فصل 02

The Gluebot

Edmond Ku interviewed with Elizabeth Holmes in early 2006 and was instantly captivated by the vision she unspooled before him.

She described a world in which drugs would be minutely tailored to individuals thanks to Theranos’s blood-monitoring technology. To illustrate her point, she cited Celebrex, a painkiller that was under a cloud because it was thought to increase the risk of heart attacks and strokes. There was talk that its maker, Pfizer, would have to pull it from the market. With the Theranos system, Celebrex’s side effects could be eliminated, allowing millions of arthritis sufferers to keep taking the drug to alleviate their aches and pains, she explained. Elizabeth cited the fact that an estimated one hundred thousand Americans died each year from adverse drug reactions. Theranos would eliminate all those deaths, she said. It would quite literally save lives.

Edmond, who went by Ed, felt himself drawn in by the young woman sitting across from him who was staring at him intently without blinking. The mission she was describing was admirable, he thought.

Ed was a quiet engineer who had gained a reputation in the Valley as a fix-it man. Tech startups stymied by a complex engineering problem called him and, more often than not, he found a solution. Born in Hong Kong, he had emigrated to Canada with his family in his early teens and had the habit common among native Chinese speakers who learn English as a second language of always speaking in the present tense.

A member of Theranos’s board had recently approached him about taking over engineering at the startup. If he accepted the job, his task would be to turn the Theranos 1.0 prototype into a viable product the company could commercialize. After hearing Elizabeth’s inspiring pitch, he decided to sign on.

It didn’t take Ed long to realize that Theranos was the toughest engineering challenge he’d ever tackled. His experience was in electronics, not medical devices. And the prototype he’d inherited didn’t really work. It was more like a mock-up of what Elizabeth had in mind. He had to turn the mock-up into a functioning device.

The main difficulty stemmed from Elizabeth’s insistence that they use very little blood. She’d inherited from her mother a phobia of needles; Noel Holmes fainted at the mere sight of a syringe. Elizabeth wanted the Theranos technology to work with just a drop of blood pricked from the tip of a finger. She was so fixated on the idea that she got upset when an employee bought red Hershey’s Kisses and put the Theranos logo on them for a company display at a job fair. The Hershey’s Kisses were meant to represent drops of blood, but Elizabeth felt they were much too big to convey the tiny volumes she had in mind.

Her obsession with miniaturization extended to the cartridge. She wanted it to fit in the palm of a hand, further complicating Ed’s task. He and his team spent months reengineering it, but they never reached a point where they could reliably reproduce the same test results from the same blood samples.

The quantity of blood they were allowed to work with was so small that it had to be diluted with a saline solution to create more volume. That made what would otherwise have been relatively routine chemistry work a lot more challenging.

Adding another level of complexity, blood and saline weren’t the only fluids that had to flow through the cartridge. The reactions that occurred when the blood reached the little wells required chemicals known as reagents. Those were stored in separate chambers.

All these fluids needed to flow through the cartridge in a meticulously choreographed sequence, so the cartridge contained little valves that opened and shut at precise intervals. Ed and his engineers tinkered with the design and the timing of the valves and the speed at which the various fluids were pumped through the cartridge.

Another problem was preventing all those fluids from leaking and contaminating one another. They tried changing the shape, length, and orientation of the tiny channels in the cartridge to minimize the contamination. They ran countless tests with food coloring to see where the different colors went and where the contamination occurred.

It was a complicated, interconnected system compressed into a small space. One of Ed’s engineers had an analogy for it: it was like a web of rubber bands. Pulling on one would inevitably stretch several of the others.

Each cartridge cost upward of two hundred dollars to make and could only be used once. They were testing hundreds of them a week. Elizabeth had purchased a $2 million automated packaging line in anticipation of the day they could start shipping them, but that day seemed far off. Having already blown through its first $6 million, Theranos had raised another $9 million in a second funding round to replenish its coffers.

