Texto do Episódio 93 do Podcast Way Ahead – The Great Silicon Valley Scam

Escrito por Fabio Emerim

(Este texto é a transcrição do áudio do episódio 93 do nosso podcast Way Ahead e você pode ouví-lo aqui: https://open.spotify.com/episode/4SAHBx6a0cjeQd98yRq0in?si=cWOKBVWkQWe885pzryK_Xg )

This is the story of the greatest scam that has ever taken place in Silicon Valley. It’s a story about an obsessed mind who was able to deceive politicians, scientists, businesspeople and journalists. It’s the story of Elizabeth Holmes and her company called Theranos.

This lady, at the age of 19, came up with an idea that she believed could change the world. With a few drops of blood from a person’s finger, Elizabeth Holmes said her invention would run tests for a variety of diseases. Precisely, 200 tests.

There was just one problem: it didn’t work.

However, that didn’t stop her creating her multi-billion dollar company.

Like all good internet start-ups, Theranos and Ms Holmes had a great story. Her father worked for government agencies, often overseeing relief work and she was brought up wanting to change the world for the better. Aged 19, she dropped out of Stanford University shortly after filing her first patent, for a drug-delivery patch that could adjust dosage to suit an individual patient’s blood type, and then update doctors wirelessly.

The patch never made it to market but the big idea – the one upon Theranos was built, was the machine that could test for a variety of diseases.

Naturally, it too came with a story: as a child she had hated needles, and she would tell how her mother and her grandmother fainted at the sight of them.

But more than that, it really could have been a game changer.

The machine called “Edison”, after the inventor, promised to revolutionize blood testing. Theranos planned to charge less than half the rates charged by Medicare and Medicaid in the US – potentially saving the US government $200bn over the next decade.

It would democratize the testing process, allowing anyone to get a test done at a pharmacy and have it analyzed in hours. Theranos was what every investor loves – an industry disrupter, a David to take on the Goliaths of the diagnostics industry such as LabCorp and Quest.

By 2014 the company had raised more than $400m and was valued at about $9bn. Ms Holmes was worth $4.5bn, according to Forbes magazine, making her the youngest self-made female billionaire.

She had also convinced big names on to her board including two former US Secretaries of State, Henry Kissinger and George Schultz. With hindsight, it is easy to point out that few of the names, while famous, had much to do with medicine or science.

Meanwhile, Ms Holmes was an interviewer’s dream: she cultivated a Steve Jobs image, wearing only black turtleneck sweaters in public. She quoted Jane Austen by heart. She went vegan and talked enthusiastically of her favorite wheatgrass-celery-cucumber “green juice”. She spoke on panels with Bill Clinton, and gave impassioned TED talks.

There was even talk of making a movie based on her, tentatively titled Bad Blood.

But if she talked the talk, there were hints that Theranos did not quite walk the walk. To start with there was the obsessive secrecy. Ms Holmes was founder, chief executive and chairman. Nothing was done without her approval. And when it came to talking about “Edison”, the shutters came down.

This is what she said to a New Yorker reporter when he asked how “Edison” worked: “A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.”

Was this secrecy – or a cover-up?

Not everyone was a believer. Bill Maris, who runs Google Ventures (GV) in 2013 decided not to invest. In an interview with Business Insider, Maris said he had got a member of his life-science investment team to take the blood test. It turned out it wasn’t as simple as the publicity claimed. Maris said: “It wasn’t that difficult for anyone to determine that things may not be what they seem here.”

One journalist who was more than suspicious was the Wall Street Journal’s John Carreyrou. A two-time Pulitzer Prize winner, he worked patiently to find out what was really going on at Theranos, talking to employees who started to tell a very different story from that of the dazzling public image.

Some were saying that the “Edison” results were inaccurate. Others revealed that the vast majority of tests were not done in Theranos labs at all, but in conventional machines bought from mainstream suppliers.

After his story was published by the Journal in October 2015, the US financial regulator, the Securities and Exchange Commission, opened an investigation.

