What It Took to Tell the Truth About Theranos | Whistleblower Tyler Shultz

0:00What happens when a company raises over a billion dollars, reaches a$10 billion valuation, all on a fraudulent lie? I don't think she started wanting to help people and save lives and the vision slowly slipped away from her. Like, I think that's kind of the excuse that a lot of people give her. It's kind of the excuse that I think Hulu gave her in the TV series. But I really think that she's proven time and time again that she does not care about patients. So I don't think that was her motivation. But I also don't think that she started out thinking, I want to defraud investors of hundreds of millions of dollars.

0:37I think she started out genuinely just wanting to be famous. I think she wanted to be the youngest self-made female billionaire. She wanted to be the female Steve Jobs. She wanted to be on the cover of Forbes and Fortune and Inc. and be on the President's Advisory Council and flying private jets with Mark Zuckerberg. And she did all of those things. She did it. She won. she achieved it. Today on the show, hear from Theranos whistleblower, Tyler Schultz.

1:08Welcome to the Heart of Healthcare podcast. I'm Hallie Teko. I'm Michael Esquivel. And I'm Steve Krause. And every Monday, we bring you the latest in healthcare innovation as we sit down with entrepreneurs and industry experts. So buckle up and join us as we figure out how to improve healthcare for all.

1:36Welcome back to the show. I'm Hallie Tecco. And today, Michael Esquivel and I are speaking with Tyler Schultz, the whistleblower who helped bring down Theranos. Michael is also part of this story. Michael was Theranos's first general counsel and was fired for trying to investigate internal wrongdoing and raise his concerns with the board. Michael, I'm proud of you. Well, thanks. Thank you, Tyler. Well, yeah, that time was surreal, as you both might imagine. Tyler showed so much courage when he first spoke out, first to regulators, then to the Wall Street Journal, ultimately exposing one of the biggest frauds in Silicon Valley history.

2:16Now he's channeling those lessons into something much more positive as a founder, venture partner, and public speaker focused on helping leaders navigate ethical challenges. Welcome to the show. Yes, thank you so much for having me, Michael. It's always good to see you. And Hallie, it's great to meet you. I'm excited for this conversation. So Tyler, we'd love to start off, you know, going all the way back to maybe day zero, day one. You were just starting your career when you joined Theranos, your first job out of college. Can you take us back to that moment? And specifically, how did you realize what you were seeing wasn't just how the world works, as we frequently hear about in Silicon Valley, but that something was fundamentally wrong?

3:02Yeah. So, going back to that day one, it was my first job out of college. I was incredibly excited to be there. They were supposed to be the apple of healthcare. She was the next Steve Jobs. But at the same time, because it was my first job out of college, I didn't have a whole lot of context. You know, I didn't have reference points for how companies are supposed to operate. And I joined the company at a really very exciting, but also tumultuous time because my first day was the day that we actually launched the product after 11 years of being in stealth mode. So just incredible timing. Like Elizabeth did this big ribbon cutting ceremony at the first Walgreens in Palo Alto that would offer these tests.

3:40We had a big party that day. You know, the Kool-Aid was flowing for sure. People were so excited. But also on that same day, it was immediately apparent that there were some pretty fundamental problems at the company. So pretty quickly, I learned that even though we had just launched the product, that on that first day, we had zero tests that had been validated on the Theranos product. So what did we really launch was really like the illusion of a product, not an actual product. And then pretty quickly, we were able to get a test validated. And that first test was HBA1C, which I thought was kind of funny because that's already pretty commonly done from a finger prick.

4:21So, you know, not something super revolutionary. But really, at the time, I was just so excited to be there that I kind of looked past those initial red flags. And I would also add that when I first joined the company, I had not seen the product, nor was I working with anyone who had ever seen the product. So, like my manager who had been there for, I think, like three years had never seen the product. Nobody in my lab that I worked with had ever seen the product. And we were not supposed to talk to colleagues about work. So, I was in this little bubble. You were not supposed to talk to colleagues about work?

4:54Yes, you were not supposed to talk to your colleagues about work. That is how secretive this company was. Wow. Like there were silos, there were locked doors, and they were so explicit. You know, like you were not supposed to put on LinkedIn that you worked at the company and you were not supposed to talk to anyone outside of your very specific little bubble of a lab about what you were working on. Wow. And so I was working with no one who had ever seen the product. Which looking back was a big red flag. It's like a true Wizard of Oz type of situation. But as Michael said, like this was your first job.

