DeviceTalks Boston finished off their conference last week with a bang –an interview with Theranos Whistleblower Tyler Shultz, who spilled the beans to the Wall Street Journal about the lack of science and surfeit of lying at the infamous company. We hoped to get the inside scoop on this big con that has spawned numerous articles, a podcast, an HBO documentary, and an upcoming feature film (we’re going with Zac Efron to play Tyler), and he did not disappoint. Tyler started off by describing how the aging, powerful Theranos Board members, including his grandpa and former US Secretary of State, George Shultz, were creepily charmed into Elizabeth Holmes’ orbit by her “big blue eyes” (according to Tyler, Theranos Board member Henry Kissinger wrote Holmes a limerick more or less saying dead Steve Jobs was pre-imitating her, not the other way around – no comment…).
Beyond the shock factor, Tyler’s stories left us with some clues for how to identify potential Theranosing (yes, we are making this a verb) in our midst. Here is a helpful guide so you can recognize when a company might be Theranosing and nip it in the bud, or stay far, far away:
· Ill-Suited Boards/Weak Oversight: Theranos loaded the board literally with top brass, including General “Mad Dog” Mattis, who knows little about healthcare and even less about diagnostics. Kissinger may have changed our relationship with China, but what does he know about quality systems or CLIA? Avoiding traditional healthcare VC financing may be a necessity in medical devices where few VCs are still active; it may also be a way to avoid management accountability or maintain unwarranted valuations.
· Impossible Financials: According to Tyler, Theranos investors never saw, or demanded, audited financial statements for the company. He claimed that grandpa George only turned on Elizabeth quite recently after seeing in black and white in an SEC document how Theranos claimed to have $100M in revenue when they only had $100K. But what’s a few zeros among (mesmerized) friends?
· Internal Secret-Keeping: A story Tyler used to illustrate how Theranos leadership kept their own people in the dark, was a visit by an electrician to fix a ceiling light. Up on that high ladder, the electrician could easily view the Edison “lab in a box” devices that were kept hidden from most of the employees. While unphased by this electrician, reporters, or regulators, Elizabeth went to great measures to ensure that her own scientists were unable to put the pieces together and uncover the truth. Companies with nothing to hide will foster cross-functional communication and learning.
· Fake Apartments: This was just too good a share from Tyler to leave out… If the CEO rents a staged apartment with only a mattress on the floor, black turtlenecks in the closet, and bottled water in the fridge to demonstrate their ascetic corporate devotion, all the while living in a luxurious mansion in Atherton, proceed with caution.
We all would like to believe that another Theranos couldn’t happen, or that we’d see right through the scam if we encountered it. The desire to believe can be intoxicating, though. If we didn’t think we could achieve great things in the face of daunting risks and skepticism, none of us would be in this business. It is easy to characterize Elizabeth Holmes as a misanthropic villain driven by ego and greed, but where does one cross the line from optimistic exuberance to deliberate deception? The healthcare industry needs visionaries who are not discouraged by the doubters or constrained by the current state of the world. What we don’t need are liars and criminals who would sacrifice patient safety for their own aggrandizement, no matter how big their blue eyes are.
Photo Credit: Wall Street Journal