The chemistry work was handled by a separate group made up of biochemists. The collaboration between that group and Ed’s group was far from optimal. Both reported up to Elizabeth but weren’t encouraged to communicate with each other. Elizabeth liked to keep information compartmentalized so that only she had the full picture of the system’s development.

As a result, Ed wasn’t sure if the problems they were encountering were due to the microfluidics he was responsible for or the chemistry work he had nothing to do with. He knew one thing, though: they’d have a much better chance of success if Elizabeth allowed them to use more blood. But she wouldn’t hear of it.

—

ED WAS WORKING late one evening when Elizabeth came by his workspace. She was frustrated with the pace of their progress and wanted to run the engineering department twenty-four hours a day, seven days a week, to accelerate development. Ed thought that was a terrible idea. His team was working long hours as it was.

He had noticed that employee turnover at the company was already high and that it wasn’t confined to the rank and file. Top executives didn’t seem to last long either. Henry Mosley, the chief financial officer, had disappeared one day. There was a rumor circulating around the office that he’d been caught embezzling funds. No one knew if there was any truth to it because his departure, like all the others, wasn’t announced or explained. It made for an unnerving work environment: a colleague might be there one day and gone the next and you had no idea why.

Ed pushed back against Elizabeth’s proposal. Even if he instituted shifts, a round-the-clock schedule would make his engineers burn out, he told her.

“I don’t care. We can change people in and out,” she responded. “The company is all that matters.”

Ed didn’t think she meant it to sound as callous as it did. But she was so laser focused on achieving her goals that she seemed oblivious to the practical implications of her decisions. Ed had noticed a quote on her desk cut out from a recent press article about Theranos. It was from Channing Robertson, the Stanford professor who was on the company’s board.

The quote read, “You start to realize you are looking in the eyes of another Bill Gates, or Steve Jobs.”

That was a high bar to set for herself, Ed thought. Then again, if there was anyone who could clear it, it might just be this young woman. Ed had never encountered anyone as driven and relentless. She slept four hours a night and popped chocolate-coated coffee beans throughout the day to inject herself with caffeine. He tried to tell her to get more sleep and to live a healthier lifestyle, but she brushed him off.

As obstinate as Elizabeth was, Ed knew there was one person who had her ear: a mysterious man named Sunny. Elizabeth had dropped his name enough times that Ed had gleaned some basic facts about him: he was Indian, he was older than Elizabeth, and they were a couple. The story was that Sunny had made a fortune from the sale of an internet company he’d cofounded in the late 1990s.

Sunny wasn’t a visible presence at Theranos but he seemed to loom large in Elizabeth’s life. At the company Christmas party in a Palo Alto restaurant in late 2006, Elizabeth got too tipsy to go home on her own, so she called Sunny and asked him to come pick her up. That’s when Ed learned that they were living together in a condo a few blocks away.

Sunny wasn’t the only older man giving Elizabeth advice. She had brunch with Don Lucas every Sunday at his home in Atherton, the ultrawealthy enclave north of Palo Alto. Larry Ellison, whom she’d met through Lucas, was also an influence. Lucas and Ellison had both invested in Theranos’s second funding round, which in Silicon Valley parlance was known as a “Series B” round. Ellison sometimes dropped by in his red Porsche to check on his investment. It wasn’t uncommon to hear Elizabeth start a sentence with “Larry says.”

Ellison might be one of the richest people in the world, with a net worth of some $25 billion, but he wasn’t necessarily the ideal role model. In Oracle’s early years, he had famously exaggerated his database software’s capabilities and shipped versions of it crawling with bugs. That’s not something you could do with a medical device.

It was hard to know how much Elizabeth’s approach to running Theranos was her own and how much she was channeling Ellison, Lucas, or Sunny, but one thing was clear: she wasn’t happy when Ed refused to make his engineering group run 24/7. From that moment on, their relationship cooled.

Before long, Ed noticed that Elizabeth was making new engineering hires, but she wasn’t having them report to him. They formed a separate group. A rival group. It dawned on him that she was pitting his engineering team and the new team against each other in some corporate version of survival of the fittest.

