فصل 17

Fame

Richard and Joe Fuisz sat warily across from David Boies and one of his partners at a table in the lobby lounge of San Jose’s Fairmont hotel. It was a Sunday evening in the middle of March and the usually bustling lounge’s two grand pianos were quiet, allowing the four men to speak without raising their voices. Boies, looking relaxed and dapper in a navy blazer and his signature black sneakers, had called the meeting to discuss settling the litigation that had pitted the Fuiszes against Theranos for the past two and a half years.

Initially determined to fight the lawsuit to the bitter end, Richard and Joe were tired and battered. The trial had started a few days earlier at the federal courthouse down the street and the extent to which they were outgunned had fully dawned on them. Unhappy with their lawyers and their mounting legal costs, they had gone “pro se” several months earlier. What had seemed then like a reasonable decision now looked foolish: Joe, a patent attorney who had never tried a case, was no match for the country’s best litigator and his army of associates.

The death of Ian Gibbons had also been a big setback. It briefly looked like they might be able to make up for it by calling his widow, Rochelle, as a witness. After Richard managed to make contact with her, Rochelle told him that Elizabeth had tried to bully Ian into not testifying and that Ian thought she was dishonest. But the judge overseeing the case had denied the Fuiszes’ late motion to call Rochelle to the stand.

More damaging, though, had been Richard Fuisz’s own courtroom testimony two days earlier. Boies had caught him in a series of pointless lies that, while they did nothing to prove Theranos’s theft allegations, had undermined his credibility. One of them was Fuisz’s contention that he still practiced medicine and treated patients—a claim his own wife had refuted in her deposition. For no discernible reason other than pride, Fuisz had refused to back away from it even after Boies confronted him with her testimony. In his rambling opening argument, Fuisz had also stated that his patent had nothing to do with Theranos, which was absurd on its face given that his patent application mentioned the company by name and quoted from its website.

Joe had watched his father’s disastrous performance on the stand with growing alarm. His dad had once been an amazing pitchman in business settings because he was a terrific schmoozer and improviser, but that off-the-cuff, loose-with-the-facts approach didn’t work when you were being questioned under oath by a legal ace ready to pounce on any inconsistency. It didn’t help that, at seventy-four years old, Richard’s memory was beginning to slip.

Joe feared his brother John’s upcoming testimony might turn into another liability. Boies knew John had a bad temper and would no doubt find ways to press his buttons in front of the jury. He had already brought up the fact that John had threatened Elizabeth during his deposition.

When he added it all up in his mind, Joe knew they were in trouble. And with a courtroom defeat looking like a very real possibility, he was haunted by a terrifying thought: What if they not only lost, but the judge made them cover Theranos’s legal expenses? He shivered to think how much money their opponent was spending on the case. He worried it might be enough to bankrupt him and his father both. They had already spent more than $2 million on their defense.

Boies had come to their powwow with Mike Underhill, one of the Boies Schiller attorneys running point on the litigation. Underhill, a very tall and gangly man, broke the ice by asking Richard Fuisz if he had really grown up on a farm (the answer was yes). That led to Fuisz and Boies discussing raising cattle, which Boies had some experience with from the ranch he owned in Napa Valley. When the conversation eventually turned to the matter at hand, Underhill said both sides would be better off settling the case. If, however, the Fuiszes remained intent on pressing forward with the trial, they should know that matters would be revealed that would destroy John Fuisz. Underhill didn’t specify what nor did he say this menacingly. He made it sound as though he liked John and it would pain him to see him get hurt. There was some irony to Underhill’s threat to air dirty laundry about John. The two of them had once been colleagues at McDermott Will & Emery and had shared a secretary. Underhill had left McDermott not long after John had made a sexual harassment complaint against him on the secretary’s behalf to the firm’s human resources department. (Underhill denies any untoward behavior and says his departure from McDermott to join Boies Schiller was already in motion.)

