sense that he knows, uh to to let 738 00:44:28,040 --> 00:44:31,000 Speaker 1: you have a long leash and to follow your knows. 739 00:44:31,080 --> 00:44:35,600 Speaker 1: He doesn't try to micromanage you. And UH, early in 740 00:44:35,680 --> 00:44:37,840 Speaker 1: two thousand fifteen, I think it was February one or 741 00:44:37,880 --> 00:44:41,200 Speaker 1: second week, I had gotten the tip from the pathology 742 00:44:41,239 --> 00:44:44,480 Speaker 1: blogger UH, coming on top of the New Yorker story 743 00:44:44,719 --> 00:44:46,640 Speaker 1: that had raised questions in my mind. I went to 744 00:44:46,719 --> 00:44:50,080 Speaker 1: Mike and I said, I think potentially there's a story here, 745 00:44:50,080 --> 00:44:52,400 Speaker 1: and I think potentially it could be a really sexy, 746 00:44:52,480 --> 00:44:56,760 Speaker 1: big story. And he sort of listened to me summarize, UM, 747 00:44:56,840 --> 00:45:00,400 Speaker 1: what I thought the story might be, and he was like, ahead, 748 00:45:00,520 --> 00:45:02,480 Speaker 1: you know, try it for a couple of weeks, and 749 00:45:02,480 --> 00:45:04,280 Speaker 1: then just give me an update in a couple of weeks. 750 00:45:05,000 --> 00:45:07,680 Speaker 1: And and and that's how the process started. And and UH, 751 00:45:07,760 --> 00:45:09,400 Speaker 1: you know, When I gave him the next update, it 752 00:45:09,440 --> 00:45:11,279 Speaker 1: was probably two or three weeks later, and I hadn't 753 00:45:11,320 --> 00:45:14,200 Speaker 1: made uh some headway, and so then he was like, 754 00:45:14,239 --> 00:45:17,200 Speaker 1: well keep going, and uh yeah, so he's a great 755 00:45:17,280 --> 00:45:20,520 Speaker 1: editor for sure. What what about when the nasty graham 756 00:45:20,640 --> 00:45:22,799 Speaker 1: start to show up? I have to tell you when 757 00:45:22,880 --> 00:45:25,839 Speaker 1: I got mine, and it's nothing like what you're my. 758 00:45:26,040 --> 00:45:28,600 Speaker 1: I wrote a book review. Someone didn't like my book review. 759 00:45:28,640 --> 00:45:32,560 Speaker 1: I got a h three page letter. But my immediate 760 00:45:32,560 --> 00:45:35,359 Speaker 1: reaction is, oh my god, I totally screwed up. What 761 00:45:35,360 --> 00:45:36,960 Speaker 1: did I do? And then I started reading through and 762 00:45:37,000 --> 00:45:39,959 Speaker 1: I'm like, wait, wait a second, that that's not that's 763 00:45:39,960 --> 00:45:43,320 Speaker 1: not true. Everything I wrote in there, you said henchman, 764 00:45:43,440 --> 00:45:46,880 Speaker 1: I used the word thug, But more or less everything 765 00:45:46,960 --> 00:45:49,919 Speaker 1: in there in my review came right for your book. 766 00:45:49,920 --> 00:45:52,560 Speaker 1: In fact, normally I don't do that. When I do, 767 00:45:52,680 --> 00:45:54,440 Speaker 1: might hear the ten books I'm gonna read this summer 768 00:45:54,520 --> 00:45:56,759 Speaker 1: or this winter. And I read a book and I'm like, oh, 769 00:45:56,800 --> 00:45:59,680 Speaker 1: that's interesting, and I put it aside, but I so 770 00:46:00,040 --> 00:46:03,640 Speaker 1: totally enjoyed the story. I'm like, there are red flags everywhere, 771 00:46:03,680 --> 00:46:07,000 Speaker 1: there are lessons for investors. I'm gonna write something like that. 772 00:46:07,440 --> 00:46:10,600 Speaker 1: Not my usual approach, and I wrote it never in 773 00:46:10,680 --> 00:46:13,160 Speaker 1: a million years expecting we're going to get a letter. 774 00:46:13,440 --> 00:46:17,400 Speaker 1: But you get the email and it shakes you. You're like, 775 00:46:17,840 --> 00:46:20,760 Speaker 1: holy cow, what did I do? And for a micro second, 776 00:46:20,800 --> 00:46:23,640 Speaker 1: it's I really I screwed the pooch. I really did 777 00:46:23,680 --> 00:46:27,040 Speaker 1: something terrible here. And then it took about ten seconds 778 00:46:27,080 --> 00:46:31,360 Speaker 1: before wait no, I literally shut the book and started 779 00:46:31,400 --> 00:46:34,040 Speaker 1: dictating on my iPhone because I was on the beach 780 00:46:34,080 --> 00:46:37,200 Speaker 1: and the Hampton's got home, wrote it up that night, 781 00:46:37,320 --> 00:46:39,839 Speaker 1: polished it the next morning. Off it went. It was 782 00:46:40,000 --> 00:46:42,799 Speaker 1: literally the book could not have been more fresh in 783 00:46:42,920 --> 00:46:47,600 Speaker 1: my mind before that, before that column. And so after 784 00:46:47,719 --> 00:46:52,480 Speaker 1: the letter came after I finally like took a deep breath, 785 00:46:53,280 --> 00:46:57,600 Speaker 1: figured out all the page citations that were being complained about. 786 00:46:57,719 --> 00:46:59,600 Speaker 1: You made the stuff up? No, I didn't. It's right 787 00:46:59,600 --> 00:47:02,359 Speaker 1: from the book. Look, I stopped and I said, what 788 00:47:02,400 --> 00:47:06,800 Speaker 1: was it like when carry my nothing little book review. 789 00:47:07,600 --> 00:47:12,399 Speaker 1: You're breaking major news stories. You're breaking stories that ultimately 790 00:47:12,960 --> 00:47:16,440 Speaker 1: leads to the revealing of fraud. So we have we 791 00:47:16,480 --> 00:47:18,920 Speaker 1: haven't even talked about the SEC and the other litigation 792 00:47:18,960 --> 00:47:22,080 Speaker 1: that's going on, but you basically brought down a company 793 00:47:22,120 --> 00:47:25,600 Speaker 1: that A was a fraud. B was putting people's life 794 00:47:25,640 --> 00:47:29,640 Speaker 1: and safety at risk. If you get a false positive, 795 00:47:29,719 --> 00:47:31,839 Speaker 1: well you it scares the hell to you. But there's 796 00:47:31,880 --> 00:47:34,399 Speaker 1: no danger if you get a false negative. If they 797 00:47:34,440 --> 00:47:38,000 Speaker 1: miss something because say this thing doesn't work, people die. 798 00:47:38,640 --> 00:47:42,440 Speaker 1: So what was it like when these letters started coming in, 799 00:47:42,480 --> 00:47:45,920 Speaker 1: these nasty graham start coming in. I can't imagine the 800 00:47:45,960 --> 00:47:49,200 Speaker 1: process you went through, right, It was stressful. I mean, 801 00:47:50,120 --> 00:47:52,319 Speaker 1: some of your colleagues have interviewed me about the Book 802 00:47:52,360 --> 00:47:55,000 Speaker 1: of asked whether there was any moment where I felt 803 00:47:55,560 --> 00:47:58,320 Speaker 1: in physical danger. And I don't think there was any 804 00:47:58,360 --> 00:48:00,560 Speaker 1: moment that I felt in physical ange. I mean there 805 00:48:00,560 --> 00:48:03,720 Speaker 1: were moments when I'd come out of my apartment building 806 00:48:03,719 --> 00:48:05,680 Speaker 1: in Brooklyn and I'd look left and right to see 807 00:48:05,719 --> 00:48:09,600 Speaker 1: if I could spot anyone UH following me. Do you 808 00:48:09,600 --> 00:48:12,200 Speaker 1: think you would follow? I don't know. I don't. I 809 00:48:12,239 --> 00:48:15,600 Speaker 1: don't know the assumption as they do a full online 810 00:48:15,640 --> 00:48:18,799 Speaker 1: search if they have, if they had someone following me, 811 00:48:18,840 --> 00:48:21,399 Speaker 1: and that comes out, I will not be surprised. But 812 00:48:21,560 --> 00:48:24,120 Speaker 1: I can't say one way or another whether they did 813 00:48:24,200 --> 00:48:27,080 Speaker 1: or not. I just don't know. I didn't I didn't 814 00:48:27,120 --> 00:48:31,319 Speaker 1: feel physically threatened. My biggest source of stress was that 815 00:48:31,440 --> 00:48:36,000 Speaker 1: this scorched earth campaign to intimidate my sources and turn 816 00:48:36,120 --> 00:48:39,480 Speaker 1: them and to also intimidate the paper that it would 817 00:48:39,480 --> 00:48:43,160 Speaker 1: be fruitful and that they would succeed in destroying the 818 00:48:43,480 --> 00:48:46,240 Speaker 1: scaffolding of reporting upon which I had built this story, 819 00:48:46,719 --> 00:48:50,239 Speaker 1: and that ultimately, uh, you know, the story wouldn't come out. 820 00:48:50,280 --> 00:48:52,920 Speaker 1: That was for me, that was the big source of stress. 