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Theranos | The Walgreens Deal | 2

Theranos | The Walgreens Deal | 2

Tue, 21 Sep 2021 09:00

Theranos prepares to go public with its blood-testing devices. But the company faces increased scrutiny, as problems with its technology—and its leadership—add up.

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To listen to American scandal one week early and add free, join Wondry Plus in the Wondri app. Download the Wondri app in your Apple or Google Play mobile app store today. It's February 2010 in Palo Alto, California. Inside Theranos headquarters, a column of sunlight streams through the windows, landing on Chelsea Burkette, one of the company's employees. Burkette shades her pale blue eyes as she rounds a corner. And when she arrives at the office of the company's CEO, Elizabeth Holmes, Burkette pauses. Today is not going to be easy. Burkette and Holmes have been friends for years, and just six months ago, Holmes hired Burkette to come work at Theranos. At first, it seemed like a dream job. Burkette would set up studies with the company's blood testing devices. She would get to travel the world, helping develop a new piece of medical technology that could save people's lives. But these last few months, Burkette has grown deeply pessimistic. Theranos's company culture has grown toxic under the leadership of Sonny Balwani, a senior executive. Balwani is a harsh and cruel leader, and he also happens to be Elizabeth Holmes boyfriend. But bad leadership isn't the only problem. There is also all the gossip that's circulating among employees, inflated revenue projections, mysterious firings, bribes to foreign governments. All of that has been upsetting for Burkette, but then came the breaking point. Holmes convinced a man having a health scare to let Theranos test his blood for cancer. The implication was that he should use the results to make medical decisions with life or death consequences. Burkette was shocked. Theranos's technology is still far from ready, but it was clear that Holmes and Theranos would continue to act recklessly. So now, as Burkette hovers outside Holmes office, she gathers her courage and gets ready to deliver some uncomfortable news. Inside her office, Elizabeth Holmes hangs up the phone and waves Burkette to come inside. Burkette enters where she finds Holmes sitting behind her desk with a smile. Hey, Jels, sorry I was on the phone with the board. Come on in. Burkette nods, taking a seat across from Holmes. As she looks at her old college friend, she can't help but notice how tired she looks. And then, oh thanks, Liz. How are you? Do you do anything except work? You're getting any sleep? Well, we're growing fast. So being tired comes with a territory. But what's up? What's on your mind? The reason I'm here is, well, this is hard. I can't tell you how much I appreciate working for you. Oh, is this bad news? Yeah, I'm sorry. This job isn't working for me. Holmes leans forward, her hands clutch together. Is this a joke? No, Liz, I'm serious. I'm giving my notice. Chelsea, I handed you an incredible position. You've traveled the world, making a difference. This is the kind of stuff that we dreamed about at Stanford. Yes, yeah, I know. And what is it? Burkette pauses. She needs to be discreet. The tech world is a small place, and she doesn't want to say anything that could hurt her own future. So she's only going to share part of the truth. Well, you know my boyfriend's in LA, so every weekend I'm flying back and forth, and yeah, it's just... It's getting exhausting. I can't keep doing it. Ugh. So it's not the problems with the studies you've been leading. No, no. Because Chelsea, we're fixing the tech. I know you've hit some rough patches, but that's what happens when you work at a startup. No, it's not the tech. It's not the studies. It's... I just can't do it. I miss my boyfriend. That's back and forth of killing me. It's just what I need. There's a flash of anger behind home size. Chelsea, you've been here six months. No one gets a dream job in the valley and then throws it away because they're annoyed by a flight to LA that takes just an hour. You're not telling me everything. No, that's it. You don't even have the courage to admit the truth. Well, whatever it is, you can just leave. Just go. We'll be fine without you, believe me. Liz, and on your way out, don't say anything to your direct report. We're done here. Burkette wants to protest, to plead her case, and win back her friend's approval. But it's too late for that. Holmes has turned away, her back to Burkette now, and begins typing something on her computer. Burkette had heard the stories about Holmes, how she could be ruthless and ignore people who disagreed with her. But she never experienced this side of her old friend. It's painful to witness. So without saying another word, Burkette rises, walks out of Theranos headquarters. Burkette steps into the blinding Palo Alto