The prospect of new damaging information coming out about his brother added yet another worry to Joe’s long list, but the truth was that he and his father had come to the meeting ready to settle. It didn’t take long for an agreement to take shape: the Fuiszes would withdraw their patent in exchange for Theranos withdrawing its suit. No money would change hands; each party would remain responsible for its legal costs. It amounted to a complete capitulation on the Fuiszes’ part. Elizabeth had won.

Boies insisted they draft the agreement right then and there. He wrote the terms down on a piece of paper and passed it to Joe, who made a few modifications. Underhill then took it upstairs to have it typed up. As they waited for Underhill to return, Richard Fuisz complained once more that Elizabeth’s theft accusation was false. Playing the part of the magnanimous victor, Boies allowed that that might be the case but he had a client to answer to.

Fuisz asked Boies if he could do something for John. His son’s reputation had been unjustly sullied, he said. Underhill had previously raised with Joe the notion that Boies Schiller could refer patent work to John if he signed a release promising not to sue Elizabeth or the firm. Boies repeated that offer. He would need to wait six months for things to quiet down, but then he could start sending work John’s way. He suggested they get John on the phone to talk it over.

Fuisz dialed John’s number in Washington and passed his cell phone to Boies. As it turned out, John was in no mood to make nice. He had been looking forward to testifying in court. He saw it as his chance to clear his name. Now this settlement would prevent him from doing that. He angrily told Boies there was no way he would ever sign a release unless Theranos issued a public statement exonerating him. Richard and Joe could see the conversation wasn’t going well: Boies was holding the phone several inches from his ear and wincing as John shouted on the other end of the line. After a few minutes, Boies passed the phone back to Fuisz. Their little side deal was dead.

But the main agreement stood. When Underhill came back with the printed settlement, Richard and Joe read it and signed it. Afterward, Richard Fuisz looked utterly defeated. The proud and pugnacious former CIA agent broke down and sobbed.

—

THE NEXT MORNING, Fuisz jotted down a note on a paper pad from the hotel and, when he got to the courthouse, asked Boies to pass it on to Elizabeth. It read:

Dear Elizabeth,

This matter is resolved now. I wish great success for you and health and happiness for your parents. We all can be wrong. Life is like that. Please know that in fact none of the 612 patent came from any of your provisionals. It derived from my brain only.

Best wishes,

Richard Fuisz

Back in Washington, the settlement didn’t sit well with John Fuisz. He was mad at everyone, including his father and brother, for agreeing to a deal that gave Theranos everything it wanted before he’d had a chance to tell his side of the story in court. In his pique, John emailed a young reporter named Julia Love, who had been covering the case for American Lawyer Media, and told her about the quid pro quo Boies had sought the night before, making it sound like an attempt to bribe him. He also vowed to sue Boies and to add his father and brother to the suit as defendants. He then forwarded the email to Underhill and to Richard and Joe, letting them know that anything they sent his way would be forwarded to the media.

Underhill responded angrily a few hours later, leaving the reporter off his reply but copying his boss. He denied any attempt to bribe John and warned him that Boies Schiller would hold him responsible if he continued to make such claims. In case the message wasn’t clear, Boies himself chimed in from his iPad a few minutes later: Those who the gods would destroy, they first make mad.

—

JULIA LOVE’S ARTICLE about the settlement in Litigation Daily, ALM’s newsletter, caught the eye of Roger Parloff, Fortune magazine’s legal correspondent. Parloff, who had once practiced law as a white-collar criminal defense attorney in Manhattan before becoming a journalist, was always on the lookout for legal sagas to write about.

This particular case struck him as strange and, in his experience, strange cases usually made for good yarns. Why had Boies, arguably the country’s most famous lawyer with his pick of high-profile cases to choose from, handled this obscure patent trial himself instead of delegating it to a more junior associate? Then there was the fact that John Fuisz, an attorney who was the son of one of the defendants and brother of the other, was publicly threatening to sue both the plaintiff and Boies for making false accusations.