821 00:48:53,520 --> 00:48:56,080 Speaker 1: And I finally, you know, breathed a sigh of relief 822 00:48:56,120 --> 00:48:58,000 Speaker 1: when the story was in the paper. I think it 823 00:48:58,040 --> 00:49:03,040 Speaker 1: was October, uh, two thousand fifteen, and then I didn't 824 00:49:03,040 --> 00:49:05,600 Speaker 1: really have time to basket it very long because then 825 00:49:05,640 --> 00:49:08,520 Speaker 1: I immediately you know, on to the next one. I 826 00:49:08,600 --> 00:49:10,439 Speaker 1: was on to the to the to the first follow 827 00:49:10,520 --> 00:49:14,360 Speaker 1: up story, which we published that very night. Um, and uh, 828 00:49:14,400 --> 00:49:18,200 Speaker 1: you know, from there it was months and months of 829 00:49:18,320 --> 00:49:22,400 Speaker 1: more follow up reporting, and I think, uh, with each 830 00:49:22,480 --> 00:49:25,880 Speaker 1: week that passed and with each regulatory inspection and finding, 831 00:49:26,000 --> 00:49:29,799 Speaker 1: we were vindicated more and more until recently, you know, 832 00:49:29,840 --> 00:49:33,600 Speaker 1: the criminal charges that were filed by the Justice Department, 833 00:49:34,320 --> 00:49:37,120 Speaker 1: the wire fraud fraud charges filed against Elizabeth Holmes and 834 00:49:37,120 --> 00:49:40,000 Speaker 1: Sunny Baliwani by the Justice Department. Really, you know, we're 835 00:49:40,000 --> 00:49:44,000 Speaker 1: the ultimate of vindication that my reporting was correct and 836 00:49:44,160 --> 00:49:46,000 Speaker 1: I had been right all along. What about the state 837 00:49:46,000 --> 00:49:50,799 Speaker 1: of California. Did they do any criminal investigations and it 838 00:49:50,840 --> 00:49:54,799 Speaker 1: all took place primarily in California? Are they getting a 839 00:49:54,880 --> 00:49:58,440 Speaker 1: pass by the state. Well, if you depends. If you 840 00:49:58,560 --> 00:50:03,040 Speaker 1: count the the U. S. Attorney's Office in San Francisco 841 00:50:03,120 --> 00:50:05,839 Speaker 1: as a federal it's not stage okay. So then if 842 00:50:05,880 --> 00:50:11,520 Speaker 1: you don't count them, California did nothing, that's shocking. I mean, 843 00:50:11,640 --> 00:50:14,680 Speaker 1: this is a serious fraud. It's a billion dollars and 844 00:50:14,760 --> 00:50:19,000 Speaker 1: investor money, not counting um, not counting the Fortress stuff 845 00:50:19,040 --> 00:50:22,319 Speaker 1: after the fact. So it's almost a billion dollars and 846 00:50:23,560 --> 00:50:28,000 Speaker 1: the risk to individuals. You know, one of in the 847 00:50:28,000 --> 00:50:31,160 Speaker 1: book you describe the Paraos people and I don't remember. 848 00:50:31,160 --> 00:50:34,520 Speaker 1: I was the lawyers or others intimidating some of the 849 00:50:34,600 --> 00:50:37,040 Speaker 1: doctors who had had used that. That was Sunny Bow. 850 00:50:37,320 --> 00:50:40,320 Speaker 1: That was the number two executive the company, the president 851 00:50:40,360 --> 00:50:43,400 Speaker 1: of the company, who was the boyfriend of the founder, 852 00:50:43,680 --> 00:50:46,320 Speaker 1: secret boyfriend of the secret boyfriend of the founder. She 853 00:50:46,400 --> 00:50:49,200 Speaker 1: was hiding it from everyone, including her own board, flewed 854 00:50:49,200 --> 00:50:53,399 Speaker 1: out to Phoenix and proceeded to intimidate and threaten all 855 00:50:53,480 --> 00:50:55,200 Speaker 1: the doctors who had spoken to me on the record, 856 00:50:55,239 --> 00:50:57,080 Speaker 1: And how did they know the names of those doctors 857 00:50:57,440 --> 00:51:01,200 Speaker 1: because they had asked that we a of them information 858 00:51:02,080 --> 00:51:04,840 Speaker 1: about the doctors and patients and their blood test results 859 00:51:04,840 --> 00:51:07,279 Speaker 1: so that they could rebut them and respond to them, 860 00:51:07,360 --> 00:51:09,080 Speaker 1: which is natural. I mean we you know, you have 861 00:51:09,160 --> 00:51:11,719 Speaker 1: you have to have the the party that you're investigating 862 00:51:11,719 --> 00:51:13,880 Speaker 1: and writing about has to have the opportunity to respond. 863 00:51:13,920 --> 00:51:15,680 Speaker 1: And so we did that. And what did they do? 864 00:51:16,280 --> 00:51:18,960 Speaker 1: Rather than responding, they went and they used the information 865 00:51:19,000 --> 00:51:21,080 Speaker 1: to find the people and threaten them, and didn't one 866 00:51:21,080 --> 00:51:23,040 Speaker 1: of the doctors pretty much tell them to go jump. 867 00:51:23,080 --> 00:51:25,120 Speaker 1: I thought one of the doctors was real stand up. 868 00:51:25,120 --> 00:51:26,920 Speaker 1: In the book, there were a couple of doctors who 869 00:51:27,560 --> 00:51:31,720 Speaker 1: either refused to meet with them or or told him, uh, 870 00:51:31,800 --> 00:51:34,800 Speaker 1: you know one and one comes to mind Dr Adrian Stewart, 871 00:51:34,880 --> 00:51:39,520 Speaker 1: who who too had two colleagues who had buckled under 872 00:51:39,560 --> 00:51:43,560 Speaker 1: pressure and signed these uh statements essentially recanting what they 873 00:51:43,640 --> 00:51:47,000 Speaker 1: told me. Uh. She wasn't there when her two Stewarts, 874 00:51:47,239 --> 00:51:51,320 Speaker 1: when her two colleagues uh were presented with those statements 875 00:51:51,320 --> 00:51:54,359 Speaker 1: and chickened out, And she came back a week later 876 00:51:54,480 --> 00:51:56,759 Speaker 1: by which time I hadn't managed to reach her, and 877 00:51:56,800 --> 00:52:00,759 Speaker 1: so she was prepared to be say, which she was 878 00:52:00,840 --> 00:52:03,520 Speaker 1: as soon as she got back by Sunny Bowani, and 879 00:52:03,560 --> 00:52:07,239 Speaker 1: she stood, you know. She she refused to sign the 880 00:52:07,600 --> 00:52:09,920 Speaker 1: document that he put to her, even though he told her, 881 00:52:10,360 --> 00:52:14,000 Speaker 1: if your name appears saying anything about the Ainos in 882 00:52:14,000 --> 00:52:17,200 Speaker 1: a Wall Street Journal story, we will drag your reputation 883 00:52:17,280 --> 00:52:20,839 Speaker 1: through the mud. Nice guy. Good for her. She she's 884 00:52:20,880 --> 00:52:24,719 Speaker 1: another one of the heroes in the book. So I 885 00:52:24,800 --> 00:52:28,160 Speaker 1: have to bring up the hail Mary that Elizabeth Holmes 886 00:52:28,560 --> 00:52:32,520 Speaker 1: pulled with Rupert Murdoch, who owner of Fox News, of 887 00:52:32,520 --> 00:52:35,680 Speaker 1: which Wall Street Journal was part of all the one 888 00:52:35,719 --> 00:52:38,120 Speaker 1: way I have to correct you now it's been split 889 00:52:38,440 --> 00:52:40,680 Speaker 1: blah blah. Webster Journals part of News Corps, which is 890 00:52:40,719 --> 00:52:44,239 Speaker 1: a separate company. Fox is part of Century Fix. Right, 891 00:52:44,280 --> 00:52:47,320 Speaker 1: So this is at the time it was a single entity. 892 00:52:47,400 --> 00:52:50,760 Speaker 1: This is pre split, right, this was post split split 893 00:52:50,840 --> 00:52:56,440 Speaker 1: was really alright? So part of news Corp, an investor 894 00:52:56,680 --> 00:53:02,840 Speaker 1: in Paraos. And the day before are publication was it October? 895 00:53:05,040 --> 00:53:08,400 Speaker 1: So it's two weeks before publication. She and she had 896 00:53:08,400 --> 00:53:11,640 Speaker 1: already done this once a month or two prior, when 897 00:53:11,840 --> 00:53:15,600 Speaker 1: she had invited Murdoch to come to Theonos offices in Paloazza, 898 00:53:15,640 --> 00:53:18,319 Speaker 1: and she'd raised my story with him and told him 899 00:53:18,360 --> 00:53:22,799 Speaker 1: I had gathered all this information that was false, uh, misleading, 900 00:53:22,880 --> 00:53:25,040 Speaker 1: and that would do great damage to the company if 901 00:53:25,040 --> 00:53:27,480 Speaker 1: it was published. And she had read about that the 902 00:53:27,640 --> 00:53:30,400 Speaker 1: last one, the latter she invited him to kill it, 903 00:53:30,440 --> 00:53:33,759 Speaker 1: and he the mirrored, told her that, you know, he 904 00:53:33,760 --> 00:53:36,840 Speaker 1: trusted the journal's editors to do the right thing. I 905 00:53:36,880 --> 00:53:39,360 Speaker 1: didn't want to involve himself. And then she came again 906 00:53:40,960 --> 00:53:44,760 Speaker 1: late September, I think it was September, two weeks before 907 00:53:44,760 --> 00:53:46,880 Speaker 1: my first story was published. She met with him in 908 00:53:46,920 --> 00:53:51,320 Speaker 1: his eighth floor office in News Corp Building on fifth floor, 909 00:53:51,480 --> 00:53:54,399 Speaker 1: so three floors, three floors above me. She was there, 910 00:53:54,520 --> 00:53:57,200 Speaker 1: meeting with him one on one, raising my story with 911 00:53:57,280 --> 00:54:01,799 Speaker 1: him urgently, again hoping that he would volunteer to kill it, 912 00:54:02,480 --> 00:54:06,319 Speaker 1: and uh, he did no such thing, despite having a 913 00:54:06,360 --> 00:54:10,240 Speaker 1: hundred twenty five million reasons to do. Soon dollar investment 914 00:54:10,239 --> 00:54:14,840 Speaker 1: in the Eventually Murdoch to his credit, so the story 915 00:54:15,200 --> 00:54:19,640 Speaker 1: publishes some years later. Murdoch sells his interest back to 916 00:54:19,640 --> 00:54:22,640 Speaker 1: the company for a dollar, so he gets the tax 917 00:54:22,719 --> 00:54:27,640 Speaker 1: right off a year and a half later, approximately sells 918 00:54:28,280 --> 00:54:30,560 Speaker 1: his stake back in the company to the to the 919 00:54:30,560 --> 00:54:33,839 Speaker 1: company for a symbolic dollar, so that he can use 920 00:54:33,920 --> 00:54:38,560 Speaker 1: that huge loss to write off taxes on other earnings. 