sun, her emotions whirling. Part of her is relieved to be done with Theranos. Still, Burkette worries about Holmes. She seems more isolated, more deluded than she's ever been. Theranos is a deeply troubled company, and yet Holmes refuses to address the underlying problems. Burkette is no visionary, no Titan, and the tech industry. But you don't have to be to see the truth. Theranos is on a dangerous course, and if Holmes doesn't make some radical changes, make them soon. Her company could soon fall apart. American scandals sponsored by Sachi Art. I'm lucky. Not only is my wife beautiful, funny, and smart, she also has great taste that matches mine, which has made decorating our home together a delight. But how do we go about finding the art for our home? Well, we agree on that, too. Sachi Art. They have art works from thousands of emerging artists around the globe in all styles, so you're guaranteed to find art that fits your style, space, and budget. Their view your room feature lets you visualize the art on your walls, and my advisor, Satin, was instrumental in finding our newest piece. Get 15% off your first order with promo code podcast. Just go to and enter code podcast at checkout. Find art you love today. Okay, the kids are already asking, what's for dinner? But breaking news, empty fridge. That's okay, I'll instacart. Let's add some organic asparagus and some farm fresh chicken. Easy. Wait, is the oldest vegetarian this week or was it gluten free? Gluten free pasta. Covered either way. Card it. And finally, some vegetarian gluten free olives from my well earned cocktail. When your family shopping list has more footnotes than groceries, the world is your cart. Visit or download the app and get free delivery on your first order. Offer valid for limited time, minimum order $10. Delivery subject to availability. Additional terms apply. From Wondry, I'm Lindsay Graham, and this is American Scandal. At the age of 19, Elizabeth Holmes set out to build a product that would revolutionize healthcare. Her company, Theronos, worked to develop new blood testing technology, which could diagnose a wide variety of medical issues using just the smallest drop of blood. To build her company, Holmes courted a number of Silicon Valley investors. Her pitch relied on a mixture of charisma and inflated projections about the company's growth. Holmes also hid some of the problems with the technology itself. But as Theronos prepared to go public with its blood testing devices, Holmes and her company faced increasing scrutiny. And with opposition mounting, Holmes found herself in a desperate scramble to stay ahead of her critics. This is episode two, The Wall Greens Deal. It's late August, 2010 at Theronos headquarters in Palo Alto, California. Elizabeth Holmes steps into a conference room where she finds a group of executives sitting at a long table. Their members have a delegation from Wall Greens, and they're here today to discuss a partnership between the drugstore chain and Theronos. Holmes smiles as she creates the group. Theronos may soon be able to place its blood testing devices inside Wall Greens stores. The two sides are currently working to launch a pilot program, and if all goes well, Wall Greens will expand this partnership nationwide. A revenue stream could be massive, and cement Theronos's reputation as a leader in tech. It would be a validation of Holmes's vision and exhausting work. Theronos's blood testing devices aren't yet ready for the public, but for Holmes, that's not a deal breaker. They'll be ready when it's time. For now though, she just needs to win over this group and deflect any concerns they may have about Theronos's technology. Inside the conference room, Holmes turns and launches a PowerPoint presentation. Welcome everyone, and thanks for being here. Before we jump into things, I want you to just let yourself dream. Imagine what this partnership would actually look like. Maybe there's a little girl who's been tired and lethargic. She and her mom live out in rural Alabama. Not a lot of hospitals out there, but there are Wall Greens. So they go in, and the little girl gets a test with just just a pin prick of blood. In less than an hour, they get the result. The girl has a deficiency in vitamin B, a simple, treatable condition, and now the family can go back to living their lives. And the girl can get back to laughing and playing in the yard. Holmes clicks forward to the next slide. That's the promise of this partnership. Together, Wall Greens and Theronos can fill a huge gap left by our healthcare system and give regular people the care they need, the care they deserve, and a price that won't drain their savings. There's nodding approval from the executives and Holmes grins with pride. So far, so good. So she turns back to her presentation. But then, a voice from the corner interrupts her. Excuse me, this Holmes, quick question. Holmes turns to Kevin Hunter, a thick set man who runs a consulting