SAN JOSE, California – At the height of her recognition in 2015, Elizabeth Holmes, the entrepreneur who founded the blood test start-up Theranos, was named “Woman of the Year” by Glamor. Die Zeit put her on the list of 100 luminaries. And it graced the covers of Fortune, Forbes, Inc., and T Magazine.
Theranos collapsed caught in a scandal three years later that missed its mission to revolutionize the healthcare industry. But it changed the world in another way: it helped piss off the media in Silicon Valley.
That point was brought home on Thursday when Roger Parloff, a journalist who wrote the 2014 Fortune cover story about Ms. Holmes and Theranos, testified in a federal courtroom in San Jose, California, where Ms. Holmes is in court for fraud in 12 cases. Mr Parloff said Ms Holmes made false statements to him, including the scope and type of tests Theranos could perform, as well as his work with military and pharmaceutical companies.
Theranos’ law firm Boies Schiller introduced him to the start-up, said Parloff. The law firm had told him that “the real story of this remarkable company and its remarkable founder and CEO was Elizabeth Holmes,” he testified, looking directly at Mrs. Holmes across the courtroom.
The discovery that Ms. Holmes, the tech industry’s most famous entrepreneur, was misleading the world about her company marked a turning point in the tech press and ended a decade of largely positive coverage. Reporters shuddered at the glowing articles they wrote about technology companies that overshadowed the truth, glossed over the negative effects of their products, or generally abused the public trust they enjoyed.
“Holmes just becomes this ‘you can’t just buy what they sell’ fable,” said Margaret O’Mara, a professor at the University of Washington and a Silicon Valley historian. “‘That wasn’t what it was supposed to be and we fell for it.'”
Understand the Elizabeth Holmes Trial
Elizabeth Holmes, the founder of the blood test startup Theranos, is currently on trial for two conspiracies to commit transfer fraud and 10 cases of transfer fraud.
According to the Wall Street Journal published exposés In 2015 and 2016, which showed Theranos wasn’t what it appeared to be, coverage of tech companies in general became more critical.
Reporters buried themselves The role of Facebook in the 2016 presidential election, as well as Uber scandals and a number of # MeToo allegations and workers’ uprisings at technology companies. The change came with the realization that the technology industry was no longer the niche realm of idealistic computer geeks. It had become the dominant force in the world economy and needed more accountability.
Now that Ms. Holmes, 37, is on trial, the media’s role in the rise and fall of Theranos has been meticulously set out. Ms. Holmes used positive articles such as Fortune’s to Gain credibility with investors, who had put $ 945 million in Theranos, prosecutors argued.
These investors have often been impressed by the media coverage. Chris Lucas, a venture capitalist whose firm had invested in Theranos, testified that reading the Fortune article made him “very proud of the situation, proud that we were involved, very proud of Elizabeth, the whole thing.” Lisa Peterson, who managed a $ 100 million investment in Theranos on behalf of the wealthy DeVos family, took the language straight from the Fortune article into a report they wrote.
The media was also eager to greet Ms. Holmes’ tale of a brilliant Stanford dropout en route to the next Steve Jobs. Here was a young, self-made billionaire who compared to Einstein and Beethoven. She loved iconography, dressed in black turtlenecks like Mr. Jobs, followed an esoteric lifestyle, and told Mr. Parloff that she was a vegan Buddhist who avoided coffee instead of green juice.
“There was a hunger for that type of story and she took this opportunity and worked very carefully on it,” said Ms. O’Mara.
The media’s fascination with Ms. Holmes became so great that her then business partner and boyfriend Ramesh Balwani, known as Sunny, warned her that the hype was going to be risky.
“For your information, I am concerned about the excessive non-solid-substance exposure that is currently absent,” wrote Mr Balwani in a text message that was attached to the court records.
Mrs. Holmes brushed aside the warning. Media coverage helped Theranos with an obvious potential deal, she wrote, adding, “The more it works, the more haters will hate.”
Later that year, The Journal revealed that Theranos’ technology didn’t do what the start-up claimed, leading to a surprise regulatory inspection that led to the company’s liquidation.
Theranos vigorously denied the journal’s report. On CNBC, Ms. Holmes dismissed the article as “what happens when you work to change things”. According to text messages in the court files, she and Mr. Balwani were planning a slander law suit. Together they led Theranos employees in To sing a swear phrase in John Carreyrou, the journal’s reporter.
Shortly afterwards, Mr. Parloff a long correction to his Fortune article, which describes the way Theranos and Ms. Holmes had misled him. He also blamed himself for not including some of Mrs. Holmes’ evasive and more opaque answers to his questions.
In court, exhibits showed that Ms. Holmes had shown Mr. Parloff the same fake validation reports – which appeared to show that pharmaceutical companies had supported Theranos’ technology when they hadn’t – that she had sent to investors. Mr Parloff also said that Ms. Holmes had told him that the military were using Theranos in Afghanistan, but that the fact was so delicate that he could not publish it or even ask General James Mattis, a board member of Theranos, about it. It turned out that Theranos machines were never used on battlefields.
“She was very concerned about trade secrets,” said Parloff.
Even though she faces up to 20 years in prison if convicted, Ms. Holmes continues to fight the media. Throughout the process, her lawyers have urged that Mr. Parloff’s testimony be narrowed down. They filed a motion to compel him to hand over all of his reporting notes, even though he had already provided both sides of the case with records of his interviews with Ms. Holmes as part of a subpoena.
The aim of this motion was to show that Mr. Parloff was “biased” and “had a desire to attribute all the mistakes he made in his first article to Mrs. Holmes,” said John Cline, an attorney for Mrs. Holmes, at a hearing in October.
A judge rejected the application as a “fishing expedition”.