5:29So how did you know? I mean, 10 years, a billion dollars, all this positive press, very impressive roster of investors. Like, did you just kind of gaslight yourself saying, well, this must it must work like something must be going right after all this time and money? Oh, yeah, absolutely. Especially on day one, I thought, you know, there's obviously a lot of pieces to this puzzle that I'm missing. I know we're not using the product today. There could be a lot of reasons for that. Maybe we'll start using it tomorrow. I didn't have enough information for that to really be as big of a red flag as it should have been.

6:04And again, like the Kool-Aid was flowing that day. You know, that was such an exciting day after being in stealth mode for 11 years. Yeah. Wow. What day was it when you started to trust your intuition that something was fishy here? That was probably about day four. Well, take us to day four then. Yeah. So it didn't take all of that long. So by day four, the assay validation team was the group that was in charge of actually making sure that these tests worked before you tested patient samples. their job is to validate these tests and so many people had quit from that lab that because we were literally working through the night like they treated their employees like pieces of machinery they would work them to the bone until they burned out then they would quit or they were fired or whatever they would replace them with new people but so many people had quit that lab that they moved all research labs into the validation team and it's pretty funny i mean i don't know funny is the right word but Elizabeth likes to have very specific like names for things and the lab that had all the Theranos devices was called Normandy so on my fourth day we basically got this email from Sonny who said all of your research experiments were pushing pause on all that and you're all being sent to the front lines of the company you're you're being sent to Normandy I don't know exactly why they were drawing on that visual but that is what it felt like I was By day four, I was being sent to the front lines of the company because there was so much attrition from that Normandy lab.

7:40And as part of our onboarding into this lab, because we were working with the Theranos devices, we got to see what they called this quote-unquote open reader, which was the Theranos device that didn't have the shell on it. So, you could see exactly what was inside. You could see exactly what it was doing. And the first time that I saw this was the first time that my manager was seeing this. And she's someone who had been at the company for a few years. She had a PhD and a postdoc from Stanford. And so the first time she sees this, she turns to the woman who's giving us the demo and she just says, do you think this is cool?

8:13And the woman shrugged her shoulders and said, I'll let you decide for yourself and walked away. And in that moment, I really realized that there was an open secret at this company that the technology flat out did not exist because what we saw was an eight channel pipette on a robotic arm. There was no new signal transduction method. There was no microfluidics. Literally everything could have been purchased off the shelf from the pipette to the tips, even all of the reagents, like the antibodies were purchased. They act, not only could you purchase them off the shelf, they were purchased off the shelf.

8:44We did, we were not making these things in house. Yeah. Tali, would you just step back a minute and remind our listeners who Sonny is? Yeah. So for a little bit of context, Sonny was the president and COO, but he was also an early investor. He was also a board member, but probably most importantly, he was Elizabeth's boyfriend. So the man wore a lot of hats. Secret boyfriend, yes. Secret boyfriend. Yeah. My, uh, yeah. Yeah. He joined, he, he joined the company after my, my short tenure there. So, uh, never interacted, never interacted with him. So, uh, but I, but I heard he was quite a personality to say the least.

9:25Michael, tell us about what day you started seeing red flags. How long were you there and when were you starting to get suspicious? It was a little nerve wracking because a number of executives had swung by and wanted to chat. And the lead in phrase is, Michael, you're the only grown up in the building. And I'm looking over my left shoulder, my right shoulder, and I'm thinking I'm 30 years old. This is a bit scary to hear. But there was so much pressure put on these scientists and researchers that they were feeling beyond overwhelmed and helpless to try to keep the research at the time on the rails instead of just really trying to force a solution.

10:12Science, as we all know, as listeners here in medicine in particular, it's not linear, right? It moves in step function-like manners. And so you can't, unlike in software solutions, simply throw more bodies at it to code faster. It doesn't quite work that way when you're trying to create novel medicine, novel science. And so throwing more bodies wasn't going to be a solution. It was instead giving those researchers and those scientists more time to work through it. But the vision was constantly ahead of the reality. And I think that gap continued to widen every day, every quarter, every year. But I think it's also the freedom to give those scientists the space to actually investigate and invent themselves.

10:58But they were not given that. They were just given instructions of do this, do this, do this and do it very, very fast. It would be impossible to do it as fast as Elizabeth and Sunny wanted you to do it. But also, you are not supposed to problem solve. You are not supposed to debug. You are not supposed to come up with your own solutions to problems. You were supposed to just follow the roadmap. There was no intellectual freedom. Yeah. And there was a culture of fear that you've talked about in terms of feeling like you couldn't speak up and you couldn't question things. Yeah, there was a huge culture of fear.