firm. Hunter is an expert in clinical lab work, and he's helping Wall Greens evaluate the partnership. Well, first I just want to say thank you for having us. Your vision is incredible. But I wanted to ask you mentioned that you have a commercially ready lab. That's right, state of the art. That's cool. That's cool. I'm a science geek myself. But I was coming back from the bathroom. I didn't see anything that looked like a lab. Holmes freezes. The fact is their labs are far from commercially ready. But in Silicon Valley, sometimes you have to sell a story that makes people dream, even if it bends the truth. Well, Kevin, of course you didn't see the lab. It's downstairs. And I promise it's all that is hyped up to be. Now, back to the presentation. Holmes clicks to the next slide. But Hunter interjects again. Yes, Holmes, I really do want to see the lab. Is that possible? Yes, of course, if we have the time. Well, time shouldn't be an issue. I know we plan to end early, go to dinner. Why don't we take a detour? Check out the lab first. Well, I'm afraid our schedule is a little tighter than that. The restaurant has an incredibly strict reservation policy. We can't be late. Well, then we'll find another time to see the lab. Holmes puts on a genial smile. You know, Kevin, I do appreciate the interest. Let's get through the important stuff first. And after that, we'll see if we can do fun tours and all that, alright? Hunter leans back in his chair, his arms folded. Holmes knows she has to quickly redirect the conversation so she won't get any more questions about the lab. Or their product. Because Holmes made a large promise, claiming that Theranos's technology could run 192 different kinds of blood tests. But so far, it can only accomplish about a half that number. But it's just an engineering problem. One that Holmes, the certain they'll soon fix. The employees will work harder and soon Theranos will be ready for a national rollout of its blood testing devices. It's just a matter of time, and working out a few kings. And Walgreens doesn't need to know everything going on the background anyways. So Holmes clasps her hands together, and smiling brightly, she begins telling the group about Theranos's new research in Mexico. There have been a number of findings that should be exciting for Walgreens. As executives chatter over the news, Holmes studies herself for many poised. She knows that Theranos will get there. Eventually, they will achieve the impossible. But in the meantime, she can't let this deal with Walgreens fall through. A few months later, Kevin Hunter squeezes into a boardroom at the Walgreens corporate headquarters in Deerfield, Illinois. The conference table is littered with turkey sandwiches, and the other executives are getting ready for their weekly video call with Theranos. As Hunter waits for the call to begin, his mind races as he remembers his first visit to Theranos at their Palo Alto headquarters. Hunter is a consultant working for Walgreens, helping to evaluate the partnership with Theranos. And when he flew out to California, he wanted to vet the company's actual technology. He wasn't interested in the PowerPoint presentations, but in the devices themselves, in their ability to test blood. That was the only way he could tell if Theranos was the real deal. But in that visit to Palo Alto, Hunter hit roadblock after roadblock. Elizabeth Holmes deflected all of his requests. He wasn't allowed to see Theranos's lab or to witness a demonstration of a live test of Theranos's device. On top of that, Theranos's executive, Sunny Ballwani, trailed him when he went to the bathroom. It was like they were trying to hide something, and it left Hunter deeply suspicious of Holmes and her biotech company. So, sitting around the board table with the Walgreens executives, Hunter thinks through his plan. Somehow, he must stop this deal from moving forward. A moment later, the video call begins, and Elizabeth Holmes face appears on a large screen. In her distinctive low voice, Holmes says she'd like to start the meeting with some housekeeping. Theranos is changing the way it deals with government regulators. From now on, Theranos will designate their tests in a legal category known as laboratory developed. Holmes flips a page, and then breezely moves on to the next topic. But Kevin Hunter's ears prick up. Did Holmes really just say that? This new designation means that Theranos's devices will be less closely regulated by the FDA, and it could present a major liability for Walgreens. Hunter is shaken, and when the call finally ends, he pulls aside Renat Vandenhoof, the Walgreens executive who's leading the pilot project. Hunter explains that he's very concerned about what Holmes just said. Theranos's legal maneuvering could put Walgreens in a precarious position. And alongside all of Hunter's other worries, this seems to add up to something bad. Walgreens needs to get to the bottom of this, before it's too