From a Washington Post story by Paul Farhi headlined “The magazine story that made Elizabeth Holmes famous could now help send her to prison”:
The magazine’s cover put a human face on the company’s alleged breakthroughs. Theranos’s founder, a young woman named Elizabeth Holmes, stared at readers with serene blue eyes and a Mona Lisa smile. “This CEO Is Out for Blood,” the headline read.
Emblematic of the gushy, overly credulous business and tech journalism ascendant at the time, Fortune’s story touched off a media stampede that transformed Holmes, then 30, into a business superstar.
Now the same article might help send her to prison.
Holmes is on federal trial in San Jose for 11 counts of fraud after Theranos effectively shut down in 2018. A jury is expected to begin deliberations as soon as Friday; if convicted, she faces up to 20 years in prison.
Holmes has pleaded not guilty and has denied lying about Theranos, which promised to make blood tests faster, cheaper and less invasive. She blames subordinates for giving her inaccurate information that she passed on to journalists, business partners and investors, who prosecutors allege were defrauded out of the nearly $1 billion….Among those she has blamed has been her chief lieutenant and former boyfriend, Ramesh “Sunny” Balwani, who will be tried separately on fraud charges next year.
The Fortune article has been a key part of the state’s case against Holmes, as has testimony and interview recordings supplied by Roger Parloff, the story’s author. Parloff has maintained for years that Theranos misled him in 2014.
Seven years after its publication, Parloff’s story stands out for its lack of skepticism and uncritical acceptance of Holmes’ confident claims. Some parts read like a script from the satirical HBO sitcom “Silicon Valley.” He portrayed Holmes as a driven, single-minded ascetic whose mere choice of beverage was impressive: “Holmes grips a plastic cup of unappetizing green juice. Her first of the day, it is made from spinach, parsley, wheatgrass, and celery. Later she’ll switch to cucumber. A vegan, she long ago dropped coffee in favor of these juices, which, she finds, are better able to propel her through her 16-hour days and seven-day weeks.”
The Fortune article claimed that Theranos was capable of doing 200 different blood-diagnostic tests from blood drops drawn from a fingertip — an astonishing advance over conventional intravenous draws and testing methods. Holmes also told Parloff about partnerships Theranos had allegedly developed with major pharmaceutical companies and the U.S. military.
Parloff quoted without challenge Holmes’ vague and enigmatic pronouncements about the company’s methods. “How Theranos accomplishes all these amazing feats is a trade secret,” he wrote. “Holmes will only say — and this is more than she has ever said before — that her company uses ‘the same fundamental chemical methods’ as existing labs do. Its advances relate to ‘optimizing the chemistry’ and ‘leveraging software’ to permit those conventional methods to work with tiny sample volumes.”
“It sounds incredible,” Parloff told Holmes after she described Theranos’s compact blood-testing computers, in a recorded interview played back at the trial.
“It is one of those special things,” Holmes replied.
In fact, it was incredible. Federal inspectors later found that Theranos was never able to detect more than a handful of conditions with its equipment, with unreliable results. Theranos’s alleged partnerships with the likes of Pfizer, the military and other companies were also illusory. Questions later emerged about whether Theranos had regulatory approval for some of its procedures.
Nevertheless, the Fortune article vaulted Holmes to celebrity status. Journalists trekked to Theranos’s headquarters in Palo Alto, producing a flood of equally awed and flawed stories. Forbes, the New Yorker and USA Today, among others, profiled her. NPR, Fox Business, CNN, CNBC and CBS News put her on the air. Glamour magazine named Holmes one of its women of the year.
The glowing coverage was typical of an era in which tech entrepreneurs were routinely lionized as masters of world-changing innovation, said Noah Shachtman, a former science and technology journalist at Wired magazine who now edits Rolling Stone magazine. Long before Holmes came along, business reporters had written rhapsodies to the likes of Bill Gates, Steve Jobs, Mark Zuckerberg and Amazon founder Jeff Bezos, who also owns The Washington Post. Only later did many journalists turn their attention to the social harm caused by big tech, and problematic business practices inside their companies.
“If you look across business and tech reporting, [the Theranos boomlet] was a moment when the [news] industry was too credulous, too fawning, too deferential to power,” Shachtman said. The reporting reflected “an urge among journalists to turn the subject of their stories into heroes or villains.” (Wired ran a flattering story on Holmes, too).
To be sure, Holmes was a compelling figure — a rare young, female chief executive in an industry dominated by men. Perpetually dressed in a black turtleneck and black slacks, she spoke earnestly about her desire to change the world through technology. Inc. magazine put her on its cover with the inevitable comparison: “The Next Steve Jobs.”
Theranos itself exuded gravitas, with an impressive list of early investors and a board of directors that Parloff would describe as arguably “the single most accomplished . . . in U.S. corporate history.” The directors included former U.S. senators Sam Nunn and Bill Frist, former defense secretary William Perry, future defense secretary Jim Mattis and former secretaries of state George Schultz and Henry Kissinger. Parloff quoted Kissinger saying: “I can’t compare her [Holmes] to anyone else because I haven’t seen anyone with her special attributes.”
The mythologizing of Theranos and other Silicon Valley firms reflected a journalistic culture in which “access” to key players was valued more than tough reporting, said John Cook, a former executive editor of Gawker Media….
“The only currency for most reporters covering the tech industry was access, and if you were critical you lost it,” Cook said. “Few tech reporters of that era were inclined to be critical in the first place, because they were largely in thrall to the Thiel-ian idea that the ‘founders’ were giants striding the earth, beyond the judgment of mortals.”
Some writers have expressed remorse for elevating Holmes and her company. Parloff wrote a lengthy essay published by Fortune in 2015: “How Theranos Misled Me.” He left Fortune the next year and is now a senior editor at Lawfare, a blog about national security issues.
Fortune offered its own sort of mea culpa last week: “The Theranos saga serves as a reminder to us all of the importance of both healthy skepticism and due diligence when reporting on companies and evaluating their claims,” it said. “It also highlights the importance of admitting and correcting mistakes, as Fortune has done in this case, and of being frank and transparent when one’s reporting doesn’t bear out, as Roger Parloff was in his 2015 follow-up essay.”
Others, however, have no such regrets.
The New Yorker featured Holmes and Theranos in a 6,000-word story in December 2014 that was nearly as laudatory as Parloff’s, though with a few caveats noting the company’s secrecy and a paucity of evidence for its claims.
A New Yorker spokesperson stood by that story last week, calling it “appropriately skeptical.”
Cook isn’t convinced that reporters have learned much from the Holmes-Fortune fiasco. On one hand, he says, tech journalists may have overcorrected and become prone to portraying tech moguls as “a coterie of Gilded-Age villains.” On the other, he cites WeWork, the office-space leasing company that got Theranos-like press notices for years until its spiraling losses were revealed in 2019 and the company became the subject of a criminal investigation.
In any event, the adoration of Holmes and Theranos came to an abrupt end more than a year after Fortune published its article, when Wall Street Journal reporter John Carreyrou began looking into the company.
Carreyrou’s front-page story in 2015 and subsequent reporting turned up irregularities and questionable practices at the company. It led in 2018 to his best selling book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup.” Apple announced last week that it will produce a movie based on the book, starring Jennifer Lawrence as Holmes.
Carreyrou’s stories eventually contributed to Theranos’ insolvency and helped set in motion the trial now concluding in Silicon Valley. They suggest their own lesson: the best way to drive out bad journalism is with a better kind.
Paul Farhi is The Washington Post’s media reporter. He started at The Post in 1988 and has been a financial reporter, a political reporter and a Style reporter.
Speak Your Mind