921 00:54:38,560 --> 00:54:42,200 Speaker 1: But um, there wasn't addendum to that buyback deal, which 922 00:54:42,239 --> 00:54:47,920 Speaker 1: was that if Fairness settled any litigation with Huh, an 923 00:54:47,960 --> 00:54:50,120 Speaker 1: investor who felt they had been defrauded for more than 924 00:54:50,120 --> 00:54:53,240 Speaker 1: forty million dollars, then Murdoch would be entitled to another 925 00:54:53,320 --> 00:54:56,360 Speaker 1: payment of four million dollars. And so that that he 926 00:54:56,440 --> 00:54:59,160 Speaker 1: did get that additional four million dollars later because there 927 00:54:59,200 --> 00:55:02,239 Speaker 1: no settled with the San Francisco Hedge Fund partner fund 928 00:55:02,320 --> 00:55:05,440 Speaker 1: that had invested a hundred million uh Sarrens settled with 929 00:55:05,520 --> 00:55:08,640 Speaker 1: them for forty three million in the in the spring 930 00:55:08,680 --> 00:55:11,120 Speaker 1: of two thousand seventeen, and so that entitled Murdoch to 931 00:55:11,160 --> 00:55:13,720 Speaker 1: another four million. So he got four million plus one dollar. 932 00:55:14,440 --> 00:55:19,520 Speaker 1: He's still in other words, he's still lost one million dollars. Amazing. Um, 933 00:55:19,840 --> 00:55:21,799 Speaker 1: there's a couple of other selmans. I wanted to ask 934 00:55:22,120 --> 00:55:25,880 Speaker 1: this safe way in Walgreens, these companies had such a 935 00:55:26,000 --> 00:55:29,440 Speaker 1: bad case of Foamo. They spent a ton of money 936 00:55:29,840 --> 00:55:33,319 Speaker 1: because they were afraid their competitors would get in over 937 00:55:33,400 --> 00:55:38,319 Speaker 1: them despite never seeing the machine, never getting the technology 938 00:55:38,320 --> 00:55:40,799 Speaker 1: of the science. Well, they saw the machine, but she 939 00:55:40,840 --> 00:55:43,520 Speaker 1: would do these these fake demos again. So the real 940 00:55:43,600 --> 00:55:45,960 Speaker 1: machine they saw, no, they saw, they saw the real machine. 941 00:55:46,000 --> 00:55:48,280 Speaker 1: But there was a what they called this secret demo 942 00:55:48,360 --> 00:55:52,680 Speaker 1: protocol where the Walgreens or the safe Way representative, or 943 00:55:52,680 --> 00:55:56,040 Speaker 1: sometimes the board member or even the journalist came and 944 00:55:56,080 --> 00:55:59,319 Speaker 1: had you know, saw the mini lab which was this 945 00:55:59,360 --> 00:56:04,759 Speaker 1: big black box with a digital UH interface, and they'd 946 00:56:04,840 --> 00:56:08,160 Speaker 1: have their finger pricked and the small fingerstick sample would 947 00:56:08,160 --> 00:56:10,600 Speaker 1: be put in this cartridge which itself would be slotted 948 00:56:10,640 --> 00:56:14,160 Speaker 1: into the mini lab machine. The Mini lab machine would 949 00:56:14,200 --> 00:56:17,440 Speaker 1: be turned on and the testing what you'd hear the 950 00:56:17,480 --> 00:56:19,680 Speaker 1: worrying of the machine. And so you think the testing 951 00:56:19,719 --> 00:56:22,080 Speaker 1: has started, and they'd say this is gonna take a while. 952 00:56:22,080 --> 00:56:24,719 Speaker 1: Why don't you go out for lunch or visit the 953 00:56:24,719 --> 00:56:27,879 Speaker 1: rest of the building, or meet with Elizabeth in her 954 00:56:27,920 --> 00:56:31,440 Speaker 1: office and then we'll get you your test result. And 955 00:56:31,520 --> 00:56:35,560 Speaker 1: so the person Walgreen, Safeway or board member would leave 956 00:56:35,760 --> 00:56:38,600 Speaker 1: the room and then when they were out of sight, 957 00:56:39,200 --> 00:56:44,160 Speaker 1: a THEONIS employee would stop the Theoronis Mini Lab UH 958 00:56:44,360 --> 00:56:46,840 Speaker 1: take the cartridge out, take the blood sample out of 959 00:56:46,880 --> 00:56:50,040 Speaker 1: the cartridge, and bring it to the Theonis lab where 960 00:56:50,040 --> 00:56:53,880 Speaker 1: they would either test it manually at the bench or 961 00:56:54,080 --> 00:56:57,000 Speaker 1: run it on one of the hacked Semens analyzers. So 962 00:56:57,040 --> 00:56:59,520 Speaker 1: if someone says, no, I'm fine, I got my phone, 963 00:56:59,520 --> 00:57:01,439 Speaker 1: I'm gonna just day busy, I just want to watch 964 00:57:01,440 --> 00:57:06,040 Speaker 1: this machine work, nothing would have happened. Well, they yeah, 965 00:57:06,080 --> 00:57:08,960 Speaker 1: you would have been pretty much without saying so, calling 966 00:57:09,000 --> 00:57:11,879 Speaker 1: their bluff, and I'm sure they would have come up with, 967 00:57:12,520 --> 00:57:16,320 Speaker 1: you know, some um excuse to get you out of 968 00:57:16,320 --> 00:57:18,400 Speaker 1: the room at some point so that they could pull 969 00:57:18,440 --> 00:57:20,920 Speaker 1: off their sliders cans. So this is this has been 970 00:57:21,600 --> 00:57:25,400 Speaker 1: a deep fraud from let's call it oh six oh seven. 971 00:57:25,520 --> 00:57:27,840 Speaker 1: Is that about right? Yeah? I mean you you could 972 00:57:27,920 --> 00:57:31,480 Speaker 1: argue that the fraud didn't matter as much until two 973 00:57:31,360 --> 00:57:33,800 Speaker 1: thirteen as long as the company remained in R and 974 00:57:33,880 --> 00:57:37,960 Speaker 1: D mode and never went live with the technology. Right. 975 00:57:38,000 --> 00:57:41,400 Speaker 1: But the second you commercialize the technology and you start 976 00:57:41,440 --> 00:57:43,880 Speaker 1: offering it to the public, which is what started happening 977 00:57:43,960 --> 00:57:46,400 Speaker 1: in the fall two thirteen, then it becomes a gigantic 978 00:57:46,400 --> 00:57:50,000 Speaker 1: fraud because it's not just investors who are being defrauded, 979 00:57:50,040 --> 00:57:53,680 Speaker 1: but it's the public that's being put in harm's away 980 00:57:53,720 --> 00:57:56,000 Speaker 1: and that and that's really you know, I think that's 981 00:57:56,040 --> 00:57:59,600 Speaker 1: what elevates this scandal, uh and puts it in in 982 00:58:00,040 --> 00:58:04,360 Speaker 1: antheon of of you know, modern financial scandals. Let's let's 983 00:58:04,400 --> 00:58:08,000 Speaker 1: talk about the army and Lieutenant Colonel Shoemaker, a no 984 00:58:08,000 --> 00:58:11,680 Speaker 1: nonsense guy with a medical background, was to approve all 985 00:58:11,760 --> 00:58:17,920 Speaker 1: of these um experimental R and D s. Holmes but 986 00:58:18,680 --> 00:58:21,840 Speaker 1: or whoever it was bumps into him when trying to 987 00:58:21,840 --> 00:58:24,520 Speaker 1: get this approved for the army. And this guy doesn't 988 00:58:24,560 --> 00:58:29,680 Speaker 1: take any bs, sees right through it practically from the beginning, well, 989 00:58:29,720 --> 00:58:33,880 Speaker 1: he didn't. He didn't necessarily think that the technology didn't work. 990 00:58:33,920 --> 00:58:37,320 Speaker 1: He didn't know whether it worked or not. Um, But 991 00:58:37,520 --> 00:58:42,320 Speaker 1: what he felt strongly about was that this device needed 992 00:58:42,360 --> 00:58:45,240 Speaker 1: to be approved by the FDA. It's a medical device 993 00:58:45,320 --> 00:58:48,640 Speaker 1: for testing blood. How couldn't it be right? And and 994 00:58:48,640 --> 00:58:52,160 Speaker 1: and the f d A approves all laboratory testing equipment 995 00:58:52,200 --> 00:58:55,440 Speaker 1: that laughs by and so he felt that the Thermis 996 00:58:55,520 --> 00:58:58,240 Speaker 1: device was no exception. And so what he really had 997 00:58:58,280 --> 00:59:01,400 Speaker 1: a problem with was this regular to strategy that Elizabeth 998 00:59:01,400 --> 00:59:05,360 Speaker 1: Holmes head um, you know, presented him with in in 999 00:59:05,560 --> 00:59:08,200 Speaker 1: two thousand eleven, a couple of months after she had 1000 00:59:08,240 --> 00:59:11,320 Speaker 1: met Maddis and wrapped