late, and they have a lawsuit on their hands. Vandenhoof's expression is pained. He admits that he hears what Hunter is saying, but at this point, they can't put the brakes on the deal. Walgreens is battling CVS to be the dominant drugstore chain across the country. If Walgreens doesn't take this opportunity, CVS will. Vandenhoof then gives a shrug, and says he knows this isn't what Hunter wants to hear, but it's the way things are. Vandenhoof turns to leave, but before he can, Hunter grabs his arm and begins pleading. He says there's another way to vet Theranos's technology. He could open up one of the devices the company left behind. He could pull back to Curtin and see what Holmes is really working with. Vandenhoof's eyes widen in alarm. He reminds Hunter that their contract prohibits any reverse engineering of Theranos's devices. Cracking one open is out of the question. Vandenhoof turns, tosses his half eaten sandwich in the trash and walks away. Hunter is left standing in a daze. He understands why the situation is difficult. Walking away from a deal with Theranos could cost Walgreens millions, billions over the long term. But there is a bigger cost to consider. Theranos's products could be defective, and if this partnership goes forward, Walgreens could cost lives. Hunter sighs. At this point, there's little he can do. He's just a consultant from a small firm, and trying to upend a major corporate deal like this, there's just too much momentum to stop it. It's September 2013, and three years later at Theranos's headquarters in Palo Alto. The company's lab director Alan Beam makes his way through the office, surveying a landscape of exhaustive employees. Engineers, product developers, researchers, everyone looks depleted. It's no shock that the company appears to be staffed by zombies. For the last three years, Theranos employees have suffered through a relentless workload, as Theranos has prepared a commercial launch of its blood testing technology. The company's deal with Walgreens could be a game changer. By getting their technology and drug stores across the country, Theranos will be able to reach millions of people and make an incredible amount of money. The stakes couldn't be greater for Theranos, and just a few days, they'll open its first wellness center inside of Walgreens in Palo Alto. But there's a problem, one that Beam just learned. Theranos's devices still aren't ready for the public. Theranos may be under incredible pressure, but Beam knows he has to stop the partnership from moving forward. Only one person can make this excruciating decision. The company's founder and CEO, Elizabeth Holmes. Beam approaches Holmes office to Knox on the door. But when she looks up, he notices that her eyes are ringed with dark circles. Beam has heard rumors that Holmes sleeps only four hours a night, that she lives on chocolate covered coffee beans. Now, looking at Holmes, rock back and forth in her seat, Beam sees that the rumors could be true. So Beam gingerly steps into the office and takes the seat. But before he can share his deep concerns, Holmes begins talking rapidly, saying that this Walgreens launch is going to change everything. And not just for Theranos. People everywhere are going to find that they can get medical tests as easily as shopping for groceries. Beam looks down. He doesn't know why he's getting the pitch that Holmes saves for investors. Maybe all her frantic energies just cover for her true feelings. Maybe she's also scared. Because the truth is that if Theranos launches in Walgreens, it will have to not just use its own technology to test blood. They'll have to rely on devices manufactured by Siemens, the industrial giant. And even those tests have proven problematic. So despite all of Theranos's promises and years of work, partnership with Walgreens isn't ready. Beam knows he has to tread carefully. So meeting Holmes's gaze, he agrees that the Walgreens partnership has big potential. And it's for that reason that they have to postpone the launch and work to fix the long list of problems. Hearing this suggestion, Holmes looks away, shakes her head. She tells Beam that it's not an option. They cannot delay. They're going to have to fix this airplane as they fly it. Beam shudders at the analogy. He could be held personally liable for any faulty test results. He can't risk that. So he leans forward and issues a demand. It's not just that she should delay the launch. Holmes must call it off. But Holmes shakes her head again, looking bitter and weary. She explains that Theranos's only currency is its promise. Postponing the launch could damage their reputation beyond repair. It's not a decision she's willing to make. Beam begins to try again, but Holmes raises her hand to silence him. And with her voice quivering, she tells Beam that somehow, everything will be fine. Holmes usheres Beam out of her office and into the hallway. For a moment, Beam just stands there, watching Holmes through her glass door. She puts on a pair of headphones, and soon is nodding along to music, her eyes closed. Beam stares into his belief. Holmes's habit of sticking her head in the sand is more than naive. It's dangerous. Theranos is corigning toward outright fraud. Patients wives run stake. Someone has to speak up and put a stop to this. The only question is whether Beam himself has the strength to take on Theranos and Elizabeth Holmes. Lots of people don't know it, but autumn is an ideal time to plant. Shorter days and cooler nights create ideal conditions for the plants to get established. 