Ed didn’t have time to dwell on it too much because there was something else he had to deal with: Elizabeth had convinced Pfizer to try out the Theranos system in a pilot project in Tennessee. Under the agreement, Theranos 1.0 units were going to be placed in people’s homes and patients were going to test their blood with them every day. The results would be sent wirelessly to Theranos’s office in California, where they would be analyzed and then forwarded to Pfizer. They had to somehow fix all the problems before the study started. She’d already scheduled a trip to Tennessee to begin training some of the patients and doctors in how to use the system.

In early August 2007, Ed accompanied Elizabeth to Nashville. Sunny picked them up from the office in his Porsche and drove them to the airport. It was the first time Ed met him in person. The extent of their age gap suddenly became apparent. Sunny looked to be in his early forties, nearly twenty years older than Elizabeth. There was also a cold, businesslike dynamic to their relationship. When they parted at the airport, Sunny didn’t say “Goodbye” or “Have a nice trip.” Instead, he barked, “Now go make some money!”

When they got to Tennessee, the cartridges and the readers they’d brought weren’t functioning properly, so Ed had to spend the night disassembling and reassembling them on his bed in his hotel room. He managed to get them working well enough by morning that they were able to draw blood samples from two patients and a half dozen doctors and nurses at a local oncology clinic.

The patients looked very sick. Ed learned that they were dying of cancer. They were taking drugs designed to slow the growth of their tumors, which might buy them a few more months to live.

On their return to California, Elizabeth pronounced the trip a success and sent one of her cheerful emails to the staff.

“It was truly awesome,” she wrote. “The patients grasped onto the system immediately. The minute you meet them you sense their fear, their hope, and their pain.”

Theranos employees, she added, should “take a victory lap.”

Ed didn’t feel as upbeat. Using the Theranos 1.0 in a patient study seemed premature, especially now that he knew the study involved terminal cancer patients.

—

TO BLOW OFF STEAM, Ed went out for beers with Shaunak on Friday evenings at a raucous sports bar called the Old Pro in Palo Alto. Often, Gary Frenzel, the head of the chemistry team, would join them.

Gary was a good old boy from Texas. He liked to tell war stories about his days as a rodeo rider. He’d given up riding and pursued a career as a chemist after breaking too many bones. Gary loved to gossip and crack jokes, causing Shaunak to burst into a loud, high-pitched giggle that was the most ridiculous laugh Ed had ever heard. The three bonded during these outings and became good friends.

Then one day, Gary stopped coming to the Old Pro. Ed and Shaunak weren’t sure why at first but they soon had their answer.

In late August 2007, an email went out to Theranos employees to gather upstairs for a meeting. The company had grown to more than seventy people. Everyone stopped what he or she was doing and assembled in front of Elizabeth’s office on the second floor.

The mood was serious. Elizabeth had a frown on her face. She looked angry. Standing next to her was Michael Esquivel, a sharply dressed, fast-talking lawyer who had joined Theranos a few months earlier as its general counsel from Wilson Sonsini Goodrich & Rosati, Silicon Valley’s premier law firm.

Esquivel did most of the talking. He said Theranos was suing three former employees for stealing its intellectual property. Their names were Michael O’Connell, Chris Todd, and John Howard. Howard had overseen all research and development and interviewed Ed before he was hired. Todd was Ed’s predecessor and had led the design of the 1.0 prototype. And O’Connell was an employee who had worked on the 1.0 cartridge until he left the previous summer.

No one was to have any contact with them going forward and all emails and documents must be preserved, Esquivel instructed. He would be conducting a thorough investigation to gather evidence with the assistance of Wilson Sonsini. Then he added something that sent a jolt through the room.

“We’ve called the FBI to assist us with the case.”