Manis around her finger and gotten 1001 00:59:11,320 --> 00:59:14,760 Speaker 1: Maddis to back this notion that the Themis technology would 1002 00:59:14,800 --> 00:59:17,240 Speaker 1: be used in the field in Afghanistan. And for that 1003 00:59:17,280 --> 00:59:20,560 Speaker 1: to happen, it had to go through Lieutenant Colonel Shoemaker 1004 00:59:20,560 --> 00:59:24,080 Speaker 1: at Fort Detrick UH in Maryland because he was the 1005 00:59:24,080 --> 00:59:27,680 Speaker 1: guy who had to approve such experiments. So this lieutenant 1006 00:59:27,680 --> 00:59:30,800 Speaker 1: colonel gets a phone call from a four star general, 1007 00:59:30,880 --> 00:59:33,800 Speaker 1: Is that right? Right? And so yeah, later, you know, 1008 00:59:33,840 --> 00:59:37,480 Speaker 1: he had has these these clash diplomatic clashes with Elizabeth 1009 00:59:37,600 --> 00:59:41,160 Speaker 1: and it becomes clear, uh to her that she's not 1010 00:59:41,200 --> 00:59:44,160 Speaker 1: gonna be able to steamroll him. And but so she 1011 00:59:44,200 --> 00:59:48,240 Speaker 1: appeals to to Maddis and she emails him and at 1012 00:59:48,280 --> 00:59:50,680 Speaker 1: that point he's actually in the war theater in Afghanistan 1013 00:59:51,280 --> 00:59:54,760 Speaker 1: and uh she uh because what what's happened by then 1014 00:59:54,840 --> 00:59:58,840 Speaker 1: is that Shoemaker has not only resisted what she wants 1015 00:59:58,880 --> 01:00:03,080 Speaker 1: to do, he has passed on what's he what he's 1016 01:00:03,160 --> 01:00:05,600 Speaker 1: learned about the Theoranis regulatory approach to the f d 1017 01:00:05,720 --> 01:00:09,080 Speaker 1: A and two CMS, the Centers for Medicare and Medicaid Services, 1018 01:00:09,120 --> 01:00:13,160 Speaker 1: and CMS has dispatched an inspector to do a surprise visit. 1019 01:00:13,600 --> 01:00:17,000 Speaker 1: And Elizabeth is furious about this, and so she writes Madis, 1020 01:00:17,200 --> 01:00:21,040 Speaker 1: who's an Afghanistan, and Mannis gets her email. He's furious. 1021 01:00:21,080 --> 01:00:25,240 Speaker 1: And so in August of two thousand twelve, Shoemaker has 1022 01:00:25,280 --> 01:00:29,520 Speaker 1: to fly down with an FDA official to Tampa, Florida, 1023 01:00:30,480 --> 01:00:32,680 Speaker 1: which is, you know, the headquarters of the Central Command, 1024 01:00:32,720 --> 01:00:34,800 Speaker 1: because Maddis at that point was the head of the 1025 01:00:34,840 --> 01:00:37,840 Speaker 1: Central Command. And he has to meet with Mannis and 1026 01:00:37,920 --> 01:00:44,160 Speaker 1: explain to this legendary journal general, I'm sorry, uh that 1027 01:00:44,400 --> 01:00:47,440 Speaker 1: uh you know that that he can't say yes to 1028 01:00:47,640 --> 01:00:51,640 Speaker 1: what this uh general wants uh and and here's why. 1029 01:00:51,800 --> 01:00:54,920 Speaker 1: And so he and this um FDA official named Alberto 1030 01:00:54,960 --> 01:00:59,520 Speaker 1: Gutierrez go in brief Maddis um and they reach a compromise, 1031 01:00:59,560 --> 01:01:03,720 Speaker 1: which is that Theoronis can the Thearoness experiment can proceed 1032 01:01:03,800 --> 01:01:09,280 Speaker 1: only if it's using after the fact, left over de 1033 01:01:09,480 --> 01:01:13,880 Speaker 1: identified samples from wounded soldiers wounded or healthy for that matter, 1034 01:01:14,400 --> 01:01:16,920 Speaker 1: and um and so that they could feed it into 1035 01:01:16,960 --> 01:01:19,160 Speaker 1: it if they want a big sample of blood to 1036 01:01:19,240 --> 01:01:22,080 Speaker 1: run tests. But nobody in the field is relying on 1037 01:01:22,120 --> 01:01:25,320 Speaker 1: this for medical exactly exactly and so, but that you know, 1038 01:01:25,440 --> 01:01:28,360 Speaker 1: that opens a window for for Theoroness to do this, 1039 01:01:28,480 --> 01:01:32,840 Speaker 1: and inexplicably, over the ensuing months, Theonis can never seem 1040 01:01:32,880 --> 01:01:36,640 Speaker 1: to get its act together to to get the study 1041 01:01:36,680 --> 01:01:41,680 Speaker 1: protocol written and ready, um and and and then you know, 1042 01:01:41,720 --> 01:01:46,640 Speaker 1: everyone retires, Mannis retires, his uh aid de camp retires, 1043 01:01:47,040 --> 01:01:51,720 Speaker 1: Shoemaker ends up retiring mid two thirteen. Um. The live 1044 01:01:51,800 --> 01:01:54,520 Speaker 1: experiment in the field in Afghanistan, and that Elizabeth wanted 1045 01:01:55,120 --> 01:01:57,720 Speaker 1: never ends up happening. And then wait, wait, wait, wait 1046 01:01:57,720 --> 01:02:01,200 Speaker 1: wait why would she want to live? Is she still 1047 01:02:01,240 --> 01:02:04,919 Speaker 1: under the illusion this damn thing works? Like how delusional 1048 01:02:05,480 --> 01:02:09,560 Speaker 1: is she? She thinks that it's sort of works. And 1049 01:02:09,600 --> 01:02:12,520 Speaker 1: then in the end, just a few tweaks right that 1050 01:02:12,600 --> 01:02:17,720 Speaker 1: you know, will iterate and uh and and basically what 1051 01:02:17,840 --> 01:02:20,480 Speaker 1: she has her eyes on is two things. She has 1052 01:02:20,520 --> 01:02:25,360 Speaker 1: her eyes on the potentially huge new revenue stream that 1053 01:02:25,800 --> 01:02:29,320 Speaker 1: a contract with the Pentagon, of course would bring. And 1054 01:02:29,440 --> 01:02:33,440 Speaker 1: she has her eyes on the validation of fairness that 1055 01:02:33,480 --> 01:02:38,240 Speaker 1: she would get by by virtue of being a supplier 1056 01:02:38,560 --> 01:02:41,520 Speaker 1: of this technology to the Pentagon. And what year is this? 1057 01:02:41,520 --> 01:02:45,200 Speaker 1: This is two thoen So when did the Safe Way 1058 01:02:45,320 --> 01:02:49,280 Speaker 1: and the Walgreens deals fall apart. So the Walgreens deal 1059 01:02:49,400 --> 01:02:54,440 Speaker 1: only fell apart after my revelations, and it took not 1060 01:02:54,520 --> 01:02:58,280 Speaker 1: even two sixteen. Really, I mean it fell apart in steps. 1061 01:02:58,920 --> 01:03:01,520 Speaker 1: But they really, uh you know, ended the whole thing 1062 01:03:01,560 --> 01:03:03,600 Speaker 1: in two thousand sixty. And I think it was the 1063 01:03:03,600 --> 01:03:05,760 Speaker 1: summer of two thousands, just a big three hundred million 1064 01:03:05,800 --> 01:03:07,640 Speaker 1: dollar right off or whatever it was. It was a 1065 01:03:07,960 --> 01:03:10,720 Speaker 1: d forty million that Walreens put in therapis. But I mean, 1066 01:03:10,840 --> 01:03:13,880 Speaker 1: but what about the renovator who did the big renovation 1067 01:03:14,040 --> 01:03:16,760 Speaker 1: was safe Way safe Weight loaned there, no thirty million, 1068 01:03:16,800 --> 01:03:19,320 Speaker 1: but on on the side, in addition to that loaned 1069 01:03:19,360 --> 01:03:24,920 Speaker 1: it renovated, uh, these these clinics inside its supermarkets and 1070 01:03:24,920 --> 01:03:28,600 Speaker 1: and about eight hundred of its supermarkets, Uh, in anticipation 1071 01:03:28,880 --> 01:03:32,880 Speaker 1: of you know, having the Theonis technology offered there. And 1072 01:03:32,960 --> 01:03:37,440 Speaker 1: that renovation cost three million dollars. So at least they 1073 01:03:37,440 --> 01:03:42,000 Speaker 1: got new painting carpet is amazing. Um. The other two 1074 01:03:42,280 --> 01:03:44,600 Speaker 1: before I get to my standard questions, the other two 1075 01:03:45,320 --> 01:03:49,439 Speaker 1: um sort of frauds that that stood out that was surprising. 1076 01:03:50,240 --> 01:03:55,960 Speaker 1: One was the Johns Hopkins letter the right explain the 1077 01:03:56,440 --> 01:04:03,320 Speaker 1: faux endorsement. Right, So uh, she goes to uh, Walgreen's 1078 01:04:03,520 --> 01:04:08,200 Speaker 1: has hired Johns Hopkins as sort of a consultant as 1079 01:04:08,280 --> 01:04:12,400 Speaker 1: it's beginning to set up this partnership with Sanis and 1080 01:04:12,480 --> 01:04:15,880 Speaker 1: so in I believe it's May of two thousand ten, 1081 01:04:16,480 --> 01:04:20,160 Speaker 1: Elizabeth and her boyfriend's Sonny go to the Johns Hopkins 1082 01:04:20,200 --> 01:04:24,520 Speaker 1: campus to meet with several Hopkins officials, among them laboratory scientists. 