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Employees grab their lunch trays as they laugh and blow off steam. Their conversation echoing off the walls. One of those employees is Tyler Schultz, who grabs his food and looks for a place to sit. For Schultz, the lunch scene is a bit overwhelming. He's a recent graduate from Stanford with dark blonde hair and an easy smile. This is his first job out of college. And looking around the cafeteria, he can admit that he feels intimidated to be in a room with so many brilliant people. But Schultz is no stranger to success himself. His grandfather is George Schultz, the former US Secretary of State, and now a Theranos board member. It was through his grandfather that Schultz met Elizabeth Holmes and built a relationship that would lead to this job. Schultz walks through the cafeteria, searching for a place to sit. As he gazes across the wide room, it hits him just how confident and comfortable everyone seems to look. Schultz wishes he could say the same for himself. He has a good job working with a team that tests blood samples for specific antibodies. But it's not the team he was hired to work with. On top of that, his supervisor just quit abruptly. According to rumors, she had a fallout with Elizabeth Holmes. There's something that feels chaotic and out of control about Theranos. Schultz sighs as he grabs a seat by himself and starts eating. He shouldn't entertain these kinds of thoughts. Theranos is an exciting company, and his grandfather wouldn't lead him astray. Still, his short time here has left Schultz wondering whether he made the right decision in taking the job. As Schultz works his way through his lunch, the cafeteria suddenly goes quiet. Schultz sets down his fork and looks over his shoulder. Elizabeth Holmes has just entered. She steps onto a raised platform and right away, a group of employees gather around her. Looks like she has an announcement to make. Surveying the quiet room, Holmes bites her lower lip and tells the employees that they've just opened their first Theranos wellness center at the Walgreens in Palo Alto. Holmes is beaming, saying she's proud of every single person in this room. All the hard work, all the sweat, tears, and of course all the blood. It all led to this moment. Every employee should give themselves a round of applause. The cafeteria erupts in cheers. And although he's still new to the company, Schultz joins in, smile forming on his face. Then Holmes begins to tear up, and the cafeteria goes quiet once again. Her voice quivering, Holmes begins talking about her uncle, who died from a cancer that could have been prevented if he'd gotten an early warning sign. That's what Theranos is ridding the world of. Holmes's voice rises in passion. As she reminds everyone that this is what she's been working for, to prevent these kinds of losses, to be able to hold on to the people in our lives who we love the most. Holmes wipes her eye. And without saying another word, she steps down from the raised platform. The crowd's response is immediate. Employees cheer and applaud, and as Schultz watches this rapturous celebration, he feels something stirring inside him. This mission, this feeling, is why he joined Theranos. Schultz dips his head and smiles. He's aware that he's still young. He's been scared, uncertain how to make sense of his first days on the job. But after hearing Holmes's speech, he feels restored. It's time to set aside any worries, and get to the business of changing the world. Several months later, Theranos shultz sets down a glass pipette, and jawns into his gloved hand. The day has gotten late, but Schultz is still at work in Theranos's lab. And it doesn't look like his work is going to end anytime soon. For hours, Schultz has been standing here, evaluating the accuracy of Theranos's blood testing technology. But no matter what he does, he keeps getting the same problematic results. Schultz squints his eyes in exhaustion. Maybe he's doing something wrong. Everyone says that Theranos has the most cutting edge technology, so how could he keep failing? But Schultz doesn't know what he can do differently. So he returns to his work, ready to pick up where he left off. But as he reaches for another pipette, Schultz overhears a quiet conversation from across the room. He scoots his chair back, and spots the clinical lab team, another