11:34On my very first day, the manager of that assay validation team was in the parking lot crying on my first day because she told them that it was not ready. they should not launch the product and then they went ahead and launched the product anyway and when Theranos fired people they did it very publicly and I know in at least one instance after they fired former employees they sued them and when they sued the former employees they also sent out company-wide emails about it and if you read between the lines in those emails they're basically saying we'll sue you too if you get in our way we will destroy your life if you mess with us so people saw these feedback loops and just stopped speaking up like why would you speak up If you know exactly what's going to happen, it doesn't benefit you.

12:16It doesn't benefit your colleagues. It doesn't benefit the patients or the doctors or anybody. People just stop speaking up. And then instead of speaking up, people would just quietly quit. And if you do this over a period of 10 years, you build a culture where people are not going to question authority. They're going to do what they're told. And then when you introduce someone like me or Erica or Michael into these types of cultures, it literally feels like you're living in a twilight zone because every single person I worked with knew that this was a fraud, every single one. And nobody was going to do anything about it.

12:49And you would talk to your managers and say like, are you seeing the same things that I'm seeing? And they'd go, oh yeah. And you're not going to do anything? Oh no, absolutely not. What gave you that courage then? Why you guys versus the thousands of other people that just either were quiet quitters or just kind of took the paycheck and went through the motions. Yeah. Well, let's start with Michael. What gave you the courage to step forward? Yeah, Michael, let's start with you. What gave you that courage? Listen, I mean, this is always something I preach to my three children. Our integrity is everything in this world, right?

13:28It's something that we just simply cannot compromise on no matter the costs. And look, I wasn't as privileged as I am today to have, thanks to these amazing companies I work with day in and day out, the kind of practice I have today. I had nothing to gain, so to speak, economically for sure, but everything to lose in the way I was raised and the way I was taught. And it was stressful. And we talk about this often, whistleblowing sounds so noble in hindsight, but it is terrifying in the moment. Uh, on your behalf, I want to say like, you weren't just, uh, you didn't just speak up. Like I spoke up, but you were in a position where you could actually take action.

14:09And I think in this story, most, almost every single person who was in that type of position did not act on it, but you actually did. You actually fulfilled your, what I would consider your job responsibilities. You tried to actually get out a, a malignant, I would call her a malignant CEO. You tried to get her out of the company. You took a shot at the queen, which was a, that's a bold move. That's more than just, you know, raising a red flag that is taking big action against it. Yeah. It's a, it's what we were, you know, what we were taught in law school, but more importantly, you know, what I was ingrained in, in my entire life to, to try to do the right thing.

14:47I fall many times, believe you me, like all of us. But it was a really, really difficult period for me, Hallie and Tyler, as you can imagine. And Theranos did not take kindly to anyone who left the company, regardless of the circumstances, even back when I was there. I mean, Tyler, you joined in 2013, was that right? Yeah, and I was there in 2007. So just even before the product had been launched in Walgreens there in 2013. And it was still a scientific research endeavor. Michael, I just want to know what was going through your head when you had already left. Tyler was there. All this fanfare.

15:30Cover of Forbes. Did you like you? But you knew. You knew. And you had kind of moved on with your life. But you had kind of carried this like this is all a fraud while it continued to only pick up the momentum in the public eye. It was really hard. I don't know about you, Tyler, but it felt like I did have moments where I questioned, did I do the right thing? Did I just miss something? I'm a lawyer. I'm an economics major by training. I barely understood what an assay was going into the role. And so there were moments walking through SFO Airport and seeing magazine covers and interviews going on on the television sets hanging above and thinking, wow, maybe I did get something wrong.

16:18So good for the company's vision if it's in fact a reality. That being said, in my heart of hearts, I just felt like something still wasn't right. Yeah. I mean, and in the six or seven years since you had left, maybe they could have figured it out, right? Totally. You really had no idea. No idea. It was very secretive even back then. And so I had no idea. Friends of mine who were still there, though there weren't, it was a dwindling number. And certainly within a couple of years, they were all gone. They were terrified to say anything privately or publicly. And I just didn't want to ask and put them in an uncomfortable position.

16:52Yeah. But it's also interesting because the culture that I was, I feel like I was just dropped into right after 10 years of creating this culture, you were there very early when they started creating this culture of fear. And in fact, maybe you were one of the first, you know, public firings to help create that culture. Were there people before you had, who had been fired by like that or shortly after you or like, when did you start seeing that type of culture? Yeah, it's a good question. I think in these early, in the early days, they would just, people would just sort of, And I know this became a verb in your tenure, Tyler, but people would just sort of disappear and no longer be at the company.