The Centers for Medicare and Medicaid Services, which oversee blood testing laboratories, revoked Theranos’ licence. Within a year the company began shutting down its labs and laid off more than 40% of its full-time employees.

Forbes magazine revised Ms Holmes’ wealth down to “nothing”.

In January this year, she was convicted by a jury in California on four counts of fraud, each of which carries a maximum sentence of 20 years in prison.

The jury found her not guilty on four other charges and failed to reach a verdict on three more. Holmes, who had pleaded not guilty to all charges, sought a new trial but those requests were denied.

She was sentenced on Friday 18 to 11 years and three months in prison.

During the trial Holmes accused her ex-boyfriend and business partner, Ramesh “Sunny” Balwani, of emotional and sexual abuse at the time of the alleged crimes, impairing her mental state.

Balwani, 56, who faced the same fraud charges, was convicted in July and is due to be sentenced next month. He had called the claims “outrageous”.

Despite being the subject of a book, HBO documentary, TV series and an upcoming film, it is still unclear why Holmes took such a gamble on technology she knew didn’t work.

She was raised in a comfortably well-off family in Washington DC, and was a polite but withdrawn child, according to people who knew her.

Inventor and businessman Richard Fuisz, 81, speculated there must have been immense pressure on Holmes to succeed. His family lived next door to the Holmes family for years, but they fell out when Theranos sued him over a patent dispute in 2011 that was later settled.

Holmes’s parents spent much of their careers as bureaucrats on Capitol Hill, but “they were very interested in status” and “lived for connections”, he told the BBC. Her father’s great-great-grandfather founded Fleischmann’s Yeast, which changed America’s bread industry, and the family was very conscious about its lineage.

At age nine, the young Elizabeth wrote a letter to her father declaring that what she “really want[ed] out of life is to discover something new, something that mankind didn’t know was possible to do”.

At 18, she already displayed an intransigence that would apparently continue and drive the company she would found the following year.

Phyllis Gardner, an expert in clinical pharmacology at Stanford, recalled discussing Holmes’s skin-patch idea and telling her it “wouldn’t work”.

“She just stared through me,” Dr Gardner told the BBC.

“And she just seemed absolutely confident of her own brilliance. She wasn’t interested in my expertise, and it was upsetting.”

Powerful people were attracted and invested without seeing audited financial accounts.

US Treasury Secretary George Schultz, media tycoon Rupert Murdoch and America’s richest family, the Waltons, were among her investors.

The support lent her credibility, as did her demeanor.

“I knew she’d had this brilliant idea and that she had managed to convince all these investors and scientists,” said Dr Jeffrey Flier, the former dean of Harvard Medical School, who met her for lunch in 2015.

“She was self-assured, but when I asked her several questions about her technology she didn’t look like she understood,” added Dr Flier, who never formally assessed her technology. “It seemed a bit odd, but I didn’t come away thinking it was a fraud.”

In 2018 Theranos was dissolved.

In March that year, Holmes settled civil charges from financial regulators that she had fraudulently raised $700m from investors.

But three months later she was arrested, along with Mr Balwani, on criminal charges of wire fraud and conspiracy to commit wire fraud.

Prosecutors said she knowingly misled patients about the tests and vastly exaggerated the firm’s performance to financial backers.

As the Theranos scandal reached trial, commentators said it was remarkable how tightly Holmes clung to her original story, and people who knew her said they doubt she has changed.

Since the trial, Holmes has been living in California with partner William “Billy” Evans, 27, an heir to the Evans Hotel Group. They had a son in July 2021 and she is pregnant with their second child.

Holmes’s attorneys had said she should not face prison time on the grounds that she was not a danger to society. They offered testimony from more than 130 people on her behalf, including Senator Cory Booker.

But prosecutors argued that she was “blinded” by ambition, which put “and will continue to put people in harm’s way”.

“She accepts no responsibility,” they wrote in court filings. “Quite the opposite, she insists she is the victim.”

fonte: https://www.bbc.com/news/business-43415967

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