workgroup sharing this space. They're whispering among themselves as they process patient samples. Schultz knows he's supposed to ignore them, but it's late, and with no barrier between them, Schultz can't help but he's dropped. It sounds like they're talking about Theranos's devices. One person says that they've been flunking quality control tests. Someone else adds that Sunny Ballwani, a Theranos executive, has been pressuring him to ignore these failures, and just keep running tests. Schultz is shocked. He's heard that Theranos's blood testing devices have been seeing some problems, and he's experienced issues firsthand. But ignoring failures in quality control, on real patients tests, that level of dishonesty is something else entirely. As he debates what to do, Schultz suddenly catches the eye of someone in the clinical lab team. Quickly, he turns back to his lab station, pretending to focus. He hopes he wasn't just caught snooping. But even if he was, there's a bigger issue here. It sounds like there may be something fraudulent happening at Theranos. And if that's true, he has to tell Elizabeth Holmes, as CEO, she is a right to know. It's early 2014, and Elizabeth Holmes is in her office staring at a large calendar on the wall. It's covered with notes about all the big events coming up soon. There's the opening of Theranos Wellness Centers, clinics hosting the company's blood testing devices. There are partnerships with pharmaceutical companies, and meeting after meeting with investors. Holmes turns away from the calendar, a giant grin on her face. Years ago, she set out to build Theranos into a juggernaut. She wanted to revolutionize medicine to make a name for herself as a pioneer in the tech industry. As it stands now, Holmes is on track to achieve those lofty ambitions. Theranos's technology could be in 100 clinics by next year. Holmes has the world's attention. The only thing left to do is fix the remaining issues with the technology itself. And it's not a minor problem. But it is fixable, and Holmes is eager to get past these issues in engineering. As Holmes returns to her desk, she notices Tyler Schultz approaching from the hallway. His dirty blonde hair pushed back. Holmes gathers her thoughts. Schultz recently sent an email that sounded like he was planning to sound an alarm about Theranos's blood testing devices. For any other employee, she would quickly dismiss the concerns and turn to something else more pressing. But Schultz's grandfather sits on Theranos's board, so Holmes has to tread carefully. Holmes waves in Schultz, and he steps into her office. Hey Tyler, thanks for stopping by. I was hoping we'd get a chance to talk. Well I'm glad to hear that. Yeah, have a seat. A red dream meal. I could tell you were alarmed about something. But I just want to assure you, I have my eye on this entire company. Nothing gets past me, and everything's going to be fine. One thing we cannot do though, is raise unfounded concerns with the investors or the board. And as we both know, you have a direct line. No, honestly, I wasn't planning to talk with my grandfather or anything. Well, that's the right call. Board members, they're not involved in the day today kinds of stuff that goes on here. It's just not their responsibility. Oh, I understand. But that's not what's on my mind. I wanted to talk to you to tell you about some issues I found. Okay, Tyler? Well, for one thing, there are some very big variations in the test results. Testing people's blood, the results are supposed to be consistently accurate. But these variations have been more than 10%. That's way more than we claim. Oh, I don't know what you mean. We would never make that kind of claim. But we do. Oh, I don't think so. Come over here. Take a look. Shultz approaches the desk and Holmes clicks over to the Theranos website as she scrolls through it. Shultz stops her. Look, right there. Coefficient of variation less than 10%. Oh, Tyler, you're not reading the fine print. Look, when you scroll down further, there. That claim refers to our vitamin D test. It's not a blanket promise. Tyler, you've got nothing to worry about. We're not breaking our promises to our partners or our customers. Now, if that's all you wanted to bring up on them, I'm glad we had the chance to talk. But I do have a very busy day. Holmes starts to usher Shultz to the door. But then he stops. Fliz, before I go, I just want to be clear that I'm concerned our company is exaggerating the accuracy of our technology. Tyler, I understand your concern. And frankly, that's good. It shows you care. But look, this would take me a long time to walk you through all the intricacies of it. And I don't have the time. Talk with Daniel Young, our VP of Biomathematics. He should be able to clear things up. But look at me. Everything's going to be okay. I promise. Shultz looks like he's about to protest. But then he catches himself in knots. Holmes smiles and takes a deep breath at