17:28So it wasn't so visceral or public and there wasn't a lot of fanfare, so to speak, around it. But instead, people just weren't at the office the next day. Yeah, people really did disappear, like whether they quietly quit and didn't want anyone to know or if they were fired and were there one day and gone the next. But one of my close colleagues actually was even too afraid just to quit. So he bought a house in another state, came in on a Friday, put in a full day's work, left his badge on his desk, left the building, was in another state by Monday morning, didn't give a single day's notice, didn't tell a single person he was just gone.

18:03He disappeared. That is how terrified people were. Wow. And Tyler, you've mentioned you slept with a knife by your bed at some point. Like you had real fear for your own personal safety, not just your reputation and, you know, your job prospects, but for your own personal safety. Yeah, well, yeah, that's much further down the line in the story. But yeah, I mean, they hid lawyers in my grandfather's house. They had private investigators following me. They were constantly threatening me, threatening me with notices to appear in court. And, you know, I'd signed all these NDAs and I just didn't know where the line was.

18:41There was this very suspicious incident when I knew I was being followed by private investigators and someone broke into the lawyer that my parents had just hired and stole her briefcase that had all the notes and documents that she had exchanged with my parents. Wow. I think you shared that with me before. Wow. Yeah. So my lawyers advised my parents to get lawyers as well because, you know, they had their own documents and things to share. And so they met with their lawyer, exchanged all these notes and documents. Afterwards, their lawyer went to a wedding and during the wedding, someone broke into her car and stole her briefcase.

19:15And I know for a fact that we were being followed by private investigators at this time. And it is probably a coincidence. I don't think they would do something like that. But it is a strange enough of a coincidence where it gets in your head and you really start to wonder where the line is. And I didn't think that it was that crazy that they would try to kill me. I didn't think it was that crazy. In my mind, I thought Sonny will want to come do it himself, you know. that's a little bit of an exaggeration, but I did. I, I, I bought, I had a knife and I slept with a knife next to my, right next to my bed.

19:47I carried pepper spray with me everywhere that I went. And I knew that if someone really tried to come after me, it probably wouldn't do that much, but it still made me feel a little bit better for some reason. Yeah. You probably weren't sleeping well though. No, no, I was not sleeping at all. Really. If you had been wearing an aura ring at the time, and we had Tom Hale on this podcast earlier, your scores would have been cataclysmic, I suspect. Yes, they would have been very, very bad. No doubt. No doubt. So Tyler, you know, this is one I've heard lots of people ask over the years and would love to get your answer.

20:24Do you think Elizabeth started Theranos with the intention to revolutionize healthcare or did she intend to commit fraud from the outset? So I get that question a lot. And I actually think the answer is neither. Like I don't think she started wanting to help people and save lives and the vision slowly slipped away from her. Like, I think that's kind of the excuse that a lot of people give her. It's kind of the excuse that I think Hulu gave her in the TV series. But I really think that she's proven time and time again that she does not care about patients. So I don't think that was her motivation.

20:58But I also don't think that she started out thinking, I want to defraud investors of hundreds of millions of dollars. I think she started out genuinely just wanting to be famous. I think she wanted to be the youngest self-made female billionaire. She wanted to be the female Steve Jobs. She wanted to be on the cover of Forbes and Fortune and Inc. and be on the President's Advisory Council and flying private jets with Mark Zuckerberg. And she did all of those things. She did it. She won. And she achieved it. And then I think she either I think she just had a poorly planned exit strategy. I actually think that her exit strategy was to pin it all on Sonny.

21:36And he played that role incredibly well. But that exit strategy only worked about 66 % of the way because he was convicted of 12 out of 12 counts. And she was only convicted of four. So I think it worked to an extent, but not to the full extent that Elizabeth had planned. I've read the book. I've listened to the podcast. I've seen the film. And as you said, like the obsession with being this person and becoming this person, like even the change in the voice, which had to be so exhausting to embody on an everyday basis. I think back to that time and how we idolize her as a female founder who's made it and did it.

22:18I do think that founders have to be really good storytellers. like that is what really gets investors listening is a really good story not even investors just anybody like if you want to impart a lesson on someone tell them a really good story and founders have to be really good at telling those stories but Elizabeth takes it to a whole nother level she doesn't just tell a story she writes the story down to every single minute detail and she will change and manipulate everything about it to tell the perfect story that she knows you want to hear. And at the time, she knew that we all wanted that female Steve Jobs.

22:57And she perfectly created herself and just served herself up on a silver platter for us all to consume. And it was a story everyone just wanted to believe in. And she had the black turtleneck. She had the deep voice. She was the Stanford dropout. But then you look at other details of things that she chose. I was listening back to an interview that she did with my grandfather on the Stanford campus about Theranos. And she started talking about how they had a partnership with Johns Hopkins University to create a new diagnostic test that could identify pancreatic cancer like 15 years before you would have symptoms.