From his office in the Time & Life Building in Midtown Manhattan, Parloff picked up the phone and called Dawn Schneider, Boies’s longtime public-relations representative. Parloff’s call was perfect timing from Schneider’s perspective. She had just talked to an ebullient Boies about the case and decided she should try to get him some press about it. She offered to come brief the Fortune writer in person. The Boies Schiller offices at Fifty-First Street and Lexington Avenue were just four avenue blocks away.

As she walked across Midtown, it occurred to Schneider that Boies’s victory in the Fuisz case was a good story but the far better story was Theranos and its brilliant young founder. She had never met Elizabeth, but she’d been hearing Boies rave about her for several years. This was an opportunity to get David’s protégée national attention just as her company prepared to expand across the country. By the time she got to the Fortune offices on Avenue of the Americas, Schneider had changed her pitch.

Parloff listened intrigued. He hadn’t seen the Wall Street Journal article from the previous fall so he had never heard of Theranos but, according to Schneider, that was precisely the point. It was like writing about Apple or Google in their early days before they became Silicon Valley icons and entered the collective consciousness.

“Roger, this is the greatest company you’ve never heard of,” she said. “Think of it as an old-school Fortune cover.”

A few weeks later, Parloff flew out to Palo Alto to meet Elizabeth. Over the course of several days, he interviewed her for a combined seven hours. After getting over his initial shock at her deep voice, he found her smart and engaging. When they broached topics other than blood testing, she was unassuming, almost naïve. But when their conversations shifted to Theranos, she became steely and intense. She was also very controlling with information. She dangled a scoop: Theranos had raised more than $400 million from investors at a valuation of $9 billion, making it one of the most valuable startups in Silicon Valley. And she showed Parloff the miniLab (though she didn’t refer to it by any name). But she wouldn’t let the magazine take photos of it and she didn’t want Parloff to use the words “device” or “machine” to describe it. She preferred “analyzer.”

Leaving those quirks aside, what Elizabeth told Parloff she’d achieved seemed genuinely innovative and impressive. As she and Sunny had stated to Partner Fund, she told him the Theranos analyzer could perform as many as seventy different blood tests from one tiny finger-stick draw and she led him to believe that the more than two hundred tests on its menu were all finger-stick tests done with proprietary technology. Since he didn’t have the expertise to vet her scientific claims, Parloff interviewed the prominent members of her board of directors and effectively relied on them as character witnesses. He talked to Shultz, Perry, Kissinger, Nunn, Mattis, and to two new directors: Richard Kovacevich, the former CEO of the giant bank Wells Fargo, and former Senate majority leader Bill Frist. Before going into politics, Frist had been a heart and lung transplant surgeon. All of them vouched for Elizabeth emphatically. Shultz and Mattis were particularly effusive.

“Everywhere you look with this young lady, there’s a purity of motivation,” Shultz told him. “I mean she really is trying to make the world better, and this is her way of doing it.”

Mattis went out of his way to praise her integrity. “She has probably one of the most mature and well-honed sense of ethics—personal ethics, managerial ethics, business ethics, medical ethics that I’ve ever heard articulated,” the retired general gushed.

Parloff didn’t end up using those quotes in his article, but the ringing endorsements he heard in interview after interview from the luminaries on Theranos’s board gave him confidence that Elizabeth was the real deal. He also liked to think of himself as a pretty good judge of character. After all, he’d dealt with his share of dishonest people over the years, having worked in a prison during law school and later writing at length about such fraudsters as the carpet-cleaning entrepreneur Barry Minkow and the lawyer Marc Dreier, both of whom went to prison for masterminding Ponzi schemes. Sure, Elizabeth had a secretive streak when it came to discussing certain specifics about her company, but he found her for the most part to be genuine and sincere. Since his angle was no longer the patent case, he didn’t bother to reach out to the Fuiszes.

—

WHEN PARLOFF’S COVER STORY was published in the June 12, 2014, issue of Fortune, it vaulted Elizabeth to instant stardom. Her Journal interview had gotten some notice and there had also been a piece in Wired, but there was nothing like a magazine cover to grab people’s attention. Especially when that cover featured an attractive young woman wearing a black turtleneck, dark mascara around her piercing blue eyes, and bright red lipstick next to the catchy headline “THIS CEO IS OUT FOR BLOOD.”