Shultz exits the office. He was raising serious red flags. And with his grandfather on Theranos's board, this could have been some sort of crisis. Still, Holmes isn't convinced that this is the last you'll hear from Tyler Shultz. So from now on, she'll have to keep a careful eye on her young employee. What if your family was the victim of a home invasion, or you woke up in the morgue, or you were seriously injured miles from help? What would you do? This is actually happening. Ask our listeners this very question while we bring you captivating real life stories of trauma and perseverance. This is actually happening brings listeners extraordinary true stories from the people who lived them. You'll hear stories about conflict, turmoil, or threats that dramatically alter the course of someone's life. Each episode is an exploration of the human spirit and how survivors manage to overcome hardship and move on with their lives. Even thriving afterward. The new season of this is actually happening is available ad free only with Wondry Plus. And if this new season isn't enough, you can listen to more than 120 exclusive episodes available only to Wondry Plus subscribers. Join Wondry Plus on Apple Podcasts or on the Wondry app. It's early 2014 and Tyler Schultz is heading down a hallway at Theranos Headquarters. He's on his way to a meeting with Daniel Young, the company's head of BioMathematics, and the two are planning to discuss Tyler's concerns about Theranos's technology. For Schultz, there's an alarming disconnect between what he sees as an employee and what the rest of the world believes about the company. Whenever he Googles Theranos, he finds euphoric articles claiming that Theranos blood tests are cheaper, faster, and more accurate than conventional technologies. But that's not what Schultz has found working in the lab. So he wants to get some answers to figure out if his concerns are actually justified. Schultz reaches Young's office and gives a quick knock. Yeah, come in. Schultz centers the office where he finds Young sitting at a computer, typing. Tyler, Elizabeth said you had some questions for me. Yes, yes I do, and thank you for making the time. I'm hoping you can explain some of the weird results I've been seeing. Well, I can't promise that, but I'll try going. Schultz takes out his notepad, which has covered in equations. Oh, I see you've done your homework, Tyler. Well, yeah, I've been looking at our test for syphilis, and when we tested samples that were known to be positive, we were only correct 65% of the time. Now the number does go up to 80% if we run a second test, but in our reports, we say we're 95% accurate. Oh, can I see? Schultz hands Young his notepad. Oh, yeah, okay, I see what's going on. So you have to understand that sometimes tests are inconclusive, and so those results aren't factored in. And that's the discrepancy in your calculations and the reports. Wait, so inconclusive tests are just thrown out? So our results will look better? Young shifts in his seat, his expression remaining inscrutable. I think you're a misunderstanding time. But we're claiming thermos test are not just cheaper and faster. We're also saying that they're more accurate than conventional technologies. I mean, that's what we told the Wall Street Journal, but you're saying it's not true. Tyler, that's just Elizabeth. She does some embellishing when she's talking to reporters. That doesn't concern you at all? Frankly, some of us don't have time to be concerned. Do you have the time to be concerned about the proficiency tests? We're running them using other company's equipment. We're not even reporting results from our own technology. I'm sorry, Tyler, what's the issue? The issue is that it's illegal. It has to be. We're running tests using other people's technology, making it seem like we're actually using thermos devices. Now, Tyler, that's just what we have to do right now. Proficiency tests, they require labs to compare their results to their peers. But our devices are cutting edge. We don't have any peers, so we can't use conventional methods. That doesn't make any sense. I'm sorry, but frankly, that's why you're not working on regulatory issues. It's complicated. Now, look, I can't offer anything more, so what I think is that you should head back to your desk and focus on what you do best, engineering, biology. If you've got other concerns, though, you know where to find me. Shultz sighs as he looks away. It's no use pressing this any further, so he rises and leaves the office. Few minutes later, Shultz is back at his desk. He's supposed to keep working, but after that meeting with Young, his stomach is in knots. Young is one of the top employees at Thernos, but he's casually dismissing a series of obvious concerns. The company's leaders are not telling the truth about the accuracy of their technology, and if they're willing to lie about something so basic, Shultz can only imagine what ounce they're hiding. He