1083 01:04:25,280 --> 01:04:27,640 Speaker 1: And they come with what is then the Edison, the 1084 01:04:27,640 --> 01:04:31,919 Speaker 1: black and white device, and they come with binders full 1085 01:04:31,960 --> 01:04:35,480 Speaker 1: of data, um, and they explain, you know, what the 1086 01:04:35,520 --> 01:04:39,960 Speaker 1: device does, and they show these binders with these graphs 1087 01:04:40,120 --> 01:04:43,280 Speaker 1: that show, you know, it's basically a diagonal line that 1088 01:04:43,360 --> 01:04:47,680 Speaker 1: shows a very tight correlation between the data from the 1089 01:04:47,680 --> 01:04:52,120 Speaker 1: Tharanis tests and regular technology with you know, regular Venus draws. 1090 01:04:52,200 --> 01:04:54,280 Speaker 1: And that was a scam also, And that was a scam. 1091 01:04:54,360 --> 01:04:57,920 Speaker 1: Those were fake, fake graphs and fake data. Um. But 1092 01:04:58,000 --> 01:05:00,600 Speaker 1: they meant for a couple of hours, and you know, 1093 01:05:00,640 --> 01:05:04,560 Speaker 1: the meeting, at theirness's request, gave rise to a two 1094 01:05:04,600 --> 01:05:06,960 Speaker 1: page letter, not even two pages, a page and a half, 1095 01:05:07,320 --> 01:05:09,680 Speaker 1: which was essentially a summary of the meeting, minutes from 1096 01:05:09,680 --> 01:05:13,040 Speaker 1: the meeting, saying this meeting happened, and you know what 1097 01:05:13,160 --> 01:05:16,439 Speaker 1: the airiness has described sounds interesting. And by the way, 1098 01:05:16,440 --> 01:05:19,680 Speaker 1: there's like small boilerplate uh at the end of the 1099 01:05:19,760 --> 01:05:21,880 Speaker 1: second letter saying you know, this is in no way 1100 01:05:21,920 --> 01:05:27,200 Speaker 1: an endorsement by Johns Hopkins of any uh Thereness technology. 1101 01:05:27,240 --> 01:05:29,760 Speaker 1: And she then uses this over the ensuing two or 1102 01:05:29,800 --> 01:05:35,360 Speaker 1: three years to claim that UH tharoness Is technology has 1103 01:05:35,480 --> 01:05:40,720 Speaker 1: been independently verified and validated by the Johns Hopkins School 1104 01:05:40,720 --> 01:05:44,200 Speaker 1: of Medicine, and everyone falls for it. Nobody calls up 1105 01:05:44,240 --> 01:05:46,880 Speaker 1: Johns Hopkins and says it seems that this is a 1106 01:05:46,920 --> 01:05:49,600 Speaker 1: stunning thing. Right time and time and time again, there 1107 01:05:49,600 --> 01:05:53,720 Speaker 1: are these statements made, these claims made. Nobody does due diligence. 1108 01:05:53,880 --> 01:05:57,880 Speaker 1: Nobody sees the technology, nobody sees the actual Well, open 1109 01:05:57,960 --> 01:06:00,960 Speaker 1: up the machine. I can't like I would. It's one 1110 01:06:00,960 --> 01:06:03,600 Speaker 1: of your Why the vcs walked because you have to 1111 01:06:03,600 --> 01:06:05,120 Speaker 1: show us this and we can't give you money. This 1112 01:06:05,200 --> 01:06:09,680 Speaker 1: is not this isn't a negotiating tactic. It's it's show 1113 01:06:09,720 --> 01:06:13,200 Speaker 1: it us or we're out, because that's how we run. Yeah. 1114 01:06:13,200 --> 01:06:15,880 Speaker 1: That the one of the Hopkins Lab scientists who attended 1115 01:06:15,960 --> 01:06:18,080 Speaker 1: that this meeting back in the spring of two thousand 1116 01:06:18,040 --> 01:06:20,200 Speaker 1: and ten at the end of the meeting, said to Elizabeth, 1117 01:06:20,720 --> 01:06:23,520 Speaker 1: you know this is all well and good, but you know, 1118 01:06:23,600 --> 01:06:26,960 Speaker 1: for us to really do a rigorous verification, you would 1119 01:06:27,080 --> 01:06:30,000 Speaker 1: need to send us one of your devices. Either you 1120 01:06:30,040 --> 01:06:32,320 Speaker 1: could leave this one or ship another one of them 1121 01:06:32,400 --> 01:06:34,600 Speaker 1: to us. And then I'll want to have it in 1122 01:06:34,640 --> 01:06:37,560 Speaker 1: my lab for several months and put it, you know, 1123 01:06:39,120 --> 01:06:42,200 Speaker 1: pointed through its paces and compare it with the diagnostic 1124 01:06:42,200 --> 01:06:44,840 Speaker 1: equipment that I have in my lab. And so he 1125 01:06:44,920 --> 01:06:46,760 Speaker 1: encouraged her to do that, and she said she would. 1126 01:06:46,920 --> 01:06:49,040 Speaker 1: And of course she promised a lot of stuff. It 1127 01:06:49,120 --> 01:06:52,600 Speaker 1: never happened, never never happened. She promised data, she never delivered. 1128 01:06:52,640 --> 01:06:56,560 Speaker 1: She promised documentation, never delivered. But we know why because 1129 01:06:56,680 --> 01:07:00,440 Speaker 1: this thing was a fraud for years and years before. 1130 01:07:02,200 --> 01:07:04,160 Speaker 1: How do you live like that? How does somebody not 1131 01:07:04,920 --> 01:07:08,320 Speaker 1: expect to get caught? You know? Again, in her mind 1132 01:07:08,360 --> 01:07:11,440 Speaker 1: goes back to the way that she channeled the traditional 1133 01:07:11,480 --> 01:07:13,920 Speaker 1: Silicon Valley, and again that what I think it was. 1134 01:07:14,000 --> 01:07:17,479 Speaker 1: The traditional Silicon Valley is the industry that grew out 1135 01:07:17,480 --> 01:07:20,200 Speaker 1: of the computer chip industry, then became you know, the 1136 01:07:20,600 --> 01:07:23,520 Speaker 1: personal computer revolution, and then the Internet boom, and now 1137 01:07:23,600 --> 01:07:27,360 Speaker 1: it's the smartphone that's the traditional Silicon Valley. It's based 1138 01:07:27,400 --> 01:07:30,760 Speaker 1: on coding, computer programming. And it's true that there's been 1139 01:07:30,800 --> 01:07:33,720 Speaker 1: a lot of faking it until you make it. There's 1140 01:07:33,720 --> 01:07:38,080 Speaker 1: been a lot of exaggerating, making exaggerated vae vaporware to 1141 01:07:38,160 --> 01:07:40,720 Speaker 1: get the funding that you need to to make the 1142 01:07:40,760 --> 01:07:44,760 Speaker 1: product happen. And she I think because she modeled herself 1143 01:07:44,800 --> 01:07:48,040 Speaker 1: after jobs and to a lesser extent, Larry Ellison, she thought, 1144 01:07:48,200 --> 01:07:51,360 Speaker 1: you know, this is the rule book that everyone goes 1145 01:07:51,360 --> 01:07:54,080 Speaker 1: by in Silicon Valley, Like, it's not a big deal 1146 01:07:54,120 --> 01:07:57,600 Speaker 1: if I go by it too. So, last question on 1147 01:07:57,680 --> 01:08:01,280 Speaker 1: her prepping for this. I watched a couple of videos. 1148 01:08:02,240 --> 01:08:04,560 Speaker 1: She always seems to speak like this in all of 1149 01:08:04,600 --> 01:08:08,560 Speaker 1: our videos. It's this sort of weird baritone. And I 1150 01:08:08,640 --> 01:08:12,640 Speaker 1: read a number of other articles that suggest that she 1151 01:08:12,840 --> 01:08:18,240 Speaker 1: faked this deep voice for reasons known apparently only to herself. 1152 01:08:18,840 --> 01:08:20,920 Speaker 1: What is the story with that? Is that her real 1153 01:08:21,000 --> 01:08:23,519 Speaker 1: voice is that fake? Is this trying to be a 1154 01:08:23,560 --> 01:08:26,360 Speaker 1: woman in a man's world? Like, what is what is 1155 01:08:26,400 --> 01:08:28,760 Speaker 1: the deal with that it's not her real voice? Um? 1156 01:08:29,080 --> 01:08:31,800 Speaker 1: And how do we know that for sure? So I'll 1157 01:08:31,880 --> 01:08:34,559 Speaker 1: give you at least four data points. One is an 1158 01:08:34,600 --> 01:08:37,519 Speaker 1: anecdote that I tell in the book. I think it's 1159 01:08:37,560 --> 01:08:41,479 Speaker 1: in chapter eight of the book where an employee who 1160 01:08:41,479 --> 01:08:44,040 Speaker 1: has just been hired to as an injury to work 1161 01:08:44,040 --> 01:08:47,160 Speaker 1: as an engineer on the mini lab meets with her 1162 01:08:47,280 --> 01:08:49,960 Speaker 1: in early two thousand eleven, and the meeting is at 1163 01:08:49,960 --> 01:08:52,400 Speaker 1: the end of a long day. She's excited that he's 1164 01:08:52,439 --> 01:08:55,559 Speaker 1: there and they're making progress on building this machine. And 1165 01:08:55,880 --> 01:08:58,759 Speaker 1: she closes the meeting by getting up and and taking 1166 01:08:58,760 --> 01:09:01,639 Speaker 1: her coat off her chair, and as she goes towards, 1167 01:09:01,680 --> 01:09:04,840 Speaker 1: you know, to open the door of her office to 1168 01:09:04,880 --> 01:09:08,519 Speaker 1: see him out, she lapses out of her baritone. She 1169 01:09:08,520 --> 01:09:11,439 Speaker 1: forgets to put on the baritone and lapses into a 1170 01:09:11,600 --> 01:09:15,759 Speaker 1: much more natural sounding young woman's voice. And he's totally 1171 01:09:15,760 --> 01:09:18,599 Speaker 1: startled at this point because he's only heard her with 1172 01:09:18,640 --> 01:09:21,600 Speaker 1: the baritone, and he he realizes at that point that 1173 01:09:21,640 --> 01:09:24,360 Speaker 1: the voice is fake. He kind of