The story disclosed Theranos’s valuation for the first time as well as the fact that Elizabeth owned more than half of the company. There was also the now-familiar comparison to Steve Jobs and Bill Gates. This time it came not from George Shultz but from her old Stanford professor Channing Robertson. (Had Parloff read Robertson’s testimony in the Fuisz trial, he would have learned that Theranos was paying him $500,000 a year, ostensibly as a consultant.) Parloff also included a passage about Elizabeth’s phobia of needles—a detail that would be repeated over and over in the ensuing flurry of coverage his story unleashed and become central to her myth.

When the editors at Forbes saw the Fortune article, they immediately assigned reporters to confirm the company’s valuation and the size of Elizabeth’s ownership stake and ran a story about her in their next issue. Under the headline “Bloody Amazing,” the article pronounced her “the youngest woman to become a self-made billionaire.” Two months later, she graced one of the covers of the magazine’s annual Forbes 400 issue on the richest people in America. More fawning stories followed in USA Today, Inc., Fast Company, and Glamour, along with segments on NPR, Fox Business, CNBC, CNN, and CBS News. With the explosion of media coverage came invitations to numerous conferences and a cascade of accolades. Elizabeth became the youngest person to win the Horatio Alger Award. Time magazine named her one of the one hundred most influential people in the world. President Obama appointed her a U.S. ambassador for global entrepreneurship, and Harvard Medical School invited her to join its prestigious board of fellows.

As much as she courted the attention, Elizabeth’s sudden fame wasn’t entirely her doing. Her emergence tapped into the public’s hunger to see a female entrepreneur break through in a technology world dominated by men. Women like Yahoo’s Marissa Mayer and Facebook’s Sheryl Sandberg had achieved a measure of renown in Silicon Valley, but they hadn’t created their own companies from scratch. In Elizabeth Holmes, the Valley had its first female billionaire tech founder.

Still, there was something unusual in the way Elizabeth embraced the limelight. She behaved more like a movie star than an entrepreneur, basking in the public adulation she was receiving. Each week brought a new media interview or conference appearance. Other well-known startup founders gave interviews and made public appearances too but with nowhere near the same frequency. The image of the reclusive, ascetic young woman Parloff had been sold on had overnight given way to that of the ubiquitous celebrity.

Elizabeth was also quick to embrace the trappings of fame. The Theranos security team grew to twenty people. Two bodyguards now drove her around in a black Audi A8 sedan. Their code name for her was “Eagle One.” (Sunny was “Eagle Two.”) The Audi had no license plates—another nod to Steve Jobs, who used to lease a new Mercedes every six months to avoid having plates. Elizabeth also had a personal chef who prepared her salads and green vegetable juices made of cucumber, parsley, kale, spinach, lettuce, and celery. And when she had to fly somewhere, it was in a private Gulfstream jet.

—

PART OF WHAT made Elizabeth’s persona so compelling was her heartwarming message about using Theranos’s convenient blood tests to catch diseases early so that, as she put it in interview after interview, no one would have to say goodbye to loved ones too soon. In September 2014, three months after the Fortune cover story, she made that message more poignant during a speech at the TEDMED conference in San Francisco by adding a personal dimension to it: for the first time, she told the story in public of her uncle who had died of cancer—the same story Tyler Shultz had found so inspiring when he’d started working at Theranos.

It was true that Elizabeth’s uncle, Ron Dietz, had died eighteen months earlier from skin cancer that had metastasized and spread to his brain. But what she omitted to disclose was that she had never been close to him. To family members who knew the reality of their relationship, using his death to promote her company felt phony and exploitative. Of course, no one in the audience at San Francisco’s Palace of Fine Arts knew this. Most of the one thousand spectators in attendance found her performance mesmerizing.