Ed and Shaunak figured Gary Frenzel was probably freaked out by this turn of events. He was good friends with Chris Todd, Ed’s predecessor. Gary had worked with Todd for five years at two previous companies before following him to Theranos. After Todd had left Theranos in July 2006, he and Gary had remained in frequent contact, talking often on the phone and exchanging emails. Elizabeth and Esquivel must have found out and read Gary the riot act. He looked spooked.

Shaunak had been friendly with Todd too and was able to quietly piece together what had happened.

O’Connell, who had a postdoctorate in nanotechnology from Stanford, thought he had solved the microfluidic problems that hampered the Theranos system and had talked Todd into forming a company with him. They’d called it Avidnostics. O’Connell also held discussions with Howard, who’d provided some help and advice but declined to join their venture. Avidnostics was very similar to Theranos, except they planned on marketing their machine to veterinarians on the theory that regulatory approvals would be easier to obtain for a device that performed blood tests on animals rather than humans.

They’d pitched a few VCs, unsuccessfully, at which point O’Connell had lost patience and emailed Elizabeth to ask her if she wanted to license their technology.

Big mistake.

Elizabeth had always worried about proprietary company information leaking out, to an extent that sometimes felt overblown. She required not just employees to sign nondisclosure agreements, but anyone else who entered Theranos’s offices or did business with it. Even within the company, she kept tight control over the flow of information.

O’Connell’s actions confirmed her worst suspicions. Within days, she was laying the groundwork for a lawsuit. Theranos filed its fourteen-page complaint in California Superior Court on August 27, 2007. It requested that the court issue a temporary restraining order against the three former employees, appoint a special master “to ensure that they do not use or disclose Plaintiff’s trade secrets,” and award Theranos five different types of monetary damages.

In the ensuing weeks and months, the atmosphere at the office became oppressive. Document retention emails landed in employees’ in-boxes with regularity and Theranos went into lockdown. The head of IT, a computer technician named Matt Bissel, deployed security features that made everyone feel under surveillance. You couldn’t put a USB drive into an office computer without Bissel knowing about it. One employee got caught doing just that and was fired.

—

AMID THE DRAMA, the competition between engineering teams intensified. The new group competing with Ed’s was headed by Tony Nugent. Tony was a gruff, no-nonsense Irishman who’d spent eleven years at Logitech, the maker of computer accessories, followed by a stint at a company called Cholestech that made a simpler version of what Theranos was trying to build. Its handheld product, the Cholestech LDX, could perform three cholesterol tests and a glucose test on small samples of blood drawn from a finger.

Tony had initially been brought to Theranos as a consultant by Gary Hewett, Cholestech’s founder. He’d had to step into Hewett’s shoes when Hewett was fired after just five months as Theranos’s vice president of research and development.

Hewett’s conviction when he’d arrived at Theranos was that microfluidics didn’t work in blood diagnostics because the volumes were too small to allow for accurate measurements. But he hadn’t had time to come up with much of an alternative. That job now fell to Tony.

Tony decided that part of the Theranos value proposition should be to automate all the steps that bench chemists followed when they tested blood in a laboratory. In order to automate, Tony needed a robot. But he didn’t want to waste time building one from scratch, so he ordered a three-thousand-dollar glue-dispensing robot from a company in New Jersey called Fisnar. It became the heart of the new Theranos system.

The Fisnar robot was a pretty rudimentary piece of machinery. It was a mechanical arm fixed to a gantry that had three degrees of motion: right and left; forward and back; and up and down. Tony fastened a pipette—a slender translucent tube used to transfer or measure out small quantities of liquid—to the robot and programmed it to make the movements that a chemist would make in the lab.

With the help of another recently hired engineer named Dave Nelson, he eventually built a smaller version of the glue robot that fit inside an aluminum box a little wider and a little shorter than a desktop computer tower. Tony and Dave borrowed some components from the 1.0, like the electronics and the software, and added them to their box, which became the new reader.