23:36So, that obviously was not happening. It was completely made up. But why choose that detail? Why pancreatic cancer? Why not breast cancer? Why not lung cancer? Steve Jobs? Well, possibly, actually. That's a good point. Steve Jobs. But my grandmother died of pancreatic cancer. And my grandfather actually had pancreatic cancer. And he got this Whipple surgery. And they removed it. And he lived another 15 years afterwards. But when she's on stage with him, I believe she specifically chose pancreatic cancer. Because it's the story that my grandfather wanted to hear. And it was one that he would believe.

24:12Well, Tyler, for our listeners who don't know, do you want to share who your grandfather is and his involvement in Theranos? Sure. So my grandfather has held more cabinet positions than anyone in U.S. history. He was the secretary of treasury for Richard Nixon, secretary of state for Ronald Reagan. And then he became a board member at Theranos around the same time that I joined as an employee. I don't know the exact timeline, but it was about the same time. You're underselling him, of course, Tyler. He's commonly referred to as one of the key individuals that helped end the Cold War and really was at the forefront of many foreign policy and other U.S.

24:53involvements and decisions throughout history. So quite a distinguished career. Yeah, and he brought in a lot of his best friends to join the board as well, which is why you look at the board and they were all former secretaries of state and defense and four-star generals and senators. It's because that is my grandfather's circle. And he brought in his best buddies into Theranos. And in a lot of ways, he was just like the stereotypical Theranos board member. The average age was 80 years old, which is insane. So I mean, just the makeup of the board was so different from a traditional biotech startup board.

25:29Why? Why do you think she wanted? Why didn't she want, you know, just a bunch of Stanford professors on her board? I think she didn't want them there because they would actually understand what they're looking at and call her out on it. And so she specifically chose people who she could outmaneuver, who she could outsmart, at least in this domain. And she also, I think, specifically chose people who thought they could not be outsmarted, who could not be outmaneuvered. And people like my grandfather have just had success after success after success his entire life and thought he could not be wrong.

26:00And he basically even told me that. Like when I was trying to convince him that Theranos was a fraud, he said, I fought in a world war. I ended the Cold War. I've seen a lot in my life. I've rarely been wrong. I know what I'm looking at. I know I'm right about this. And you can't argue with that because everything he just said is true. But you just have to say, even though you've always been right, you can still be wrong. I don't care how old you are. You can still be wrong. And you would even bring up concerns with him like, well, there's no one on the board with medical expertise. You don't understand this.

26:29And he would say, well, I was on the board of Gilead and I was on the board of Gilead when they went from the red to the black. So it worked there. Why not here? And Elizabeth just found these these types of men and just made them feel so important, so good about themselves. And they all just vied for her attention. And she just completely used that to her advantage. Well, Tyler, one of the things you've, you know, in your in your post Theranos career here, I've really focused on is is ethics, of course, understandably. And you've said that ethics can be a competitive advantage for companies. From your perspective, what does that look like in practice?

27:10Yeah. Yeah. So, when I talk to CEOs, especially of like quickly growing startups, if I ask them, like, if you had a superpower where you could listen to people's thoughts and you could hear what your employees didn't want to tell you, would you use it? And they say, yes, absolutely. Of course, I would love that superpower. And then I say, well, you know what? You can actually have that superpower if you develop the right culture. If you create a culture of transparency where people's concerns are heard, where people can have passionate debates without feeling like without fear of retribution, people will actually tell you what they think.

27:44And you might not always like what they say and you have to figure out how you react in those situations. And I really believe that this, by building ethical cultures, you are developing an ability to see around corners and to identify problems in their earliest stages when you can most easily address them. And sometimes that will come at a cost. It might take longer to get your product launched. But if you're willing to do things right, do it the right way in the long run, it ends up being an absolute competitive advantage for your company. If you're someone looking to join a startup or even a larger company, how can you evaluate the ethics of a company?

28:27Like what would be something like a due diligence list for you as an employee that you would look for now? It's a great question. So there's a, there's a few things that I would look for. One is company turnover, but that could be very hard to actually figure out. You know, there's not an easy tool to see how many people have come and left. But if you can talk to former employees, they might be able to give you some sort of an indication on turnover. I would also ask about collaboration and almost more like silos. Like, are you allowed to talk to other departments and collaborate about your work, right?

29:02That's a huge, huge red flag, especially in scientific companies. Like you need every time that a piece of your product gets handed off to the next team, you need so much collaboration and teamwork to make sure that transfer goes well and that, you know, everything is working as it should when it goes to the next step. So, I think asking questions about that could be very telling. But actually, I think there's a very, very easy, easy question that you can ask, which unfortunately might feel like a gotcha to the interviewer. But if you ask the interview, what are the core values of this company?