feels shaken. At first, he doesn't know what to do, but slowly his head grows clear, and Shultz realizes that he has an obligation. It's time to start talking, both to his co workers and to people outside Thernos. It's March 31, 2014 in Palo Alto, California. Sunlight peaks through the blinds of a bedroom where everything is silent and still. But suddenly there's a ding, announcing the arrival of a new email. Tyler Shultz shoots up in bed and opens his blood shut eyes. His mouth is hot, and his body aches after a long night of tossing and turning. He probably got a few hours of sleep, but that wasn't enough to shake the feeling of panic. Shultz has raised concerns with both Daniel Young and Elizabeth Holmes, and both times he got the sense that they didn't want to hear his warnings. He's afraid that by raising red flags, he could be the next person fired at Thernos. But Shultz is even more afraid of what will happen if he does nothing. He was brought up to do the right thing, and in the case of Thernos, the right thing means protecting innocent patients from a medical technology that is not ready for the public. So Shultz escalated his campaign. He began by setting up an anonymous email account. Then he emailed a director at the New York State Department of Health. In his email, Shultz described how a lab he works at may not have been properly assessing whether his technology actually works. He wanted to get an expert's opinion of the matter. He's been waiting for a reply. Shultz gets out of bed and sustains his computer. When he checks his inbox, his heart skips a beat. There's a message from Stephanie Schulman, the director at the New York State Department of Health. According to Schulman, Schulz is right. The practices that he described are in fact a form of cheating that violates state and federal rules. Shultz has two choices. He can come forward and name the lab that he described, or he can file an anonymous complaint with a state. Shultz fingers hover over the keyboard. If he goes forward with either of these choices, if he names Thernos in a complaint, he could destroy the company that he works for. And he could humiliate his grandfather, who's one of Elizabeth Holmes's strongest supporters. But if Shultz does nothing, the consequences could be dire for countless people across the country. That's something he can't let happen. So Shultz begins typing. He will file a complaint, and he will blow the whistle on Thernos. From Wondry, this is episode two of Thernos from AmericanScan. On the next episode, news of fraud and corruption inside Thernos reaches an investigation into the state of New York. He reaches an investigated reporter at the Wall Street Journal, with the press closing in. Elizabeth Holmes does everything she can to keep the facts from leaking out. If you like our show, please give us a five star rating and leave a review and be sure to tell your friends. I also have two other podcasts you might like. American History Tellers and Business Movers. Follow on Apple Podcasts, Amazon Music, or wherever you're listening right now, or you can listen to new episodes early and add free by subscribing to Wondry Plus in Apple Podcasts or in the Wondry app. You'll also find some links and offers from our sponsors in the episode. Supporting them helps us keep offering our shows for free. Another way you can support the show is by filling out a small survey at slash survey to tell us what topics we might come next. You can also find us and me on Twitter. Follow me at Lindsay A. Graham, Lindsay with an A, Middle Initially, and thank you. If you'd like to learn more about Thernos, we recommend the book Bad Blood, Secrets and Lies in the Silicon Valley Startup by John Kerryrub. A quick note about our reenactments. In most cases, we can't know exactly what was said, but all our dramatizations are based on historical research. American Scanellas hosted, edited and executed produced by me Lindsay Graham for airship, audio editing by Molly Bach, sound design by Derek Garens. This episode is written by Samantha Charlotte, edited by Christina Malzberg. Our senior producer is Gabe Riven. Executive producers are Stephanie Jenns, Jenny Lauer Beffen, and her nonlopest for Wondry. Hi, grownups. Bedtime isn't always easy, and winding down after a busy day can feel almost impossible. But we're here to help. Introducing Stories Podcast Sleep Series. All of your favorite stories from classic fairy tales to modern myths all read in a calm and soothing voice over dreamy soundscapes and gentle lullabies. Snuggle in and turn down the lights and let us read the bedtime story so you can relax and unwind with your kids with Stories Podcast Sleep Series. Listen exclusively on Wondry Plus Kids and Apple Podcasts or on Wondry Plus in the Wondry app. Stories Podcast Sleep Series. Soothing Stories to Help You Sleep. Available exclusively on Wondry Plus Kids and Apple Podcasts or on Wondry Plus in the Wondry app. Sweet Dreams.