The new cartridge was a tray containing little plastic tubes and two pipette tips. Like its microfluidic predecessor, it could only be used once. You placed the blood sample in one of the tubes and pushed the cartridge into the reader through a little door that swung upward. The reader’s robotic arm then went to work, replicating the human chemist’s steps.

First, it grabbed one of the two pipette tips and used it to aspirate the blood and mix it with diluents contained in the cartridge’s other tubes. Then it grabbed the other pipette tip and aspirated the diluted blood with it. This second tip was coated with antibodies, which attached themselves to the molecule of interest, creating a microscopic sandwich.

The robot’s last step was to aspirate reagents from yet another tube in the cartridge. When the reagents came into contact with the microscopic sandwiches, a chemical reaction occurred that emitted a light signal. An instrument inside the reader called a photomultiplier tube then translated the light signal into an electrical current.

The molecule’s concentration in the blood—what the test sought to measure—could be inferred from the power of the electrical current, which was proportional to the intensity of the light.

This blood-testing technique was known as a chemiluminescent immunoassay. (In laboratory speak, the word “assay” is synonymous with “blood test.”) The technique was not new: it had been pioneered in the early 1980s by a professor at Cardiff University. But Tony had automated it inside a machine that, though bigger than the toaster-size Theranos 1.0, was still small enough to make Elizabeth’s vision of placing it in patients’ homes possible. And it only required about 50 microliters of blood. That was more than the 10 microliters Elizabeth initially insisted upon, but it still amounted to just a drop.

By September 2007, four months after he’d started building it, Tony had a functioning prototype. One that performed far more reliably than the balky system Ed Ku was still laboring on in another part of the office.

Tony asked Elizabeth what she wanted to call it.

“We tried everything else and it failed, so let’s call it the Edison,” she said.

What some employees had taken to derisively calling the “gluebot” was suddenly the new way forward. And it now had a far more respectable name, inspired by the man widely considered to be America’s greatest inventor.

The decision to abandon the microfluidic system in favor of the Edison was ironic given that Theranos had just filed a lawsuit to protect the intellectual property underpinning the former. It was also bad news for Ed Ku.

One morning a few weeks before Thanksgiving, Ed and his engineers were called into a conference room one after the other. When it was Ed’s turn, Tony, a human resources manager named Tara Lencioni, and the lawyer Michael Esquivel informed him that he was being let go. The company was heading in a new direction and it didn’t involve what he was working on, they said. Ed would have to sign a new nondisclosure and nondisparagement agreement if he wanted to get his severance. Lencioni and Esquivel walked him to his workspace to retrieve a few personal belongings and then escorted him out of the building.

About an hour later, Tony glanced out the window and noticed that Ed was still standing outside, his jacket slung over his arm, looking lost. It turned out he hadn’t driven his car to the office that morning and was stranded. This was before the days of Uber, so Tony went to find Shaunak and, knowing that they were friends, asked him to drive Ed home.

Shaunak followed Ed out the door two weeks later, albeit on friendlier terms. The Edison was at its core a converted glue robot and that was a pretty big step down from the lofty vision Elizabeth had originally sold him on. He was also unsettled by the constant staff turnover and the lawsuit hysteria. After about three and a half years, it felt like time to move on. Shaunak told Elizabeth he was thinking of going back to school and they agreed to part ways. She organized an office party to see him off.

Theranos’s product might no longer be the groundbreaking, futuristic technology she’d envisioned, but Elizabeth remained as committed as ever to her company. In fact, she was so excited about the Edison that she started taking it out of the office almost immediately to show it off. Tony quipped to Dave that they should have built two before telling her about it.

Jokes aside, Tony was a bit uncomfortable with her haste. He’d had a basic safety review done to make sure it wouldn’t electrocute anyone, but that was about the extent of it. He wasn’t even sure what sort of label to put on it. The lawyers weren’t of much help when he asked them, so he looked up Food and Drug Administration regulations on his own and decided that a “for research use only” sticker was probably the most appropriate.

This was not a finished product and no one should be under the impression that it was, Tony thought.