Clad all in black, she strode solemnly around the stage as she spoke, like a preacher giving a sermon. In a stunt that made for brilliant theater, she pulled a nanotainer out of her jacket pocket midway through and held it up to illustrate how little blood Theranos’s tests required. Calling the fear of needles “one of the basic human fears, up there with the fear of spiders and the fear of heights,” she then told other touching anecdotes. One was about a little girl who got stuck repeatedly with a syringe by a hospital nurse who couldn’t find her vein. Another was about cancer patients whose spirits were broken by all the blood they had to give as part of their treatments.

One of the people watching from a seat halfway up the auditorium was Patrick O’Neill, whom Elizabeth had hired away from TBWA\Chiat\Day and appointed Theranos’s chief creative officer. Patrick had become instrumental in honing Elizabeth’s image and raising her profile. He had helped her prepare for the conference and before that had worked with Fortune’s photographer on the magazine’s cover shoot. To Patrick, making Elizabeth the face of Theranos made perfect sense. She was the company’s most powerful marketing tool. Her story was intoxicating. Everyone wanted to believe in it, including the numerous young girls who were sending her letters and emails. It wasn’t a cynical calculus on his part: Patrick was one of her biggest believers. He had no knowledge of the shenanigans in the lab and didn’t pretend to understand the science of blood testing. As far as he was concerned, the fairy tale was real.

Before he became a full-time employee, Elizabeth had hung inspirational quotes in little frames around the old Facebook building. One of them was from Michael Jordan: “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” Another was from Theodore Roosevelt: “Far and away the best prize that life has to offer is the chance to work hard at work worth doing.”

Patrick suggested they make them a more integral part of the workplace by painting them in black on the building’s white walls. Elizabeth liked the idea. She also loved a new quote he suggested. It was from Yoda in Star Wars: “Do or do not. There is no try.” She had it painted in huge capital letters in the building’s entrance.

To accommodate its swelling ranks, which now totaled more than five hundred, Theranos was planning to move to a new location it had leased from Stanford a few blocks away on Page Mill Road. It was the site of an old printing plant that had been demolished. Patrick was put in charge of the new building’s interior and hired the South African architect Clive Wilkinson, who had designed the converted Chiat\Day warehouse in L.A., for the job.

The central motif of the design was once again the sacred geometry of the circle. Desks were arranged in large circular patterns rippling out from circular glass conference rooms in the center. The carpeting followed the same circular patterns. In the building’s lobby, interlocking rings of brass were embedded in the floor’s terrazzo tiles to form the Flower of Life symbol. Elizabeth’s new corner office was designed to look like the Oval Office. Patrick ordered a custom-made desk that was as deep as the president’s at its center but had rounded edges. In front of it, he arranged two sofas and two armchairs around a table, replicating the White House layout. At Elizabeth’s insistence, the office’s big windows were made of bulletproof glass.

Patrick wasn’t just Elizabeth’s style and décor consultant. He also spearheaded a big marketing push Theranos was making in Arizona, where its wellness centers had expanded to forty Walgreens stores. He hired Errol Morris, an Academy Award–winning documentary filmmaker who moonlighted as a producer and director of commercials, to make video ads the company ran on TV stations in the Phoenix area and on its website and YouTube channel. One of the spots was a close-up of Elizabeth in her customary black turtleneck staring into the camera and talking about what she called people’s “basic human right” to access their own health information through blood tests. Her eyes looked so big and she spoke so slowly and deliberately that the video had a hypnotic quality to it.

Another spot featured patients complaining about how much they hated big needles and then acting pleased at the painlessness of the Theranos experience as they got their fingers pricked. Patrick thought it was powerful and arranged for it to run during shows with high female viewership, like the ABC drama Scandal, because research had shown that mothers were households’ medical decision makers. But the ad had to be pulled a couple of weeks after it started airing because a local doctor complained that some of his patients had gone to Walgreens stores expecting a finger-stick draw only to be told their tests required a needle after all. Patrick was disappointed but didn’t raise a fuss about it because he knew this was a sensitive subject. Several months earlier, he had asked Sunny what proportion of Theranos tests were performed with finger-stick draws versus regular venous ones. Sunny had refused to give him a straight answer and had abruptly changed the subject.