turns it in 1174 01:09:24,439 --> 01:09:26,800 Speaker 1: his head over the next couple of days and realizes, 1175 01:09:27,360 --> 01:09:31,639 Speaker 1: you know, she must have decided this was necessary because, uh, 1176 01:09:31,920 --> 01:09:35,519 Speaker 1: Silicon valleys a man's world, and she dropped out as 1177 01:09:35,560 --> 01:09:38,280 Speaker 1: this young woman and that was so unusual. She must 1178 01:09:38,280 --> 01:09:40,400 Speaker 1: have felt along the way that it was necessary to 1179 01:09:40,439 --> 01:09:43,559 Speaker 1: get people's attention. Now, the other data points I have 1180 01:09:43,800 --> 01:09:46,880 Speaker 1: are one is that um, as the book makes clear, 1181 01:09:47,360 --> 01:09:50,599 Speaker 1: one of my sources for the book was Elizabeth's best 1182 01:09:50,600 --> 01:09:53,120 Speaker 1: friend at Stanford, a young woman by the name of 1183 01:09:53,200 --> 01:09:57,479 Speaker 1: Chelsea Burquette UM. And Chelsea says that Elizabeth's voice was 1184 01:09:57,520 --> 01:10:02,080 Speaker 1: nothing like that at Stanford or even after Stanford. UM. 1185 01:10:02,120 --> 01:10:06,200 Speaker 1: And so Chelsea herself believes that the voice is fake. UM. 1186 01:10:06,240 --> 01:10:11,160 Speaker 1: A family member UM uh cooperated as well for the book. 1187 01:10:11,200 --> 01:10:13,960 Speaker 1: And I'm not going to say this person's name, but 1188 01:10:14,320 --> 01:10:18,040 Speaker 1: that person believes and and uh professes that he knows 1189 01:10:18,080 --> 01:10:21,200 Speaker 1: for a fact that the voice is fake. And then 1190 01:10:21,840 --> 01:10:24,840 Speaker 1: there's probably the most conclusive proof is that there's an 1191 01:10:24,880 --> 01:10:28,680 Speaker 1: interview that she gave to the show Biotech Nation in 1192 01:10:29,000 --> 01:10:32,600 Speaker 1: May of two thousand five. It's an NPR show. UM 1193 01:10:32,640 --> 01:10:34,760 Speaker 1: and I have a recording of it. And at that point, 1194 01:10:34,760 --> 01:10:37,240 Speaker 1: she's eighteen months out of Stanford. She's like twenty or 1195 01:10:37,240 --> 01:10:40,320 Speaker 1: twenty one years old. Uh. She gives this interview to 1196 01:10:40,400 --> 01:10:45,799 Speaker 1: Morrow Gunn and um Uh she sounds nothing like uh 1197 01:10:45,840 --> 01:10:51,759 Speaker 1: the Elizabeth Holmes of later years. She sounds like this, uh, 1198 01:10:51,800 --> 01:10:56,479 Speaker 1: this this kid almost who's speaking very fast, uh, in 1199 01:10:56,560 --> 01:11:00,680 Speaker 1: a much more natural sounding young woman's voice, that's a 1200 01:11:00,680 --> 01:11:05,479 Speaker 1: couple of pitches higher and uh, and you realize listening 1201 01:11:05,520 --> 01:11:10,160 Speaker 1: to that audio recording that she basically at a certain 1202 01:11:10,200 --> 01:11:14,000 Speaker 1: point after that decided to create a whole new persona 1203 01:11:14,040 --> 01:11:16,760 Speaker 1: for herself, and and that changing her voice was part 1204 01:11:16,800 --> 01:11:19,680 Speaker 1: of that new persona fashion. I always thought when you 1205 01:11:19,680 --> 01:11:22,639 Speaker 1: close your b around, your voice changes, and that that 1206 01:11:22,720 --> 01:11:24,800 Speaker 1: could have something to do with it. But you're saying 1207 01:11:24,920 --> 01:11:28,719 Speaker 1: nothing to do with that whatsoever. It was for sure 1208 01:11:28,960 --> 01:11:33,320 Speaker 1: a very part of a very contrived attempt to project 1209 01:11:34,080 --> 01:11:39,479 Speaker 1: this uh you know, female Steve jobs Aura, which which 1210 01:11:40,000 --> 01:11:46,559 Speaker 1: other than the other than the the black turtleneck. There 1211 01:11:46,680 --> 01:11:51,280 Speaker 1: was just nothing in common whatsoever. But um, hey, what 1212 01:11:51,280 --> 01:11:54,880 Speaker 1: are you gonna do that? That's was That was um 1213 01:11:54,920 --> 01:11:59,600 Speaker 1: attempt and uh, just just astonishing. So I only have 1214 01:11:59,680 --> 01:12:01,599 Speaker 1: you for a couple of more minutes. Let me jump 1215 01:12:01,640 --> 01:12:05,599 Speaker 1: to my favorite questions that I ask all my guests. 1216 01:12:05,960 --> 01:12:07,519 Speaker 1: Before I do that, I just have to say, we 1217 01:12:07,600 --> 01:12:10,920 Speaker 1: covered a ton of stuff. Anything you want to bring up, 1218 01:12:10,920 --> 01:12:14,840 Speaker 1: anything I might have missed you think is noteworthy. A 1219 01:12:14,960 --> 01:12:19,080 Speaker 1: funny moment in this saga, which is uh, forty eight 1220 01:12:19,080 --> 01:12:24,200 Speaker 1: hours after my first story is published in October two fifteen, Um, 1221 01:12:24,200 --> 01:12:28,280 Speaker 1: Elizabeth and Sonny lead this all employee meeting. You have 1222 01:12:28,400 --> 01:12:31,559 Speaker 1: that in the book, and that's it's amazing that people 1223 01:12:31,920 --> 01:12:34,920 Speaker 1: just go along with that. Yeah. And I was told that, 1224 01:12:35,080 --> 01:12:37,839 Speaker 1: you know, at least half of the employees in the audience, 1225 01:12:38,120 --> 01:12:41,880 Speaker 1: uh didn't go along with it. And and uh, I 1226 01:12:41,880 --> 01:12:45,760 Speaker 1: couldn't believe that this was actually happening. But then you 1227 01:12:45,760 --> 01:12:48,160 Speaker 1: you did have some employees, many employees, who did go 1228 01:12:48,200 --> 01:12:50,880 Speaker 1: along with it. And I think it speaks to the 1229 01:12:50,960 --> 01:12:57,760 Speaker 1: culture of hubris arrogance. Uh. You know, us versus them, 1230 01:12:57,960 --> 01:13:01,799 Speaker 1: we're above everything, Uh, even though we haven't really invented 1231 01:13:01,800 --> 01:13:05,639 Speaker 1: anything new. Um. And and you know that that's it 1232 01:13:05,680 --> 01:13:08,840 Speaker 1: really speaks to how broken the culture of that company was. 1233 01:13:09,160 --> 01:13:15,080 Speaker 1: F you, Carrie row is what Bawani and Holmes lead 1234 01:13:15,120 --> 01:13:18,080 Speaker 1: them on chanting? And how long does this go on? 1235 01:13:18,439 --> 01:13:20,640 Speaker 1: And I think people told you about it was it 1236 01:13:20,680 --> 01:13:24,840 Speaker 1: was just a couple of times, two or three chants, um. 1237 01:13:25,000 --> 01:13:28,160 Speaker 1: And it had been preceded. There had been a precedent 1238 01:13:28,240 --> 01:13:33,040 Speaker 1: three months prior after Aaroness had received FDA approval for 1239 01:13:33,200 --> 01:13:36,240 Speaker 1: one of its fingerstick tests. One turned out the only 1240 01:13:36,280 --> 01:13:39,160 Speaker 1: fingerstick tests that ever got approval for was a test 1241 01:13:39,200 --> 01:13:42,599 Speaker 1: to detect HERPS, which is actually a pretty easy test 1242 01:13:42,640 --> 01:13:44,559 Speaker 1: to do because it's just a test that says yes 1243 01:13:44,640 --> 01:13:47,160 Speaker 1: or no, do you have the disease um. So those 1244 01:13:47,160 --> 01:13:50,160 Speaker 1: tests are much much easier than than most lab tests, 1245 01:13:50,160 --> 01:13:54,080 Speaker 1: which are quantitative tests. Anyways, Aarons had gotten this approval 1246 01:13:54,120 --> 01:13:56,599 Speaker 1: from the f d A and was very very proud, 1247 01:13:57,600 --> 01:14:01,080 Speaker 1: and Sonny had led employees in the Uteria in a 1248 01:14:02,080 --> 01:14:04,559 Speaker 1: chant which I actually have on tape because I have 1249 01:14:04,640 --> 01:14:07,840 Speaker 1: footage of that meeting, and he yeah, he had the 1250 01:14:07,840 --> 01:14:11,200 Speaker 1: whole company yelling, and at that point the chant was 1251 01:14:11,920 --> 01:14:15,920 Speaker 1: directed at Aronos's rivals Quest and Lab Corps, where the 1252 01:14:16,240 --> 01:14:19,280 Speaker 1: two nine pound guerrillas in the in the lab never 1253 01:14:19,360 --> 01:14:22,400 Speaker 1: for a second thought this little pissent company with a 1254 01:14:22,479 --> 01:14:26,280 Speaker 1: fake technology was That's the most amazing thing is they 1255 01:14:26,360 --> 01:14:30,120 Speaker 1: think these are their rivals. And these two companies couldn't 1256 01:14:30,160 --> 01:14:32,840 Speaker 1: possibly care less about that. Well, I mean, by the 1257 01:14:32,840 --> 01:14:36,920 Speaker 1: time she became famous, they certainly knew who she was. 1258 01:14:37,080 --> 01:14:40,559 Speaker 1: And I think it, uh, it didn't escape them that 1259 01:14:40,960 --> 01:14:45,280 Speaker 1: the valuation of Paris first disclosed and Fortune magazine in 1260 01:14:45,400 --> 01:14:48,840 Speaker 1: June two fourteen was nine