29:35And they don't know. I think that's a big red flag. And I really I really think that the best way to build an ethical culture is to have clearly defined core values and then be consistent about communicating what those core values are and then use those values as a lens through which to make decisions. And especially in startups, when you have people wearing all kinds of hats. You want people to be aligned on what are the most important things to this company so that you can make uniform decisions across people, across departments, so that the CEO doesn't have to be involved in every single one of them.

30:12So I think, especially at startups, but also at big companies, if you ask, what are your core values? And if that interviewer can list off the three or four things, that's a really good sign because it means it's something they're thinking about all the time. It's something that it's a lens through which they're making decisions. But if they go, I think it's honesty. And I think that I think that's a big problem. Yeah. But hopefully you also don't want to put the interviewer in a situation where they feel put off. But I do think it's a good question. You do see a lot of companies posting their core values on their website, though they do.

30:47It may be in an investor relations page or somewhere, but you oftentimes do see it. But that's a great bit of a masterclass tidbit advice there. So in that same vein, Tyler, so, you know, we are in this insanely fast-paced race for innovation, especially in healthcare. There's just enormous pressure to move quickly, right? First mover advantage is a constant theme that Hallie and I, and I know you in the ecosystem frequently encounter. So what advice would you give to our listeners, many of whom are scientists, researchers, and healthcare professionals themselves, when they encounter something that doesn't quite feel right?

31:24Yeah. So my number one piece of advice is that you have to trust your gut. And if something doesn't feel right, it probably isn't. And it can be really easy to question yourself, to doubt yourself. And so you need to really get that conviction in your beliefs first. And I think one thing that I did really, really well while I was at Theranos was I tried to do everything I could possibly do to prove myself wrong. I did not want to be right. I so genuinely did not want to be right. So, I would talk to my colleagues, to my managers, to make sure that I wasn't missing something. I even reached out to regulators and asked them, you know, is what we're doing okay?

32:06And they responded and said, no. I read CLIA laws myself. You know, I'm not a lawyer, but you can find laws. You can read them yourself and you can, especially now with AI tools. They could really help you understand the laws that govern the things that you and your company are doing. And then I had conversations with the vice president, with ultimately with Elizabeth, the CEO, with the president and COO, with a board member. I went to every single channel that I possibly could to try to prove myself wrong. And once I couldn't, I had 100 % conviction that I was right. And I needed that 100 % because of how much pressure was put on me later, if I was at 99.9%, I would have caved.

32:48And I think one thing that people often don't fully understand about the whistleblower experience is that at least for me, it wasn't a decision that I made once and then I just had to live with it. It seemed like every single day there was the opportunity to give in, to cave, to give Elizabeth and Theranos what they wanted. And every single day I would have to remake the decision that I'm going to continue down this incredibly difficult path that I'm going down and not take the exit route, not take the easy way out. And I knew that, you know, there were times when I felt like I would absolutely lose.

33:23Like the truth counted for nothing. There was no way that I would win this, but I still felt like the fight was one that was worth having, even if I lose. So to people who see potential wrongdoing, first of all, I would say, trust your gut, then try to prove yourself wrong. Then if you do decide to move forward, you have to make sure that you have the conviction to take it as far as you need to take it. But also that there are a lot of resources that are available to whistleblowers. So I would seek those out. And without getting into those details, I'm just curious if you think that whistleblowers should be compensated somehow because they're doing really important work, yet oftentimes their careers are destroyed.

34:05Yes, I do. And that is somewhat of a controversial opinion. But the SEC has this great program where if a whistleblower brings a tip to the SEC and they act on it and they recover a fine, that the whistleblower is eligible for 10 to 30 percent of what the SEC recovers. And I think that's great because, like you said, a lot of whistleblowers are never able to work ever again. So I do think it's important to financially compensate them for the risk that they took. But actually, more importantly than that, I think it's amazing that there's now an industry of lawyers who will work for free with whistleblowers on contingency.

34:43So, they only get paid if their whistleblower gets one of these rewards. But that means that there are people like me who have not and may not ever get a government SEC whistleblower reward, but I've actually still benefited from the program because I've gotten free legal counsel from these types of lawyers. And then the third reason I really like this program is that it has created a new type of whistleblower. And in a lot of ways, I'm a very typical whistleblower. I was very low at the company. I was not paid well. I had no stock options. And so, in a way, I was not conflicted. But now, you have kind of like a new class of whistleblowers where you have the CFOs of companies blowing the whistle on the CEO of their company.

