By Zora Ilunga-Reed on January 15, 2019

In a packed room at CEMEX Auditorium on Monday, Theranos whistleblowers Tyler Shultz ’13 and Erika Cheung described the shuttered company as secretive and toxic, saying that it was an “open secret” among employees that founder and CEO Elizabeth Holmes’ infamous blood testing technology was fake.

Also on Monday, a federal court in California held a hearing on June 2018 charges against Holmes and former Theranos president Sunny Balwani. The results of the hearing have not yet been released.

Theranos was one of a handful of so-called “unicorns,” a Silicon Valley term for startup companies with a valuation of at least $1 billion. The company promised to revolutionize blood testing using an innovative finger prick system that would ideally replace the industry-standard venous draws and revolutionize the healthcare industry.

Dreamt up in Holmes’ Stanford dorm room, Theranos was exposed in the fall of 2015 by a series of investigative pieces, primarily from the Wall Street Journal (WSJ), which found that Holmes had fabricated Theranos’ claims of revolutionary innovations.

On Monday, hosted by CS + Social Good, Alexander Lam ’21 opened the event with an observation.

“Four years ago, Elizabeth Holmes, the CEO of Theranos, sat in this very auditorium,” he said.

Eliciting nervous laughter from the audience, this fact set the stage for the gravity and reality of the Theranos story and Cheung and Shultz’s reflections.

“It’s a bit surreal, honestly,” Cheung said. “You never would’ve expected by joining Theranos that this is what would’ve happened.”

Both Cheung and Shultz joined Theranos fresh out of college. Cheung, who had considered pursuing a Ph.D. prior to joining the company, said she “fell in love with the vision of Theranos.”

“I was super sold on the vision,” she said. “Totally drank the Kool-Aid, initially.”

Contrary to Cheung, Shultz began working at Theranos while still in college. After meeting Elizabeth Holmes in his junior year, he too “fell in love with [Holmes’] vision.”

“[I] changed my major to biology so I could do some more chemistry,” he said. “I ended up graduating biology and then going to Theranos.”

Shultz began his career at Theranos in the department working on antibodies for testing, but less than a week after he joined the company, the lab he was working in was shut down. He was added to a new team focused on assay validations.

“The reason that I was told was that that team was, like, 20 people and then it dropped down to, like, eight people super quickly because they were working through the night,” he said.

Cheung began in Research and Development at Theranos but, like Shultz, was quickly moved to a different department. This constant shuffling of employees at Theranos from department to department was just the beginning of a toxic corporate culture, Cheung and Shultz said.

“The moment you entered into Theranos, the first thing they’d have you do is sign an NDA,” she said.

The secrecy didn’t stop there, Shultz added.

“There would be barriers up that would surround where the devices were so even if you were in the lab you still couldn’t see the devices,” he said. “It’s kind of crazy to think that you have, like, most of your company working towards something that they’ve never even seen.”

Many companies in Silicon Valley operate under similar stealth conditions, but few are as extreme as Theranos. Cheung and Shultz agreed that it was partially this secretiveness that tipped them off that something was wrong. Additionally, day-to-day operations at Theranos included open falsification and cherry-picking of data.

Employees were forced to re-run tests if they didn’t get the results Holmes and Balwani wanted. At one point, Shultz’s team ran Theranos tests for syphilis on employees and found that about 20 percent of the employees had syphilis.

Shultz recalled his boss saying “it’s possible” that employees could contract syphilis. This blurring of the line between possibility and plausibility, however, struck Shultz as a bad way of thinking for a biotechnology company.

“It was sort of an open secret [among employees] that [Theranos technology] wasn’t real,” Shultz recalled.

Once both Cheung and Shultz decided to quit Theranos and begin the process of bringing regulators to the company, Theranos actively threatened them with lawsuits and even sent people to follow them to their homes and offices.

“I had a burner phone for over a year,” Cheung said, recalling the long period of paranoia and stress she and Shultz endured as they tried to bring Theranos to justice.

“I, at least, had no idea what I was getting into when I got into it,” Shultz said of the legal process which alienated him from his family, including his grandfather and former Secretary of State George Shultz.

“At that time, my lawyers told me that the only people I could talk to are my wife, my lawyers and my priest and I’m not religious and I’m not married,” Shultz added.

But when asked if they wished they’d rather stayed silent about the truth about Theranos, both Shultz and Cheung said they stood behind their decisions.

“Frankly, I’m not one of these people who can kind of keep quiet,” Cheung said.

Both Cheung and Shultz say their lives have returned to normal since the Theranos scandal. Shultz is now the CEO and Co-Founder of Flux Biosciences, which focuses on bringing medical grade in-vitro diagnostics to patients’ homes. Cheung is the Program Director at Betatron, a startup accelerator company in Hong Kong.

When asked if their experience with Theranos has tainted their views of Silicon Valley culture, both Cheung and Shultz said they still have a fairly positive view.

“I generally think most entrepreneurs are just really passionate, smart people,” Shultz said.

However, they both stressed the importance of honesty, transparency and due diligence in the tech entrepreneurial industry.

“Just be honest, you know?” said Cheung. “Just be honest, be transparent.”

This post has been updated to reflect that the Theranos whistleblowers event at Stanford took place on Monday, Jan. 14, not Tuesday, Jan. 15. The article has also been updated to note that Elizabeth Holmes was not tried on Jan. 14 but rather that a court hearing was held regarding charges against her. The Daily regrets these errors.

Contact Zora Ilunga-Reed at zora814 ‘at’ stanford.edu