Americans have been fascinated with successful entrepreneurs since Horatio Alger days. In recent years, Silicon Valley billionaires like Apple’s Steve Jobs, Google’s Larry Page and Sergey Brin and Facebook’s Mark Zuckerberg have become icons. Elizabeth Holmes looked to be next.
Claiming she was transforming medicine with her blood-testing company, Theranos Inc., the 31-year-old Stanford University dropout became a celebrity. The New Yorker and Fortune published admiring profiles. Time named her one of the 100 Most Influential People in the World. Harvard’s medical school appointed her to its prestigious board of fellows. President Obama named her a U.S. ambassador for global entrepreneurship. Theranos became the nation’s largest private health-care startup, with Ms. Holmes’s stake valued at more than $4.5 billion.
But a series of investigative articles by The Wall Street Journal’s John Carreyrou detailed how Ms. Holmes and Theranos often have hit technological snags – with employees filing complaints with three regulatory agencies alleging the company concealed problems – as Theranos performed millions of blood tests on patients.
Mr. Carreyrou faced significant hurdles. Theranos issued litigation threats to his sources, including the widow of a company scientist. When Mr. Carreyrou solicited the company’s input about specific patients who said they had questioned Theranos’s blood-test results, the company sent its president to personally try to persuade the patients’ doctors to change their accounts. David Boies, Theranos’s outside counsel, sent the Journal letters threatening to sue it. He twice visited the Journal’s headquarters with Theranos lawyers to urge the paper to kill the story. Ms. Holmes declined Mr. Carreyrou’s efforts to interview her, despite making numerous other media appearances.
The Journal’s Theranos reporting opened a major crack in the technology boom, which had propelled some 125 private tech companies to “unicorn” status – a term coined in Silicon Valley to describe startups valued at a $1 billion or more. Jason Calacanis, an angel investor and technology journalist, called the Journal’s reporting “a watershed moment.” Speaking on a radio program, he said the Theranos affair “could be the beginning of the end of the cycle.” In an email to readers, the editor of Fortune Magazine, which in 2014 had put Ms. Holmes on its cover, wrote that “a high-flying unicorn has been brought closer to earth this morning by a deeply reported story on the front page of the Wall Street Journal,” adding that as a former top Journal editor, he “can vouch for the quality of Carreyrou’s work.” A Fortune reporter later apologized to readers for his earlier coverage in an article entitled: “How Theranos Misled Me…And How I Screwed Up, Too.” (Theranos denies misleading Fortune.)
Crediting the Journal’s investigation, the New York Times wrote: “While hot Silicon Valley start-ups like Uber and Airbnb have run into regulatory hurdles, as a medical technology company, Theranos has bumped up against something else: the scientific method, which puts a premium on verification over narrative.” Mr. Carreyrou’s dogged digging and precise writing, in the face of enormous hurdles, is the epitome of investigative journalism. Because of his efforts, the public is more informed about the science of blood testing, and more leery about the lofty valuations in the technology boom.