35:24And they're getting rewards that are like $100 million,$200 million doing this. And when the CEO knows that the CFO can make$100 million blowing the whistle on them, it creates an incredibly strong deterrence mechanism. So I do think that it's a positive thing to pay whistleblowers. If nothing else, I feel like you should be compensated for damages from Theranos, like the, just like anyone else would, right? I mean, just your, your, your mental health and wellbeing during that time. Like I think you deserve an award for damages. I don't know. I'm not the lawyer here though. I wish you were the lawyer and the judge and the jury.

36:06Cause I agree with you. You know, I suffered emotionally, my relationships with my parents, with my grandparents suffered. And there was also a huge financial toll. I ended up spending somewhere between$400 ,000 and$500 ,000 in legal fees just to not give in. I didn't even go to court. I was just standing my ground refusing to sign their affidavits when they were trying to get me to retract statements that I had made to the Wall Street Journal. And I was just saying no. Just saying no cost over$400 ,000. And I would love to just be made whole. I'm not asking for a$100 million payout. I just, I do wish that those legal fees could have been recouped somehow.

36:47Yeah, it's unfortunate when companies like this flame out the way they did. You know, there are obviously many victims here, but there's just no cash to go around. There's nothing left. And then you think about the poor victims. I mean, thinking you had HIV when you did and thinking you had lost your fetus when you hadn't. I mean, just horrific stories we read about in the press, when you had these victim patients endure an emotional turmoil to only find out, well, the tech was never validated and no, you did not suffer a miscarriage or you were not suffering a miscarriage and no, you did not have HIV and so on and so forth.

37:25I mean, that's just the tragedy of it all is that when you're in the health tech, biotech world, you're not creating another photo app. You're impacting human life. Yeah. And it's just, it's just a crazy, it's crazy. Tyler, as you think about this all, do you think our venture capital ecosystem has learned from the Theranos saga? And do you think that same fraud would be possible today under new branding and buzzwords? So I do think that the VC world has learned something from Theranos, but it might not actually be the one you think. So, I consider what Elizabeth did to be, you know, she, in my opinion, she raised the biggest angel round of all time.

38:09She got individuals, wealthy individuals to write checks that were a hundred plus million dollars. And she did this over and over and over again. But if you look at her list of investors, there are actually no Silicon Valley venture capital firms. There's no Coastal Ventures. There's no Sequoia ventures. There's no Google ventures. Draper is on there, but he was more like an angel investor. He was her neighbor. It was very early and very small. I think he put in like 500 ,000, maybe he put in more later, but you know, they were, I don't think Draper was even a major investor and I wouldn't consider that real institutional money anyway.

38:46But what this shows is that like, if you talk to partners at those firms, of course, Elizabeth pitched them, right? She was right in their backyard. And they said, yeah, you know, I would go visit the company. I would put together the diligence team. They would run the process. The process led to the answer no. And then we didn't invest. And in a way, that is the most unsexy story you've ever heard because it's not that splashy. But in a way, I really think that Silicon Valley VC didn't get enough credit for staying out of this. They ran processes. The processes worked. They said, don't invest.

39:21And they actually listened to the result of the process, which is kind of amazing. The highest risk-taking capital allocators in our economy. Yes. Stayed away. Yeah. Stayed away. And she really just preyed on these individual decision makers. So I think the big lesson is that individual decision makers can make really, really bad decisions. But if you put a process in place and you listen to the process, it's an incredibly strong tool when your diligence in a company. Well said. Well said. So it was announced earlier this year that Elizabeth Holmes is now husband, not Sonny. His name is Billy Evans is launching a new blood testing company while she's in prison.

39:59What was your response to that? So it's kind of long winded, but first of all, come on, this is not Billy Evans. This is Elizabeth. Like how, how do we really think that Elizabeth's husband independently came up with the exact idea that she had a He's not a scientist? He's not a scientist as far as I know. Real estate or something. Yeah. I think in one of Elizabeth's recent interviews for like People Magazine, she said that she was working on her inventions in prison every single day, which is just eye rolling. Like, how are you inventing new blood testing technology from a prison cell? But the company is doing, it's basically Theranos 2.0.

40:38You know, it's another blood testing from very small amounts. They're using a completely different technology, but it's actually one that has existed for a really long time, kind of as Theranos technology had existed for a long time as well, called Raman spectroscopy. And they're introducing like a second laser that should help cancel out some noise. So to me, it doesn't seem like it's all that revolutionary, but I really don't think that they're launching this company with the expectation that it is a huge commercial success. And like we talked about earlier, Elizabeth doesn't tell the story.

