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Ken Auletta: Elizabeth Holmes 'gave me gobbledygook'

In 2014, the writer Ken Auletta profiled Elizabeth Holmes, the CEO of the biotech startup Theranos, for the New Yorker. Holmes claimed the company had revolutionary technology that could run sophisticated medical tests on patients with just one drop of blood.

Though Auletta mostly took Holmes at her word, one odd detail caught his attention. She couldn't explain how her blood-testing device worked.

“I asked her six different times,” Auletta remembered on a recent episode of Influencers with Yahoo Finance’s Editor-in Chief, Andy Serwer. “I said, 'Tell me what happens to the nanotainer of drops of blood when you put it in your machine.' And six different times she gave me gobbledygook.”

Elizabeth Holmes founded Theranos in 2003 while still just a student at Stanford University. At 19 years old, she dropped out of school to concentrate on the start-up full time. She collected over $700 million from venture capitalists and ultimately grew the company to a staggering $9 billion valuation, according to Forbes.

Widely praised for her achievements, she appeared on the cover of the New York Times Style Magazine and Fortune, among others. Meanwhile, she gained the support of powerful men like George Shultz, the former Secretary of State, who sat on Theranos’ board and Henry Kissinger, whose estate lawyer helped the company gather nearly $400 million in investments, according to reporting by Bloomberg.

Theranos founder Elizabeth Holmes and her family leave the federal court after a U.S. jury found Holmes guilty in her fraud trial, in San Jose, California, U.S. January 3, 2022. REUTERS/Brittany Hosea-Small
Theranos founder Elizabeth Holmes and her family leave the federal court after a U.S. jury found Holmes guilty in her fraud trial, in San Jose, California, U.S. January 3, 2022. REUTERS/Brittany Hosea-Small

When Auletta published his profile of Holmes, an article titled "Blood, Simpler," in the New Yorker, John Carreyrou, the Wall Street Journal Reporter, read the piece with suspicion. Carreyrou later said he sensed Auletta’s misgivings and felt dubious of the notion that a college dropout could revolutionize blood diagnostics technology, according to reporting by Vanity Fair.

“I had some skepticism. And John picked up on that,” Auletta remarked.

'I did not produce the goods that he did.'

Soon, a source tipped Carreyrou off to Theranos' wrongdoing. He discovered that the company was using traditional blood tests instead of the Edison, which he learned often produced inaccurate results and couldn't perform many of the tests the company said it could.

With the help of several whistleblowers, he wrote a series of damning stories that revealed Holmes to be a fraud. Four years later, in 2018, he published “Bad Blood: Secrets and Lies in a Silicon Valley Startup," a New York Times best-selling book covering the rise and fall of her company.

“John Carreyrou did a brilliant job of exposing Elizabeth Holmes — I did not.” Auletta reflected. “So, when I look back on that, yeah, I did a profile of her, but I did not produce the goods that he did.”

Theranos paid to settle several investor lawsuits and ultimately, ceased operations in 2018. In January, a federal jury found Holmes guilty of four counts of defrauding investors. She's due to be sentenced on Nov. 18., with each of her charges carrying a maximum sentence of 20 years.

Editor's note: This article was originally published on Oct. 20 with the head "Ken Auletta: John Carreyrou did a 'brilliant job of exposing Elizabeth Holmes" and was updated on Oct. 21.

Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.

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