billion, which was essentially the 1261 01:14:49,120 --> 01:14:53,639 Speaker 1: same you know, market capitalization that Quest and Labcorp had 1262 01:14:54,040 --> 01:14:56,680 Speaker 1: so um that had to get their their attention, and 1263 01:14:56,720 --> 01:15:01,040 Speaker 1: I know it did. But yeah, the the the amount 1264 01:15:01,320 --> 01:15:05,080 Speaker 1: that the degree to which Elizabeth and Sonny were obsessed 1265 01:15:05,200 --> 01:15:11,360 Speaker 1: with Quest and Lab Corp uh is uh exponentially greater 1266 01:15:11,479 --> 01:15:14,439 Speaker 1: than uh, you know, than how concerned Question and lap 1267 01:15:14,479 --> 01:15:19,360 Speaker 1: Court were with Paras. But anyways, that first chant was 1268 01:15:19,439 --> 01:15:22,519 Speaker 1: directed at Quest and Lab Corps. And then three months later, 1269 01:15:22,520 --> 01:15:24,960 Speaker 1: when my story came out, at the end of this 1270 01:15:25,080 --> 01:15:28,000 Speaker 1: meeting in which Elizabeth and Sonny had both been very 1271 01:15:28,040 --> 01:15:32,000 Speaker 1: defiant about how my reporting was false and about how 1272 01:15:32,040 --> 01:15:34,840 Speaker 1: they would take the fight to the journal and to 1273 01:15:35,080 --> 01:15:41,880 Speaker 1: the journalist, a senior software engineer asked Sonny if he 1274 01:15:41,920 --> 01:15:45,120 Speaker 1: would lead them in a chant, and Uh, no, one 1275 01:15:45,520 --> 01:15:48,599 Speaker 1: you know had to ask what the chant was. Everyone 1276 01:15:48,680 --> 01:15:51,080 Speaker 1: knew based on what had happened three months prior, and 1277 01:15:51,160 --> 01:15:55,800 Speaker 1: so Sonny was of course very happy to oblige and 1278 01:15:56,439 --> 01:16:00,320 Speaker 1: lead the company for a second time in a chant. Uh. 1279 01:16:00,320 --> 01:16:03,240 Speaker 1: And this time added my name after the F you, 1280 01:16:03,439 --> 01:16:07,559 Speaker 1: which was convenient because it rhymed amazing, John carry row 1281 01:16:07,880 --> 01:16:12,360 Speaker 1: your fake news. Let's um that's what he should have said. Um, 1282 01:16:12,920 --> 01:16:14,800 Speaker 1: I think the book is not fake news, and it's 1283 01:16:14,840 --> 01:16:19,200 Speaker 1: absolutely fascinating. Let's let's jump to to our favorite questions, 1284 01:16:19,240 --> 01:16:21,080 Speaker 1: and I'm I'm going to skip around a little bit 1285 01:16:21,320 --> 01:16:24,040 Speaker 1: because I know we're tied on time. Tell us about 1286 01:16:24,120 --> 01:16:30,080 Speaker 1: some of your early mentors, so, uh, I would cite 1287 01:16:30,120 --> 01:16:33,120 Speaker 1: a few people. One of them would be uh my 1288 01:16:33,400 --> 01:16:37,760 Speaker 1: investigative team colleague Mark Merrimont. He's still at the Wall 1289 01:16:37,800 --> 01:16:41,040 Speaker 1: Street Journal to this day and still does great work 1290 01:16:41,080 --> 01:16:43,320 Speaker 1: for the Wall Street Journal. Um was he on one 1291 01:16:43,360 --> 01:16:46,880 Speaker 1: of the Pulitzer Prize winning teams that you uh yeah, 1292 01:16:46,920 --> 01:16:50,559 Speaker 1: he was actually uh he he uh lead wrote one 1293 01:16:50,600 --> 01:16:53,879 Speaker 1: of the stories that was in a package on corporate 1294 01:16:53,920 --> 01:16:57,559 Speaker 1: scandals in two thousand two that won the Pulitzer Prize 1295 01:16:57,600 --> 01:17:02,479 Speaker 1: for Explanatory Reporting, and I lead wrote another one of 1296 01:17:02,479 --> 01:17:05,759 Speaker 1: those stories. Um, but he he had been a mentor, 1297 01:17:06,080 --> 01:17:11,240 Speaker 1: uh several years prior on my first ever uh investigative work, 1298 01:17:11,280 --> 01:17:16,639 Speaker 1: which was unmasking a Belgian a speech recognition software company 1299 01:17:16,680 --> 01:17:19,400 Speaker 1: called learn out in Hospital, which was the pride of 1300 01:17:19,479 --> 01:17:22,080 Speaker 1: Flanders back then. And I was based in Brussels, and 1301 01:17:22,080 --> 01:17:25,919 Speaker 1: and Mark and another journal colleague named uh jesse Eisener 1302 01:17:26,120 --> 01:17:31,120 Speaker 1: had um uh smelled a rat and and started writing 1303 01:17:31,120 --> 01:17:33,559 Speaker 1: about this company and they needed help from a reporter 1304 01:17:33,560 --> 01:17:36,200 Speaker 1: on the ground in Belgium and sought out my help 1305 01:17:36,240 --> 01:17:39,360 Speaker 1: and then we we ended up, you know, spending close 1306 01:17:39,400 --> 01:17:42,640 Speaker 1: to a year unraveling the fraud of this company. And 1307 01:17:42,640 --> 01:17:44,919 Speaker 1: I learned a ton from those twho's got two guys, 1308 01:17:45,040 --> 01:17:49,360 Speaker 1: especially from Mark Merrimont and uh so he was a mentor. 1309 01:17:49,400 --> 01:17:53,400 Speaker 1: And then, UM, I'm gonna name check another former colleague, 1310 01:17:53,400 --> 01:17:58,599 Speaker 1: Mike Williams, who's now the UH investigative editor at UM 1311 01:17:58,640 --> 01:18:02,599 Speaker 1: at UH Reuters and who's a long time Wall Street 1312 01:18:02,640 --> 01:18:06,040 Speaker 1: Journal reporter and editor. He was my bureau chief in 1313 01:18:06,120 --> 01:18:09,160 Speaker 1: Paris for several years and he was later the Page 1314 01:18:09,160 --> 01:18:12,360 Speaker 1: one editor of the journal. And then of course Mike Sikonolfie, 1315 01:18:12,400 --> 01:18:15,599 Speaker 1: who was my current editor on the Investor investigative team. 1316 01:18:15,760 --> 01:18:18,880 Speaker 1: I would mention that Eisener went on to win the 1317 01:18:18,920 --> 01:18:23,240 Speaker 1: first online Pulitzer for his work at a pro public 1318 01:18:23,360 --> 01:18:27,120 Speaker 1: That's right. So um, a lot lots of Pulitzer Prize 1319 01:18:27,320 --> 01:18:30,360 Speaker 1: UH winning journalists came out of out of his shop. 1320 01:18:30,720 --> 01:18:33,800 Speaker 1: So who, um, let's talk about your favorite books. Bad 1321 01:18:33,840 --> 01:18:36,760 Speaker 1: Blood is your first book? What do you read? Who 1322 01:18:36,800 --> 01:18:43,320 Speaker 1: do you really enjoy? Fiction? Nonfiction? Right Blood related or not? So? Um, 1323 01:18:43,479 --> 01:18:49,560 Speaker 1: I love nonfiction and I love UH page turning nonfiction. 1324 01:18:50,640 --> 01:18:52,640 Speaker 1: One of my favorite books of all time is a 1325 01:18:52,760 --> 01:18:57,320 Speaker 1: Civil Action, which I read in the in the late nineties. UH. 1326 01:18:58,439 --> 01:19:00,080 Speaker 1: I think it's uh. The name of the author is 1327 01:19:00,160 --> 01:19:02,120 Speaker 1: Jonathan Harror. I think he worked on that book for 1328 01:19:02,160 --> 01:19:08,439 Speaker 1: seven years. UM. Another deeply reported book that I love 1329 01:19:08,560 --> 01:19:12,560 Speaker 1: is Black Hawk Down by Mark Bowden. Uh an amazing 1330 01:19:12,680 --> 01:19:18,920 Speaker 1: feat of reporting uh reconstructing uh what those soldiers went 1331 01:19:18,960 --> 01:19:25,000 Speaker 1: through in Somalia. Uh. Just an unbelievable book. UM. I 1332 01:19:24,360 --> 01:19:30,280 Speaker 1: I loved the the sort of definitive UH nonfiction book 1333 01:19:30,320 --> 01:19:34,360 Speaker 1: about Wall Street and the eighties Barbarians at the Gate, 1334 01:19:34,920 --> 01:19:39,040 Speaker 1: which was written by UH guys who at the time 1335 01:19:39,080 --> 01:19:41,920 Speaker 1: worked for the Wall Street Journal, Brian Burrow and John Helliar. 1336 01:19:42,240 --> 01:19:48,599 Speaker 1: They've long since moved on. UM. I am a big 1337 01:19:48,640 --> 01:19:53,120 Speaker 1: fan of the former Wall Street Journal reporter and now 1338 01:19:54,040 --> 01:19:58,240 Speaker 1: best selling author Eric Larson. UM. Among his books H 1339 01:19:58,439 --> 01:20:03,880 Speaker 1: Devil in the White City were um. Uh. The latest 1340 01:20:03,880 --> 01:20:06,880 Speaker 1: that I lead that I read by him is about 1341 01:20:06,920 --> 01:20:11,479 Speaker 1: the Lusitania. UM. He's just a terrific writer. UM. And 1342 01:20:11,520 --> 01:20:15,000 Speaker 1: I would say, UH an influence in terms of writing 1343 01:20:15,800 --> 01:20:20,760 Speaker 1: UH non nonfiction probably my my biggest influence. So what 1344 01:20:20,880 --> 01:20:23,920 Speaker 1: has changed since you became a journalist twenty years ago. 1345 01:20:24,080 --> 01:20:26,439 Speaker 1: How do you how do you see the we know, 1346 01:20:26,560 --> 01:20:29,600 Speaker 1: the industry, the business of journalisms have changed. What do 1347 01:20:29,640 --> 01:20:34,280 Speaker 1: you see as different in the actual reporting? Well, the 1348 01:20:34,320 --> 01:20:40,680 Speaker 1: one obvious thing is the rise of social media. Um uh, 1349 01:20:40,720 --> 01:20:45,479 Speaker 1: it's it's there everywhere you turn, you know. Uh. Um. 1350 01:20:45,680 --> 01:20:49,400 Speaker 1: People you investigate are on social media or use social media. 