41:11She writes the story. And she's been writing her Rise from the Ashes story since before she went to prison. She had her kids. She posed with her kids for magazines and newspaper shoots. You know, most people try to hide their kids from things like that. But she put them front and center because it's part of her story that she's a mother now. She's no longer Elizabeth. She's quote unquote Liz. And this is just the next step. And I really think that, like we said earlier, again, the Silicon Valley VCs, they do love, or not even just Silicon Valley VCs, people love good stories. Investors love good stories.

41:50And I think what would be even more compelling than the Mark Zuckerberg dorm room or the Hewlett Packard garage is the Elizabeth Holmes prison cell, where she launched this next venture. And I think that there's enough people with enough money who are willing to put a substantial amount of money in, but they're willing to be wrong just to be part of that story. Like what if she's right? What if she does create this new company that realizes the Theranos vision that vindicates her in a way, and I can be part of this Elizabeth Holmes rise from the ashes story. But I also don't think it needs to have commercial success for that to happen.

42:30I think they just need to prove that they can build something that works to a very small extent to try to prove vindication or at least to claim vindication, not prove it. You know, if they, if they, from a single drop of blood measure cholesterol or something, she's going to say, look, I did it. All I needed was more time. And one thing that's frustrating to me right now is that she's also tweeting or X-ing, I don't know what it is, tweeting from prison. And she seems like she's building quite the following actually. And she's kind of telling this story that all she needed was a little bit more time.

43:05And I was surprised to see that the president of Y Combinator was starting to buy into this. He actually was in a tweet thread with her saying like, I think you were very close. It didn't have to go this way. And Elizabeth's response was like, yeah, kind of like if she was led into Y Combinator, she only needed one more month and she'd be out of prison. Like she'd vindicate herself and be out of prison. And I'm just like, man, how are people starting to believe this again already? It's pretty shocking. And I don't hold anything against the president of Y Combinator. I think Elizabeth is just really, really good at she does.

43:39So, I actually reached out to him and I said, I'm like, I'm genuinely curious. Like I don't want this to feel like an attack on you or Y Combinator. Like I'm genuinely curious, what makes you think Elizabeth or Theranos was close? Like what gave you that message? Because we were not close. We were so, so far away. Did he reply? No, he didn't reply, but I'm hoping I can get in touch with him somehow because it's like, whatever's working on him is probably working on a whole bunch of other people. But yeah, but I mean, in this country, felons can become president. So it almost feels like people can get behind any sort of criminal.

44:20Yeah, it really does seem like that. But I really do not believe that Elizabeth deserves a second chance. I think that there's a lot of people who never get a first chance. And she had so many chances while she was at Theranos. Like even when the Wall Street Journal started publishing their reporting on Theranos, they had hundreds of millions of dollars in the bank. They had hired amazing scientists who were not listened to. They did a great job hiring, not a good job retaining necessarily, but they had great people. They had an incredibly powerful board. They had tons of money. And in a lot of ways in that moment, they had more opportunities than most founders ever dream of having.

45:00And she squandered it again. She continued to make bad judgment decisions over and over and over again. So she had her first through thousandth opportunity at Theranos. And I just I really think we should give we should allocate resources to somebody else, not to her. Yeah. I mean, if a doctor were to have some sort of break some sort of law that led them to jail, they would not be able to get out and practice medicine again. Right. That's a great analogy. but almost undoubtedly she will step out of prison and raise another, maybe a hundred million dollars for a company or a VC fund. She will have a perfectly, you know, happy ending.

45:43She might not need to. There's no doubt. She married rich. She might not need to. Well, Tyler, this was such a fascinating conversation. Just like really admire the courage that you showed at such a young age, like really incredible. So, you know, thank you for that. Thank you for your time today and all of your insights. I do want to express my gratitude, Tyler, to you. Our collaboration over many years, our friendship has meant a lot to me. And grateful that you made some time to join us here, but also to share these words of wisdom as we move forward. It's time to turn the page on the Theranos saga in many ways and make sure that we don't encounter another situation like this, especially in our industry, because so many people, 99.99 % are focused on improving the human health condition and they're committed, they're passionate, they're dedicated.

46:33And those are the people that I hope this podcast reaches and that we're able to empower them so that we can sit back and talk about the glorious future ahead in our health condition. Definitely. Yes. Well, thank you so much for having me. This has been a really fun conversation. I hope your listeners enjoy it.

46:57Thanks for listening to The Heart of Healthcare. If you enjoyed this episode and you'd like to support the podcast, please leave a rating and review. And don't forget to subscribe. The Heart of Healthcare is produced by Hallie Tecko and hosted by Michael Esquivel, Steve Krauss, and Hallie Tecko. The show is engineered, edited, and mixed by Kyle Moore. Visit our website, heartofhealthcarepodcast.com, for show notes and details. Yeah.