After spending 10 hours behind her on the witness stand, it had become pretty clear how Elizabeth Holmes, the disgraced founder of blood-testing start-up Theranos, once managed to persuade a parade of investors to bid farewell to hundreds. millions of dollars.
This week, just like then, the 37-year-old Stanford dropout seemed to have an answer for everything.
It helped that she already knew the questions, as they came from her lead attorney Kevin Downey; all part of a calm and collected display, delivered maskless and behind plexiglass in the San Jose courthouse.
While defending herself on charges of fraud, Holmes seemed so relaxed this week at times that she even smiled at the judge’s jokes. Soon it will be a lot more difficult. Prosecutors are likely to have their long-awaited turn to question her early next week.
Downey led Holmes through a testimony carefully orchestrated to serve two purposes. First, to present Holmes as an ambitious young entrepreneur with deep knowledge of her work, with an intense belief that her vision was possible.
Second, Holmes had to tackle and ideally temper some of the government’s strongest evidence.
When she took the stand on Tuesday, she quickly confessed to one of the most serious allegations: that she personally altered Theranos reports to include the logos of two major drug companies — Pfizer and Schering-Plough.
Prosecutors said it implied that the pharmaceutical giants had endorsed Theranos’ technology, which was not the case. Nevertheless, the documents were sent by Holmes to Walgreens executives as part of what would be a successful pitch to open “wellness centers” in as many as 3,000 of the pharmacy chain’s locations. Walgreens became Theranos’ breakthrough customer, and the deal was the springboard to another major investment round that meant Theranos became a $9 billion company.
“This work has been done in conjunction with those companies and I was trying to get that across,” Holmes said of her editing intervention, acknowledging that the drug companies were unaware of her actions. “I wish I had done it differently,” she added — a rare token of regret.
Then she took on another line of attack: that Theranos was covering up the use of conventional test machines because its own hardware was not up to the task, as previous witnesses had stated.
Holmes dug in and said she made the choice to fall back on hardware from the likes of Siemens because of the amount of testing from Walgreens customers that had to be handled. The Theranos machines were once designed to process only one person’s sample at a time, she explained, but third-party technology, such as machines from Siemens, could handle much more.
When her attorney asked her why she didn’t share details about the change of process with Walgreens, its clients, or the investors of Theranos, Holmes claimed that instead of orchestrating a cover-up, she was in fact a new ones invention: the ability to use existing testing machines to analyze smaller blood samples.
“This was an invention we understood from our counsel that we had to protect as a trade secret,” Holmes said. “The big medical device companies like Siemens were able to reproduce what we had done. They had a lot more engineers than us.”
At times the atmosphere in and around the court betrayed the seriousness of what lay ahead for Holmes, who became a mother in July. She faces 11 charges of wire fraud and conspiracy to commit wire fraud, all related to the widespread allegation that her promise to reduce the cost and inconvenience of a blood test was a sham. If convicted, she faces up to 20 years in prison.
Whether it was fortunate timing or a well-executed plan, Holmes’s appeal as a witness stand at the defense late Friday afternoon set off a siren for domestic and international media to be in San Jose Monday morning to hear her speak for herself at last. for the first time since Theranos crashed.
It now also means jurors will go home for their Thanksgiving break with Holmes’ defense on their minds — not the government’s charges.
Those most desperate for one of the approximately 30 public seats in the courtroom arrived at 3 a.m. each morning, with two reporters implementing a strictly registered queuing system to reward the early birds. The system was praised by a local schoolteacher who, after deciding to go along out of curiosity, said she organizes her seven-year-olds in much the same way.
Nearby, an opportunistic—perhaps not quite serious—woman opened a briefcase to reveal a selection of “merchandise,” including a blonde wig for $40, or a Holmes-esque black turtleneck sweater for the same price.
The scene proved that while it may not be quite as she intended, Holmes has undoubtedly become an industry icon. As she walked into the court on Tuesday, a male supporter shouted, “Girl Boss! God bless you, Boss!” — a condescending nickname, but one that speaks to a sentiment of some pointing out that, for all male-led failed start-ups, it’s telling that it’s a woman who finds herself in the dock in one of the most talked-about about cases in Silicon Valley history.
Others suggest it’s not Holmes’ gender, but her choice of business. Compared to the “move fast and break things” wild west of software and social networks, the highly regulated healthcare sector offers ample opportunity for relentless scrutiny and the cost of getting it wrong – as evidenced by a witness here who was falsely told by Theranos that she had a miscarriage – is serious.
If Holmes is convicted, some argue that it would curb future innovators and introduce fear of failure. If Holmes walks, it sends a signal to investors that even someone who they believe lied continuously will not face criminal penalties.