1351 01:20:49,560 --> 01:20:54,040 Speaker 1: I used LinkedIn to make contact with ex Theoris employees, 1352 01:20:54,160 --> 01:20:59,439 Speaker 1: one of them Tyler Schultz. Um and uh yeah, I 1353 01:20:59,479 --> 01:21:02,360 Speaker 1: think that it's it's it's both a reporting tool, but 1354 01:21:02,400 --> 01:21:06,760 Speaker 1: it's also a disinformation tool, as we see hint, hint 1355 01:21:07,280 --> 01:21:12,240 Speaker 1: with the current administration, it's sort of a propaganda tool. Um. 1356 01:21:12,280 --> 01:21:17,920 Speaker 1: Thinking of Twitter in particular, um uh and uh it's 1357 01:21:17,920 --> 01:21:23,559 Speaker 1: got other sort of um effects on our craft, uh, 1358 01:21:24,280 --> 01:21:26,240 Speaker 1: which some of which aren't so great, which is that 1359 01:21:26,320 --> 01:21:28,400 Speaker 1: journalists spend a lot of time on Twitter, probably too 1360 01:21:28,479 --> 01:21:34,519 Speaker 1: much time on Twitter instead of actually doing work. Um right, 1361 01:21:34,600 --> 01:21:38,160 Speaker 1: and sometimes they appine on Twitter in a way that 1362 01:21:38,160 --> 01:21:44,320 Speaker 1: that compromises their objectivity or person objectivity. Um. So yeah, 1363 01:21:44,320 --> 01:21:46,880 Speaker 1: social media has been a game changer, I think for 1364 01:21:46,880 --> 01:21:49,400 Speaker 1: for our profession. If I had to point to something, 1365 01:21:50,160 --> 01:21:52,280 Speaker 1: so tell us about a time you failed and what 1366 01:21:52,320 --> 01:21:55,920 Speaker 1: you learned from the experience. So when I was a 1367 01:21:55,920 --> 01:21:59,720 Speaker 1: brand new reporter at the Wall Street Journal Europe and 1368 01:22:00,040 --> 01:22:04,559 Speaker 1: uscles back in I think it was UM and the 1369 01:22:04,600 --> 01:22:06,960 Speaker 1: Wall Street Journal Europe back then was separate from the 1370 01:22:07,000 --> 01:22:10,360 Speaker 1: mother ship. UM. We had these these European and Asian 1371 01:22:10,479 --> 01:22:13,200 Speaker 1: editions that were run separately. So I wasn't a full 1372 01:22:13,240 --> 01:22:15,360 Speaker 1: fledged Wall Street Journal reporter. I was a Wall Street 1373 01:22:15,400 --> 01:22:20,240 Speaker 1: Journal Europe reporter. And uh, with respect to this incident, 1374 01:22:20,280 --> 01:22:23,240 Speaker 1: it was a good thing. I M a colleague and 1375 01:22:23,280 --> 01:22:30,160 Speaker 1: I wrote a story about a business deal that we thought, um, 1376 01:22:30,200 --> 01:22:33,280 Speaker 1: you know, we had learned about that that was basically 1377 01:22:33,360 --> 01:22:36,360 Speaker 1: turned out to be complete fiction. Uh. And it was 1378 01:22:36,439 --> 01:22:41,560 Speaker 1: like a comedy of errors. It was a a merger 1379 01:22:41,680 --> 01:22:45,439 Speaker 1: or so we thought, between several post offices in Europe, 1380 01:22:46,320 --> 01:22:49,840 Speaker 1: and um, you know, we had these sources who were 1381 01:22:50,280 --> 01:22:53,360 Speaker 1: who were just you know, these pseudios, sources who were 1382 01:22:53,400 --> 01:22:57,320 Speaker 1: several times removed from actual information, but who uh you know, 1383 01:22:57,720 --> 01:23:01,799 Speaker 1: told us that they thought they knew what they couldn't 1384 01:23:01,800 --> 01:23:04,600 Speaker 1: have known because it wasn't true. And so we we 1385 01:23:04,680 --> 01:23:08,879 Speaker 1: wrote this this completely absurd story that was completely wrong 1386 01:23:09,000 --> 01:23:13,160 Speaker 1: and erroneous. What was the take um was that what 1387 01:23:13,320 --> 01:23:16,800 Speaker 1: was your takeaway? No, my takeaway was that, um, you 1388 01:23:16,840 --> 01:23:20,479 Speaker 1: know you can't you you got to verify. I'm reading 1389 01:23:20,479 --> 01:23:25,880 Speaker 1: Cy Hirsch's um Um autobiography right now, and he has 1390 01:23:25,960 --> 01:23:28,479 Speaker 1: an expression for it that he learned at City News 1391 01:23:28,479 --> 01:23:32,360 Speaker 1: in Chicago, where he started out his career, uh, which 1392 01:23:32,439 --> 01:23:35,679 Speaker 1: is uh check it out. You know, he check it out. 1393 01:23:36,360 --> 01:23:38,599 Speaker 1: And we didn't do any checking. We just went with 1394 01:23:39,640 --> 01:23:41,880 Speaker 1: what you know, the first person we got on the 1395 01:23:41,880 --> 01:23:44,200 Speaker 1: phone told us and the story was completely wrong. It 1396 01:23:44,240 --> 01:23:46,599 Speaker 1: was embarrassing, and frankly, I just I still don't understand 1397 01:23:46,600 --> 01:23:49,200 Speaker 1: why I wasn't fired for it. And what is it 1398 01:23:49,240 --> 01:23:52,920 Speaker 1: that you know about investigative reporting today that you wish 1399 01:23:52,960 --> 01:23:57,919 Speaker 1: you knew twenty years ago? I mean, I think earlier 1400 01:23:57,920 --> 01:24:03,080 Speaker 1: in my career, I think that I thought investigative reporting 1401 01:24:03,200 --> 01:24:09,240 Speaker 1: was a glamorous craft. You know this may sound um corny, 1402 01:24:09,360 --> 01:24:12,760 Speaker 1: but um. One of the things that contributed to inspiring 1403 01:24:12,800 --> 01:24:15,439 Speaker 1: me to become a newspaper reporter was reading All the 1404 01:24:15,479 --> 01:24:19,080 Speaker 1: President's Men after college graduated in ninety four, and that 1405 01:24:19,160 --> 01:24:21,919 Speaker 1: was one of the first books I read after college, 1406 01:24:22,720 --> 01:24:26,560 Speaker 1: and uh, you know, I think it made uh investigative 1407 01:24:26,600 --> 01:24:30,560 Speaker 1: journalism and reporting seemed glamorous to me. And what I 1408 01:24:30,600 --> 01:24:34,000 Speaker 1: would caution you know, young people getting into this line 1409 01:24:34,000 --> 01:24:39,440 Speaker 1: of work is that uh of the time, it's not glamorous. 1410 01:24:39,520 --> 01:24:43,559 Speaker 1: It's digging. Uh you know, behind the scenes and the 1411 01:24:43,720 --> 01:24:49,040 Speaker 1: dark in semi or complete obscurity. And um, you know, 1412 01:24:50,160 --> 01:24:53,360 Speaker 1: hopefully you you you published some some good stories, but 1413 01:24:53,680 --> 01:24:57,559 Speaker 1: oftentimes the stories won't have as much impact as you 1414 01:24:58,280 --> 01:25:02,000 Speaker 1: would hope they would have. And you know, it can 1415 01:25:02,040 --> 01:25:05,040 Speaker 1: be thankless work, and um, I would argue that it's 1416 01:25:05,040 --> 01:25:09,240 Speaker 1: also also can be very rewarding work, but you gotta 1417 01:25:09,320 --> 01:25:13,320 Speaker 1: stick with it, and it's uh work that requires persistence 1418 01:25:13,560 --> 01:25:17,559 Speaker 1: and perseverance. UM. I don't know if I necessarily knew 1419 01:25:17,600 --> 01:25:20,560 Speaker 1: all those things when it started out, just just fascinating. 1420 01:25:20,800 --> 01:25:22,960 Speaker 1: Thank you, John for being so generous with your time. 1421 01:25:23,400 --> 01:25:28,000 Speaker 1: We have been speaking with John Carrirew, author of Bad Blood, 1422 01:25:28,280 --> 01:25:31,280 Speaker 1: Secrets and Lies in a Silicon Valley start up. If 1423 01:25:31,320 --> 01:25:33,880 Speaker 1: you enjoyed this conversation, well then look up and intro 1424 01:25:33,960 --> 01:25:38,360 Speaker 1: down an intro on Apple, iTunes, Overcast, Stitcher, or wherever 1425 01:25:38,400 --> 01:25:40,840 Speaker 1: your final podcasts are sold, and you can see any 1426 01:25:40,960 --> 01:25:45,800 Speaker 1: of our prior two hundred plus conversations. We love your 1427 01:25:45,840 --> 01:25:49,840 Speaker 1: comments feedback and suggestions right to us at m IB 1428 01:25:50,000 --> 01:25:53,080 Speaker 1: podcast at Bloomberg dot net. I would be remiss if 1429 01:25:53,120 --> 01:25:55,760 Speaker 1: I did not thank my crack staff that helps to 1430 01:25:55,800 --> 01:25:59,680 Speaker 1: put together this conversation each week. Medina Parwana is our 1431 01:26:00,040 --> 01:26:04,120 Speaker 1: you engineer slash producer, Taylor Riggs is our booker and producer, 1432 01:26:04,160 --> 01:26:08,200 Speaker 1: and Michael Batnick is our head of research. I'm Barry Retolts. 1433 01:26:08,360 --> 01:26:11,679 Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.